I. Arbitration clauses in foreign-related contracts

While PRC Contract Law allows the parties to a foreign-related contract to submit their contractual disputes to a PRC arbitration institution for arbitration, it is critical to accurately name the arbitration commission in the arbitration clause. Designating the place of arbitration is not enough to ensure the validity of the arbitration clause, especially for those places  there are more than one arbitration institutions.

According to Article 18 of PRC Arbitration Law, “if the arbitration commission is not agreed upon by the parties in the arbitration agreement, or if the provision is not clear, the parties may supplement the agreement. If the parties fail to agree upon the supplementary agreement, the arbitration agreement shall be invalid.”

Further, according to Article 6 of the Supreme Court’s Interpretation of Arbitration Law, “when an arbitration agreement stipulates that the disputes shall be arbitrated by the arbitration institution at a certain locality and there is only one arbitration institution in this locality, that arbitration institution shall be regarded as the stipulated one. If there are two or more arbitration institutions, the parties may agree to choose one arbitration institution for arbitration upon agreement; if the parties fail to agree upon the choice of the arbitration institution, the arbitration agreement shall be invalid.

For instance, there are three arbitration institutions in Shanghai, that are “China International Economic and Trade Arbitration Commission (CIETAC) Shanghai Sub-Commission”, “Shanghai International Arbitration Center (SIAC)”, and “Shanghai Arbitration Commission (SAC)”. If the arbitration clause stipulates that “Any dispute arising from or in connection with this Contract shall be submitted to the arbitration commission in Shanghai.” And one party applied for arbitration to SIAC, while the other filed an objection to jurisdiction to the court on the ground of invalid arbitration clause, claiming that SIAC has no jurisdiction in this case because it is not clearly named among the three arbitration institutions located in Shanghai and therefore the opposing party is entitled to submit the case to court. Since the parties cannot agree upon the choice of the arbitration institution (one party submits the case to SIAC while the other files objection to court to invalidate the arbitration clause), the court will hold that the arbitration clause is invalid because of unclear designation of arbitration committee.

A model arbitration clause looks  this:

”Any dispute arising from or in connection with this Contract shall be submitted to China International Economic and Trade Arbitration Commission (CIETAC) Shanghai Sub-Commission for arbitration which shall be conducted in accordance with CIETAC's arbitration rules in effect at the time of applying for arbitration. The arbitral award is final and binding upon both parties.”

II. Unforeseeability should not be a deciding factor in carrier exemption of natural disasters and marine perils

Article 51 of PRC Maritime Law provides that, “the carrier shall not be liable for the loss of or damage to the goods occurred during the period of carrier responsibility arising or resulting from natural disasters and perils, dangers and accidents of the sea or other navigable waters”, which incorporates two of carrier exemptions - “(c) Perils, dangers and accidents of the sea or other navigable waters; and (d) act of God” - from Article 4 of International Convention for the Unification of Certain Rules of Law relating to Bills of Lading ("Hague Rules") into one (hereinafter referred to as “Natural Disasters and Marine Perils”).

To establish a defense of carrier exemption under Natural Disasters and Marine Perils, there are two standpoints regarding the requirement of unforeseeability. U.S. courts and Canadian courts emphasize that the marine peril has to be unforeseeable and cannot be guarded. Un U.S. courts and Canadian courts, Australian courts hold that foreseeability is only relevant in determining ship navigability, ship management obligations and reasonable lashing, while it is irrelevant in determining whether the marine weather condition constitutes Natural Disasters and Marine Perils.

In current Chinese maritime judicial practice, most cases adopted the first view,  PRC courts considered Natural Disasters and Marine Perils as equivalent to Force Majeure exemption.

However, in a 2014 case published by Shanghai Maritime Court as exemplary case, Shanghai Maritime Court hold that: (1) To dispute over sea cargo transportation contract, Natural Disasters and Marine Perils exemption under Article 51 of Maritime Law shall apply over Force Majeure under Contract Law. (2) The severe maritime condition caused by Typhoon Muifa, as the main cause of the cargo damage, that the ship “Yulee” enered was normal maritime risk and should be considered Marine Peril in the nature of Natural Disaster. Therefore, the carrier shall be exempted from liability for the loss caused thereby.

Starting with this case, Chinese courts are taking the second viewpoint which does not consider unforeseeability a requirement in examining carrier exemption of Natural Disasters and Marine Perils, and is more consistent with the history and original text of Hague Rules.

III. Judicial Interpretation of Judicial Review of Arbitration

On 26 December 2017, the Supreme People’s Court promulgated “Provisions of the Supreme People’s Court on Several Issues relating to the Hearing of Cases Involving Judicial Review of Arbitration” which was deliberated and adopted by the plenary session of the Judicial Committee on 4 December 2017 (“Judicial Interpretation of Judicial Review of Arbitration”).

This Judicial Interpretation of Judicial Review of Arbitration, in consideration of unifying regulatory standards and equal protection of the parties' lawful rights and interests as well as for avoiding different treatments for same cases, regulates issues arising in the hearing of cases involving judicial review of arbitration, on which there are either no clear provisions or inconsistencies in current civil procedure law. These issues concerning arbitration judicial review cases include the types of cases, admissibility, jurisdiction, application of law, examination procedures, and other specific legal application issues.