Draft an Arbitration Clause both Tailored and Clear

 Authored by Arthur Dong (dongxiao@anjielaw.com) & Darren Mayberry (darren.mayberry@anjielaw.com) at AnJie Law Firm

Arbitration clauses benefit from simplicity. The best arbitration clauses also inform. Rarely are they inventive or creative. This is true for Chinese arbitration, or any other. Arbitration clauses should be tailored to your contract's purpose and your firm's needs. Above all, construct your arbitration clause with an eye towards clarity, and not towards partisan advantage.


Domestic Arbitration Update for Foreign Invested Enterprises; Anti-Protectionist Measures may delay Enforcement of Awards

 Authored by Arthur Dong (dongxiao@anjielaw.com) and Darren Mayberry (darren.mayberry@anjielaw.comat AnJie Law Firm

A recent reform of the Prior Reporting System  will likely impact the procedural rights of Foreign Invested Enterprises (FIEs) following domestic arbitration. The 2017 Supreme People's Court Provisions on the Prior Reporting System dropped on 26 December, 2017. They became effective on 1 January, 2018. The Prior Reporting System originated in 1995. It has been expanded to apply to enforcement of a specific class of awards which have arisen from domestic arbitration proceedings.
The Prior Reporting System has served as an enforcement and annulment process for awards produced from either international arbitration or 'foreign-related' arbitration proceedings. Basically, enforcement courts must report 'up' to the High People's Court for that province before they may refuse enforcement. Likewise, High People's Courts which agreed to refuse enforcement had to report to the Supreme People's Court. Intermediate courts had served as the first instance forum for enforcement of both domestic and foreign arbitral awards. Deadlines for reporting or reply are sporadically observed. Resultant delays can drag enforcement out a year, or even longer.

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The Wisdom behind the Selection of Chinese Institutions

Authored by Arthur Dong (dongxiao@anjielaw.com) and Darren Mayberry (darren.mayberry@anjielaw.comat AnJie Law Firm

As discussed in the first post in our series, the Chinese arbitration system has matured over the last several years. Foreign parties should favor arbitration clauses in their China deals. Even so, this brings us to yet another question. Should a dispute resolution clause for a China-centered contract select a China-based institution to host the arbitration? Or should a non-Chinese party instead take refuge with regional offshore powerhouse institutions?

Answers will of course vary according to the contemplated contract's particular circumstances. Nonetheless, Chinese arbitration institutions offer two clear advantages. Chinese courts will facilitate China's institutional interim measure requests. Also, Chinese institutions offer international service without the cost premium. We explore how these advantages each can impact a dispute. We book-end the advantages with reassurances that Chinese institutions offer truly international arbitration. 

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Introduction to a Series on International Arbitration in China Certainty in China Enforcement: a Response to China Law Blog

Authored by Arthur Dong (dongxiao@anjielaw.com) and Darren Mayberry (darren.mayberry@anjielaw.comat AnJie Law Firm

Early this year, Dan Harris of China Law Blog  directed his attention to the erstwhile arbitration versus litigation debate. Dan Harris's position, as of 2014, was that international arbitration was a bad idea when considering China-based enforcement. He seems to have softened his position since then, but without abandoning his priors. Logic and recent available statistics should favor international arbitration in China deals. This is the Introduction to five subsequent posts in a series which addresses the international arbitration process with a particular focus on China.
Dan Harris offered a guarded appraisal for international arbitration as a dispute resolution selection for US companies engaged in China deals:
Arbitration is usually not the best way to go when dealing with Chinese companies, but sometimes it is. 
Arbitration acts as the form of alternative dispute resolution most similar to litigation. Just as in litigation, representatives advocate the merits for its party. Just like a court judgment, it is a formal and adversarial process that results in a written decision. A tribunal sits as 'judges' and comes to a final decision. But the representatives may be lawyers from any jurisdiction (or not licensed at all). The members of the Tribunal also may be from the United States, Canada, China, or any other country. Unlike litigation, arbitration only rarely allows for appeals on the merits. Most importantly, arbitration removes jurisdiction from a national court and places it in the hands of an institutional arbitration commission.  And foreign arbitral awards experience routine enforcement, even in present-day China.




Enterprises in Chinas Free Trade Zones Enter 2017 with New Options for Arbitration

Authored by Arthur Dong (dongxiao@anjielaw.com) and Darren Mayberry (darren.mayberry@anjielaw.comat AnJie Law Firm

The post Enterprises in China’s Free Trade Zones Enter 2017 with New Options for Arbitration appeared first on Kluwer Arbitration Blog.

On December 30, 2016, the Supreme People’s Court (“SPC”) issued a set of new Opinions.  It covers an array of matters relating to legal measures to expedite the development of Free Trade Zones. (Opinions on Providing Judicial Protection for the Construction of Pilot Free Trade Zones, December 30, 2016). Among other matters, the SPC sought to open the Free Trade Zones  to further options regarding alternative dispute resolution. Remarks made in Article 9 have effectively designated as Foreign Per Se any Wholly Foreign-Owned Enterprises which are registered in one of 11 current Free- Trade Zones. In three brief paragraphs, the SPC seems to have shifted the landscape for China-based arbitrations. The immediate practical significance of the Opinions may remain humble and limited. In time, the SPC’s Opinions may  permit increased deference and  jurisdictional purview to foreign tribunals. It also may serve as the  beginning of ad hoc arbitration in China.




