CHAPTER 2: OVERVIEW OF THE CHINESE ARBITRATION SYSTEM
2.2. Sources of law
2.2.2. Sources of law produced by the Supreme People’s Court
In general, national legislation in China lays down only broad principles and, thus, various supplementary sources are often needed in practice. Likewise, in the area of arbitration, there exists a need to fill the gaps, and especially the sources provided by the SPC have performed such a function.
This function of the SPC has been crucial in the post-1994 times, because of the lack of experience of the Chinese courts with arbitration. The general condition of the Chinese courts, especially around that time, paired with the tendency to apply law strictly and narrowly, was not the best environment for the implementation of the CAL. In light of that, the SPC has played a critical role in supporting the implementation of the new arbitration law.107
According to Art. 45 of the Chinese Legislation Law,108 the formal power to interpret the laws is given to the Standing Committee of the NPC. However, since, in fact, the Standing Committee of the NPC
102 Song, Zhao, and Li, 172.
103 See Chapter 10 p. 206-207.
104 See Chapter 6 p. 150-153.
105 Yuen, McDonald, and Dong, 38.
106 See, for example, Thorp, 607 et seq.; Michael Moser, "CIETAC Arbitration: A Success Story?," Journal of International Arbitration 15, no. 1 (1998), 28 et seq.
107 Yuen, McDonald, and Dong, 57 & 60.
108 Legislation Law of the People’s Republic of China, issued on 15 March 2000; amended on 15 March 2015;
[中华人民共和国立法法（2000年3月15日第九届全国人民代表大会第三次会议通过根据2015年3月
15日第十二届全国人民代表大会第三次会议《关于修改〈中华人民共和国立法法〉的决定》修正）].
Art. 45 of the Legislation Law: “The power to interpret a national law shall vest in the Standing Committee of National People’s Congress. The Standing Committee of National People’s Congress shall give interpretation to a national law in any of the following circumstances: (1) the specific meaning of a provision of such legislation requires further clarification; (2) a new situation arises after enactment of such legislation, thereby requiring clarification of the basis of its application.”
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rarely provides legislative interpretations, sources produced by the SPC constitute an important source of the Chinese law.109 The authority of the SPC to interpret laws and regulations is derived from the Organic Law of People’s Courts110 and the Resolution of the Standing Committee of the NPC on Strengthening of Legal Interpretive Work.111 In the case of an SPC interpretation conflicting with later laws, the interpretation will remain in force to the extent to which it is not inconsistent with the later law. Furthermore, the SPC’s interpretation can expressly repeal or cancel the earlier interpretations.112 As noted above, although in 1994, the introduction of the CAL was a great leap forward for the development of arbitration in China, one of the practical problems was the limited experience with arbitration of the Chinese courts. In order to address a variety of problems arising in practice, the SPC took the lead. In that context, the SPC can be described as a designer of changes and directions the Chinese arbitration system should go. Therefore, the SPC’s role in integrating the system and moving the arbitration environment toward a more arbitration-friendly one is of great importance.113 Since the enactment of the CAL in 1994, the SPC has made numerous efforts to explain and/or update the system by promulgating various sources of law to guide especially the courts in their decisions related to arbitration.114
The Prior Reporting System (事先报告制度, shì xiān bào gào zhì dù, “PRS”) established by the SPC’s notice of 1995,115 and subsequently extended by the SPC’s notice of 1998,116 can serve as an example
109 See Chenguang Wang, "Lawmaking Functions of the Chinese Courts: Judicial Activism in a Country of Rapid Social Changes," Frontiers of Law in China 1, no. 4 (2006), 533-534.
110 The Organic Law of the People's Courts of the People's Republic of China, issued on 1 July 1979, effective on 1 January 1980, amended in 1983, 1986 and 2006; [中华人民共和国人民法院组织法, 颁布时间:1979年7月 1日, 实施时间: 1980年1月1; 1983年, 1986年, 2006年修改]. Art. 32: “The Supreme People’s Court gives interpretation on questions concerning specific application of laws and decrees in judicial proceedings.”
111 Resolution of the Standing Committee of the NPC on Strengthening of Legal Interpretive Work issued on and
effective from 10 June 1981; [全国人民代表大会常务委员会关于加强法律解释工作的决议；1981年6月
10日生效日期]. Art. 2: “Issues of applying laws and regulations in court proceedings shall be interpreted by the Supreme People’s Court”.
112 Yuen, McDonald, and Dong, 61. (see also note 26 on p. 61-62).
113See Fan, Arbitration in China, A Legal and Cultural Analysis, 234.; Yuen, McDonald, and Dong, 39-40.; Tao, Arbitration Law and Practice in China, 18-21.
