Changes In Enforcement Of Arbitral Award. Why Western Companies Should Pay Attention

The Prior Reporting System – The Current Framework

In its original form, the Prior Reporting System, designed in 1994 and 1995, established a duty for lower courts to report and request approval from the higher courts (all the way up to the SPC) if the former intend to annul or refuse enforcement of a foreign-related or foreign award.

The original purpose of the Prior Reporting System was to ensure consistency and a minimum quality for the judicial review of foreign-related arbitration cases. The Prior Reporting System is believed to have contributed to the substantial reduction of local protectionism and to a more pro-arbitration environment in the Chinese court system. Yet this improvement came with a price: Given the lack of specific time limits imposed on the courts as well as the lack of sanctions for undue delay, the Prior Reporting System has led to substantial delays in the process for enforcing arbitral awards.