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."
Considering the above article, we are informed of two standards present in identifying foreign arbitral awards. One is the standard of territory; the other is the standard of non-domestic.
The basis of the standard of territory is as follows; the territory where an award is made is the territory where the award is enforced, the award is domestic; if the award is foreign, the New York Convention shall apply.
According to the New York Convention, it is easy to say that although foreign factors may be involved in an award, the award may simply be domestic as the territory where the award is made and the territory where the award is enforced are the same.
The standard of non-domestic infers that the territory where an award is made is the territory where the award is enforced; however, if the performing court considers the arbitral award not to be domestic, the award shall be considered foreign and the New York Convention shall apply. According to the legislative background of the New York Convention, the non-domestic standard is mainly applied to contracts agreed upon by both parties and the awards are made in accordance with the law of the foreign country. The court in the place of performance can justify this standard as the award is made in accordance with the other countries’ law. It is noteworthy that the standard of the territory will prevail when both standards may be applied. The standard of non-domestic is a complementary standard, which shall not be in conflict with any other and shall be applied to extend the scope and application of the New York Convention’s.
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.
"The commercial reservation" means China will recognize and enforce arbitral awards concerning disputes arising from contractual and non-contractual commercial legal relationships. According to the Circular of the Supreme People’s Court on the Enforcement of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, "contractual and non-contractual commercial legal relationship" means the economic rights and duties arising from contracts or torts or stipulated in the regulations, such as goods sale, property lease, project contract, processing contract, technique transfer, joint venture, joint business operation, exploration and development of natural resources, insurance, financial credit, personal services, agency, consulting services and marine, air, railway and road transportation of cargo and passengers, product liability, environment pollution, accidents at sea and ownership disputes, except the disputes between the foreign investors and the government in the host country.
With an increasing volume of countries acceding to the New York Convention, the New York Convention wields increasing influence in international commercial arbitration and has been called one of the most successful international conventions in the history of international trade. It’s importance in resolving China related disputes remains invaluable and the Convention must not go unrecognized.