I. International Business Identification

Name of case ×× Household Appliances (Group) Co., Ltd. and×××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××

The first applicant XX Household Appliances (Group) Co., Ltd. signed a contract with the second applicant XX Factory with the number of 89 mssc 00 1- People's Republic of China (PRC) and the respondent XX Co., Ltd. had an arbitration clause in the contract, so the applicant submitted it to the China International Economic and Trade Arbitration Commission on March 28th 1997, which accepted it. The respondent submitted the Objection to Arbitration Jurisdiction on May 8, 1998. The reasons are as follows: According to Article 2 of the Arbitration Rules [1], non-international or foreign-related economic and trade disputes between legal persons and/or natural persons in China are not within the arbitration jurisdiction of the Arbitration Commission. All three parties in this case are legal persons in China, and the contract is just a general contract for the sale of goods. The contract was signed and performed in China, and there were no foreign factors. Therefore, disputes between the applicant and the respondent related to or caused by the sales contract are not within the arbitration jurisdiction of the Arbitration Commission, and the arbitration clause of the contract is invalid. The first applicant's reply to the objection to jurisdiction stated that according to Article 7 of the Arbitration Rules, if any party agrees to submit the dispute to the Arbitration Commission for arbitration, it shall be deemed as agreeing to arbitration in accordance with these Arbitration Rules. Both parties have signed an arbitration clause in the contract, which is enough to conclude that both parties agree to arbitration in accordance with the arbitration rules, so the arbitration commission has jurisdiction. After reviewing the contract and related materials, the Arbitration Commission believes that all three parties to the contract in this case are legal persons in China, but there are still foreign-related factors in the contract, which is a foreign-related arbitration case.

legal question

1. How to identify the concepts of "internationality" and "commerce" in international commercial arbitration?

2. Are there any foreign factors in this case?

case analysis

In this case, there is a question of what criteria are used to judge the internationality of commercial arbitration. Many countries strictly distinguish between international arbitration and domestic arbitration. The criteria for judging internationality in arbitration legislation of various countries and relevant international conventions are as follows: 1) If a single domicile or habitual residence is taken as the connecting factor and at least one party's domicile or habitual residence is not in China, it is international arbitration. 2) With a single nationality as the connecting factor, if at least one party's international nationality is non-national, it is international arbitration. 3) Taking the related factors such as nationality, domicile, place of performance of the contract and location of the subject matter as the defining criteria, as long as one of the related factors is not in China, it is international arbitration. 4) The business places of both parties to the dispute are located in different countries other than the country where the sole business places of both parties to the arbitration are located. 5) Take the nature of the dispute as the standard. Although there are differences in standards, the overall development tends to be extensive. Generally speaking, they will meet one of the above criteria, and they will be considered international.

China introduced the concept of foreign arbitration into the Arbitration Law of People's Republic of China (PRC). Chapter VII "Special Provisions on Foreign-related Arbitration" Article 65 stipulates that the arbitration of disputes arising in foreign-related economic and trade, transportation and maritime affairs shall be governed by the provisions of this chapter, and other relevant provisions of this law shall apply if there are no provisions in this chapter. Article 260th of the Civil Procedure Law of People's Republic of China (PRC) uses the concept of "award made by foreign-related arbitration institutions", but in practice, the judgment of the people's court on foreign-related arbitration is not based on whether the award was made by foreign-related arbitration institutions, but according to the provisions of Article 178 of the Supreme People's Court's Opinions on Several Issues of Implementation (Trial): All cases involving civil relations, The object of civil relations is overseas; The legal facts of creating, changing and eliminating civil rights and obligations are all foreign-related civil relations when they occur in foreign countries. Arbitration involving Hong Kong, Macao and Taiwan should also refer to foreign arbitration.

In China, the provisions on revocation and non-enforcement of arbitral awards have different meanings in distinguishing foreign-related arbitration from domestic arbitration. Comparatively speaking, the requirements for revocation and non-enforcement of domestic arbitral awards are more stringent, and not only procedural issues but also substantive issues should be examined.

