Court recognize the effectiveness of foreign arbitration clauses
In recently, our client entrusted us for solving the international goods dispute. In this case, the Chinese seller supplied the trucks to the Australian buyer. Due to quality issues with one batch of goods, the buyer requested return goods during inspection and refused to pay the final payment. Later, the buyer sold the defective goods to end buyer at low price. The seller sued the buyer to return the goods or pay for the goods in china court litigation.
After reviewing the case, we raised a jurisdictional objection to the court on the grounds that both parties have agreed on an arbitration clause and the arbitration venue is in Australia, and the applicable law is Australian law. After accepting the case, the court held that the premise for the validity of the objection to jurisdiction is the determination of the effectiveness of the arbitration agreement. The seller submitted an application to the court to confirm the invalidity of the arbitration agreement. The court rejected the application for invalidity of the arbitration agreement in the sales contract.
According to Chinese law, the applicable law for resolving contract disputes agreed upon by the parties in the contract cannot be used to determine the effectiveness of foreign arbitration clauses. If the parties have clearly agreed on the applicable law for the effectiveness of the arbitration clause in the contract, the law clearly agreed upon by the parties shall apply; If the applicable law for the effectiveness of the arbitration clause is not specified but the arbitration location is specified, the law of the country or region where the arbitration is located shall apply. Only in cases where the parties have not agreed on the applicable law for the validity of the arbitration clause or have not agreed on the place of arbitration, or where the agreement on the place of arbitration is unclear, can the law of the forum, i.e. the law of China, be applied as the applicable law for confirming the validity of the arbitration clause.