Arbitrability of PPP Contract Disputes in China & Implications on Belt & Road Projects: Understanding the PRC Supreme Court’s Judicial Interpretation on Administrative Agreement Cases
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In China, the arbitrability of disputes arising out of PPP (Public-Private Partnership) contracts is a hotly debated question, especially in light of how the PPP model has been highlighted as an important policy tool to stimulate economic growth and institutional transformation. Meanwhile, under China’s Belt and Road Initiative, the arbitrability of disputes arising out of PPP contracts is not simply a Chinese domestic law issue. Can PPP contracts involving Chinese enterprises use arbitration seated in China as a mode of dispute resolution? According to Article V (2) of the New York Convention, arbitrability is based on the local laws of signatory states. If China takes the position that PPP contract disputes are non-arbitrable, international arbitration awards involving PPP contract disputes may not be recognized and enforced in China. After a long period of uncertainty, the PRC Supreme Court published a judicial interpretation on 10 Dec 2019, stipulating that PPP agreements “entered into by an administrative organ through consultation with a citizen, a legal person or any other organization that contains rights and obligations under administrative law in order to achieve the objectives of administrative management or public service” are classified as “administrative agreements”, and ensuing disputes would fall under the jurisdiction of administrative litigation. In light of this judicial interpretation, is there still room to argue in favour of arbitrability of PPP contract disputes in China? What would be theconsequences of this judicial interpretation which may affect international BRI projects? This paper aims to analyse the Supreme Court’s judicial interpretation and suggests possible areas for future reform.
Abstract
In China, the arbitrability of disputes arising out of PPP (Public-Private Partnership) contracts is a hotly debated question, especially in light of how the PPP model has been highlighted as an important policy tool to stimulate economic growth and institutional transformation. Meanwhile, under China’s Belt and Road Initiative, the arbitrability of disputes arising out of PPP contracts is not simply a Chinese domestic law issue. Can PPP contracts involving Chinese enterprises use arbitration seated in China as a mode of dispute resolution? According to Article V (2) of the New York Convention, arbitrability is based on the local laws of signatory states. If China takes the position that PPP contract disputes are non-arbitrable, international arbitration awards involving PPP contract disputes may not be recognized and enforced in China. After a long period of uncertainty, the PRC Supreme Court published a judicial interpretation on 10 Dec 2019, stipulating that PPP agreements “entered into by an administrative organ through consultation with a citizen, a legal person or any other organization that contains rights and obligations under administrative law in order to achieve the objectives of administrative management or public service” are classified as “administrative agreements”, and ensuing disputes would fall under the jurisdiction of administrative litigation. In light of this judicial interpretation, is there still room to argue in favour of arbitrability of PPP contract disputes in China? What would be theconsequences of this judicial interpretation which may affect international BRI projects? This paper aims to analyse the Supreme Court’s judicial interpretation and suggests possible areas for future reform.
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