Viewpoint... The main contract stipulates arbitration jurisdiction, guarantees the practical review of the contract.

Published:

2022-12-02

Presentation of 1. issues At the entity level, the main contract and the guarantee contract are mainly subordinate to the contractual relationship, and at the procedural level, in practice, most of the main-subordinate contract agreement supervisor jurisdiction is different, at this time still follow the principle of contract subordination? This paper takes "whether the validity of the arbitration agreement of the main contract can be expanded to apply to the contract, and whether the judicial organ should accept and how to deal with the guarantee contract" as the focus, combined with examples, with a view to clarifying the main contract at the procedural level on the jurisdiction of the agreement of the judicial disposal of the problem. The cited example Company A applies to Bank B for financing. Both parties sign a Financing Contract with a financing amount of RMB 0.2 billion. The main contract stipulates that the jurisdiction is N Arbitration Commission. In order to guarantee the performance of Company A's obligations to Bank B, C entered into a Guarantee Contract with Bank B and undertook to assume an irrevocable joint and several liability guarantee for the obligations under the above-mentioned main contract, with the jurisdiction of the M court from the contractual agreement. After Bank B paid the financing amount to Company A, as Company A experienced significant operational difficulties and began to owe interest on the financing, which constituted a breach of contract, Bank B then filed an arbitration with the N Arbitration Committee on the main contract dispute, requiring Company A, the principal debtor, to assume responsibility for the return of the financing amount and the corresponding losses. (as shown in the figure) As can be seen from the above figure, there is a master-slave relationship between the two contracts in this case, when the principal debtor A company overdue payment of the due debt constitutes a default, creditor B Bank chose to first to the N arbitration committee on the main debt of the arbitration. At this point, the following questions arise: 1. Can the creditor B Bank file an arbitration with the N Arbitration Commission on the guarantee claim against C? (Is the arbitration agreement agreed in the main contract effective as the guarantee contract?) 2. Can the creditor B bank bring a lawsuit to the M court together with the principal creditor's right and the guaranteed creditor's right? (How to determine the competent authority when the principal-subordinate contract stipulates that the competent jurisdiction is inconsistent?) 3. After the creditor B initiates arbitration, can the creditor B separately file a separate lawsuit for the guarantee contract dispute with the M court? (Does the creditor have a separate right of action against the joint and several liability guarantor?) 4. If the creditor B brings the lawsuit of guarantee contract to the M court, should the M court accept the case? If the case is accepted, how should the subsequent judgment be made? (The acceptance and judgment of the lawsuit of joint guarantee contract in the arbitration of the main contract?) 2. association law (I) Article 21 of the Interpretation of the Supreme People's Court on the Application of the the People's Republic of China Civil Code on the Guarantee System: If an arbitration clause is agreed upon in the main contract or the guarantee contract, the people's court shall have no jurisdiction over the dispute between the parties to the contract in which the arbitration clause is agreed. If the creditor sues the debtor and the guarantor together, the competent court shall be determined in accordance with the main contract. Where the creditor may sue the guarantor alone and only the guarantor in accordance with the law, the competent court shall be determined in accordance with the guarantee contract. (II) (abolished) Article 126 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the the People's Republic of China Guarantee Law (abolished and now replaced by Article 21 of the above-mentioned Judicial Interpretation of the Guarantee System): If the debtor of joint and several liability guarantee fails to perform the debt at the expiration of the debt performance period stipulated in the main contract, the creditor may directly require the guarantor to bear the guarantee responsibility within the scope of its guarantee. Article 5 of the (III) the People's Republic of China Arbitration Law: If the parties reach an arbitration agreement and one party sues the people's court, the people's court shall not accept it. (Arbitration clause has the compulsory effect of excluding the jurisdiction of the court) Article 21 of the (IV) the People's Republic of China Arbitration Law stipulates: "The parties applying for arbitration shall meet the following conditions: (1) there is an arbitration agreement; the (II) has specific