Jurisdictional Challenge Against Arbitration Agreement Under Chinese Law (III) —— Problems Arising From Principal And Accessory Contracts

Compared to other commercial dispute resolution mechanisms (e.g. litigation and mediation), arbitration has a lot of advantages, such as the award is final and binding, the procedure and the hearing are confidential, the award is much easier to be recognized and enforced abroad, etc. However, in practice, quite a lot arbitration awards are held by local courts as non-enforceable due to lack of jurisdiction of the arbitral tribunal. Therefore, in order to minimize the possibility of such jurisdictional challenge, parties who refer their disputes to arbitration shall pay attention to the wording and the applicable scope of the arbitration agreement. In some complex transactions, the foregoing question does not only relate to the drafting of a specific arbitration clause under a contract, it requires consistency among a series of contracts.