When a foreign arbitral award is sought to be recognised and enforced in China, the respondent is entitled by law to raise procedural defences. Article V of the New York Convention sets out seven statutory grounds; their purpose is not to obstruct enforcement but to ensure the procedural propriety and fairness of arbitration — only awards rendered under proper procedure deserve the international comity of recognition and enforcement.
Internal Reporting and the Framework of Review
China acceded to the New York Convention in 1987, with both reciprocity and commercial reservations. To harmonise application, the Supreme People’s Court (SPC) established the “three-tier internal reporting system”: an intermediate court intending to refuse must escalate to the high people’s court, which, if agreeing to refuse, must in turn report to the SPC for approval. This mechanism has held the recognition rate steadily above 90% and provides multi-layered review for the respondent.
Under Article 304 of the Civil Procedure Law, applications for recognition and enforcement of foreign awards are heard at the intermediate people’s court for the respondent’s domicile or assets. The foreign-related answering period is 30 days — the respondent’s critical preparation window.
The Seven Article V Defences
Allocation of Review Powers Drives Strategy
Article V(1) sets out five party-driven grounds, which must be raised and proved by the respondent; the court does not review them ex officio. Article V(2) sets out two grounds reviewed by the court of its own motion. The SPC has clarified in its [2016] Min Ta No. 11 Reply that grounds not raised by the party will not be examined. The respondent must therefore raise and substantiate defences within the answering period; missed deadlines forfeit the rights.
Invalidity of the Arbitration Agreement: The Most Frequent Ground
Of refusal cases, 53% involved invalid or non-existent arbitration agreements. Chinese courts apply the law chosen by the parties; absent choice, the law of the seat.
- Beijing Chaolaixinsheng ([2013] Min Si Ta Zi No. 64) established a key rule: two Chinese legal persons agreed to submit a Chinese golf-course share transfer to Korean arbitration; the SPC held there were no foreign-related elements, that Chinese law did not authorise referral of purely domestic disputes to foreign arbitration, and that the arbitration clause was invalid.
- Concordia confirmed the strict written-form requirement: Article II of the NY Convention requires writing; absent sufficient evidence of an executed or exchanged written agreement, recognition is to be refused.
- IM Global (Tianjin No. 1 Intermediate Court) addressed authority: the signatory was found to have lacked authority, with no apparent authority, rendering the agreement invalid. Where reasonable doubt exists, the respondent should focus evidence on signatory identity and scope of authority.
Notice and Opportunity to Be Heard: Substance Over Form
“Lack of proper notice or inability to present the case” is frequently raised but rarely succeeds. Chinese courts apply a substance-over-form review, looking at the method of notice, the level of participation, and whether procedural safeguards were sufficient.
- Li v. Jiu ([2014] Min Si Ta Zi No. 52) — the Vietnamese tribunal repeatedly used an incorrect address, with documents going to basic procedural events (hearing notice, tribunal-constitution notice); the SPC supported refusal.
- Suzhou Intermediate Court ([2019] Su 05 Xie Wai Ren No. 6) — minor address spelling errors did not amount to a basis for refusal where the city, building and company name were correct and DHL signed-receipt evidenced delivery.
A bare claim of non-receipt does not suffice. The respondent must show that the notice procedure departed from the rules and that the right to be heard was actually denied. Parties also bear a duty to notify address changes; self-caused delivery failure is not protected.
Defective Tribunal Composition: Party Autonomy is the Touchstone
The benchmark case is Noble Resources ([2016] Hu 01 Xie Wai Ren No. 1). The arbitration clause specified a three-member tribunal; SIAC nevertheless imposed a sole arbitrator under expedited rules, despite the respondent’s express objection. The Shanghai No. 1 Intermediate Court held: party autonomy is the bedrock of arbitration; imposing a sole arbitrator over an express agreement to a three-member tribunal and the respondent’s objection denied the right to choose the tribunal. Recognition was refused.
Excess of Authority: Partial Refusal as a Tool
U.S. GMI ([2003] Min Si Ta Zi No. 12) established the “severability principle”: the tribunal had named, as respondent, a third party with whom no arbitration agreement existed. The SPC held the excess portion separable from the authorised portion, recognised the authorised portion, and refused the excess. Even where the respondent cannot overturn the entire award, partial-excess arguments can reduce the recoverable sum.
