The agreement stipulates that "China Arbitration Center" means China International Economic and Trade Arbitration Commission

Information originated from: Cai'an Law Firm

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In this case, the contract between the Chinese company and the Singapore company stipulated that the dispute should be submitted to the "China International Arbitration Center" (China Arbitration Center) for settlement, is this clause valid under PRC law? The Singapore High Court interpreted the arbitration clause from the intention of the parties, holding that the "China International Arbitration Center" (China Arbitration Center) agreed in the agreement between the parties should be understood as the China International Economic and Trade Arbitration Commission.

On 18 March 2022, the High Court of Singapore ruled in Re Shanghai Xinan Screenwall Building & Decoration Co, Ltd [2022] SGHC 58, holding that the "China International Arbitration Center" (China Arbitration Center) agreed in the agreement between the parties should be understood as the China International Economic and Trade Arbitration Commission.

Facts of the case

Shanghai Company A and Singapore Company B signed two contracts stipulating that Party A would supply Materials to Party B for the construction of the façade of a housing project in Singapore and the installation of a glass curtain wall for the same project. Both contracts contain the following arbitration clauses:

“Any dispute arising from or in relation to the contract shall be settled through negotiation. If negotiation fails, the dispute shall be submitted to China International Arbitration Center for arbitration in accordance with its arbitration rules in force at the time of submission.”

Chinese Translation: Any dispute arising out of or in connection with the contract shall be resolved through negotiation. If the negotiations fail, the dispute shall be submitted to the China International Arbitration Center for arbitration in accordance with the arbitration rules in force at the time of submission. (Chinese translation is not Chinese contract text)

The contract was drafted in both Chinese and English versions, and provided that in the event of any conflict of interpretation, the English version would prevail.

In a dispute arising from the performance of the contract between the two parties, Company A applied to the China International Economic and Trade Arbitration Commission for arbitration, and the arbitral tribunal ruled that Company B lost the case after trial. Company A applied to the High Court of Singapore for enforcement of the arbitral award and was approved by the High Court of Singapore, and Company B revoked the order of recognition and enforcement from the High Court of Singapore.

The focus of the dispute in this case: "China International Arbitration Center" should be understood as China International Economic and Trade Arbitration Commission

Company B claims that the "China International Arbitration Center" (China Arbitration Center) as stipulated in the agreement does not exist, and that in accordance with the provisions of Articles 16 and 18 of the Arbitration Law of the People's Republic of China, if the arbitration agreement does not stipulate the arbitration matters or the arbitration commission or the agreement is unclear, the parties may supplement the agreement; If no supplementary agreement is reached, the arbitration agreement shall be invalid. Therefore, the arbitration agreement in this case is invalid.

Judge Philip Jeyaretnam held that the English version of the contract took precedence over the Chinese text, and the question in this case was whether the "China International Arbitration Center" (China Arbitration Center) agreed in the contract referred to the China International Economic and Trade Arbitration Commission in this case. Pursuant to Insigma Technology Co Ltd v Alstom Technology Ltd [2009] 3 SLR(R) 936 before the Court of Appeal of Singapore, the arbitration agreement should be construed like any other commercial agreement in order to give effect to the intention objectively expressed by the parties therein. The principle of effective interpretation in arbitration law is to strive to make arbitration clauses effective and enforceable, thereby promoting and protecting the autonomy of the parties. Gary Born also notes on pages 775-776 of his book International Commercial Arbitration (Kluwer Law International, 2nd Ed, 2014):

If the parties have indicated their intention to resolve the dispute through arbitration and not otherwise, that intention should be given effect; （If the parties have evinced an intention to resolve their disputes by arbitration, as opposed to by other means, then that intention should be given effect; it constitutes an agreement to arbitrate and defects or uncertainties in the implementation of this agreement should not preclude its enforcement. Along this line, courts in almost all jurisdictions have shown a clear willingness to ignore or minimize imperfections in the parties' arbitration agreements, to extrapolate missing clauses and/or to adopt liberal interpretations to supplement missing clauses or to reconcile clearly inconsistent clauses.

The judge held that the starting point of this case was that the parties did intend to resolve their dispute through arbitration, conduct arbitration in China, and be managed by an institution they called the "China International Arbitration Center". The parties did not choose a non-existent body to administer their arbitration. Rational business parties would not deliberately choose an institution that does not exist, just as they could not virtually use a state as a seat of arbitration. The parties did not adopt the official name or abbreviation of THEC CHINA International Economic and Trade Arbitration Commission in the arbitration agreement, but this does not mean that they did not express their common intention to choose CIETAC as the arbitration institution. Considering that the main text is the English text, the agreement uses the first two words in the CITETAC name, namely "China" and "International". They also used another word in the CIETAC name, "arbitration." The agreement omits two other words in the CIETAC name, namely "economic" and "trade". Finally, they used the word "center" instead of the "committee" in the CIETAC name.

The Court noted that Company B's opinion listed five major arbitral institutions in China. The first is the China International Economic and Trade Arbitration Commission, while the remaining four are the Shenzhen Court of International Arbitration, the Beijing International Arbitration Center, the Shanghai International Arbitration Center and the China Maritime Arbitration Commission. Three of the four institutions don't even have the key national name "China," instead adopting the name of the city. The judge therefore found that it would be possible to conclude without hesitation that none of the three institutions embodied the intent of the parties to choose. The fourth agency did use the term "China", but it was modified by the word "maritime". It is fair to say that business people will not agree to use a maritime arbitration body to resolve non-maritime disputes.

Therefore, the judge held that when the agreement stipulates "China International Arbitration Center", the parties actually agree on the China International Economic and Trade Arbitration Commission. The name used in the arbitration agreement is inaccurate and does not invalidate the parties' consent to arbitration or the choice of the China International Economic and Trade Arbitration Commission.

Company B also provided the Zhejiang Provincial Higher People's Court's (2016) Zhejiang Min Zhong Zi No. 278 Civil Ruling, namely the second-instance ruling in the dispute between Shennong Resources Co., Ltd. and Ningbo Cimei International Trade Co., Ltd. over the international goods sale contract. In this case, the agreement stipulated that the dispute should be submitted to the "China International Arbitration Center" for arbitration, and the courts of first and second instance held that the agreed arbitration institution should not be understood to refer to the China International Economic and Trade Arbitration Commission, and the arbitration clause was invalid because the agreed arbitration institution did not exist.

The judge held that the above-mentioned PRC court ruling does not mean that any arbitration clause under PRC law that chooses "China International Arbitration Center" is invalid. As under Singapore law, Chinese courts have also held that arbitration agreements should be contractually interpreted to determine whether the parties, although using the wrong name, objectively refer to a particular arbitral institution. In this case, the Chinese court concluded that after examining the parties' intentions, "it is impossible to deduce the specific arbitration institution". In this case, the judge examined the parties' intentions and concluded that the objective intention of the parties to the contract was that their disputes should be submitted to the China International Economic and Trade Arbitration Commission.

Caian analysis

Article 1 of the Arbitration Rules of the China International Economic and Trade Arbitration Commission, which came into effect on November 4, 2014, stipulates that: (1) The China International Economic and Trade Arbitration Commission (hereinafter referred to as the "Arbitration Commission"), formerly known as the Foreign Trade Arbitration Commission of the China Council for the Promotion of International Trade and the Foreign Economic and Trade Arbitration Commission of the China Council for the Promotion of International Trade, shall also use the name of "Arbitration Court of the China Chamber of International Commerce". (2) Where the parties stipulate in the arbitration agreement that they will be arbitrated by the China Council for the Promotion of International Trade/China Chamber of International Commerce, or by the Arbitration Commission or the Court of Arbitration of the China Council for the Promotion of International Trade/China Chamber of International Commerce, or if the arbitration institution is originally named by the Arbitration Commission, they shall be deemed to have agreed to arbitration by the China International Economic and Trade Arbitration Commission. Previously, cai'an arbitration | Summary of Judicial Views: The article "China Chamber of International Commerce Arbitration Court" agreed to determine the validity of arbitration clauses of "China Chamber of International Commerce Arbitration" takes "China International Chamber of Commerce Arbitration Court" as the keyword, and obtains four relevant results through search and data collection.

In particular, the Fujian Provincial Higher People's Court (2020) Min Min Zhi Zhong No. 112 Civil Ruling, in which the arbitration agreement stipulates that if the dispute cannot be resolved through negotiation, it may be submitted to the China International Trade Arbitration Center for arbitration in accordance with the International Arbitration Rules, and the place of arbitration is Beijing. The Fujian Higher Court of the Court of Second Instance found that the arbitration institution agreed upon by the two parties was "China International Trade Arbitration Center", which was not completely consistent with the names of the three existing arbitration institutions in Beijing, but from the three keywords of "China", "international" and "trade", it can be determined that the two parties should point to "China International Economic and Trade Arbitration Commission". See cai'an arbitration | fujian high court case: the agreement to submit to the "China International Trade Arbitration Center" should be understood as a reference to CIETAC. The idea of this case is similar to the above-mentioned fujian higher people's court's ruling, which is a typical case of transnational judicial dialogue and also reflects the friendly position of the Singapore court in support of arbitration.

About the Author:

Ye Wanhe

Managing Partner of Cai'an

Mr. Ye Wanhe, managing partner of Cai'an, holds the qualification of Royal Chartered Surveyor (MRICS), national first-class registered construction engineer and construction economist; industry training expert of China Foreign Contractors Association, core member of the draft "PPP Law" of the National Development and Reform Commission, expert of the PPP expert database of the National Development and Reform Commission, and arbitrator of the China International Economic and Trade Arbitration Commission.