Arbitrability of PPP Disputes in China

Authored by Arthur Dong (dongxiao@anjielaw.com) at AnJie Law Firm

First published on IBA, Public Law Committee Newsletter, July 2016

1 Introduction

A few days ago, Mr. Han Bin, the vice director of the Social Capital Cooperation Center of the Ministry of Finance delivered his address to the China First Finance Daily that the Ministry of Finance would soon introduce the third batch of Chinese Public-Private Partnership (“PPP”) programs, following the first batch in 2014 and the second batch in 2015. The overall amount of investment into the public private partnership in China was over 180 billion in RMB Yuan in 2014, the number of programs was only 30, while in 2015, the above two figures topped 650 billion and 206 billion in RMB Yuan respectively.[1] It is estimated that those numbers would come to another break-through this year. Despite the dramatic surge of investment in the public-private partnership sector, public-private partnership faces many dilemmas. Among these, the resolution of disputes concerning the PPP draws the most attention. There are different mechanisms of dispute resolution, but it remains difficult to determine which mechanism is the most dominant for resolving PPP disputes, because there is ambiguity in the definition about the nature of PPP contracts.

2 What is PPP under Chinese Legal Context?


PPP is short for Public-Private Partnership. There is no uniform definition for PPP, but the most commonly known version of the definition comes from United Nations Institute for Raining and Research. In its Report called, “PPP -For sustainable development” the UN describes PPP as “voluntary and collaborative relationships among various actors in both public (State) and private (non-State) sectors, in which all participants agree to work together to achieve a common goal or undertake specific tasks.[2] ” The European Commission’s definition of PPP refers to a cooperative relationship between the public sector and the private sector, the purpose of which is to provide service or projects that are traditionally run by the public sector.[3]

In 2014, the year when PPP arrangements in China really took off, National Development and Reform Commission of China issued the Guiding Opinions of the National Development and Reform Commission on Work relating to Public-Private Partnership.[4] The provisions of this policy document define PPP as “[T]he relationship of benefit and risk sharing and long-term cooperation established by the government with private capitals by way of franchise, service purchase, equity partnership or otherwise in order to enhance the public product and service supply capacity and improve supply efficiency.”

B.The scope of public sectors of PPP in China

Starting from the end of 2013, PPP arrangements in China increased rapidly over the years. Over 30 provinces in China have PPP projects. PPP covers a wide range of industrial sectors in China, but PPP projects are concentrated in the railway infrastructure sector. Other industrial sectors in which PPPs have been concluded include :[5]

  • power generation and distribution,
  • water and sanitation,
  • pipelines,
  • hospitals,
  • school buildings and teaching facilities,
  • stadiums,
  • air traffic control,
  • railways,
  • roads,
  • billing and other information technology systems, and
  • housing.

C.Characteristics of Chinese PPP

The PPP arrangements can be executed through various forms, namely the BOT (Build-Operate-Transfer),[6] BOO (Build-Own-Operate), TOT (Transfer-Operate-Transfer) and ROT (Rehabilitate-Operate-Transfer) . The purpose of the PPP program is to better provide public service to the common people, especially in the infrastructure building industry. Parties involved in PPP contracts include administrative agencies, social-capital-backed private investors, enterprises that are set up for operation of PPP projects, banks as the financing parties, and other parties such as the contractors of the projects, and possibly the sub-contractors . [7] And the role of the public sector, most often the administrative agencies in the PPP projects, are multiple, they are parties to the PPP contract, organizers of the PPP program and also the regulator who push the projects forward and ensure the projects are operated in a legal and sustainable manner.

3 Resolving Disputes in PPP Contracts

A.The nature of PPP contracts under Chinese law and policy

The key for the operation of PPP projects or arrangements is the PPP contract itself, which means the contract entered into by the administrative organs and private investors, or civil capital facilitated enterprises. Resolving disputes arising from PPP contracts faces substantial obstacles in China.

Chinese legislation is hierarchical. The Constitution is at the top of the hierarchy, and then comes laws and subsequently administrative statutes. There is yet no special law in China enacted to regulate PPP. At the present time, the fundamental legal documents concerning PPP in China are all at the administrative statutory level, which has lower legal effect than law, for example, the Guiding Opinions of the National Development and Reform Commission on Work relating to Public-Private Partnership. Some documents regulating PPP arrangements are policies promulgated by different ministries or local governments in China, which as such have lower legal effect than law, for example, the Guidelines for Mode of Cooperation for Government and Social Capital (for Trial Implementation). Therefore, these lower-level directives can hardly be directly applied as legal basis in court rulings.

B.Traditionally PPP disputes are subject to Administrative Procedure Law

Noticeably, there is a provision in the Administrative Procedure Law of China which provides lawsuits filed in “cases where an administrative organ is considered to have failed to perform in accordance with the law or as agreed or modify or terminate in violation of laws the government concession operation agreements, land or housing expropriation and compensation agreements or other relevant agreements “ [8] shall be accepted by the judicial court. From the above, it can be indicated that, as a major form of concession agreements in China, PPP contracts are characterized as administrative acts. They are therefore actionable under the Administrative Procedure Law of China.

In Chinese legal practice, traditional PPP contractual disputes are resolved by administrative litigation. For example, in theHuijin Company Ltd. v Government of Changchun City case, Huijinis a water discharge company that entered into contract with the Government of Changchun City to cooperatively exploit water discharge and sewage treatment business in Changchun City. After years of failure in cooperation projects operation, the Government issued a decision to terminate the cooperation. Huijin Company therefore filed an administrative lawsuit against the Government’s action and prevailed in the end. This case is a good example of PPP contractual dispute gets resolved through administrative litigation. The result of this case is among the very few of administrative lawsuits in which a civil party prevailed over the administrative agencies. Winning administrative lawsuits can be challenging for civil parties in China.[9]

Many civil parties lose administrative lawsuits against the administrative agencies. In China, local governments manage the finances of local people’s courts. Currently Chinese courts remain financially dependent upon the local government. Consequently, the judge is often perceived as unable to act as a neutral adjudicator in administrative lawsuits.

