Chapter 3 Arbitration Agreement

1
Chapter 3Arbitration Agreement
2
Definition and Forms

• Agreement between the parties to submit their
  dispute for the settlement by arbitration
• Submission to arbitration
• Arbitration clause in a contract

3
Content (CAL,Art.16)

• Intention of both parties to settlement their
  dispute by arbitration
• Matters to be arbitrated
• Definite arbitration institution,excluding ad hoc
  commercial arbitration tribunal

4
Matters to be arbitrated

• Art. 2 of the Judicial Interpretation
• Contract disputes refers to the formation,
  validity, amendment, assignment, performance,
  liabilities for the breach, interpretation,
  termination of the contract.

5
Written Form

• Judicial interpretation(Art.1) apart from the
  contract, it could be expressed in the form of
  telegraph, telex, EDI, email, etc.

6
Void Arbitration Agreement

• CAL Article 17
• if an agreed arbitrable matter exceeds the scope
  of arbitrable matters(Art.2,3 CAL) as specified
  by law
• if a party that concluded the arbitration
  agreement has no capacity for civil acts or has
  limited capacity for civil acts or
• if one party coerced the other party into
  concluding the arbitration agreement.

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Art. 7 of the Jud. Interpr. on Invalid
arbitration agreement

• The parties agreed either arbitration or
  litigation. Unless one party applied for
  arbitration, the other party failed to challenge
  of the validity of the arbitration agreement
  prior to the first hearing of the arbitration
  tribunal.
• The parties failed to reach agreement on a
  definite arbitration institution.

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Authority to decide (CAL20)

• If a party challenges the validity of the
  arbitration agreement, he may request an
  arbitration commission to make a decision or a
  People's Court to give a ruling. If one party
  requests an arbitration commission to make a
  decision and the other party requests a People's
  Court to give a ruling, the People's Court shall
  give a ruling.
• A party's challenge of the validity of the
  arbitration agreement shall be raised prior to
  the first hearing of the arbitration tribunal.

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Competent Court to decide validity of the arb.
Agreement

• Intermediate peoples court
• where the agreed arb. Commission located
• in case of no agreed definite arbitration
  commission, where the agreement was signed or the
  parties domicile or place of business located

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Applicable Law for decision

• Judicial interpretation (Art. 16)
• Agreed by the parties
• Seat of arbitration if any
• Law of the national court
• In agreement with Art.5(1)(a) New York Convention

11
ICC Model Arb. Clause

• All disputes arising out of or in connection with
  the present contract shall be finally settled
  under the Rules of Arbitration of the
  International Chamber of Commerce by one or more
  arbitrators appointed in accordance with the said
  Rules.

12
ICC recommends the following clause for
arbitrations seated in Mainland China after
Zueblin

• All disputes arising out of or in connection with
  the present contract shall be finally settled by
  ICC Court of International Arbitration under the
  Rules of Arbitration of the International Chamber
  of Commerce by one or more arbitrators appointed
  in accordance with the said Rules.
• http//www.iccwbo.org/uploadedFiles/Court/Arbitrat
  ion/other/mc_arb_chinese(1).doc

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AAA Model Arb. Clause

• Any controversy or claim arising out of or
  relating to this contract shall be determined by
  arbitration in accordance with the International
  Arbitration Rules of the American Arbitration
  Association.

14
The Doctrine of Separability of the Arb. Clause

• An arbitration clause which forms part of a
  contract shall be treated as an agreement
  independent of the other terms of the contract. A
  decision by the arbitral tribunal that the
  contract is null and void shall not entail ipso
  jure (L. ???)the invalidity of the arbitration
  clause.

15
Art. 16 UNCITRAL Model Law

• The arbitral tribunal may rule on its own
  jurisdiction, including any objections with
  respect to the existence or validity of the
  arbitration agreement.

16
Harbour Assurance Case (76-)

• UK Case b/w British co. and Finland co. over
  reinsurance contract
• The contract was void without permission from the
  British authority
• The invalidity of the main contract does not
  impeach the validity of the arbitration clause.

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Art. 19 of CAL

• Arbitration agreements shall exist independently.
  The amendment, rescission, termination or
  invalidity of a contract shall not affect the
  effectiveness of the arbitration agreement.

18
Guangdong Huizhou JV Case

• JV K between Chinese co. and HK co.
• Arbitration clause in the K
• Dispute before the approval the contract by the
  authority
• Huizhou Intermediate Ct. ruled on its
  jurisdiction due to invalidity of the K
• Decision overruled by the Higher Ct.

19
Jiangsu co. v. HK and Canadian co. in 1998

• Import used electronic machines K with
  arbitration clause
• Jiangsu co. applied to the ct. due to fraud
  contract
• HK and Canadian co. challenged the ct.
  jurisdiction
• The Supreme Ct. replied that the Ct. has no
  jurisdiction over the case

20
Judicial Interpretation (Art.10)

• The arbitration agreement is valid after it is
  formed but failed came into force or it is
  revoked.

21
Heyman v. Darwins ,1942

• Facts
• Dispute
• Judgment by the basic ct.
• Decision by the ct. of appeal
• Decision by the House of Lords

22
Assignment of Arb. Clause

• Whether the assignee is bound by the arbitration
  clause in the assigned contract?

23
Filanto v. Chilewich (85-89)

• Sales K between Chilewich and Russian co. for the
  supply of footwares
• Chilewich sent order with the same terms to
  Filanto, including arb. in Mosccow
• Letter of credit opened by Chilewich w/o reply
  from Filanto
• Filanto challenged the arb. Clause

24
MS. Emja CASE(95-98)

• Construction K b/w Ferus(Dutch shipyard) to build
  Ms. Emja for Firden (Dutch company)
• Sales K b/w Firden and German Emja during
  construction of the ship
• Ferus sub-contracted Bijlma shipyard
• Bijlsma contracted Sweddish Wartsila for delivery
  of the diesel engines
• diesel engines dispute brought by German Ms. Emja
  against Swidish Wartsila

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Chinese Practices

• No provision in CAL
• Art.8 ?9 of the Judicial Interpretation
• The arb. Agreement is binding on assignee while
  the parties merged or separated.
• Successors responsibility
• Assignment of credits and liabilities

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