CHAPTER 7: EVIDENCE TAKING
B. Hong Kong and Singapore
The compromise position of the UNCITRAL Model Law as to the allocation of power to address jurisdictional objections is followed by Hong Kong282 and Singapore.283 By way of illustration, the High Court of Hong Kong summarized Hong Kong’s position in 1991:
“[a]rbitrators should not pull down the shutters on the arbitral process as soon as one party objects to the jurisdiction of the tribunal. The arbitrator can rule on the question as to whether he has jurisdiction but he cannot make a binding and final
280 See Holtzmann and Neuhaus, 482-483.; United Nations Commission on International Trade Law, UNCITRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration, 78-79. See also Astro Nusantara Int’l BV v. PT Ayunda Prima Mitra, Singapore High Court, 23–25 July; 28 August; 22 October 2012 [2012] SGHC 212 in support of this position (in this case a preliminary decision on jurisdiction was given by the tribunal and the party decided not to bring an appeal under Art. 16(3) of the UNCITRAL Model Law).
281 See Holtzmann and Neuhaus, 486. See also Geoffrey Ma and Denis Brock, Arbitration in Hong Kong: A Practical Guide (3rd Ed.) (Sweet&Maxwell, 2015), 415. suggesting that whenever possible, the decision should rather take a form of a preliminary ruling; see also Fung Sang Trading Limited v. Kai Sun Sea Products and Food Company Limited, High Court of Hong Kong, Court of First Instance, 29 October 1990, [1991] HKCFI.
282 Sections 20 and 34 of the HK Arbitration Ordinance. See more in Ma and Brock, 186-192., Neil Kaplan and Robert Morgan, "National Report for Hong Kong (2018)," in ICCA International Handbook on Commercial Arbitration, ed. Jan Paulsson and Lise Bosman (Kluwer Law International, 2018), 28-29.
283 Art. 16 of the UNCTRAL Model Law read together with Sections 3(1) and 10 of the SIAA. See also Joseph and Foxton, 179-91.; Chew, 45-46.
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decision on that issue as the matter can always be taken to court either by direct challenge or at the setting aside or enforcement stage.”284
In Singapore, the High Court in Malini Ventura v Knight Capital Pte Ltd and others confirmed in 2012 that if the parties agreed to submit disputes to arbitration, the court “must give way” to the tribunal’s jurisdiction as required by Section 6 of the SIAA and Art. 16 of the UNCITRAL Model Law (and also the SIAC Rules in the given case). That means that the arbitral tribunal is empowered to decide on the question of jurisdiction. However, the High Court also confirmed that a party that is dissatisfied with the tribunal’s finding can still turn to the court and ask it to review a preliminary decision on jurisdiction, or it can challenge an award on the merits. Therefore, the state court has the final say on jurisdictional matters.285
There are, however, some points on which the UNCITRAL Model Law jurisdictions differ when applying Art. 16. One particular point is whether a negative ruling on jurisdiction stating that the tribunal does not have jurisdiction is reviewable under Art. 16(3), or whether such review is only available for a decision of the tribunal confirming its jurisdiction. The language of Art. 16(3) does not expressly refer to the review of a negative jurisdictional ruling made by the tribunal. It rather suggests that only a positive decision confirming the jurisdiction should be a subject to appeal. The travaux préparatoires of the UNCITRAL Model Law support this latter stance. Nonetheless, the position of Model Law jurisdictions has differed in this regard.286
As to Hong Kong, the language of Section 34(4) of the HK Arbitration Ordinance, being in line with Article 16(3) of the UNCITRAL Model Law, plainly stresses that only a decision confirming the jurisdiction of the tribunal is appealable under Art. 16(3). This has been confirmed by the Hong Kong judiciary.287 Generally, the main reason for this position is the inappropriateness of compelling the arbitrators who have made a negative ruling to continue as arbitrators.288
284 Fung Sang Trading Limited v. Kai Sun Sea Products and Food Company Limited, High Court of Hong Kong – Court of First Instance, 29 October 1991, [1991] HKCFI 190.
