Chapter 11 Enforcement of Arbitral Awards

1. Chapter 11Enforcement of Arbitral Awards

2. Remedies for Int’s Awards • Set aside (撤销） • Refusing enforcement（拒绝执行） • General principle: National courts are entitled to set aside their own awards. As to foreign awards, the courts may only decide whether to enforce or not.

3. Conditions for refusing enforcement under NYC • General principle: procedure issues instead of merits of the case • Invalid arbitration agreement • Lack of due procedure • Tribunal beyond authority • Impropriate composition of the tribunal • Non-arbitrability of the dispute • Award in conflict with the public policy

4. Invalid arbitration agreement • ELF Aquitaine Iran(France) v. National Iranian Oil Co. (Iran) 135 • Tibor Varady，223-228; • Nationalization of oil industry in Iran • Arbitration agreement was void. • Dispute is settled by the Special Committee of Iran. • Sole arbitrator declared its competence.

5. Lack of due procedure • Paklito Investment Ltd. v. Klockner East Asia Ltd. 251 • Sales K between the parties • Dispute on the defects of the goods • Expert opinions and review • Award in favor of the buyer • Refusing enforcement

6. Tribunal beyond its authority Norsolor S. A. (France) v. Pabalk Ticaret Sirketi S.A. (Turkey) 381 Agency agreement b/w French and Turkey co. ICC Arbitration award made in Vienna. Tribunal beyond its authority via amicable compositeur.

7. Improper composition of the tribunal • Commercial man as arbitrator • Engineer of the servant of the parties during the construction work

8. R. A. Sally(Fin.) v. S.R.L. Termarea (Italy) p.455 • Yearbk. Comm. Arb’n 294(1979) • C/P between Sally and Termarea • Arbitration clause （ad hoc) • Demurrage claim from Sally • Award by two chosen arbitrators • Refusing enforcement by the Italian court due to improper composition of the tribunal

9. Arbitrability matters • Wilko v. Swan (1953) • Sherk v. Alberto-Culver Co. (1974) • Rodriguez v. Shearson/American Express (1989)

10. Public policy consideration • Julius A. Furer in the USA（[1978] 3 Yearbook Commercial Arbitration. 290 ； • Army ship wreckaged • near Netherlands in 1974 • Lloyd’s open form salvage agreement • Dispute could not be arbitrated under US Public Vessel Act， • Commercial matters reservation

11. US Latest Cardegna Case • Buckeye Check Cashing, INC. v. Cardegna Et Al.(US, Feb.21,2006) • Agreement for deferred payment transaction b/w the parties • Cardegna sued that Buckeye charged usurious interest rates and the agreement violated various Florida laws • Trial court denied Buckeye’s motion to compel arbitration because the contract is illegal and void ab initio

12. Cardegna Case (2) • State appellate court reversed • in turn was reversed by the Florida Supreme Court: enforcing an arbitration agreement in a contract challenged as unlawful would violate state public policy and contract law • Reversed by the US Supreme Ct.—the challenge should be decided by the arbitrator instead of the court.

13. Chinese Practices • Domestic awards （国内裁决） • Foreign-related awards（FRA, 涉外裁决） • Foreign awards（外国裁决）

14. Foreign Related Awards(FRA) • Art.260 CPL : award made by the Foreign-related Arbitration Institutions in the PRC (CIETAC, CMAC) • Set aside and refusing enforcement in Art. 71, Art. 72（拒绝执行）CAL (Art. 260 CPL applied) • Jurisdiction of domestic & international arbitration institutions since 1996

15. Awards Classification by the Place of Arbitration • Domesticawards are those that were made in the State where the arbitration is taken place. • Foreign awards are those that were made outside of the State where the arbitration is taken place.

16. International Awards • Awards made in China under the administration of the Chinese arbitration institutions based on the international arbitration agreement • Awards made in China under the administration of foreign arbitration institution (ICC, LCIA, AAA) in accordance with the Rules of such arbitration institutions • Foreign awards made out of China

17. Court Supervision on the Int’l Commercial Arbitral Awards • Int’l award made in China byChinese Arbitration Institutions • Int’l award made in China by Foreign Arbitration Institutions • Foreign award made outside China

18. Draft Provisions by the Supreme Court in 2003 • Foreign-related arbitral awards refer to those involving foreign element made by the CIETAC, CMAC and other arbitration commissions (domestic arb. commissions) reorganized under CAL. • How about awards made in China by foreign arbitration institutions, such as ICC, AAA, LCIA?

19. Grounds Refusing Enforcing Domestic Awards: Art.217,CPL • No arbitration agreement; • Tribunal beyond the authority; • Tribunal improperly composed; • Main evidence insufficient; • Definite error in application of the law; • Arbitrators have committed embezzlement, accepted bribes or done malpractice for personal benefits or perverted the law.

20. Grounds for Refusing Enforcement FRA • CAL 71 & Art.260, CPL (1991, Art.258 in 2007) • No arbitration agreement • Lack of due process • Improper composition of tribunal • Tribunal beyond authority • Burden of proof by respondent

21. Public Interest • Art.58(2), CAL • If the People's Court determines that the award is contrary to the public interest, it shall rule to vacate the award. • CIETAC awards on US co. v. Chinese Travel co.

22. Remedies for Foreign Awards • NYC awards • Non- NYC awards

23. Obligations under NYC • China acceded NYC in 1986 with the following two reservations • reciprocal reservation (互惠保留声明） • Commercial reservation （商事保留声明）

24. Reciprocal Reservation • China applies NYC only to recognition and enforcement of awards made in the territory of another NYC Contracting State. • Territoriality standard to decide the nationality of the arbitral awards

25. Commercial Reservation • China applies NYC only to differences arising out of legal relationships whether contractual or not which are considered as commercial under the national law.

26. Commercial Matters in China • Notice by the Supreme Court on Apr. 10 1987: Commercial legal relationship of contractual or non-contractual matters refers to such economic rights and obligations under contract and torts as the sale, leasing, CJV, EJV, insurance, credit, agency, consultancy, all types transportation, product liability, environments pollution, etc. excluding dispute b/t the government and foreign investors.

27. Competent Court for Enforcement • Intermediate People’s Court where the place of business of the respondent or his executing property is located.