C.New approach: PPP disputes should be defined as civil or even commercial disputes

Typical mechanisms of dispute resolution include litigation, mediation, and arbitration. Under Chinese law, litigation is further categorized as either civil litigation or administrative litigation. Unlike what is stipulated in the Administrative Procedure Law, administrative statutes and policies promulgated in the last three or four years have more often characterized PPP contracts as civil contracts and can therefore be resolved through civil or commercial litigation, arbitration and mediation, such as the Notice of Promotion and Application of PPP Model issued by the Ministry of Finance, the Contract Guidelines for PPP Projects issued by the National Development and Reform Committee, and Measures for the Administration Procurement Concerning PPP Projects issued by the Ministry of Finance. The difference between civil contracts and administrative contracts is that parties in the civil contracts are equal in legal status, while parties in the administrative contracts are not, since public power is involved in the administrative contracts. Administrative contractual disputes can only be resolved by filing lawsuits to be heard before the administrative tribunal.

Recent judicial practice in China also shows a trend to define PPP contractual disputes as civil or even commercial disputes rather than administrative disputes. Taking one of the Fifth Pile of Guideline Cases issued by the Supreme People’s Court of China as an example, Case No. 53 is a PPP contractual dispute arising from contract between a local bank, a local sewage treatment company, and an SOE. In the decision of the court, it can be inferred that that all legal relationships were decided to be of a civil contractual nature, even when administrative agencies[10] are involved.

As alternatives from litigation, arbitration and mediation could be introduced to resolve PPP disputes. According to the Arbitration Law of China, contractual disputes are arbitrable, just as are other disputes over rights and interests in property between citizens, legal persons and other organizations that are “equal subjects.” Chinese Mediation law contains similar provisions. Because the “administrative” characteristics of the PPP contract, the parties to the contract are not “equal subjects,”[11] so no explicit legal basis permits PPP contracts to be arbitrated or mediated under Chinese law. Only civil and commercial contractual disputes, where the parties to which are “equal subjects,” are entitled to arbitration or mediation. Due to the more tolerant and flexible judicial practice in China, characterizing PPP contracts as civil or commercial contracts would grant a new approach for PPP contractual disputes to be arbitrated or mediated.

4 Can Arbitration Be Applied to Settlement of PPP Contractual Disputes

If PPP contractual disputes could be defined as civil or commercial contracts, rather than administrative contracts, then such disputes could be resolved by arbitration. And settling PPP contractual disputes through arbitration has many advantages.

A.The feasibility of PPP contract arbitration

Theoretically speaking, there are three different kinds of academic opinions regarding the nature of PPP contract. Namely, the public law contact opinion, the private law contract opinion, and the third one as a hybrid of the previous two. The mainstream voice in Chinese PPP industry is the third opinion, which agrees that PPP contracts are both public law and private law in nature. Especially when the principal PPP contract contains many sub-contracts, the nature of these contracts can vary, and particular situations in different contracts must be taken into account. The adjudicators in specific cases concerning PPP related disputes have wide discretion in deciding the nature of the contracts and whether or how to distinguish the public aspects from the private aspects.

Traditionally, administrative agencies are not equal subjects in civil or commercial contracts. Now, with the accumulation of judicial practice, PPP practitioners have discerned that it is possible to makea distinction in PPP contracts as to which part of the contracts is administrative and which part is civil or commercial. When an administrative party acts as a cooperator instead of a regulator in the PPPcontract, the contract is more of a civil or commercial one entered into by equal subjects, thus disputes arising therefrom can be settled by arbitration. In the Guidelines for Mode of Cooperation forGovernment and Social Capital, Article 28 provides that interested parties to the PPP projects are entitled to apply for arbitration or file lawsuits in front of the People’s Court if they are not able to settle the disputes through amicable negotiation. Though the Guideline is still at trial, it affirms the arbitrability of PPP related disputes.

B.The advantages of resolving PPP contractual disputes through arbitration

Resolving PPP contractual disputes by arbitration is not only feasible, but also advantageous. According to statistical research in 2015, the rate of final conclusion of PPP contracts was actually very low. Characterizing PPP contracts as administrative contracts hampers private businesses’ investment enthusiasm. A major concern is that in administrative lawsuits, private parties seldom prevail. However, if PPP contractual disputes are characterized as civil or commercial contractual disputes, they can be settled through arbitration instead of litigation. Arbitration offers advantages over litigation in many aspects. Resolving PPP contractual disputes requires higher levels of special and technical knowledge. Parties can choose professional and specialized practitioners in the PPP industry to decide the case. Arbitrators with professional PPP related knowledge are more appropriate candidates to decide the case than judges, because very often judges are not equipped with professional knowledge in a specific field like the PPP industry. And in return, bring PPP related disputes to arbitration also reduces the considerable heavy amount of caseload of judges.

Aside from considerations of professionalism and technical expertise, resolving PPP contractual disputes through arbitration strengthens and safeguards neutrality. Unlike the Chinese judicial system, there are no hierarchical structures within arbitration institutions. This assures the neutrality and independence of the arbitration tribunal’s award. . Therefore, settling disputes through arbitration guarantees more neutrality and safeguards the ultimate fairness of the decision.