285 See Malini Ventura v Knight Capital Pte Ltd and others, 27 August 2015, [2015] SGHC 225.
286 See United Nations Commission on International Trade Law, UNCITRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration, 81-82.
287 See Kenon Engineering Ltd. v. Nippon Kokan Koji Kabushiki Kaisha, High Court of Hong Kong, Court of First Instance, 2 July 2003, [2003] HKCFI 568.
288 See Holtzmann and Neuhaus, 487.
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The SIAA in Singapore, on the other hand, since 2012, allows also an appeal of a decision of the tribunal that it does not have the jurisdiction.289 The language of Section 10 of the SIAA titled “Appeal on ruling of jurisdiction” refers to both positive and negative jurisdictional decisions. It provides explicitly that
“10.(1) This section shall have effect notwithstanding Article 16(3) of the Model Law. […](3) If the arbitral tribunal rules […](b) on a plea at any stage of the arbitral proceedings that it has no jurisdiction, any party may, within 30 days after having received notice of that ruling, apply to the High Court to decide the matter.” The change in the SIAA was reasoned on a few bases, including the fact that, in view of the legislator, denying the review of negative jurisdictional decisions undermines the purpose of an arbitration agreement. This should be understood that without such review, the parties who originally selected arbitration in a neutral territory as a method to resolve disputes are forced instead to do it via the court. This typically would be the home state court of one of the parties, which is a scenario often sought to be avoided. Also, in the course of discussion on the amendment of the SIAA, it was pointed that the parties should be given the equal right to appeal both types of jurisdictional decisions for the reason that inequity can arise both from erroneous negative jurisdictional decisions and from erroneous positive jurisdictional decisions.290
Furthermore, in contrast to the language of the UNCITRAL Model Law text and the position of Hong Kong, Singapore’s regulation differs from Art. 16(3) of the UNCITRAL Model Law in the sense that Section 10(4)(5) of the SIAA allows a party to appeal the court’s decisions in the area of jurisdiction.
Yet, in that instance, Section 10(5)(6) of the SIAA provides that the High Court’s decision can be appealed to the Court of Appeal only with the leave granted by the High Court, and that there is no appeal against the decision refusing to grant the leave.
Concerning the continuation of the arbitration proceeding while the court is dealing with the tribunal’s jurisdictional decision under Art. 16(3), the language of the Hong Kong Arbitration Ordinance mirrors the language of the UNCITRAL Model Law. It provides that the tribunal “may” continue with arbitration while the jurisdictional decision is appealed by a party to the court.
Also in Singapore, the appealing procedure will not automatically lead to the stay of the arbitration proceeding and hence, arbitration can continue during the court’s decision-making.291 However, the
289 Before 2012 and the amendment of the SIAA, the position in Singapore was consistent with the UNCITRAL Model Law. See, for example, PT Asuransi Jasa Indonesia (Persero) v Dexia Bank SA, 1 December 2006, [2006]
SGCA 41.
290 See Law Reform Committee of the Singapore Academy of Law, "Report of the Law Reform Commitee on the Right to Judicial Review of Negative Jurisdictional Rulings," (January 2011), 5-6.
291 Art. 16(3) of the UNCTRAL Model Law read together with Sections 3(1) and 10(9) of the SIAA. See Antony Crockett and Daniel Mills, "A Tale of Two Cities: An Analysis of Divergent Approaches to Negative Jurisdictional Rulings," Kluwer Arbitration Blog (8 November 2016),
http://kluwerarbitrationblog.com/2016/11/08/a-tale-of-77
language used by the SIAA is stronger than the “may” wording of the UNCITRAL Model Law. Section 10(9) of the SIAA provides explicitly: “[w]here an application is made pursuant to Article 16(3) of the Model Law or this section — such application shall not operate as a stay of the arbitral proceedings or of execution of any award or order made in the arbitral proceedings unless the High Court orders otherwise […]” (emphasis added). Accordingly, once the tribunal confirms its jurisdiction, it should proceed and render the award without waiting for the court’s decision on jurisdiction. Yet, if the award is rendered, but there is a subsequent finding by the court that there was no jurisdiction of the tribunal, the award can be set aside under Art. 34 of the UNCITRAL Model Law.292 Similarly, under the SIAA, an appeal from the court’s decision rendered under Art. 16(3) will not suspend the arbitration proceeding, or the execution of an award, or order made in the arbitration proceeding, unless the High Court or the Court of Appeal orders otherwise.
