Beijing Financial Court: Unilateral selective arbitration clauses shall not be simply construed as "judgment or litigation" clause
Beijing Financial Court ruled over a foreign-related case that the agreement on unilateral selective arbitration clause is the result of consensus between the parties, as there is no prohibition by law the agreement shall not be constituted as a manifest unfairness of the rights and obligations of both parties, and the autonomy of both parties should be respected. Where the agreement is exclusive to the selection of the arbitration institution and has applied to the arbitration institution for arbitration, the right to initiate a lawsuit before the court has been expressly waived, the dispute resolution clause has therefore formed a definite and exclusive arbitration clause, which is not equivalent to "arbitration or litigation" clause, and shall be deemed valid.
Court rulings and grounds:
According to Article 7 of the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Arbitration Law of PRC if the parties agree that the dispute may apply to an arbitration institution for arbitration or file a lawsuit in a people's court, the arbitration clause shall be invalid. Therefore, the definition standard of the "adjudication or adjudication" agreement should be a parallel or selective agreement on the two dispute resolution methods of arbitration and litigation, and a jurisdictional dispute arises as a result. In this case, the arbitration clause in question was a unilateral selective dispute resolution clause, the nature of which depended on the choice of the parties to the agreement. The agreement in question did not violate the provisions of Article 6 of the Arbitration Law and the parties' selection of the arbitration institution through the agreement was unique, which did not fall under the circumstance of unclear agreement on the arbitration institution referred to in Article 18 of the Arbitration Law. If one of the parties to the agreement has applied for arbitration and expressly waives the right to file a lawsuit in court, the dispute resolution clause involved in the case has formed a definite and exclusive arbitration agreement, which is not an "adjudication or litigation" clause found invalid by the Interpretation of the Supreme People's Court on Several Issues Concerning the Application of the Arbitration Law of PRC, and meets the requirements of the Arbitration Law for a valid arbitration clause and shall be deemed legal and valid. In summary, the grounds for confirming the invalidity of the arbitration agreement could not be upheld and were not supported, and the court ruled to reject the application.
(Source: CYan Law Firm Wechat Account)