Clients don’t like China litigation due to costs and the time it takes to reach a decision. Arbitration is often a very valid alternative. Many draft contracts will include an arbitration clause that includes language purporting to eliminate the potential appeal of the arbitration decision to a court, similar to the following. “The Arbitration Award is final and cannot be appealed to court.” Is this kind of clause valid in China? The clause may be enforceable in certain conditions.
In accordance with the
Arbitration Law of the People’s Republic of China
, there are several factors allowing the arbitration award to be appealed to court, including:
- There is no Arbitration Agreement between both parties;
- The matters decided by the arbitrators exceed the scope of the arbitration agreement or beyond the authority of the arbitrators;
- There is violation of procedural rules in the arbitration proceedings;
- Evidence submitted to the arbitration is fabricated;
- Information which could affect the Arbitration Award is concealed;
- The Arbitrator accepted bribes, had misconduct or perverted the law in the arbitration proceedings.
There are many things which can be amended, avoided or waived by both parties’ agreement in the arbitration proceeding, however the validity of the arbitration award and the possibility for appeal may not be so modified due to these provisions of the Arbitration Law of the PRC. If a case falls within the items listed above, any award received at arbitration may be challenged at a China court.
To ensure your China dispute resolution provision is valid and effective, make sure to have your agreement reviewed by an experienced China lawyer.