arbitration claims and facts and reasons; and the (III) shall fall within the scope of acceptance of the Arbitration Commission." (The judgment of the principal-subordinate relationship of the contract is not a statutory consideration for the arbitration institution to decide whether to accept the case) Article 24 of the (V) the People's Republic of China Arbitration Law (Revised) (Draft for Comment) stipulates: "If a dispute involves a master-slave contract, and the arbitration agreement between the master contract and the slave contract is inconsistent, the agreement of the master contract shall prevail. If there is no arbitration agreement in the slave contract, the arbitration agreement of the master contract shall be valid for the parties to the slave contract." 3. Practice Review (I) the validity of the arbitration agreement of the main contract shall not be extended to the subordinate contract. There are three reasons for this: First, from the perspective of laws and regulations, Article 21 of the Judicial Interpretation of the Guarantee System expressly states: "If the main contract or the guarantee contract stipulates an arbitration clause, the people's court shall have no jurisdiction over the dispute between the parties to the contract that stipulates the arbitration clause." The jurisdiction of the court can be forcibly excluded for the main contract or guarantee contract that has agreed on the arbitration clause in advance. However, in the second paragraph of the above judicial interpretation: "If the creditor sues the debtor and the guarantor together, the competent court shall be determined according to the main contract", it is stated that the principal-subordinate contract and the application of the principal contract to determine the competent court are not stipulated in the principal-subordinate contract, that is, there is no statutory situation that excludes the jurisdiction of the court from the contract. In addition, according to article 5 of the Arbitration Act, the arbitration clause has the mandatory effect of excluding the jurisdiction of the court. Second, from the point of view of the independence of the arbitration agreement and the relativity of the contract, according to article 19 of the Arbitration Law: "The arbitration agreement exists independently, and the modification, termination, termination or invalidity of the contract does not affect the validity of the arbitration agreement". And Article 21 of the Arbitration Law, from the point of view of weightlifting, since the change, termination, termination and invalidity of the contract will not affect the validity of the arbitration agreement, only by the subordinate nature of the main contract, can not cause the expansion of the validity of the arbitration agreement. Third, the classic case view of the Supreme Court is mainstream: Judicial precedent 1: Chengdu Youbang Stationery Co., Ltd. and Wang Guojian applied for revocation of Shenzhen Arbitration Commission (2011) Shen Arbitration Zi No. 601 Arbitration Award [(2013) Min Si He Zi No. 9]] Views of the Supreme Court: (Refer to the following reply) The case-related security contract did not agree on an arbitration clause, and the arbitral tribunal's opinion that the main contract had an arbitration clause and that the security contract as a subordinate contract should be bound by the arbitration clause in the main contract lacked a legal basis. The arbitral tribunal heard and made an award on a security contract that did not agree on an arbitration clause, and the guarantor Wang Guojian applied to set aside the grounds for the arbitration award involving his part as a guarantor. In view of the fact that Wang Guojian and Qi Xiang and Chen Jianjun are co-guarantors, the three have a common legal status, and the ruling on the liability of the three persons is expressed in item (IV) of the award, the people's court should set aside the award as an indivisible award. Thus, the Supreme People's Court held that the guarantee contract was not bound by the arbitration clause of the main contract. At the same time, the guarantee contract dispute case of Xi 'an Maike Metal International Group Co., Ltd. and Jinchuan Group Co., Ltd. [(2017) No. 47 of the Supreme People's Court] also involves the dispute over the jurisdiction of the principal-subordinate contract supervisor. The Supreme People's Court once again quoted the reply letter and stressed once again that the validity of the arbitration agreement of the principal contract cannot be extended to the subordinate contract. Judicial precedent 2: dispute over performance guarantee between Huizhou weitong real estate co., ltd. and Huizhou municipal people's government [(2001) min er zong zi no 177]] The Supreme Court's view: The case creditor Weft Company and the guarantor Huizhou City Government in the "performance confirmation" signed by both parties did not agree on the arbitration clause. This case is a performance guarantee dispute filed by Weitong Company against Huizhou Municipal