Perspective | Practical Analysis of One of the Legal Grounds for Applying to Revoke Domestic Arbitration Awards: "No Arbitration Agreement"

Article 58: If a party provides evidence proving that the award has one of the following circumstances, it may apply to the intermediate people's court where the arbitration commission is located for annulment of the award:
 

(1)There is no arbitration agreement;

(2) The matters of the award are not within the scope of the arbitration agreement or the arbitration commission has no jurisdiction to arbitrate;

(3) The composition of the arbitration tribunal or the arbitration procedure violates statutory procedures;

(4) The evidence on which the award is based is forged;

(5) The other party concealed evidence that could affect a fair ruling;

(6) The arbitrator engaged in bribery, favoritism, or made a wrongful ruling during the arbitration of the case.

If the people's court, after forming a collegial panel, verifies that the award has one of the circumstances specified in the preceding paragraph, it shall rule to annul it.

If the people's court determines that the award violates public interest, it shall rule to annul it.

Article 18: The "no arbitration agreement" as stipulated in the first paragraph of item (1) of Article 58 of the Arbitration Law refers to the situation where the partieshave not reached an arbitration agreement. If the arbitration agreement is deemed invalid or revoked,it is regarded as having no arbitration agreement.
 

Article 27: If the partiesdo not raise objections to the validity of the arbitration agreement during the arbitration process,and after the arbitration award is made, claim to annul the arbitration award or raise a defense against non-enforcement on the grounds of invalidity of the arbitration agreement, the people's court shall not support it.

If a party raises objections to the validity of the arbitration agreement during the arbitration process, and after the arbitration award is made, claims to annul the arbitration award or raises a defense against non-enforcement on this basis, and it meets the provisions of Article 58 of the Arbitration Law or Articles 213 and 258 of the Civil Procedure Law, the people's court shall support it.

In cases where annulment of the arbitration award is requested on the grounds of "no arbitration agreement", the focus of judicial review is whether an objection to the validity of the arbitration agreement was raised during the arbitration process. If no objection to the validity of the arbitration agreement was raised during the arbitration process, the court should not support the claim for annulment of the arbitration award on the grounds of "no arbitration agreement". Based on judicial cases, the common circumstances for requesting annulment of the arbitration award on the grounds of "no arbitration agreement" are as follows:

[Case] Yin Ping vs. Dongguan Bank Co., Ltd. Guangzhou Branch Application for Annulment of Arbitration Award (Case No.: (2018) Yue 01 Min Te 683, Court: Intermediate People's Court of Guangzhou, Guangdong Province)
 

The court held:In this case, Dongguan Bank mailed a "Notice of Change of Dispute Resolution Method for Credit Card Overdue Collection" to Yin Ping, informing him of the change to arbitration. However, this change was merely a unilateral expression of intent by Dongguan Bank and was not confirmed by Yin Ping. Although Dongguan Bank provided relevant evidence proving that it had mailed the above notice to Yin Ping, it did not provide sufficient evidence to prove that Yin Ping had signed for the notice, nor did it provide relevant evidence to prove that Yin Ping had expressed consent to the change. Therefore,the existing evidence cannot prove that after Dongguan Bank sent the "Notice of Change of Dispute Resolution Method for Credit Card Overdue Collection" to Yin Ping, Yin Ping received the notice and clearly expressed acceptance of the arbitration clause stated in the notice, thus it cannot be considered that the parties reached a consensus on the arbitration clause involved. Therefore, since the arbitration tribunal made the arbitration award without examining whether there was a valid arbitration clause between the parties, according to the provisions of item (1) of the first paragraph of Article 58 of the Arbitration Law of the People's Republic of China, Yin Ping's application for annulment of the arbitration award on the grounds of the absence of an arbitration agreement is reasonable and supported by this court.

[Case] XX vs. Shanghai Tongyue Leasing Co., Ltd. Application for Annulment of Arbitration Award (Case No.: (2017) Hu 01 Min Te 668, Court: First Intermediate People's Court of Shanghai)
 

The court held:According to Article 58 of the Arbitration Law of the People's Republic of China and Article 18 of the Interpretation of Several Issues Concerning the Application of the Arbitration Law, if it is verified that the parties to the arbitration award did not reach an arbitration agreement, it should be ruled to annul.It has been identified by the Judicial Appraisal Scientific Research Institute that the signature "XX" at the place of the guarantor's seal in the "Guarantee Contract" is not signed by XX himself, and the imprint cannot determine its authenticity, therefore it should be recognized that there is no agreement on arbitration between XX and Tongyue Company, that is, there is no arbitration agreement between the parties.Applicant XX's application for annulment of the arbitration award regarding the liability of XX in the case meets the provisions of item (1) of the first paragraph of Article 58 of the Arbitration Law of the People's Republic of China and should be supported.

1. If it is simultaneously agreed that both the arbitration institution and the people's court have jurisdiction, the arbitration agreement is invalid and should be regarded as having no arbitration agreement.
 