5 Conclusion

In China, there is no specific law on PPP so far, however, many administrative agencies have published circulars regarding PPP, and in these administrative policies, the arbitrability and civil or commercial nature of PPP contracts are affirmed. In addition, in international practice, PPP related disputes are defined as civil and commercial contracts, in particular in countries where the PPP has developed into a mature stage, special arbitration institutions are established to resolve PPP related disputes. With the increasing number of PPP related disputes ever since 2014, defining PPP contractual disputes as civil and commercial disputes and resolving them through arbitration become a voice for reform of relevant PPP legislation in China. It seems that Chinese government policy and judicial practice are one step ahead in PPP regulation. Chinese PPP practitioners are looking forward to the promulgation of a special law to regulate PPP related disputes, which would affirm the arbitrability of PPP contracts as civil or commercial contracts entered into by “equal subject” parties.


Arthur Dong is a founding partner of AnJie Law Firm in Beijing, Officer of IBA Public Law Committee. Email: dongxiao@anjielaw.com. The author thanks Darren Mayberry and Jocelyn Li, associates in AnJie Law Firm’s Beijing office, for their invaluable assistance with this article.

[1] China First Finance Daily, 12 May, 2016, available at:

[2] United Nations Institute for Raining and Research, (2000) “PPP--For sustainable development”.

[3] European Commission. (2003) The European Commission Guidance for successful PPP.

[4 ]Ministry of Finance, Document serial number: FaGaiTouZi [2014] NO. 2724.

[5] Xiao Chen, Legal Framework of PPP in China, 2010 master degree thesis in economic law of China University of Political Science and Law.

[6] Supra 4.

[7] LihuaXu, (2015) Prevention of Legal Risks under PPP Model, Modern SOE Research, Vol. 12, No.2.

[8] Article 12 (11) of the Administrative Procedure Law of China.

[9]Jinmin Wang, (2015) Can Civil Parties Prevail in PPP lawsuits, Legal System, Vol. 12, No.1.

[10] SOE in China is count as administrative agency, since leaders in the SOE have “Bianzhi”, which stands for authorized identity of civil servants.

[11] Article 2, Arbitration Law of China.

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A New Reform for a Very New Year of International Arbitration and Third-Party Funding in Singapore

 Authored by Arthur Dong (dongxiao@anjielaw.com) and Darren Mayberry (darren.mayberry@anjielaw.comat AnJie Law Firm

On January 10, 2017, Singapore enacted yet another landmark legal reform, renewing its status as a leading seat for international arbitration. Singapore has completely abolished the torts of maintenance and champerty. This will allow parties to international arbitration to engage attorneys on a contingency fee basis. In addition, Singapore has expressly declared that third-party funding agreements are neither illegal nor contrary to public policy. Third-party funding arrangements allow parties to borrow money from certified lenders to pay their lawyers or experts in advance, but at the cost of a significant portion of the expected recovery. Once the reform comes into effect, the changes will further solidify its status as international arbitration hub. 

Here we restate the objectives of Singapore's Civil Law Amendment Bill, after which we examine the effect of the bill on contingency fee arrangements. We explore comparisons with other jurisdictions throughout. We will also address the most remarkable effect of the Civil Law Bill, Singapore's resounding affirmation of third-party funding. We then examine the framework under which the Civil Law Act will soon delegate its regulation of third-party funding to the Ministry of Law.  

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When the Arbitration Clause Leaves the Number of Arbitrators Implied

 Authored by Arthur Dong (dongxiao@anjielaw.com) and Darren Mayberry (darren.mayberry@anjielaw.comat AnJie Law Firm                                                             


What happens when the parties to a contract have chosen an arbitration institution, but not specified the number of arbitrators to resolve the dispute? In effect, the parties have already chosen the number of arbitrators, because arbitration institutions have provisions for choosing the number of arbitrators when the arbitration clause is silent. If the parties adopted a summary/expedited procedure, they have elected a single arbitrator.

Institutions take varied positions on the implied number of arbitrators assigned to a tribunal. All authorities agree that the choice is only between one and three arbitrators. 

The graph below displays the positions taken by the rules of four institutions, CIETAC, BAC, SIAC, and HKIAC, as well as the UNCITRAL rules. The implied number of arbitrators are given, and whether the determinate implication of number is presumptive or firm is indicated. Note that the implied number below do not reflect separate and distinct Summary/Expedited Procedures.

China Highly Likely to Recognize SIAC Awards Based on Early Dismissal

Authored by Arthur Dong (dongxiao@anjielaw.com) and Darren Mayberry (darren.mayberry@anjielaw.comat AnJie Law Firm                                                             

 On October 27, 2016, the Singapore International Arbitration Centre (SIAC) held its annual China Roadshow in Shanghai. SIAC is a premier global arbitration forum and institution that caters particularly to Chinese, Indian, and other ASEAN legal users. The initial panel included arbitration luminaries such as Chan Hock Seng, Steven Lim, John Zou, SIAC’s Deputy Registrar Kevin Nash, and AnJie Law Firm Partner and specialist on arbitration enforcement Arthur Dong. 

SIAC’s China Head, Sophia Feng, convened the distinguished panel to discuss SIAC’s innovations in its 2016 Rules, particularly its bold Early Dismissal provision. Rule 29 permits the Tribunal to dismiss claims or defenses which are “manifestly” either “without legal merit” or “outside the jurisdiction of the Tribunal.” Drawn from ICSID, SIAC is nonetheless the first arbitration institution to enact an Early (or Summary) Dismissal provision in its commercial arbitration institutional rules. 