Government, and the contract dispute between Weitong Company and Jiacheng Company is two different civil relations. The performance guarantee civil relationship formed between Weitong Company and Huizhou Municipal Government is not bound by the arbitration clause agreed in the contract between Weitong Company and Jiacheng Company. The parties did not choose arbitration to resolve the dispute in the performance confirmation signed. The lawsuit of Weitong Company complies with the provisions of Article 108 of the the People's Republic of China Civil Procedure Law, and the Guangdong Higher People's Court shall accept it. The Higher People's Court of Guangdong Province ruled that the arbitration clause in the contract was clear, thus excluding the jurisdiction of the people's court over the performance guarantee dispute, and ruled that the lawsuit of Tongweitong Company should be corrected according to law. Contrary view: According to Article 24 of the the People's Republic of China Arbitration Law (Revised) (Draft for Comment), "If a dispute involves a master-slave contract, and the arbitration agreement between the master contract and the slave contract is inconsistent, the agreement of the master contract shall prevail. If the slave contract does not agree on an arbitration agreement, the arbitration agreement of the master contract shall be valid for the parties to the slave contract." This provision actually expands the validity of the arbitration agreement of the main contract, showing that the legislator has expanded the scope of the validity of the arbitration agreement to apply the subordinate attribute of the main contract in order to improve the legislative purpose of judicial efficiency. However, the author believes that the arbitration clause generally only strictly restricts the parties to voluntary arbitration, and not only considers the subordinate nature of the guarantee contract, and applies the law of substantive law to the level of procedural law. This provision not only conflicts with other provisions of the Arbitration Law, but also leads to some problems in judicial practice. Therefore, it is suggested that this provision should be adopted carefully. In summary, the arbitration clause in the main contract does not necessarily bind the parties to the security contract, nor should its effect be extended to the contract. Therefore, in the cited example, Bank B may not apply to the N Arbitration Commission together with the guarantee contract (the arbitration agreement may not be extended to a subordinate contract), nor may it bring the main claim against Company A together with the guarantee claim against C to the M court (the arbitration agreement excludes the jurisdiction of the court). After the (II) creditor has initiated arbitration on the main claim (or has not initiated arbitration), the judicial treatment of a separate lawsuit for the guarantee contract dispute. According to Article 21, paragraph 3, of the Judicial Interpretation of the Security System: If the creditor may sue the guarantor alone and only the guarantor in accordance with the law, the competent court shall be determined in accordance with the security contract. According to Article 18 of the the People's Republic of China Guarantee Law and Article 126 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the the People's Republic of China Guarantee Law (abolished and now replaced by Article 21 of the Judicial Interpretation of the Guarantee System), if the debtor of joint and several liability guarantee fails to perform the debt at the expiration of the debt performance period stipulated in the main contract, the creditor may directly require the guarantor to bear the guarantee responsibility within the scope of its guarantee. From the above, in terms of procedure, creditors have the legal right of action against the guarantor of joint and several liability. Through searching cases and consulting relevant professional articles and materials, the author found that in judicial practice, the court under the jurisdiction of the guarantee contract dispute will have the following disposal methods (refer to the following figure). According to the relevant classic cases of the Supreme Court, the mainstream view is that creditors directly claim the guarantee responsibility to the guarantor and the people's court should accept it, however, the scope of liability for security cannot be determined because the principal obligation has not yet been determined, and in principle, the scope of the principal obligation should be confirmed by consensus of the parties or by arbitration before proceeding with the proceedings. Specific as shown in the following figure: Representative jurisprudence 1. Case of Dispute over Guarantee Contract between AVIC Huide Wind Power Engineering Co., Ltd. and Liaoning Gaoke Energy Group Co., Ltd. [(2015) Min Er Zhong Zi No. 125]] Interpreting the views of the Supreme Court: 1. The focus of the dispute in this case: the main contract agreed on the jurisdiction of arbitration, the guarantee contract did not agree on the jurisdiction of arbitration, the creditor directly to the guarantor to claim the responsibility of the guarantee, whether it can be supported by the people's court. 