Guiding case a special example on time limits for foreign arbitral award enforcement

On 18 December 2014, the Supreme People’s Court (SPC) released guiding case no. 37, “A case on the reconsideration on the enforcement of an arbitral award: Shanghai Jwell Machinery Co v Retech Aktiengesellschaft”.

While the Shanghai Municipal Higher People’s Court did not strictly tabulate the time limit for enforcing the foreign arbitral award in China per stipulations on the time limit for award enforcement in the Civil Procedure Law in the case, the SPC affirmed and encouraged the Shanghai court’s stance.

Case background

The China International Economic and Trade Arbitration Commission (CIETAC) reached an arbitral award in a contract dispute between Shanghai Jwell Machinery Co and Retech Aktiengesellschaft on 18 September 2006.

After the foreign arbitral award went into effect, Jwell applied to the Swiss local court for recognition and enforcement of the award. However, the Swiss court rejected Jwell’s application on account that the documents submitted did not satisfy the relevant statutory requirements.

On 30 July 2008, Jwell discovered that Retech had enforceable property in Pudong New Area, Shanghai, and therefore applied to the Shanghai Municipal No. 1 Intermediate People’s Court for recognition and enforcement of the arbitral award. The court enforced the award, seizing Retech’s property the same day the filing was made.

Retech raised an objection against Jwell’s application to enforce on the grounds that the two-year time limit for enforcement had already passed. Retech requested that the intermediate court not accept the case, lift the seizure and halt enforcement of the arbitral award.

After hearing the case, the intermediate court overruled Retech’s opposition to the enforcement. Retech appealed the decision to the Shanghai Municipal Higher People’s Court, but the court overruled the objection.

Efar Zhou is an associate of Martin Hu & Partners