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Shall the court examines the arbitration clause when the defendant absents court

Both the buyer and supplier reached purchase contract for the goods, and in the settlement article, if there is dispute occurred between both parties, then it shall be settled by the ; during the performance of the contract, the buyer did not pay the cargo on time. So the dispute occurred. The supplier as foreign company sued the Chinese company in China court. During examining of the case, the court found the arbitration article in the purchase contract. However the defendant, the Chinese buyer did not attend the court hearing. So if the court shall examine the effectiveness of the arbitration article in this case. After seeking the Chinese law and Singapore laws, the court decides that the arbitration article is effective, and the dispute shall be settled in the arbitration.

Regarding the first question, this court believes that jurisdictional issues belong to procedural issues, and procedural issues should be judged according to the law of the court. Civil Procedure Law of the People’s Republic of China Article 124, Paragraph 2 stipulates, “If, in accordance with legal provisions, the parties reach a written arbitration agreement to apply for arbitration and are not allowed to bring a lawsuit to the people’s court, the plaintiff shall be notified to apply for arbitration to an arbitration institution.” Article 271 stipulates that in the event of a dispute arising from foreign economic, trade, transportation, or maritime activities, if the parties have an arbitration clause in the contract or reach a written arbitration agreement afterwards, and submit it to a foreign arbitration institution or other arbitration institution of the People’s Republic of China for arbitration, the parties shall not bring a lawsuit to the people’s court. If there is no arbitration clause in the contract or no written arbitration agreement is reached afterwards, the parties may bring a lawsuit to the people’s court Therefore, in the case where an arbitration clause is included in the contract between the parties, the parties shall not bring a lawsuit to the court, which is the Civil Procedure Law of the People’s Republic of China. The court should proactively review matters according to its authority.

Regarding the second question, can the defendant’s absence be considered as a waiver of the arbitration clause in the contract. This court believes that although the defendant did not appear in court to respond after serving the court summons and response notice in accordance with the law, they did not defend their jurisdiction. The Reply of the Supreme People’s Court on How to Handle a Party to a Contract with an Arbitration Clause If One Party fails to appear in court to respond clearly states that if an arbitration clause is found after acceptance, the validity of the arbitration clause should be first reviewed and determined. If the arbitration clause is valid and the defendant has not responded to the lawsuit after being lawfully summoned, it cannot be determined that they have abandoned the arbitration and that the people’s court has obtained jurisdiction based on this. If the arbitration clause involved in this case is valid and the plaintiff still insists on filing a lawsuit, the plaintiff’s lawsuit should be dismissed. Therefore, the absence of the defendant cannot be considered as a waiver of the arbitration agreement, and the court does not gain jurisdiction as a result.

Regarding the third question, if it is believed that the defendant has not waived the arbitration clause, is the arbitration clause valid. The issue of the effectiveness of agreement clauses involves the determination of the applicable law for the effectiveness of arbitration clauses. According to Article 18 of the Law of the People’s Republic of China on the Application of Law in Foreign Related Civil Relations, the parties may agree to choose the law applicable to the arbitration agreement. If the parties have not chosen, the law of the place where the arbitration institution is located or the law of the place of arbitration shall apply. After investigation, it has been found that the Singapore International Arbitration Law, it shall be deemed that there is a valid arbitration agreement between the parties. The parties should apply for arbitration to the arbitration institution in accordance the sales contract. The lawsuit should be dismissed.



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