114 See Tao, Arbitration Law and Practice in China, 18-21.
115 Notice of the Supreme People’s Court on the Handling of Issues Concerning Foreign-related Arbitration and Foreign Arbitration by People’s Courts, Fa Fa [1995] No. 18, issued on and effective from 28 August 1995; [最高 人民法院关于人民法院处理与涉外仲裁及外国仲裁事项有关问题的通知, 法发(1995)18号, 颁布时间: 1995年8月28, 实施时间: 1995年8月28日].
116 Notice of the Supreme People’s Court on Setting Aside Arbitral Awards Involving Foreign Elements by People’s Court, issued on and effective from 23 April 1998, Fa Fa [1998] No. 40; [最高人民法院关于人民法院
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of the SPC’s efforts to improve the system. The PRS, which is discussed in greater detail below in Chapter 4, is a mechanism designed in order to fight the local protectionism and to disallow the Chinese courts to easily disregard arbitration agreements and arbitral awards involving a foreign interest.117 The PRS was primarily created in order to tackle and prevent misapplications of the New York Convention by the courts, and by doing so, to enhance the confidence of foreign investors in China.118
The PRS mechanism provides that if the court determines that an arbitration agreement is invalid, or it wants to set aside an arbitral award, or it refuses to enforce it, such action has to be reported to a higher level court for approval. Further, in case the court making a decision within the PRS system upholds the validity of an arbitration agreement, a party cannot subsequently raise an argument of the invalidity of this agreement when seeking to set aside an award or when resisting the enforcement of it.119
The PRS was implemented even before the CAL came into effect. As such, it was not a response to the existing practice of the courts in China based on the new arbitration law, but rather a preventative mechanism designed to supervise the implementation of the CAL from the beginning. Despite the lack of a requirement to publish the courts’ decisions made within the PRS system, the SPC has published a number of its replies to the lower level courts with the purpose of explaining, educating, and harmonizing the practice of the courts across China.120 As discussed more extensively in Chapter 4, the SPC at the end of 2017 produced another document relevant for the functioning of the PRS mechanism.121
撤销涉外仲裁裁决有关事项的通知; 法发(1998) 40号, 颁布时间: 1998年4月23, 实施时间: 1998年4月 23日].
117 See Chapter 4 p. 79-80
118 Yuen, McDonald, and Dong, 84.
119 See, for example, Reply of the Supreme People's Court on Request for Instructions Regarding Enforcement of Award No. 224 [2007] of the CIETAC from 12 September 2008; [最高人民法院关于是否应不予执行[2007]
中国贸仲沪裁字第224号仲裁裁决请示的答复, 2008 年9月12日].
120 Yuen, McDonald, and Dong, 39-40.
121 Provisions of the Supreme People’s Court on a Number of Issues Pertaining to Judicial Reporting in
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]. See Chapter 4 p. 80.
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There are a number of interpretive sources that can be issued by the SPC. Presently, these documents are prescribed in the Provisions of the SPC on the Judicial Interpretation Work.122 The range of sources that can be produced by the SPC is limited compared with past practice.123 As of now, the SPC can issue:
interpretations (解释jiě shì), provisions (规定guī dìng), replies (批复pī fù), and decisions (决定jué ding).124 These sources are “legally effective” (interpretations)125 or otherwise binding on the lower courts.126 Article 6 of the Provisions of the SPC on the Judicial Interpretation Work provides an explanation of what particular sources are.
An “interpretation” is a judicial interpretation on the application of a certain law and it comments the operation and meaning of its parts or of the entire law. The interpretation performs the role of a secondary source of law explaining some of the critical issues under the primary legislation. One of the key interpretations in the context of arbitration in China is the Interpretation of the SPC concerning Some Issues on Application of the Arbitration Law of the PRC from 2006 (“SPC 2006 Interpretation”).127 The SPC 2006 Interpretation deals with a number of important issues, such as those related to the validity of an arbitration agreement.
“Provisions” should be understood as a formulation of norms or opinions necessary for the trial work.
The provisions are made in line with the legislative intent. They are, generally, similar to court rules, and deal with the administration of justice, rather than with how to apply a particular piece of law.128 An example of provisions is the SPC’s Provisions on the Recognition and Enforcement of Arbitral Awards made in the Taiwan Region.129 These particular provisions deal with issues, such as requirements
122 Provisions of the Supreme People's Court on the Judicial Interpretation Work, no. 12, 23 March 2007; [最高 人民法院关于司法解释工作的规定; 法发〔2007〕12号2007年3月23日].
