In the case of Application for Determining the Validity of an Arbitration Agreement by Jiangsu Jinxia Construction Group Co., Ltd. , the parties agreed that “if disputes arise, the parties may negotiate to resolve the disputes, and if negotiation fails, either party may apply for mediation by the relevant departments; if mediation fails, the parties may apply for arbitration to the Jinzhong Municipality Arbitration Commission. If neither arbitration nor mediation works, the parties may file a lawsuit to the people’s court in the place where the contract is concluded”.

The court held that although the name of the arbitration commission agreed upon by the parties was inaccurate, there was only one arbitration commission in Jinzhong. Pursuant to the literal understanding and common sense, it could be ascertained that the arbitration institution agreed upon by the parties was Jinzhong Arbitration Commission. With respect to the dispute resolution, a clear order is followed, i.e. arbitration should be resorted to first before litigation, instead of “either arbitration or litigation”, which is not in conformity to the circumstances of “either arbitration or litigation” provided in Article 7 of the Judicial Interpretation of the Arbitration Law. Thus, the court rejected the applicant’s challenge to validity of the arbitration clause.