Are monopoly disputes arbitrable in China?

In its final judgment in a case involving an objection to jurisdiction in a monopoly dispute between a Chinese company of a Fortune 500 company and its distributor, the Jiangsu Provincial Higher People’s Court held that where a monopoly dispute involves the public interest, and where Chinese laws are silent on whether such a dispute is arbitrable, the arbitration agreement between the parties cannot serve as the basis for determining jurisdiction.

This case has been called “the first case on whether a monopoly dispute is arbitrable” in China, and the Jiangsu court’s finding that a “monopoly dispute is not arbitrable” indicates that current Chinese judicial practice holds that monopoly disputes are not arbitrable. The authors, however, would question that whether a monopoly dispute is arbitrable in China should be analyzed on a case by case basis.

The Jiangsu court’s conclusion that a “monopoly dispute is not arbitrable” is closely tied to the background of the case. As counsel for the defendant in this case, the authors argue that the specific background of this case had a major impact on the court findings, e.g., such background factors as both of the parties to the dispute being Chinese companies, the arbitration institution specified in the arbitration clause being an arbitration institution in China, the disputed matters being limited to distribution matters in the relevant regions of China, etc. What was substantively and specifically discussed in this case was the issue of whether a Chinese arbitration institution could have jurisdiction in a contract dispute between Chinese entities in China that involves anti-monopoly.