The other panelists eagerly requested Arthur’s professional outlook on whether Chinese courts would be willing to recognize an Award anchored in a resolution by Early Dismissal. In short, Arthur is optimistic. Arthur noted that China is a signatory to the New York Convention. As such, China takes its obligations to enforce foreign Awards very seriously. Arthur reminded that China has a strong track record on enforcement. Furthermore, China will avoid delving into the substantive merits underlying any arbitration Award. Chinese courts respect that the Tribunal’s Award is the last word on the application of the facts to the law in any arbitration. Therefore,  Chinese courts will respect Awards where the Early Dismissal provision had a major impact.

The distinguished panelists considered enforcement issues globally. Although summary judgment features prominently in common law jurisdictions, particularly in the United States, civil law countries rarely exhibit any examples of such an early dismissal device. The panelists considered the danger of Early Dismissal in light of the New York Convention’s requirement that parties be afforded a “fair opportunity to present their cases.” Reassurance came, at least to an extent, by attention to the limiting language of Early Dismissal: the remedy of dismissal could only apply to matters of pure law or jurisdiction, and the standard required “manifest” burden. Any admixture of fact and law would require treatment of the issue under a full hearing. There was some concern about the vagueness of what might prove ‘manifest.’

In any case, SIAC Deputy Registrar Kevin Nash anticipates that few resolutions of the Early Dismissal procedure would entirely dispose of any matter, except perhaps when jurisdiction or legal grounds were facially and clearly wrong. This expectation appears sound. Early Dismissal was designed to narrow the issues before the hearing. As such, it would prove an absolute bar to only the most frivolous or mistaken claims. 

In addition to Early Dismissal, the panel discussed the Emergency Arbitrator provision. Arthur Dong pointed out that these will be useful to China-based users. Normally, interim measures are unavailable in China, unless the host institution is also based in China. Therefore, the breadth and scope of SIAC’s Emergency Arbitrator provisions may allow China-based users to accomplish what they otherwise might not through interim measures. 

Overall, Arthur Dong remains optimistic that Chinese courts will respect and enforce SIAC Awards, even when they rely on innovations under SIAC’s 2016 Rules. 



Third-Party Funding in Arbitration Favoured by UK Court


In a judgment handed down on 15 September 2016, the Honourable Judge Waksman QC, sitting in the High Court in London, ruled that arbitration courts could award third-party financing costs as “other costs” collectible under the Arbitration Act of 1996. The full circumstances and facts surrounding the opinion are currently unavailable, as we await release of a detailed and final decision.

Here is what we do know. The case involved a contract dispute concerning operation of an offshore drilling platform. The two parties were Norscot Rig Management and Essar Oilfield Services. Norscot applied for third-party financing to fund its action against Essar. The arbitration Tribunal awarded Norscot at least part of its third-party financing costs. 

Prior decisions in other common law jurisdictions have approved the existence and validity of third-party funding generally in the context of litigation. In Bayens v Kinross Gold Corporation, 2013 ONSC 4974, the trustee plaintiffs, acting on behalf of the Musician’s Pension Fund of Canada, moved for approval of an underlying litigation funding agreement designed primarily to protect the class counsel from the risk of an indemnity where the Defendant won an award on adverse costs. The Ontario Superior Court approved the legality of the agreement, specifying that in litigation all such arrangements would need to be disclosed and receive court approval. The recent London High Court ruling took the matter a step further, awarding some portion of the applicant’s costs for the expense of the third-party funding arrangement itself. 

As we await the final published decision, we anticipate Judge Waksman’s reasoning might in some way addresses one of the following three questions.


1) Since the United Kingdom is a leading ‘costs-follows-the-event’ jurisdiction, would that make its High Court justices more likely to acknowledge the reasonableness of recovery of third-party funding costs? Will higher courts from ‘bear-your-own-costs’ jurisdictions (such as the United States) wind up approaching third-party funding costs more skeptically?

2) Are third-party costs presumptively unreasonable, but only available in specific cases where the facts especially merit their recovery? Or will third-party funding costs be seen as an increasing reality in a world where transactional financing costs are already prevalent and recoverable?

3) Should a Tribunal’s award of third-party funding costs be explicitly subject to appeal, such that a party awarded third-party funding fees must know that this award will become a roadblock to immediate enforcement? And if so, should courts of the seat of the arbitration bifurcate enforcement of the ‘normal’ and special ‘third-party funding’ costs awards, and allow enforcement of the rest of the award while the third-party funding portion of the award awaits and undergoes the lengthy. and also perhaps expensive process of judicial review?

4) Will Chinese courts actively support third-party funding schemes? Third-party financing arrangements have already made an appearance, particularly in off-shore arbitrations where the fees are relatively high. Will courts view it as beneficial to resolve more commercial disputes? Or, will courts believe it would encourage more litigation/arbitration or perhaps discourage settlement?


Abuse of Process and Regulation in Commercial Arbitration - A Chinese Perspective

Authored by Arthur Dong (dongxiao@anjielaw.com) at AnJie Law Firm


This paper discusses the problem of extraordinary delay in the commercial arbitration process, increased arbitration fees, and denial of the benefits of arbitration to other parties due to the abuse of procedural rights by relevant parties in commercial arbitration process. This paper proposes measures to reduce abuse of process in commercial arbitration, such as statutory mocification, judicial supervision, amendment of arbitration rules and intervention of disciplinary bodies. 