As to the applicable standards of review under Art. 16(3) of the UNCITRAL Model Law, the issue has not been answered consistently by the courts in Model Law jurisdictions.293 Notably, however, in this regard, the High Court of Singapore stated that the court intervening based on Art. 16(3) of the UNCITRAL Model Law should be free to “make […] an independent determination of the issue of jurisdiction and is not constrained in any way by the findings or the reasoning of the tribunal.”294 4.2.2. Chinese standards
A. Enforcement of an arbitration agreement
In China, Art. 5 of the CAL seems to express the principle that a valid arbitration agreement excludes the jurisdiction of the state court. It stipulates: “[w]hereas the parties concerned have reached an agreement for arbitration, the people's court shall not accept the suit brought to the court by any one single party involved, except in a case where the agreement for arbitration is invalid.”
Further, Art. 26 of the CAL deals with the timing for raising the objection before the court in order to exclude the court’s jurisdiction. It stipulates that if the court that was unaware of the existence of an arbitration agreement has already accepted the case, a party asserting that a dispute should be
two-cities-an-analysis-of-divergent-approaches-to-negative-jurisdictional-rulings/. (last accessed: 20 November 2018). See also, generally, Joseph and Foxton, 184-191.
292 Joseph and Foxton, 188.
293 See United Nations Commission on International Trade Law, UNCITRAL 2012 Digest of Case Law on the Model Law on International Commercial Arbitration, 80-81.
294 PT Tugu Pratama Indonesia v Magma Nusantara Ltd, 10 September 2003, [2003] SGHC 204. See also Born, 1107-1110. pointing out that the language of Art. 16(3) arguably implies de novo judicial review.
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resolved through arbitration needs to bring its objection and submit the arbitration agreement before the first hearing in a court proceeding. Otherwise, it should be deemed have waived its right to arbitrate, and the court may continue to hear the case. Article 14 of the SPC 2006 Interpretation further clarifies that the "first hearing" in this context should be understood as the first court hearing of a case conducted by the court after the expiration of the time limit for defense, excluding activities carried out in a pre-trial process.
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were made to both, the court should not accept the case if the arbitration institution had already accepted the request and decided the issue. However, if the request was accepted by the institution, but it has not yet decided the matter, the court should decide it. It also should ask the arbitration institution to suspend the arbitration proceeding until it reaches its decision.298
Article 20(2) of the CAL provides that if a party seeks to object to the validity of an arbitration agreement, it can do so before the first arbitration hearing. Otherwise, it is considered to have waived the objection. Moreover, as prescribed by Art. 13 of the SPC 2006 Interpretation, if a party failed to object to the validity of an arbitration agreement prior to the first arbitration hearing, and subsequently, it applies to the court seeking to invalidate the agreement, the court will dismiss such an application. Further, it is provided that where the arbitration institution had already made its decision on the validity of an arbitration agreement, and a party subsequently applies to the court seeking to invalidate it, the court will reject this application. In addition, according to Art. 27 of the 2006 SPC Interpretation, if a party has not raised the objection to the validity during the arbitration proceeding, but it subsequently pursues to set-aside an award, or object to its enforcement based on the ground that the arbitration agreement was invalid, the court will reject such a request.