In this case, whether it is a foreign-related arbitration case or not, the respondent thinks that there is no foreign-related factor in the contract. The applicant thinks that Article 7 of the Arbitration Rules should be applied, but the Arbitration Commission finds that there are foreign-related factors. The reason is that the trade term used in the contract is CIF. The contract stipulates that the price composition of CIF is FOB American price+freight+insurance premium. On the surface, the port of shipment of the goods is in the United States, that is, the place of performance of the contract in this case is the United States. The arbitration commission shall be subject to the provisions of Article 304 of the Opinions on Several Issues concerning the Implementation (Trial): a civil case involving the establishment, alteration or termination of a civil legal relationship between the parties occurs in a foreign country, or the object of litigation is in a foreign country, which is a foreign-related civil case. Combined with the provisions of article 178, it is determined that this case belongs to a foreign-related economic and trade dispute between legal persons and/or natural persons in China, which conforms to the provisions of Article 2 of the Arbitration Rules (1995 10 1) on the scope of accepting cases by the arbitration commission, and the respondent's jurisdictional objection is rejected. The applicant's reasons are debatable. Article 7 of the Arbitration Rules only applies to the arbitration rules and cannot prove the jurisdiction of the Arbitration Commission. The arbitration commission did not adopt the applicant's reasons in its jurisdiction decision.

It is worth noting that the current arbitration rules came into effect on May 1 2005, which stipulated that domestic arbitration cases should be accepted. Therefore, if the case occurs now, the arbitration commission will certainly have jurisdiction over the case, and the respondent will not raise any jurisdictional objection because the case has no foreign factors.

In addition, the definition of international commercial arbitration is controversial, but most countries adopt a broad interpretation. Paragraph 3 of Article 1 of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards concluded in 1958 stipulates that any contracting state may declare that "this Convention is only applicable to disputes arising from legal relationships that are commercial in nature according to its domestic laws, regardless of whether the legal relationships are contractual." The commercial reservation statement made by China when it acceded to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards on 1986, China only applies the Convention to disputes arising from commercial legal relationships that are recognized as contracts or non-contracts according to China laws.

Second, the effective elements of the arbitration agreement

The name of the case is ×××× Private Limited Company and ×××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××

Case introduction

The applicant ×××× Private Limited Company and the respondent ××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××××× The arbitral award is final and binding on both parties.

In this regard, the applicant submitted an arbitration application to China International Economic and Trade Arbitration Commission on March 3, 20 10, demanding the respondent to pay the arrears. The defendant raised an objection to jurisdiction on the grounds that there was no trade contract between the defendant and the applicant. The signature and seal of the buyer in the contract No.97-Bax-24 submitted by the applicant is the true behavior of the respondent, but after the respondent faxed the blank offer of the buyer to the applicant, the applicant failed to reply to the respondent. In the other three contracts, the respondent faxed the offer to the applicant, and the applicant did not get a reply. The contract is not the true intention of both parties, and the arbitration clause in it is not binding on both parties. In addition, the respondent has no import and export rights. According to China's relevant foreign trade laws, the respondent is not qualified to sign contracts and cannot operate and perform four contracts.

The applicant then submitted two pieces of evidence: it proved that the respondent wrote to the applicant on February 9 1997, saying that the cash flow was difficult, and the arrears could only be paid to the applicant at the end of April 1998; 1On May 27th, 998, the respondent sent a letter to the applicant, reconfirming the fact that the amount owed was $64,699. The arbitration commission believes that there is a contractual relationship between the two parties and the respondent has the right to sign an arbitration agreement. Therefore, the arbitration clause in the contract is valid and the arbitration commission has jurisdiction.

legal question

1. What are the valid elements of an arbitration agreement?

2. What is the impact of signing on the arbitration clause in this case? How do the relevant conventions and Chinese laws and judicial interpretations stipulate this issue?

case analysis

This case involves the valid elements of an arbitration agreement, that is, the basic conditions that an effective arbitration agreement must have. Generally speaking, it mainly includes three issues: the form of the arbitration agreement, the qualifications of the parties to the arbitration agreement, and the arbitrability of the disputed matters.

