Alexandr Svetlicinii
Commercial arbitration has become the major dispute resolution venue for Chinese companies doing business abroad as well as for foreign enterprises in China. According to a 2022 survey carried out by CIETAC, 70% of the surveyed Chinese companies include arbitration clauses in their contracts with foreign counterparts, while 86% indicated their preference for out-of-court settlement of commercial disputes arising out of their overseas business activities. The nation’s highest court, the Supreme People’s Court (SPC), also supports and promotes commercial arbitration. In its 2015 Opinions on providing judicial services and safeguards for the construction of the Belt and Road Initiative (BRI), the SPC called upon people’s courts to “support the resolution of disputes by the Chinese and foreign parties through mediation, arbitration, and other non-litigation forms” as well as to “accurately comprehend and apply the New York Convention” when faced with requests for recognition and enforcement of foreign arbitral awards in China.
What if, however, a contract containing an arbitration clause also contains provisions that may be contrary to the Anti-Monopoly Law (AML), as they may implement anti-competitive agreements or abuse of market dominance? Can a determination regarding compliance or non-compliance with AML be determined by the arbitrator(s) in the context of arbitration proceedings prompted by a contract-related dispute? The Chinese lawyers frequently caution that there is no consensus as to the arbitrability of AML-related issues, and the parties should be prepared for a stand-off in court even if their contract contains an arbitration clause. Furthermore, there are observable traces of a litigation strategy to intentionally stall or delay arbitration proceedings by launching AML-based claims before a court and calling it to declare the respective contract invalid.
This discussion is quite timely, as China is in the process of revising its Arbitration Law in a bid to improve the credibility of the country’s arbitration system. Currently, competition law issues do not feature among either arbitrable or non-arbitrable matters listed in Arbitration Law. The 2021 draft amendments released by the Ministry of Justice in 2021 provided for the possibility to expand the range of arbitrable matters through other laws by adding the following provision: “Where the law provides that a party may institute civil proceedings in a people’s court, without clearly stating that the matter involved is not arbitrable, the arbitration agreement concluded by the parties which complies with the provisions of this [Arbitration] Law shall be valid”.
As the legislators discussed the possibility of expanding the list of arbitrable matters by adding investment, intellectual property, and anti-monopoly disputes, the Supreme People’s Court (SPC) moved in the opposite direction by stipulating that “if the plaintiff files a civil lawsuit in a people’s court in accordance with the Anti-Monopoly Law, and the defendant raises an objection on the grounds that there is a contractual relationship between the two parties and that an arbitration agreement has been established, it will not affect the acceptance of the civil monopoly dispute case by the people’s court” (2022 draft amendments to the 2012 Provisions on civil anti-monopoly disputes). Under these circumstances, the courts have developed an inconsistent judicial practice featuring divergent approaches towards the arbitrability of AML-related matters. The cases analyzed for the purposes of the present study revealed various factors affecting courts’ assessments of the scope of arbitration agreements and parties’ invocation of AML infringements in contractual disputes.
To address the aforementioned inconsistencies in judicial interpretations, enhance compliance with and private enforcement of AML, and encourage the alignment of China’s arbitration system with those of its major trading partners where arbitrability of competition matters is well recognized, the paper advances a call for conditional arbitrability of antitrust-related contractual disputes. First, it proposes to reflect the increased significance of AML in the amendments to the Arbitration Law by affirming the arbitrability of contractual disputes involving AML matters. Second, the paper calls upon the SPC to provide detailed guidance on substantive and procedural aspects to guide the courts in cases where AML-related questions arise in the context of contractual disputes covered by arbitration agreements. Third, the Arbitration Law should preserve the centralized system of judicial review concerning requests for setting aside or refusing recognition/enforcement of arbitral awards on public policy grounds. The proposal echoes the statement of the SPC Vice President, judge Tao Kaiyuan, who acknowledged in 2022 that “anti-monopoly disputes can be included in the scope of arbitration, but they should be treated in a classified manner, and only civil and commercial disputes should be submitted to arbitration”.
The paper Consensual settlement of competition disputes in China: a call for conditional arbitrability was published in the Asia Pacific Law Review. Alexandr Svetlicinii is Associate Professor at the University of Macau, Faculty of Law where he also serves as the Programme Coordinator of Master of Law in International Business Law. He is the author of the monograph Chinese State Owned Enterprises and EU Merger Control.