Meaning
A judicial mechanism before an intermediate people’s court allows a party to declare an arbitration award invalid or unenforceable due to specific statutory defects. These set aside proceedings must be initiated within six months of receiving the award. Under the PRC Arbitration Law, this process provides a check on the power of arbitration tribunals.
If the court finds that the award suffers from severe procedural or jurisdictional flaws, it will nullify the decision. This action releases the parties from the obligation to perform the award.
Filing Requirement
An applicant must submit a formal petition to the intermediate court of the municipality where the arbitration institution is located. The petition must specify the statutory grounds for the challenge and be accompanied by the arbitration agreement, the award, and supporting evidence. The filing party must pay court fees, which are calculated based on the complexity of the case.
Missing the six-month deadline results in the automatic dismissal of the application.
Review Mechanism
The court conducts a formal hearing where both parties can present arguments. During these hearings, the judges do not re-examine the commercial merits of the case but limit their review to procedural compliance. Under Chinese judicial practice, if the court intends to set aside a foreign-related award, it must report its findings to the Higher People’s Court for approval.
This internal report mechanism ensures consistency and prevents local protectionism.
Practical Recourse
If the court sets aside the award, the parties can renegotiate their contract or submit the dispute to court litigation. Alternatively, they can sign a new arbitration agreement to start a new proceeding. This option provides a pathway to resolve the dispute after the initial award is nullified.