Public Policy: A Last Resort with an Extremely High Bar
Chinese courts have been highly restrained in applying the public-policy ground. The sole case in which recognition has been refused on public-policy grounds is Hemofarm ([2008] Min Si Ta Zi No. 11): an ICC award rendered after the Chinese courts had ruled on a related leasing dispute and issued asset preservation was held to infringe Chinese judicial sovereignty and jurisdiction.
The following do not breach public policy: violation of Chinese general substantive-law principles; violation of administrative regulations or departmental rules; mistaken understanding of Chinese law by arbitrators; or factual or legal errors in the award. The SPC has made clear that where other Article V grounds are available, public policy is not considered. The respondent should prioritise other grounds.
Non-Arbitrability
Wu Chunying ([2009] Min Si Ta Zi No. 33) is China’s only refusal on the ground that the subject matter is not arbitrable. The award concerned confirmation of heirship and entitlement to investment property; Arbitration Law Article 3 excludes succession from arbitration. Excluded matters under Chinese law also include marriage, adoption, guardianship, maintenance, and administrative disputes to be handled by administrative authorities.
Procedural Strategy
Use the 30-Day Answering Period
The respondent should: assess jurisdictional propriety and consider any jurisdictional objection; analyse possible Article V grounds and gather evidence; engage experienced counsel; complete notarisation/legalisation of overseas evidence; draft the answer and evidence list.
Answering is not strictly mandatory, but failure to answer forfeits the five Article V(1) grounds — the court will not raise them ex officio.
Overseas Evidence — Formality
Apostille Convention contracting states: an apostille suffices. Non-contracting states: notarisation in the country of origin and legalisation at the Chinese embassy/consulate. Hong Kong/Macao: entrusted notary plus the relevant transmission. Foreign-language evidence must be accompanied by a certified Chinese translation.
Conditions for Staying Review
Under Article VI of the NY Convention, where the respondent has commenced set-aside proceedings at the seat, the Chinese court has discretion to stay recognition. To obtain a stay, the respondent must evidence the set-aside application and explain the grounds and likelihood of success. A bare assertion without formal supporting evidence will not move the court.
New Relief Under the 2024 Civil Procedure Law
The 2024 amendments provide a new procedural right: a party dissatisfied with the ruling on recognition (or refusal) may apply for review by the next-level court within 10 days of service. This is an important new procedural safeguard.
Enforcement Settlement: Pragmatic Damage Control
Where the award should clearly be enforced, settlement may minimise loss. Following settlement, joint submission (or one-party submission with the other’s acknowledgment) supports a stay of enforcement. Settlements are not directly enforceable; on default, the creditor may seek resumption of enforcement against the original award. Settlement key terms — performance schedule, mode, amount, security, default consequences and relationship with the original award — must be carefully drafted.
Conclusion
Article V’s defences are a procedural-propriety review mechanism. Exercising them seeks to ensure that only awards rendered under proper procedure based on valid arbitration agreements are enforced — both protecting the respondent’s lawful rights and safeguarding the international arbitration system’s integrity.
The respondent must assess each case carefully: where procedural defects within Article V exist, defend actively; where the award is procedurally sound, enforcement settlement is often the more pragmatic course. In every case, prompt engagement of experienced counsel, full preparation within the 30-day answering window, and timely completion of overseas-evidence formalities are the foundation of effective response.
Authorities
- New York Convention (1958), Article V.
- Civil Procedure Law of the PRC (2024 Revision), Article 304.
- SPC Notice on Implementation of the NY Convention (Fa (Jing) Fa [1987] No. 5).
- SPC Notice on Handling Foreign-Related Arbitration and Foreign Arbitration Matters (Fa Fa [1995] No. 18).
- SPC Provisions on Internal Reporting in Arbitration-Related Judicial Review (Fa Shi [2017] No. 21).
- SPC Provisions on Fees and Time Limits for Recognition and Enforcement of Foreign Arbitral Awards (Fa Shi [1998] No. 28).