China SPC publishes regulations on recognition and enforcement of Taiwan awards

The Supreme People's Court of the People's Republic of China (the "SPC") recently released statistics on cases handled by the PRC courts under the Cross-Straits Joint Crime Combating and Mutual Legal Assistance Agreement (海峡两岸共同打击犯罪及司法互助协议) (the "Agreement") since it entered into force in June 2009. The SPC has also published new regulations, consolidating and revising the old judicial regulations on recognition and enforcement of Taiwan civil judgments and arbitral awards. These include the Regulations on the Recognition and Enforcement of Arbitral Awards of the Taiwan District (the "Arbitral Awards Enforcement Regulations") and the Regulations on the Recognition and Enforcement of Civil Judgments of the Courts of the Taiwan District (the "Civil Judgments Enforcement Regulations") (together, the "Regulations"), which came into effect on 1 July 2015.

The Agreement, signed in 2009, was the first agreement between mainland China and Taiwan setting out comprehensively, and at a high-level, the legal framework for cross-straits mutual legal assistance. The areas for legal assistance under the Agreement include service of legal documents, investigation and evidence collection, transfer of criminal suspects and proceeds and recognition and enforcement of civil judgments and arbitral awards. Since 2009, the number of cases handled by the PRC courts under the Agreement has increased substantially, from 1,200 in 2009 to 10,678 in 2014. Specifically, in respect of recognition and enforcement of civil judgments and arbitral awards, the PRC courts dealt with 29 cases in 2009, rising to 74 in 2014. Between June 2009 and May 2015, PRC courts handled a total of 335 cases of this type (although the statistics do not distinguish between cases concerning enforcement of arbitral awards and cases concerning enforcement of civil judgments).

The SPC has in the past issued a number of judicial regulations on recognition and enforcement of Taiwan civil judgments and arbitral awards, including the SPC Provisions on the Recognition of Civil Judgments of the Courts of the Taiwan District (the "Provisions") and the SPC Supplementary Provisions on the Recognition of Civil Judgments of the Courts of the Taiwan District (the "Supplementary Provisions") (both of which have been replaced by the Regulations). The Provisions and the Supplementary Provisions, however, do not make any distinction between enforcement of arbitral awards and enforcement of civil judgments. For example, the Provisions were designed mainly for recognition and enforcement of civil judgments.

The Arbitral Awards Enforcement Regulations were therefore the first judicial regulation specifically focused on enforcement of arbitral awards. Although similar to the Civil Judgments Enforcement Regulations in many respects, they also contain provisions specifically designed for arbitral awards.

Key aspects of the Arbitral Awards Enforcement Regulations include: 

• Different procedures for the recognition of Taiwan arbitral awards and their enforcement. The two procedures may be initiated at the same time; however, an arbitral award will not be enforced until it has been recognised (Article 3). 
• Additional courts competent to hear applications to recognise and enforce Taiwan arbitral awards. An applicant may now apply to the intermediate people's court or, if appropriate, a special people's court (such as the maritime or railway transport court which is dedicated to specific types of cases), at its own domicile or habitual residence, the counterparty's domicile or habitual residence, or the place where the relevant assets are located. Under the Provisions, the applicant could apply only to the people's court at its own domicile or habitual residence or the place where the property is located. This amendment expands the number of PRC courts with jurisdiction over recognition and enforcement applications; in particular, the new provision offers more options to applicants who are not domiciled, and do not have a habitual residence, in mainland China (Article 4). 
• The applicant must submit evidence to prove the authenticity of the arbitral award. Under the Supplementary Provisions, the applicant was required to notarise and authenticate the judgment or award by itself before bringing the application, and PRC courts would not provide assistance. Under the Arbitral Awards Enforcement Regulations, if the applicant has no evidence as to the authenticity of the arbitral award, it may request the court to investigate the award, under the terms of the Agreement (Article 9). This simplifies the process of bringing a recognition and enforcement application. 
• The PRC courts may order interim measures within the scope of its authority provided under the Civil Procedure Laws and relevant judicial interpretations (such as freezing orders) before or after accepting an application to recognise or enforce a Taiwan award (Article 10). 
• Applications for recognition of Taiwan arbitral awards appear to be subject to the SPC reporting system. Where a local court intends to refuse recognition, it is required to refer the case to the SPC for a final decision. The PRC courts must either recognise the award within two months from the date of acceptance of the application, or, if minded to refuse recognition, report the case to the SPC within the same two month period (Article 13). 

The grounds on which PRC courts may refuse recognition of a Taiwan award are similar to those in Article V of the New York Convention. In addition, PRC courts must refuse recognition if such recognition would be contrary to the "One-China Principle", under which Taiwan and the mainland are deemed inalienable parts of a single China (Article 14).

The Arbitral Awards Enforcement Regulations look set to streamline and improve the process for enforcing Taiwanese awards on the mainland. As such, their publication is to be welcomed as a positive development in judicial relations between mainland China and Taiwan.

For further information, please contact Jessica Fei, Partner, Brenda Horrigan, Partner, Weina Ye or your usual Herbert Smith Freehills contact.