In August 2020, Guangzhou Intermediate People’s Court of China (“Guangzhou Intermediate Court”) rendered a ruling in Brentwood Industries v. Guangdong Fa-anlong Mechanical Equipment Manufacture Co. Ltd. (2020) (“Brentwood Case”) concerning an application for recognition and enforcement of the arbitral award. According to the ruling, the arbitral award rendered by the International Court of Arbitration of the International Chamber of Commerce (ICC) in Guangzhou was a foreign-related Chinese award and shall be applied for enforcement in accordance with China’s Civil Procedure Law rather than the New York Convention.

This is the first time of China to consider an arbitral award rendered in mainland China by a foreign arbitral institution as a Chinese arbitral award. Previously, Chinese courts either determined the arbitration agreement invalid or considered it as a foreign arbitral award.

China is welcoming foreign arbitral institutions to arbitrate in China, and the Case has cleared the way for this trend. However, this also indicates that arbitrators and parties need to learn in advance how Chinese courts review Chinese arbitral awards.

I. Facts

Brentwood Industries Co. Ltd. (“Brentwood”), Guangdong Fa-anlong Mechanical Equipment Manufacture Co. Ltd, and Guangzhou Zhengqi Trade Co. Ltd. entered into the Sale Contract of Construction Equipment and its supplementary agreements in 2010. The parties agreed in the contract that any dispute should be submitted to ICC Arbitration Commission and settled by arbitration at the place of project (Guangzhou) according to international usages. Chinese law should be the applicable law for the contract.

In May 2011, Brentwood applied to Guangzhou Intermediate Court for invalidating the involved arbitral clause. In February 2012, Guangzhou Intermediate Court rendered a ruling, verifying the validity of the arbitral clause.

In August 2012, Brentwood filed an arbitration application with the International Court of Arbitration of the ICC.

In March 2014, Jane Willems, the sole arbitrator of the International Court of Arbitration of ICC rendered the final award No. 18929/CYK in Guangzhou.

In April 2015, Brentwood applied to the Guangzhou Intermediate Court to recognize the arbitration award as a foreign award or a Hong Kong award in accordance with the New York Convention.

On 6 Aug. 2020, Guangzhou Intermediate Court rendered a final ruling.

II. Ruling

Guangzhou Intermediate Court determined that the arbitral award was rendered by a foreign arbitral institution in Mainland China, and it could be considered as a foreign-related Chinese arbitral award, and thus Brentwood could apply for enforcement of the Chinese arbitral award in accordance with China’s Civil Procedure Law.

However, Brentwood proposed to apply for recognition and enforcement of the arbitral award based on the New York Convention or the Arrangements on the Reciprocal Enforcement of Arbitration Awards by Mainland China and the Hong Kong Special Administrative Region (《关于内地与香港特别行政区相互执行仲裁裁决的安排》) (if the award was deemed as the one rendered by ICC’s branch in Hong Kong). The legal basis of this application was obviously wrong. The court had given repeated explanations, yet Brantwood refused to correct it. Therefore, it should bear the corresponding legal consequences accordingly.

The Court indicated that, after the termination of review of this case, Brantwood may file a new application for enforcement according to law.

The Brantwood Case provides an answer to China’s exploration of the issue concerning arbitration conducted by foreign institutions in China.