Statutory mechanisms in the People’s Republic of China govern the setting aside of foreign-related arbitral awards based on procedural grounds defined in the Civil Procedure Law. This provision, known as article 70 prc arbitration law, permits a competent intermediate people’s court to set aside a foreign-related award if the party applying for the setting aside proves specific procedural flaws. The scope of review under this article is narrower than that for domestic awards, as it excludes substantive issues such as the sufficiency of evidence or the application of domestic law.
It ensures that foreign and domestic parties engaged in cross-border trade can rely on the finality of their arbitral agreements while retaining a shield against serious procedural injustice. The judicial authority cannot re-examine the facts or the merits of the underlying dispute, which preserves the international standard of non-intervention in arbitral proceedings.
The application of this specific legal provision depends entirely on the presence of a foreign element in the underlying commercial dispute or the arbitration itself. This foreign element may arise when one or more of the parties are foreign individuals, enterprises, or organizations, or when the legal facts that establish, modify, or terminate the civil relationship occur outside China. It also applies when the subject matter of the dispute is located in a foreign jurisdiction, making the entire relationship international in character.
Arbitration commissions established within China that handle these cases must follow specific foreign-related rules, which are subject to different judicial oversight than purely domestic proceedings. The distinction between domestic and foreign-related awards is critical because the grounds for setting aside a foreign-related award are strictly procedural and do not include the domestic ground of insufficient evidence.
The judicial assessment of a foreign-related award under this framework is confined to the procedural requirements listed in the Civil Procedure Law. The reviewing court will examine whether the parties had a valid arbitration agreement and whether the applicant received proper notice of the appointment of arbitrators or the progress of the arbitration. It will also verify if the applicant was given an opportunity to present their case and whether the composition of the tribunal or the arbitral procedure complied with the arbitration rules.
If the tribunal ruled on matters beyond the scope of the arbitration agreement or the authority of the commission, the court has the power to set aside the award. In practice, the courts maintain a pro-arbitration stance and will not invalidate an award for minor procedural irregularities that did not affect the outcome. This high threshold for judicial intervention protects the integrity of foreign-related arbitration in China.
When a party files a petition under this provision, the intermediate people’s court must conduct a rigorous review before issuing a final decision. Under the judicial review reporting system, if the intermediate court intends to set aside the foreign-related award, it must report its proposed ruling to the high people’s court for approval. If the high court agrees with the decision to set aside, it must submit the case to the Supreme People’s Court for a final determination.
This multi-tiered reporting chain ensures that no foreign-related award is set aside without the highest level of judicial scrutiny, preventing local protectionism and ensuring consistency across jurisdictions. If the court ultimately sets aside the award, the parties may conclude a new arbitration agreement or initiate litigation in a competent people’s court.
PRC lower courts cannot set aside foreign-related arbitral awards without mandatory prior approval from the Supreme People Court through a formal three-tier reporting chain.
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