2. Interpretation (1) Creditors sue guarantors in the law-creditors have the legal right to sue, the court should file a case, emphasizing the irrationality of the court's decision not to accept and reject the prosecution. According to Article 18 of the the People's Republic of China Guarantee Law and Article 126 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the the People's Republic of China Guarantee Law (abolished and now replaced by Article 21 of the Interpretation of the Supreme People's Court on the Application of the Guarantee System of the the People's Republic of China Civil Code), the debtor of joint and several liability guarantee fails to perform its debts at the expiration of the debt performance period stipulated in the main contract, the creditor may directly require the guarantor to assume the guarantee liability within the scope of its guarantee. In this case, AVIC, in accordance with the "Guarantee Letter", sued Gaoke to assume the responsibility of the guarantee, in accordance with the law. (2) Because the principal obligation has not been determined, the scope of security liability has not been determined, triggering the guarantor to exercise the right of defense-the court is unable to conduct a substantive hearing of the principal creditor's debt relationship. The lawsuit request of the creditor AVIC Company is to claim that the guarantor Gaoke Company shall bear the guarantee responsibility and perform the obligation of unpaid payment on behalf of the debtor Ruixiang Company. The entity right of AVIC Company comes from the Supply Contract and Supplementary Agreement signed with Ruixiang Company. As the guarantor, Gaoke Company can also exercise the debtor's defense right in accordance with the provisions of the Supply Contract and Supplementary Agreement and the performance of the contract, including whether AVIC has fulfilled its supply obligations in accordance with the quantity and quality agreed in the contract, whether Ruixiang has fulfilled its payment obligations, whether it should continue to pay for the goods and the amount owed, etc., to carry out a physical defense. According to the "Supply Contract" and "Supplementary Agreement" of AVIC and Ruixiang, the above issues are disputes arising from the performance of the "Supply Contract" and "Supplementary Agreement" and fall within the scope of arbitration jurisdiction. If the People's Court conducts a substantive hearing of the above-mentioned dispute, it will inevitably infringe the right of AVIC and Ruixiang to choose arbitration to resolve disputes based on the agreement of the arbitration clause, and violate the principle of party autonomy. Therefore, when the arbitration jurisdiction is stipulated in the main contract, but the arbitration jurisdiction is not stipulated in the guarantee contract, the scope of the main debt should be confirmed through consensus between the parties or arbitration in principle. If the creditor only brings a lawsuit against the guarantor, the guarantor will defend the agreement and performance of the main contract, which will inevitably involve the issue of whether the court can hear and judge the disputes that have been agreed to the arbitration award, this involves both the right of choice of arbitration proceedings for the parties to the agreed arbitration jurisdiction and the scope of the exercise of the people's court's judicial power. In this case, Ruixiang, the third party in the original trial, did not waive its arbitration jurisdiction agreement with AVIC and held that the principal debt should be determined through arbitration. Therefore, for the high-tech company on the scope of the main debt can not be determined, the scope of the guarantee liability can not be determined, in the main debt has not been determined by the arbitration award, the air company directly requires it to bear the responsibility of the guarantee, belongs to the claim of insufficient evidence, according to law should be supported. 5. related recommendations To sum up, returning to the four problems mentioned in the cited example, the author believes that in order to avoid the complicated judicial disposal relationship similar to that under the jurisdiction of the supervisor and maintain the security and stability of creditor's rights, attention should be paid to the consistency of the dispute resolution methods of the master-slave contract, so as to avoid the subsequent separate guarantor claiming rights, the adjudication authority thinks that the dispute over the master contract should be resolved first and the scope of the master debt can be determined guarantee liability, this provides an opportunity for debtors and guarantors to evade their responsibilities and transfer property, ultimately affecting the realization of debt.

Key words: