I. Significance

China International Commercial Court (CICC) of China’s Supreme People’s Court (SPC) extends its jurisdiction from the listed scope to the judicial review of arbitration cases. More specifically, to review the validity of an arbitration agreement is not clearly listed in CICC’s jurisdiction scope. The court, therefore, invoked the catch-all clause to establish its jurisdiction on this case, i.e. “other international commercial cases that the Supreme People’s Court considers appropriate to be tried by the International Commercial Court”.

II. Case information

Applicant: Newpower Enterprises Inc. (新劲企业公司)

Respondent: Shenzhen Zhongyuan Cheng Commercial Investment Holdings Co., Ltd.(深圳市中苑城商业投资控股有限公司)

Cause of action: Application for determining the validity of an arbitration agreement

III. Case summary

Luck Treat Co., Ltd. (“Luck Treat Ltd.”) and its affiliates (including Newpower Enterprises Inc.) had disputes with Shenzhen Zhongyuan Cheng Commercial Investment Holdings Co., Ltd. (“Zhongyuan Cheng Ltd.”) on the establishment of an arbitration agreement.

Zhongyuan Cheng Ltd. applied to Shenzhen Court of International Arbitration for arbitration on the disputes arising from the three contracts. Prior to the arbitration tribunal’s first hearing, Luck Treat Ltd. and its affiliates filed three lawsuits in Shenzhen Intermediate Court respectively, requesting to confirm that the arbitration agreement was not established.

During the review by Shenzhen Intermediate Court, the SPC held that the three cases were of legal significance, and should be heard by the First International Commercial Court.

IV. Court decision

The SPC rendered decisions on the three cases separately, namely this case as in [2019] Zui Gao Fa Min Te No.2 ([2019]最高法民特2号), and the other two cases as in [2019] Zui Gao Fa Min Te No. 1([2019]最高法民特1号) and [2019] Zui Gao Fa Min Te No. 3([2019]最高法民特3号).

The court held that an arbitration agreement shall exist independently. The failure to establish a contract does not affect the validity of the arbitration agreement. The establishment of an arbitration clause mainly depends on whether the parties reach the consensus of submitting the dispute to arbitration, i.e. whether the agreement on arbitration has been reached.

The court, therefore, ruled that the arbitration agreement was effective, the parties should settle the disputes concerning the establishment of the contract by arbitration.