Key Words: Commercial Arbitration, Abuse of Process, Regulation

First published by Journal of Arbitration Studies (Korea)

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Challenging Jurisdiction and Anti-suit Provisions in China's Arbitration Practice

 Authored by Arthur X. Dong (dongxiao@anjielaw.com) at AnJie Law Firm


Challenging the jurisdiction of a Chinese arbitral institution to hear a matter always requires challenging the binding force of an arbitration agreement. Article 5 of the Arbitration Law of the People’s Republic of China (‘Arbitration Law’) gives arbitral tribunals exclusive authority to hear cases when the parties ‘have concluded an arbitration agreement’. At the same time, Article 5 prevents the people's court from accepting a case, ‘unless the arbitration agreement is null and void’.

Chinese law envisages two types of challenges to the jurisdictions of arbitral tribunals. Namely, total challenges and partial challenges to jurisdiction. A total challenge, as the name implies, is to dispute the existence or validity of the jurisdiction granting arbitration clause. Partial challenges admit the existence of an arbitration clause, but refute that the dispute is within the scope of the arbitration clause being relied upon.

First pulbised by LexisNexis

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Interim Measures in Support of Commercial Arbitration in China

 Authored by Arthur Dong (dongxiao@anjielaw.com) at AnJie Law Firm

In China, arbitral tribunals do not have the power to implement interim protection measures, regardless of the institutional rules to be applied to the arbitration. Moreover, the arbitral tribunals are prevented from implementing interim protection measures even if its rules would grant it such a right. In simple terms, the parties to arbitration must first make their applications for property preservation or evidence preservation to the relevant arbitration institution. From there, the arbitration institution then transfers the party's application to the people’s court. The arbitral institution is prohibited from considering the merits of the motion. Based on the recent amendment to Civil Procedure Law of the People’s Republic of China (‘Civil Procedure Law’, the latest version become effective from 1 January 2013), parties are allowed to apply for interim measures directly with the judicial court before initiating arbitration proceedings, which is deemed a sign of pro-arbitration judicial policy.

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Supreme Court Further Clarifies the Criteria For Determining the Validity of Foreign-Related Arbitration Clauses

 Authored by Arthur Dong (dongxiao@anjielaw.com) at Anjie Law Firm


During the past year, for those who are running international commercial activities, it is noteworthy that the Supreme People’s Court of China (the “Supreme Court”) has, through the publication of a series of official replies towards cases in lower level courts, further clarified the criteria for determining the validity of foreign-related commercial arbitration clauses. Taking into consideration relevant cases, this column will explore with its readers the issue of how to distinguish the effectiveness of foreign-related commercial arbitration clauses in China.

Reflections on HKIAC's Revised Model Arbitration Clause and Its Impact on Chinese Practice

Authored by Arthur Dong (dongxiao@anjielaw.com) at AnJie Law Firm

The Hong Kong International Arbitration Centre (“HKIAC”) has recently revised its Model Arbitration Clause to include a choice of law provision.

"Any dispute, controversy, difference or claim arising out of or relating to this contract, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered by the Hong Kong International Arbitration Centre (HKIAC) under the HKIAC Administered Arbitration Rules in force when the Notice of Arbitration is submitted.

The law of this arbitration clause shall be ... (Hong Kong law).

The seat of arbitration shall be ...(Hong Kong).

The number of arbitrators shall be ... (one or three). The arbitration proceedings shall be conducted in ...(insert language)."

It’s understood that this change is aimed at advancing the efficiency and to avoid unnecessary twists and turns of arbitration proceedings. From the perspective of a Chinese practitioner, this addition is a highly sophisticated development.

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Does Supreme People's Court's Decision Open the Door for Foreign Arbitration Institutions to Explore the Chinese Market?

Authored by Arthur Dong (dongxiao@anjielaw.com) from AnJie Law Firm and Li Meng

Whether foreign arbitration institutions could conduct arbitration in the People’s Republic of China (“PRC”) is a question that many industry insiders are curious about. Back in 2006, when the Wuxi Intermediate People’s Court (“Wuxi Court”) refused to recognize and enforce an arbitral award issued by the ICC Court of Arbitration in Shanghai in the Züblin case,1 many practitioners deemed that Chinese courts would decline opportunities for foreign arbitration bodies to carry out arbitration in China. However, the recently published PRC Supreme People’s Court (“SPC”) instruction in Longlide Packaging Co. Ltd. v. BP Agnati S.R.L. may suggest otherwise.

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Is an Infringement Claim within the Scope of Arbitration Clause under Laws of PRC?

Authored by Arthur X. Dong (dongxiao@anjielaw.com) & Li Meng from AnJie Law Firm

For the last ten years, whether an arbitration clause such as “any disputes arising from, or in connection with, the execution of this agreement shall be resolved by arbitration” may be applied to an infringement claim has been a topic of heated discussion among the legal practitioners in China.  This is a matter of great concern to arbitration practitioners in China because the case history of Supreme People’s Court has failed to clarify whether the courts or the arbitration tribunal should have jurisdiction over the infringement claims. 

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Ten Highlights of the China (Shanghai) Pilot Free Trade Zone Arbitration Rules

Authored by Arthur Dong

On April 8, 2014, the China (Shanghai) Pilot Free Trade Zone Arbitration Rules (the “New Rules”), which will take effect on May 1, 2014, was unveiled to the public. It is the first arbitration rules for a China’s Free Trade Zone (“FTZ”) with the purpose of speeding up commercial arbitrations to those at the international level. This article aims to discuss several unique characteristics of the New Rules. 

