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Arbitration Rules vs. Disputing Parties' Consensus

Time£º2017/08/22 17:26:27 View£º hits
Recently Shanghai No.1 Intermediate People¡¯s Court (¡°Shanghai Court¡±) refused to admit and enforce the arbitration award made by Singapore International Arbitration Centre (¡°SIAC¡±) because the arbitration process is not due.


The applicant (the foreign party) and the respondent (the Chinese party) entered into a purchase agreement and agreed that if there was any disputes in relation to or arising from the transaction or the agreement, the disputes should be submitted to and resolved by the SIAC in accordance with the then effective Arbitration Rules of SIAC as at present in force. The two parties also reached consensus that the arbitration tribunal should have three arbitrators.


On January 14, 2015, the applicant filed an arbitration application against the respondent due to the disputes occurred during the performance of the purchase agreement, and applied for the arbitral proceedings to be conducted in expedited procedure. Respondent objected and thought there should be three arbitrators in the tribunal. On March 3, 2015, SIAC noticed each party that the president of the SIAC would appoint a sole arbitrator to deal with the case. On August 26, 2015, the arbitrator made the final award. Then the applicant applied for the recognition and enforcement of this arbitration award to Shanghai Court. 


According to Shanghai Court, the ¡°expedited procedure¡± in the SIAC Arbitration Rules didn¡¯t exclude the adoption of other patterns of tribunal formation beyond sole arbitrator, nor did the SIAC Arbitration Rules stipulate that the ¡°sole arbitrator stipulation¡± would prevail over disputing parties¡¯ agreements; thus, the agreement between the applicant and the respondent is valid and a tribunal of three arbitrators shall be formed. According to United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (¡°Convention¡±),

¡°Recognition and enforcement of the award may be refused, at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that: ¡­The composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where the arbitration took place;¡±


Shanghai Court refused to admit and enforce the arbitration award in accordance with the Convention cited above.


Shanghai Court¡¯s adjudication is reasonable. Arbitration is to resolve the disputes, and the autonomy principle is the base in the arbitration system. During the arbitration, the tribunal should respect the disputing parties¡¯ consensus rather than merely obeying its own rule. No matter in an arbitration or a lawsuit, when the process is not due, each litigant shall bring up their objections directly, positively and promptly in order to safeguard their legitimate procedural rights.