[Case] Yiyuan Yuantai Real Estate Co., Ltd. and Zhou Qinggang's case to revoke the arbitration award (Case No.: (2022) Lu 03 Min Te 30, Court: Intermediate People's Court of Zibo City, Shandong Province)

The court held:In this case, although Article 27 of the "Commodity House Sale Contract" signed by both the applicant and the respondent stipulates that "disputes arising during the performance of this contract shall be submitted to the Zibo Arbitration Commission for arbitration," the parties agreed in Article 19 of the "Supplementary Agreement" that "both parties shall perform this supplementary agreement and the main contract. If a dispute arises, it shall be resolved through negotiation, and if negotiation fails, it shall be filed with the People's Court of Yiyuan County in accordance with the law." From the content of the supplementary agreement, the scope of resolving disputes through court litigation includes not only the supplementary agreement but also the main contract.Combining the stipulation in Article 18 of the "Supplementary Agreement" that "if the provisions of the main contract conflict with this supplementary agreement, this supplementary agreement shall prevail," it should be recognized that the applicant and the respondent agreed that they could apply for arbitration to the arbitration institution or file a lawsuit with the People's Court to resolve disputes, and that arbitration agreement should be deemed invalid.Article 18 of the "Interpretation of Several Issues Concerning the Application of the Arbitration Law of the People's Republic of China" by the Supreme People's Court stipulates: "The term 'no arbitration agreement' in the first item of the first paragraph of Article 58 of the Arbitration Law refers to the situation where the parties have not reached an arbitration agreement. If the arbitration agreement is deemed invalid or revoked, it is regarded as having no arbitration agreement."In this case, after the arbitration agreement involved was deemed invalid, it should be recognized that there is no arbitration agreement between the applicant and the respondent.At the same time, on the day of the arbitration hearing, the applicant also exercised the right to raise a written jurisdictional objection in court. Article 58, paragraph 1, item 1 of the Arbitration Law of the People's Republic of China stipulates: "If a party provides evidence proving that the award has one of the following circumstances, it may apply to the intermediate people's court where the arbitration commission is located to revoke the award: (1) there is no arbitration agreement." In this case, the Zibo Arbitration Commission made the arbitration award involved without an arbitration agreement, which violates this provision and should be revoked.

2. If the arbitration agreement points to multiple arbitration institutions and the parties cannot reach an agreement on which one to choose, the arbitration agreement is invalid and should be regarded as having no arbitration agreement.

[Case] Taiyuan Heavy Industry Engineering Technology Co., Ltd. applies to revoke the arbitration award of Shanxi Metallurgical Geotechnical Engineering Survey General Company (Case No.: (2017) Jin 07 Min Te 8, Court: Intermediate People's Court of Jinzhong City, Shanxi Province)

The court held:The applicant, Taiyuan Heavy Industry Engineering Technology Co., Ltd., and the respondent, Shanxi Metallurgical Geotechnical Engineering Survey General Company, signed the construction engineering survey contract, which stipulates in Article 9: "Disputes arising during the performance of this contract shall be resolved through negotiation by both parties, and if negotiation fails, shall be submitted to the local arbitration commission for arbitration."In this stipulation, although both parties clearly expressed their intention to request arbitration and the arbitration matters, there was a disagreement on the understanding of the arbitration location (local), and the applicant and the respondent are both located in Taiyuan, while the place of performance of the contract is in Jiexiu City, which belongs to different administrative jurisdictions, making it impossible to determine the uniqueness of the arbitration location, and thus unable to confirm the uniqueness of the arbitration institution. The arbitration agreement is unclear regarding the arbitration institution. The parties could not reach a supplementary agreement on which specific arbitration institution to choose. The applicant, Taiyuan Heavy Industry Engineering Technology Co., Ltd., clearly raised a jurisdictional objection before the first arbitration hearing, indicating that it had not waived its right to object. According to Article 6 of the Arbitration Law of the People's Republic of China, arbitration does not implement hierarchical jurisdiction and territorial jurisdiction, therefore the Jinzhong Arbitration Commission's belief that the local arbitration institution specified in the contract is unique, namely the engineering location in Jiexiu, is inappropriate, and it did not issue a written decision. According to Article 27 of the "Interpretation of Several Issues Concerning the Application of the Arbitration Law of the People's Republic of China" by the Supreme People's Court, the situation in this case meets the provisions of Article 58 of the Arbitration Law, and the request of the applicant, Taiyuan Heavy Industry Engineering Technology Co., Ltd., should be supported.

3. If the name of the agreed arbitration institution is not standardized and it is impossible to determine the specific arbitration institution, it should be regarded as having no agreed arbitration institution.