I. Applicability of the Rules    

Article 3.1 provides that the Pilot Free Trade Zone Arbitration Rules shall apply if: 1) the parties have agreed  to select SHIAC (“Shanghai International Arbitration Center” or “Shanghai International Economic and Trade Arbitration Commission”) as the forum for arbitration without stipulating the arbitration rules; and 2) any of the following connections exists, including 1) the parties, 2) the subject matter to a dispute, or 3) the legal facts that lead to the establishment, change, and termination of a civil and commercial relationship.

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Significant Changes Proposed in Beijing Arbitration Commission's ('BAC') New Rules

Authored by Arthur Dong (dongxiao@anjielaw.com)

Beijing Arbitration Commission (‘BAC’) was founded in 1995 by Beijing Municipal government and later became a financially independent institution. Since its founding, BAC has received great reputation among the business and legal community and growing very fast in recently years. [1] Many foreign companies choose CIETAC and BAC as the top two choices for their arbitration forum in Mainland China.

The last amendment of the Beijing Arbitration Commission’s (‘BAC’) Arbitration Rules (‘Rules’) was made in 2007 and went into effect in 2008. On October 31, 2013, BAC announced its latest amended Rules seeking for public comments. BAC claims that the new revision of the Rules reflects the valuable experience BAC has gained in application and enforcement of its 2008 Rules in the last 5 years. The discussion below will address numerous amendments to the 2008 Rules and the reasoning behind those revisions. 

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China Supreme People's Court Holds That a Dispute Must Meet "Foreign-Related" Requirement for Arbitration at Foreign Arbitration Forums

Authored by Arthur Dong ( dongxiao@anjielaw.com)

While foreign invested companies in China, either operating as a joint venture or wholly-owned entity, may have a strong desire to apply the rules and administration of an international arbitration commission due to their unfamiliarity with the Chinese arbitration system, there is a common misunderstanding that they can just draft an arbitration clause in their commercial contract to designate a foreign arbitration forum to arbitrate the case. The most recent decision rendered by the Supreme People’s Court illustrates that corporate users need to be very cautious in reviewing the “foreign-related” requirement before choosing a foreign arbitration forum.

On August 31, 2012, the Supreme People’s Court, in its certiorari, affirmed Jiangsu Higher People’s Court’s decision in Jiangsu Aerospace Wanyuan Wind Power Co., Ltd. vs. LM Wind Power (Tianjin) Co., Ltd. ("Wanyuan vs. LM”).  The Supreme People’s Court held that the parties cannot choose ICC arbitration because there is no basis in Chinese law that permits parties to choose arbitration at a foreign arbitration institution or ad hoc arbitration outside the PRC’s territory if the dispute fails to present any “foreign-related” element. 

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To Go to Arbitration or Litigation in Subrogation Cases?

Authored by Dr. Zhan Hao (zhanhao@anjielaw.com)

One of the questions in China is whether an insurer should go to arbitration or litigation in subrogation cases.

1. The contradiction between bulks of insurance disputes and less efficient resolution channels

China is facing an increasing number of insurance disputes in respect of all business lines such as construction insurance, credit insurance, marine insurance, product liability insurance, car insurance, D&O liability insurance, environment protection insurance, investment-linked insurance, and life insurance. According to a speech of the Assistant Chief Justice of the PRC Supreme People's Court, 14,465 insurance litigations were formally accepted by courts in 2005, and in 2010, the number of cases accepted reached 59,747 cases. Some legal experts have estimated that the number of insurance litigations in 2012 is around 1.5 times of that in 2010. Insurance disputes frequently arise from disagreements on the scope of clauses limiting or excluding coverage (“excluding clauses”), the obligation of the insurer to clearly explain the excluding clauses to the applicant, and the disclosure obligation of the applicant and insured.

The biggest proportion of insurance disputes belongs to automobile insurance disputes. 

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Plaintiff Victory in China Private Antitrust Litigation

Authored by Dr. Zhan Hao (zhanhao@anjielaw.com), Dr. Song Ying (songying@anjielaw.com)

It has recently been reported that the plaintiff in a private antitrust litigation, heard by the Xian Intermediate People’s Court, was successful in bringing a lawsuit involving abuse of dominant market position.  Given that there have been very few cases won by plaintiffs in China’s private antitrust enforcement since the Anti-Monopoly Law (“AML”) entered into force in 2008, a plaintiff victory is quite rare and encouraging. According to the statistics, there has not been a single plaintiff victory in civil antitrust litigations brought in China since June 2012. In this regard, the concerning case is full of significance and reflects to some extent the effect of the Judicial Interpretation on private antitrust litigation (“the Judicial Interpretation”) published in May of 2012.

Case Description

On June 4th, 2012, Wu Xiaoqin, a consumer located in Xianyang of the Shanxi province, sued Shanxi Broadcast & TV Network Intermediary (Group) Co., Ltd. (“the Company” or “the defendant”) in the Xian Intermediate People’s Court (“the Court”) claiming that the Company, as the only local cable service provider, has tied basic cable TV program services with value-added paying TV programs by taking advantage of its dominant market position. Through the court proceedings, involving further investigation and debate, the Court upheld the plaintiff’s suit, finding that the Company’s practice violated Article 17(5) of the AML regarding tying sales and imposition of unreasonable trading conditions.

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How to Exercise the Preservation and Enforcement of the Debts Owed to the Defendant

Authored by Gao Ping (gaoping@anjielaw.com)

The preservation of property is a very important step in civil actions. The timely and effective preservation of property plays a vital role in the smooth execution of the case in the future. In practice, the property of the defendant or the person subject to enforcement is often insufficient to meet the requirements of the preservation and enforcement, but at the same time, it is found that the defendant enjoys a large claims owed to it by an outside party. How should these claims be preserved and enforced?