Article 12 of the SPC 2006 Interpretation assigns which courts should have the authority to hear the challenges to jurisdiction and it designates the intermediate level court for both domestic cases and those involving foreign elements (foreign-related cases). This is a positive step, because judges at higher level courts in China are believed to be equipped with higher qualifications and more experience than judges from district courts. Furthermore, this shift of power can help to reduce local influences.299 In addition, Art. 15 of the SPC 2006 Interpretation provides that in order to decide the validity of an arbitration agreement, the court of an intermediate level must form a collegiate panel. This is also a positive development, because it potentially increases the likelihood that the arbitration agreement will be upheld.
Prior Reporting System
Power to decide jurisdictional claims shifts in another important way in China. If the court denies the validity of an arbitration agreement under Art. 20 CAL, the case will be directed onto the track of the
298 Reply of the Supreme People’s Court on Several Questions Regarding the Determination of the Validity of Arbitration Agreements , Fa Shi [1998] No. 27, issued on 26 October 1998, effective from 5 November 1998;
[《最高人民法院关于确认仲裁协议效力几个问题的批复》法释(1998)27号; 颁布时间: 1998年10月21, 实施时间: 1998年11月5].
299 See Gu, "Judicial Review over Arbitration in China: Assessing the Extent of the Latest Pro-Arbitration Move by the Supreme People’s Court in the People’s Republic of China," 235.; Fan, Arbitration in China, A Legal and Cultural Analysis, 113.
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Prior Reporting System (“PRS”). As mentioned in Chapter 2, the PRS, which is a unique mechanism of the Chinese arbitration system, was originally designed to help protect the arbitration agreements and arbitral awards involving foreign elements by introducing a special system of reporting decisions against such agreements and awards to courts of a higher level for approval.300 As of today, concerning foreign-related cases, that means that if a court of an intermediate level decides: (1) not to enforce an arbitration agreement; (2) not to enforce an arbitral award; or (3) decides to set aside an award, it has to report its decision to a higher level court for approval. If a higher level court subsequently agrees with a lower level court – it has to report to the SPC for a final determination of the matter.
It should be noted that a source produced by the SPC in 2017 (“SPC 2017 Provisions no. 21”)301 brought significant changes to the functioning of the PRS mechanism. One of the changes is to extend the application of the PRS mechanism to domestic cases.302 In the past, the PRS mechanism only targeted foreign-related cases. This was pointed as problematic by, among others, the respondents to the China Arbitration Survey.303 The application of the PRS mechanism embraces now also domestic cases and as such, for example, a Sino-foreign joint venture or a WFOEs involved in a dispute will now enjoy the benefits of the PRS mechanism – even if a particular case is classified as a domestic one under the Chinese law. Yet, for domestic cases, a higher level court (High People’s Courts), and not the SPC, will have a final say.
It is noteworthy that if a decision of a court is to endorse the validity of an arbitration agreement (or enforce an award), it does not require any further reporting. Also, once the court affirms the validity of an arbitration agreement, the argument of the invalidity cannot be subsequently asserted by a party seeking to set aside or resisting the enforcement of the award based on such an agreement.
b. Arbitration institution v. arbitral tribunal
As introduced above, according to the provisions of the CAL, the competence to decide jurisdictional objections is shared by the state court and the arbitration institution in China. The role of the arbitral
300 See Chapter 2 p. 30. See also Weidong Zhu, "Determining the Validity of Arbitration Agreements in China:
Towards a New Approach," Asian International Arbitration Journal 6, no. 1 (2010), 50.
301 See Provisions of the Supreme People’s Court on the Number of Issues Pertaining to the Judicial Reporting in the Supervision of Arbitration, Fa Fa [2017] no. 21 issued on 26 December 2017, effective from 1 January 2018;
[最高人民法院关于仲裁司法审查案件报核问题的有关规定, 法释〔2017〕21号, 发布时间：2017年12
月26日, 实施时间: 2018年1月1日].
