Judicial review of arbitral awards in China: the need for reform

Abstract

The subject of this thesis is the judicial review of arbitral awards in China. Chinese arbitration law provides a distinct set of rules for reviewing international and domestic awards, which is usually referred to as the dual-track system (“Shuang Gui Zhi”). First, the judicial review standard is dual-track because international awards are subject to procedural and limited review, whereas domestic awards are subject to substantial review. Second, the review procedure is also dual-track because a reporting mechanism under which the lower courts cannot deny an international award without confirmation by the Supreme People’s Court of China is applied to international awards but is not applied to domestic awards.

The following question arises: Should the dual-track judicial review system for arbitral awards be harmonised into a single system, and if so, how should it be accomplished. This question has sparked heated debates among scholars and practitioners. It is important because appropriate and efficient judicial review of awards is essential to the functioning and development of the arbitration system in China.

The research is based on the theory of path-dependent and institutional change. My consideration of the future of the dual-track system is centred on the wisdom of the original policy considerations behind the dual-track judicial review path, the solidity of the institutional foundations of the dual-track judicial review path and feedback on the dual-track system from judicial practice and the arbitration market. The research critically examined the policies and institutions behind the design of the dual-track judicial review and conducted an empirical study of the feedback of the design, which included a comprehensive review of various materials, cases and data relating to the subject.

The thesis concluded that the dual-track review path should be reformed by harmonising the dual-track review standard while maintaining and revising the dual-track procedure. The dual-track review standard should be uniform, and the limited scope of procedural review should be applied to both domestic and international awards. Policy and institutional foundations have failed in the substantial review of domestic awards due to the disruption in boundaries between international business and Chinese domestic business, as well as a weakened distinction between international and domestic arbitration commissions. The case study and the survey provide further empirical evidence that supports my argument, which revealed that the dual-track standard causes chaos and abuse of law in judicial practice and has gained negative feedback from arbitration market participants.

In contrast, the dual-track judicial review procedure should be maintained and revised. The study indicated that the reporting mechanism still acts as a positive force to control the outcome of reviews and secure proper and uniform application of the law. Despite its shortcomings, it still plays an important role in counteracting the negative effect of local protectionism and reinforces confidence of foreign investors in arbitration and within the legal infrastructure in China.

Based on the above findings, the author proposed a new regulatory framework designed to be sufficiently flexible and current for meeting the practical requirements of arbitration, while considering suitable interaction between arbitration bodies and courts. Specifically, the thesis suggested that the Arbitration Law should be revised as a unitary and exclusive legal framework for regulating judicial review of arbitral awards, and for incorporating the rules of enforcement of arbitral awards specified in the Civil Procedural Law. Although separate regimes for domestic and international arbitration should be maintained, the criteria for differentiating various types of arbitral awards should be clarified and redefined. Finally, the thesis made several concrete suggestions for improving specific provisions of the law that govern judicial review of arbitral awards.