As provided in Article 105 of the "Opinions on Certain Issues Concerning the Application of the Civil Procedure Law of the People's Republic of China by the Supreme People's Court" the People's Court may rule that in accordance with the creditor's application, where the debtor's property cannot fulfill the injunction but has debts owed to it by a third party, the third party may not settle with the debtor. When the third party is required to pay, the third party must hold the property or price in escrow. It can be seen that the credit due to the defendant may be preserved by ruling that the third party may not settle the debt to the defendant. This kind of "credit preservation" is different from the preservation of the defendant's property, and its function is limited. It can only prevent the defendant from privately transferring the property after receiving payment from the third party. But it cannot prevent the third party from paying off other creditors, nor prevent the third party from disposing their own property. Therefore, the ruling cannot be deemed as the preservation of the third party's property.

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China International Arbitration: Standards of Territory and non-domestic

Article 1 of the New York Convention states:

“This Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal. It shall also apply to arbitral awards not considered as domestic awards in the State where their recognition and enforcement are sought.”

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A Purely Domestic Case (China) Arbitrated in Foreign Forums?

The question of whether a Chinese case with purely domestic elements is capable of being arbitrated in foreign forum has been pondered by many foreign and Chinese lawyers. The results have led to confusion. Recently a major International law firm posed the question before Dr. Zhan Hao, we have summarized Dr. Zhan Hao’s reply below.

In short, if parties opt to arbitrate in a foreign forum, for example, Hong Kong; and opt to use English Law or the law of another foreign jurisdiction; the likelihood of the award being enforced is strong. However, the position is unclear under Chinese law as there are no specific regulations addressing the adjudication of a purely domestic dispute by a foreign arbitral institution. We will now consider the question in further detail.

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An Introduction to China's Judicial System: the Courts

In China and according to the Organic Law of the People’s Courts, judicial powers are exercised by the courts at four levels:

(i) Basic People’s Court: Courts at the county or district level. Tribunals may also be established in accordance with local practice;

(ii) Intermediate People’s Court: Prefecture level courts;

(iii) Higher People’s Court: Provincial level courts.

(iv) The Supreme People’s Court: the highest court in the judicial system located in Beijing. The court is directly responsible to the NPC and its Standing Committee. The court supervises the administration of justice by the People’s Courts at various levels. Additionally, the court provides interpretations of law which play an important role in the application of law and which act as guidelines for trials in China.

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Arbitration in China: Benefits of an Arbitration Clause

With the rapid growth of the Chinese economy, international business between foreign companies and Chinese companies is commonplace. The presence of dispute is inevitable. Should a commercial dispute arise concerning international trade in China, there is enormous potential for complex legal problems to arise. For example, the party may suffer a large loss; and questions arise as to where in China the lawsuit should be brought and whether a judgment is binding. Parties need to know whether their rights will be protected. Arbitration presents itself as a practical alternative to the traditional mode of courts.


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China, International Arbitration and the New York Convention

The People's Republic of China acceded to the New York Convention on April 22nd,1987,declaring it would reserve the rights of "reciprocity reservation" and "commercial reservation"

The "reciprocity reservation" means China will apply the Convention only for the recognition and enforcement of awards.

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Quickly, Some Advantage of CIETAC Arbitration in China

1) Effective Resolution of Domestic and International Disputes

I can attest to CIETAC’s ability to effectively resolve domestic as well as complex international disputes. CIETAC has a long history, with its first arbitration rules being promulgated in 1956 with the last revisions effective as of May 1, 2005. It provides rules similar to those of many other international arbitral institutions and carefully records qualified domestic and international arbitrators. International arbitrators may be selected as language does not pose a problem, thus the types of commercial disputes which go before CIETAC are not limited. In addition, the cost of resolving disputes at CIETAC is likely to be less than in Hong Kong and many other arbitral forums.

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A Domestic Insurer, A Chinese Manufacture, A Foreign Element?

With foreign investors testing ingenious ways in which to circumvent the regulatory burdens and scrutiny associated with a foreign owned Chinese insurance company, an interesting question has come to light; is it possible for an insurance policy between a domestic insurer and a Chinese manufacture to have a foreign element. The foundation of this question is rooted in the uncertainty surrounding the enforcement and validity of an arbitration clause designating a foreign jurisdiction for a case which is purely domestic (China).

Article 304 of the Opinions of the Supreme People’s Court on Some Issues Concerning the Application of the Civil Procedure Law of the People’s Republic of China (Opinions of the Supreme Court on the Application of the Civil Procedure Law) states:

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Foreign Judgments and Chinese Courts - A Mixed Bag...Be Aware!

The question of whether a foreign judgment is capable of being enforced in China should be taken into account by all foreign investors who see China as a potential ground for expansion and development. The following should provide some clarity:


Article 126 of the Contract Law of the People's Republic of China states:


"Parties to a contract with a foreign element may choose the law to apply to the handling of disputes, unless otherwise provided by law. If parties to a contract with a foreign element have not made a choice, the law of the State with the closest connection applies"

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China: Supreme People's Court Issues Judicial Explanation Regarding Liquidation

Recently, China’s Supreme Court issued a Judicial Explanation relating to the enforcement of the Company Law of the PRC. The focus of this Explanation is legal responsibility when company liquidation occurs.

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China and Issues surrounding international commercial arbitration and the 1958 New York Convention

Article 1 of the New York Convention states "this Convention shall apply to the recognition and enforcement of arbitral awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought, and arising out of differences between persons, whether physical or legal. It shall also apply to arbitral awards not considered as domestic awards in the State where their recognition and enforcement are sought."

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