302 See Art. 2 of the SPC 2017 Provisions no. 21.
303 See Chapter 9 on the China Arbitration Survey p. 197-198, as well as Appendix 1 to this thesis p. 283-284.
See also Gu, "Judicial Review over Arbitration in China: Assessing the Extent of the Latest Pro-Arbitration Move by the Supreme People’s Court in the People’s Republic of China," 240.
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tribunal in this regard is not even mentioned in the CAL. To the best of knowledge of the author of this thesis, China is the only country in the world, where once the arbitral tribunal was constituted, the power to decide jurisdictional objections is given to the arbitration institution, rather than to the tribunal.304
Regarding the timing for deciding the objection when the arbitration institution is designated to do that, there is no time limit prescribed under the CAL and the arbitration rules. In case of CIETAC, the objection is typically raised at the beginning of the arbitration proceeding, and it is often decided by CIETAC within a month.305 As to who specifically deals with the objection once the arbitration institution is put in charge, a clear answer cannot be found either in the CAL or in arbitration rules. By way of example, as to the BAC’s practice, according to Chen, it is a case-handling secretary.306
It should be noted that if the objection was decided by the arbitration institution and the validity of an arbitration agreement was affirmed, a party disagreeing with the decision of the institution does not have immediate recourse to the court. However, like in case of virtually all jurisdictions, recourse to the court is available after the award is rendered. This can happen when a dissatisfied party seeks to set aside the award or when it resists its enforcement.307
Developments of the leading arbitration institutions
Over the last years, China has been more and more exposed to the practice of international commercial arbitration. Not only foreign parties, arbitrators, and counsels take part in the arbitration proceedings in China, but also more and more international arbitration institutions, such as the HKIAC, the SIAC, and the ICC, have appeared on the Chinese arbitration stage offering their help and assistance in further improving the arbitration environment of China.308 The leading arbitration institutions in China seem to be aware of the shortcomings of the Chinese system. Hence, they try to innovate in order to bring China’s practice closer to internationally recognized standards, and also – to become more
304 See also Gu, Arbitration in China: Regulation of Arbitration Agreements and Practical Issues, 96 note 38.
305 Yuen, McDonald, and Dong, 215.
306 Chen, "Striving for Independence, Competence, and Fairness: A Case Study of Beijing Arbitration Commission," 336.
307 For China, see Art. 58(1)(1) and (2) and 63 of the CAL read together with Art. 237(1) and (2) of the CCPL. Also Art. V (1)(a) and (c) of the NYC will be relevant for the enforcement of foreign arbitral awards. For the
UNCITRAL Model Law, see Art. 34 and Art. 36; for Hong Kong see, Sections 81, 86, and 89 of the HK Arbitration Ordinance; and for Singapore, see Art. 34 and 36 of the UNCITRAL Model Law read together with Section 3(1) of the SIAA.
308 See more Chapter 8. p. 187-188.
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competitive as service providers. This can be observed, for example, in the area of allocating the power to decide objections to jurisdiction.
The BAC was the first arbitration institution in China that officially introduced a mechanism of delegating the power to decide jurisdictional objections from the arbitration institution to the tribunal in 2004.309 Article 6(4) of the 2004 BAC Rules provided that the BAC or the tribunal, if authorized by the BAC, shall have the power to rule on the objections to the validity of an arbitration agreement. It was provided that the tribunal’s decision could take a form of an interim or final award. This is carried forward into the most recent version of the 2015 BAC Arbitration Rules.310
CIETAC officially introduced this delegation mechanism in its arbitration rules from 2005. However, Gu argues that the delegation of the competence was already present in the CIETAC’s practice even before the amendment of the arbitration rules in 2005. A case from 2002 illustrates these joint efforts of both the tribunal and CIETAC in deciding jurisdictional matters. Gu terms this the “underground” practice.311 The case from 2002 involved a contract concluded between a Hong Kong and a Chinese company with an arbitration clause providing for the CIETAC arbitration. After a dispute arose, on 19 February 2002, a respondent objected to the tribunal’s jurisdiction claiming the non-existence of a clause naming CIETAC. A few months later, on 24 June 2002, before the arbitral tribunal was established, CIETAC carried out a preliminary examination. Based on a prima facie review, it concluded that the arbitration clause existed and hence, the dispute should be arbitrated. On 2 July 2002, the respondent again challenged the jurisdiction of the tribunal claiming that the clause had not been signed and therefore, should be deemed invalid. In response, CIETAC informed the respondent that the issue of the existence and validity of the signature would be determined by the tribunal. As a final result, on 20 January 2003, the tribunal confirmed the existence and validity of the signature and as such, upheld the initial affirmative decision made by the institution. After the findings by the tribunal, CIETAC reaffirmed its decision as to the jurisdiction on 27 June 2003.