123 See Yuen, McDonald, and Dong, 61.; see more for the situation before 2007 in Wang, "Lawmaking Functions of the Chinese Courts: Judicial Activism in a Country of Rapid Social Changes", 536-537.
124 Art. 6 of the Provisions of the Supreme People's Court on the Judicial Interpretation Work.
125 Art. 5 of the Provisions of the Supreme People's Court on the Judicial Interpretation Work: “The judicial interpretations issued by the Supreme People's Court shall have full legal force.” (the original wording is “具有 法律效力”, jù yŏu fǎ lǜ xiào lì).
126 See Yuen, McDonald, and Dong, 61.; also Art. 5 of the Provisions of the Supreme People’s Court on the Judicial Interpretation Work.
127 Interpretation of the Supreme People's Court concerning Some Issues on Application of the Arbitration Law of the People's Republic of China, Fa Shi [2006] No. 7, issued on 23 August 2006, effective from 9 August 2006;
[最高人民法院关于适用《中华人民共和国仲裁法》若干问题的解释, 法释[2006]7号, 颁布时间: 2006年8
月23日，实施时间: 2006年8月 9日].
128 See Yuen, McDonald, and Dong, 61.
129 Provisions of the Supreme People’s Court on Recognition and Enforcement of Arbitral Awards made in the Taiwan Region, issued on 2 June 2015, effective from 1 July 2015; [《最高人民法院关于认可和执行台湾地区 仲裁裁决的规定》颁布时间: 2015年6月2日，实施时间: 2015年7月1日].
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toward the form of an arbitral award and a power of attorney, due process requirements, and time periods for the examination of the award.
A “reply” is made upon a request for an instruction on the application of law in a specific case by a lower level court. Whether replies are binding on the courts in subsequent cases is unclear. The most common view is that, although they are highly persuasive, they do not have a formally binding nature.
The reason is the fact that a reply is aimed at addressing a particular concern of a particular court in a particular case, and not at establishing a universal principle. In practice, however, some replies have had implications for the entire practice of arbitration in China and have been published by the SPC.130 An example of a reply is the SPC’s reply how to handle the jurisdictional issues resulting from the split of one of the leading arbitration institutions in China – CIETAC.131 This clarification was a response to requests from the Shanghai Higher People’s Court, the Jiangsu Higher People’s Court, and the Guangdong Higher People’s Court. In another reply, the SPC addressed the issue whether an arbitration clause providing for a non-Chinese arbitration institution to administer a dispute in a China-seated arbitration is valid under the Chinese law.132 This reply addressed the question coming from the Anhui Higher People’s Court. In both of these cases, the replies of the SPC were published and made available to a wider audience.
A “decision” is a form for the amendment or an abolishment of a previous interpretation. Also, it needs to be added that there are some SPC documents produced in the past that still have legal meaning for the Chinese arbitration system, but the Provisions of the SPC on the Judicial Interpretation Work do not provide for these forms anymore. These are, for example, circulars, such as the Circular of the SPC on Implementing the Convention on the Recognition and Enforcement of Foreign Arbitral Awards Entered by China.133
130 See Yuen, McDonald, and Dong, 61-62.
131 Reply of the Supreme People's Court’s on the Judicial Supervision and Review of the Jurisdiction and Arbitral Awards in Cases Involving Arbitration Agreements for Arbitration at the CIETAC South-China Sub-Commission and the CIETAC Shanghai Sub-Commission; Fa Shi [2015] No. 15 issued on 15 July 2015, effective from 17 July
2015; [《最高人民法院关于对上海市高级人民法院等就涉及中国国际经济贸易仲裁委员会及其原分会等
仲裁机构所作仲裁裁决司法审查案件请示问题的批复》，法释〔2015〕15号, 颁布时间: 自2015年7月 15日, 实施时间: 2015年7月17日].
132 Reply of the Supreme People’s Court regarding the Dispute on the Validity of an Arbitration Agreement between Anhui Longlide Packing and Printing Co., Ltd. and BP Agnati S.R.L; issued on 25 March 2013, effective
from 25 March 2013; [《最高人民法院关于申请人安徽省龙利得包装印刷有限公司与被申请人BP Agnati
S.R.L.申请确认仲裁协议效力案的复函; [2013]民四他字第13号; 颁布时间: 自2013年3月25日, 实施时 间: 2013年3月25日].
133 Circular of Supreme People's Court on Implementing Convention on the Recognition and Enforcement of Foreign Arbitral Awards Entered by China, issued on and effective from 10 April 1987; [最高人民法院关于执行
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