International commercial arbitration agreement must be in written form, which has been accepted as a unified requirement by modern international arbitration law. The arbitration laws of most countries stipulate that the arbitration agreement must be made in writing. For example, Article 5 of the Arbitration Law of the United Kingdom 1996 stipulates that the provisions in this part only apply to the case that the arbitration agreement is in written form. 1958 article 2 of the new york convention stipulates that the arbitration agreement shall be in written form, which is one of the conditions for the state party to recognize and enforce the arbitral award. China's Civil Procedure Law 199 1 and Arbitration Law 1994 require that the arbitration agreement must be in written form. However, for the interpretation of "written", national legislation and international conventions are not completely consistent. The new york Convention stipulates that a written arbitration agreement includes: an arbitration clause or an arbitration agreement signed by the parties; An arbitration clause or arbitration agreement written in correspondence and telegrams, even though the parties have not signed it directly. At present, the interpretation of written meaning in various countries is becoming more and more flexible and broad. In this case, the arbitration clause exists in the contract, but there are differences on whether the contract is reached, which directly affects the existence of the arbitration clause. For the first contract, the buyer has the signature and seal of the respondent. Although the buyer's office of the last three contracts was not signed or sealed by the respondent, the respondent admitted that it owed the applicant $64,669 for the transaction when writing to the applicant on February 9 1997 and May 27. The correspondence between the two parties confirms the existence of the contractual relationship between the two parties, so both parties also acknowledge the existence of arbitration clause in the contract, which, as a part of the contract, is binding on both parties. Article 16 of the Arbitration Law stipulates that the arbitration agreement includes the arbitration clause in the contract and the arbitration agreement reached in other written forms before or after the dispute occurs. "Other written forms" include but are not limited to letters, faxes and telegrams exchanged between the two parties. In this case, the two parties reached a contract in the form of contract documents and correspondence, which also met the requirements of the written form of the arbitration agreement. Therefore, the respondent's first reason cannot be established.

The ability of the parties to the arbitration agreement is also one of the effective elements to determine the validity of the arbitration agreement. According to the general view of the international community, all actions of a person without capacity are legally invalid. Therefore, one or both parties to the arbitration agreement have no capacity when concluding the arbitration agreement, and the concluded arbitration agreement is invalid. Generally speaking, the ability of the parties to conclude an arbitration agreement should be determined according to the conflict laws of each contracting state, except for relevant international treaties, and the personal laws of the parties should usually apply. The second objection of the respondent in this case is that the respondent has no import and export rights and does not have the subject qualification to sign a contract. The Arbitration Commission believes that the import and export right is only related to the validity of the contract, and does not affect the respondent's ability to sign an arbitration agreement with the other party as an equal subject. In other words, the respondent, as a legal person with full capacity for civil rights and full capacity for civil conduct, has the right to sign an arbitration agreement even if the respondent has no right to sign a foreign trade contract because he does not have the right to operate the import and export business. Therefore, the respondent's second defense cannot be established, and the arbitration clause in this case is valid.

The matters agreed in the arbitration agreement to be submitted for arbitration must be those allowed by the laws of the countries concerned. Article 3 of China's Arbitration Law stipulates that disputes over marriage, adoption, guardianship, maintenance and inheritance, as well as administrative disputes that should be handled by administrative organs according to law, cannot be arbitrated. Other countries generally stipulate that matters involving marriage, family and inheritance, as well as matters that are considered to belong to public interests and social interests, cannot be submitted for arbitration. If the agreed matters are not arbitrable in the laws of the relevant country, the court of that country will rule that the arbitration agreement is invalid, and will order the execution of the arbitration agreement or refuse to recognize and enforce the arbitration award made according to the arbitration agreement. Therefore, generally speaking, when concluding a qualified arbitration agreement, the parties should at least consider the laws of the place of arbitration and the place where the award may be recognized and enforced, and must comply with the relevant provisions of these two laws on arbitrability. Otherwise, if the former is violated, the arbitration agreement is invalid and the arbitration procedure cannot be carried out in that country; In violation of the latter, the arbitral award made cannot be recognized and enforced by the country.

On this basis, the Arbitration Commission believes that the arbitration clause in this case has the necessary elements for substantive entry into force.

[1] The arbitration rules here shall refer to the arbitration rules revised by1September 4, 1995 and implemented on1May 1998 10. It is stipulated that the arbitration rules applicable to cases accepted by the Arbitration Commission and its sub-branches before the implementation of these arbitration rules are still applicable; These arbitration rules can also be applied if both parties agree. Both rules exclude the acceptance of domestic cases from the scope of acceptance.