As mentioned, an official endorsement of this practice by CIETAC took place in its arbitration rules from 2005. This move was welcomed in Chinese arbitration circles, and is referred to as the CIETAC’s
309 The 2004 BAC Rules were effective as of 1 March 2004.
310 Art. 6(4) of the 2015 BAC Rules: “The BAC, or the Arbitral Tribunal as authorised by the BAC, may determine an objection as to jurisdiction. The Arbitral Tribunal may make its decision on jurisdiction either during the arbitral proceedings or in the arbitral award”.
311 Gu, Arbitration in China: Regulation of Arbitration Agreements and Practical Issues, 110-111.
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determination in advancing the principle of competence-competence in China.312 Article 6 of the 2005 CIETAC Rules provided the following:
“(1) CIETAC has the power to determine the existence and validity of an arbitration agreement and its jurisdiction over an arbitration case. CIETAC may, where necessary, delegate such power to the arbitral tribunal.
(2) Where CIETAC is satisfied by prima facie evidence that a valid arbitration agreement exists, it may make a decision based on such evidence that it has jurisdiction over the arbitration case. Such a decision shall not prevent CIETAC from making a new decision on jurisdiction based on facts and/or evidence found by the arbitral tribunal during the arbitral proceedings that are inconsistent with the prima facie evidence.”
What needs to be noted is the fact that Art. 6(2) of the 2005 CIETAC Rules (as well as its subsequently amended versions) provide that CIETAC first employs a prima facie standard to decide on the validity of an arbitration agreement. This, generally, is in line with international practice, whereby the arbitration institution receiving the case will decide on a prima facie basis whether it accepts it or not.313 Yet, that which is different from international practice is a possibility that CIETAC will subsequently make a new decision on jurisdiction, based on the facts and/or evidence found by the tribunal during the arbitration proceeding. That kind of practice is absent in arbitration laws and arbitration rules of the leading international arbitration institutions, where any subsequent jurisdictional decisions can be made by the arbitral tribunal only.314
The wording of the CIETAC’s provision can be read as a careful construction made due to the restrictions in Art. 20 of the CAL, which explicitly grants the power to the arbitration institution, and not to the tribunal. CIETAC kept this concept of delegation of power in its subsequent versions of arbitration rules in a nearly identical language.315
Although these actions of the leading arbitration institutions should be seen as positive developments, one theoretical question relates to their effectiveness. In China, like elsewhere, arbitration rules need to comply with existing national laws. Hence, there is a theoretical problem of the compatibility of the arbitration rules’ innovations with Art. 20 of the CAL. Nevertheless, it occurs to be a common practice in arbitration in China that in face of constantly changing needs of arbitration users, the leading
312 See ibid., 112.
313 See, for example, Art. 19(5) of the 2018 HKIAC Rules and Art. 28(1) of the 2016 SIAC Rules.
314 Compare with Art. 19(5) of the 2018 HKIAC Rules, Art. 28(1)(2) of the 2016 SIAC Rules, and also with Art. 16 of the UNCITRAL Model Law.
315 See Art. 6 of the 2015 CIETAC Rules.