Tackling Local Protectionism in Enforcing Foreign Arbitral Awards in China: An Empirical Study of the Supreme People's Court's Review Decisions, 1995–2015

Abstract

In an effort to fight against local protectionism in court enforcement proceedings, China's Supreme People's Court (SPC) promulgated its “Notice on relevant issues pertaining to the people's court handling foreign and foreign-related arbitration” in 1995. Pursuant to this Notice, all Intermediate People's Courts have to report to the SPC and obtain its approval for any decision not to enforce a foreign or foreign-related arbitral award. However, the effectiveness of this internal reporting mechanism in constraining local protectionism has never been empirically tested. This study is based on 98 publicly available non-enforcement reply opinions rendered by the SPC after lower courts have made and reported preliminary non-enforcement decisions. It analyses whether these non-enforcement decisions show any pattern of local protectionism. Statistical results do not suggest that local protectionism is a major barrier hindering effective enforcement of foreign or foreign-related arbitral awards in China. We therefore contend that this internal reporting system may serve other functions by providing an alternative tool to reinforce judicial oversight in spite of China's weak appellant system. At the same time, the Chinese government seems to rely on this internal reporting system to achieve important policy goals. In this sense, analysing the functionality of this internal reporting system offers insights into this mechanism for top-level judicial control.