Laws of the People's Republic of China

Reply of the Supreme People's Court to the Request for Instructions concerning Whether or not to Revoke an Arbitration Award Made by Chengde Arbitration Commission

Min Si Ta Yu [2005] No. 51 January 24, 2006

The Higher People's Court of Hebei Province:

We have received your Request for Instructions on Revoking the Arbitration Award [2000] No. 33and the Supplementary Arbitration Award [2000] No. 1 of Chengde Arbitration Commission (No. 89 [2005] of the Higher People's Court of Hebei Province). Upon deliberation, we give the following reply.

This case involves an application for revoking a foreign-related arbitration award made by an arbitration institution of China. Chengde Arbitration Commission once made the Arbitration Award No. 33 [2000] on the dispute between Beijing Penghua Economy & Technology Development Co., Ltd. and British Virgin Islands Haoyun Co., Ltd. on December 26, 2000 in accordance with the status reflected in your report on request for instructions as well as the attached files, but made a Supplementary Arbitration Award [2000] No. 1 on December 28 of the same year, which was meant to revoke the Arbitration Award [2000] No. 33. It is stipulated in Article 56 of the Arbitration Law of the People's Republic of China that: "An arbitration tribunal should correct the errors concerning context or computation and matters that have been arbitrated in the arbitral segment but omitted in the arbitration award. Within 30 days after the receipt of the arbitration award, the related parties may apply for correction with the arbitration tribunal" Paragraph 3, Article 46 of the Arbitration Rules of Chengde Arbitration Commission stipulates: "A modified or supplemented arbitration award as made by an arbitration tribunal shall be part of the original arbitration award." Thus, the related laws and arbitration rules just authorize the Arbitration Commission to make a supplementary arbitration award on any procedural or omitted matters but do not authorize the arbitration commission to revoke any arbitration award which has been made, served and entered into force. That Chengde Arbitration Commission made a supplementary arbitration award to revoke its original arbitration award on the same dispute falls short of legal foundation and does not accord with the provisions of the Arbitration Rules of Chengde Arbitration Commission, which is a situation as stipulated in item (3), paragraph 1 of Article 260 of the Civil Procedure Law of the People's Republic of China where "the composing of the arbitration tribunal or the procedure of arbitration does not accord with rules of arbitration", so, on the base of the provisions of Article 70 of the Arbitration Law of the People's Republic of China, the people's court may revoke the arbitration awards.

Whereas the main problem in the arbitration awards of this case lies in that the arbitral procedures are in violation of the legal procedures, this procedural violation (by making a supplementary arbitration award to revoke the original arbitration award) that may influence the rights of the related parties could be corrected by means of informing the arbitration tribunal of re-arbitration. On the base of the provisions of Article 61 of the Arbitration Law of the People's Republic of China, the arbitration tribunal shall be informed to make a re-arbitration within a certain time limit and rule to cease the procedures for revocation in accordance with the actual situation regarding the arbitration award in this case,. If the arbitration tribunal refuses to make a re-arbitration, a rule of resuming the procedures for revocation shall be made and both the two arbitration awards shall be revoked concurrently under law.

Appendix: Request for Instructions of the Higher People's Court of Hebei Province on Revoking the Arbitration Awards Made by Chengde Arbitration Commission [2000] No. 33 and the Supplementary Arbitration Award [2000] No. 1

Yi Li Min Han Zi [2005] No. 89 November 23, 2005

Tribunal No. 4 of the Supreme People's Court:

In accordance with the requests of your court in Letter [2004] No. 45, the Intermediate People's Court of Chengde Municipality accepted and publicly heard a the case concerning the application of Beijing Penghua Economy & Technology Development Co., Ltd. (hereinafter referred to as Penghua), the applicant, and the British Virgin Islands Haoyun Co., Ltd. (hereinafter referred to as Haoyun), the respondent, for revocation of arbitration awards and thereby set forth the following opinions on treatment:

Haoyun did not submit any certification of its legal existence when applying with Chengde Arbitration Commission for arbitration. The identity certification of its legal representative was not verified by the Chinese foreign representative office located in Hong Kong either. During the hearing, it did not submit the aforesaid certification documents to this court within the time limit as provided for by our court. Therefore, Haoyun is disqualified as a subject in an arbitration or action in accordance with the Civil Procedure Law of the People's Republic of China as well as the replies of the Supreme People's Court regarding any foreign-related or Hong Kong-related litigation documents as well as the service thereof. Moreover, Chengde Arbitration Commission made a Supplementary Arbitration Award No. 1 [2000] in order to revoke the Arbitration Award [2000] No. 33 after Chengde Arbitration Commission made an Arbitration Award [2000] No. 33 on the dispute between Penghua and Haoyuan, which has gone against the related provisions of the Arbitration Law as well as the arbitration rules of Chengde Arbitration Commission, thus, the aforesaid supplementary arbitration award shall be regarded as illegal. So, it is determined to revoke the Arbitration Award [2000] No. 33and the Supplementary Arbitration Award [2000] No. 1.

As far as the opinions as reported by the Intermediate People's Court of Chengde Municipality are concerned, this court holds that the facts as confirmed are clear and the application of law is accurate and therefore consents to revoke the Arbitration Award [2000] No. 33and the Supplementary Arbitration Award [2000] No. 1 after an earnest examination. All the aforesaid matters are hereby reported to you for verification in light of the Circular of the Supreme People's Court on Revoking the Foreign-related Arbitration Awards.

Please make a reply to us whether the aforesaid opinions are right or not.