[Case] XX Company applies to revoke the arbitration award (Case No.: (2023) Shan 01 Min Te 915, Court: Intermediate People's Court of Xi'an City, Shaanxi Province)

The court held:Both parties agreed to the jurisdiction of the "Xi'an Arbitration Commission," and there is one arbitration institution within Xi'an, namely the Xi'an Arbitration Commission. Another arbitration center within Xi'an, the Silk Road Arbitration Center, is a directly affiliated institution of the China International Economic and Trade Arbitration Commission (CIETAC) and is integrated with CIETAC. In the absence of a clear indication from the parties to choose CIETAC as the arbitration institution, it does not lead to ambiguity in the choice of arbitration institution. In other words,Although the arbitration clause in the contract involved does not standardize the name of the arbitration institution, it does not affect the certainty of the choice of arbitration institution. According to Article 6 of the "Interpretation of Several Issues Concerning the Application of the Arbitration Law of the People's Republic of China" by the Supreme People's Court, which states that "if the arbitration agreement stipulates that a certain local arbitration institution shall arbitrate and there is only one arbitration institution in that locality, that arbitration institution shall be regarded as the agreed arbitration institution," the Xi'an Arbitration Commission should be regarded as the agreed arbitration institution by both parties. The applicant's claim that the contract involved is invalid and that the arbitration agreement should also be invalid is not in accordance with legal provisions, and the court does not support it.

1. The successor of the rights and obligations of the arbitration agreement should be bound by the arbitration agreement.
 

[Case] Ma Lili and Bazhou Zuoyou Cultural Media Co., Ltd. apply to revoke the arbitration award (Case No.: (2024) Xin 28 Min Te 1, Court: Intermediate People's Court of Bayingolin Mongol Autonomous Prefecture, Xinjiang Uygur Autonomous Region)

The court held:Regarding the validity of the arbitration agreement raised by the applicant, Article 8 of the "Interpretation of Several Issues Concerning the Application of the Arbitration Law of the People's Republic of China" by the Supreme People's Court stipulates that if the parties merge or split after entering into an arbitration agreement, the arbitration agreement is valid for their successors of rights and obligations. If a party dies after entering into an arbitration agreement, the arbitration agreement is valid for the heirs inheriting the rights and obligations in the arbitration matters. The above two provisions are subject to any other agreements made by the parties at the time of entering into the arbitration agreement. Article 28 of the "Individual Proprietorship Enterprise Law of the People's Republic of China" stipulates that after the dissolution of a sole proprietorship enterprise, the original investor shall still bear the repayment responsibility for the debts incurred during the existence of the sole proprietorship enterprise, but if the creditor does not make a repayment request to the debtor within five years, this responsibility is extinguished.According to the above legal provisions, Ma Lili, as the sole proprietor shareholder of Bazhou Xin Future Cultural Media Co., Ltd., should bear responsibility for the company's debts and obligations, therefore the agreement signed by her with Bazhou Xin Future Cultural Media Co., Ltd. is binding, and thus the applicant's claim that the arbitration agreement is invalid cannot be established, and this court does not support it.

2. The heirs of the arbitration agreement should be bound by the arbitration agreement.

[Case] The top ten typical cases of judicial review of domestic commercial arbitration by the Fourth Intermediate People's Court of Beijing (2019-2021) No. 6

Court's view:Company A, as the creditor, and Lei and Li, as guarantors, signed the "Loan Agreement" which is legal and valid. Lei, as a party to the contract, clearly accepts the jurisdiction of the arbitration clause in the "Loan Agreement."According to Article 8, Paragraph 2 of the "Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Arbitration Law of the People's Republic of China," if a party dies after entering into an arbitration agreement, the arbitration agreement is valid for the heirs inheriting the rights and obligations in the arbitration matters. For the rights and obligations of Li under the "Loan Agreement," Li's statutory heirs, Li Lao, Qiao, and Li Xiao, should be bound by the arbitration jurisdiction in the agreement.

3. Although a written arbitration agreement was not signed, an agreement formed during negotiations should be recognized as an existing arbitration agreement.

[Case] The Fourth Intermediate People's Court of Beijing's Ten Typical Cases of Judicial Review of Domestic Commercial Arbitration (2019-2021) No. 4

Court's view:Article 16, Paragraph 1 of the "Arbitration Law of the People's Republic of China" stipulates that an arbitration agreement includes arbitration clauses established in contracts and agreements to request arbitration reached in other written forms before or after a dispute arises. Article 1 of the "Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Arbitration Law of the People's Republic of China" states that the "other written forms" of arbitration agreements referred to in Article 16 of the Arbitration Law include agreements to request arbitration reached in the form of contracts, letters, and data messages (including telegrams, telexes, faxes, electronic data exchanges, and emails).From the WeChat conversation between Lu and the representative of Company A, it can be seen that although the parties did not sign a written "Medical Institution Custody Agreement," they reached an agreement on the content of the arbitration clause in the "Medical Institution Custody Agreement" through WeChat communication on October 31, 2020.The above arbitration clause complies with the provisions of Article 16 of the "Arbitration Law of the People's Republic of China," and there are no invalid circumstances as stipulated in Articles 17 and 18, indicating that there is a legal and valid arbitration agreement between the parties.