Originally from Business Disputes In China - 3rd Edition

The Chinese Supreme People’s Court (the “SPC”) has issued its latest Interpretation on Certain Issues Relating to the Application of the Arbitration Law1 (the “Interpretation”). Since the adoption of its Arbitration Law in 1994, the SPC has made numerous pronouncements to guide the lower courts on the application of the Arbitration Law, including on such issues as the court’s jurisdiction over interim measures, the handling of jurisdictional challenges, and setting aside and enforcement of awards. This Interpretation provides further clarification on aspects of practical application. However, a number of important issues with respect to the PRC arbitration framework remain unaddressed.

What Does the Interpretation Deal with?

The Interpretation provides clarification in relation to the following key matters:

1. The Requirements for a Valid Arbitration Agreement By this Interpretation, the SPC is permitting greater flexibility in determining the validity of arbitration agreements. Among other requirements, the Arbitration Law requires an arbitration agreement to be in writing and to designate an arbitration institution. The Interpretation now confirms that the requirement for a “written form” of arbitration agreement may be satisfied where such agreements are evidenced through correspondence and electronic forms of exchanges (for example, facsimiles and e-mails). Further, where an arbitration agreement has not specified the accurate name of an arbitration institution, but that institution can be readily identified, the arbitration agreement will also be deemed valid. In circumstances where the choice of institution is ambiguous (for example, where two arbitration institutions are named or where parties only refer to an arbitration institution located in a certain place), the Interpretation nevertheless gives parties the opportuntity to "salvage" the arbitration agreement by reaching a supplementary agreement on the choice of arbitration institution.