Minhang court sets arbitration precedent

Tian Shengjie
Shanghai court rules in support of an arbitral agency's ability to investigate and collect evidence based on a new local move aimed at improving the city's business environment.
Tian Shengjie

Minhang District's court set a new legal precedent in China to support an arbitral agency to investigate and collect evidence, it said on Friday.

The move is based on a new rule for the improvement of the business environment and the Shanghai court has established a mechanism to support the trial of arbitration cases and issue investigation warrants.

It was adopted at a vote during the session of the Shanghai People's Congress Standing Committee last Wednesday and took effect on Friday.

The new rule has been applied in a dispute on Friday over an industrial occupancy sales contract.

In the past, the Shanghai Arbitration Commission would issue a letter to ask the parties involved to cooperate with the investigation. But it is not a mandatory order and some people may refuse to assist evidence collection.

Now, with the support of the court, all parties must provide the information to the commission. Otherwise, they will face punishment, including fines and detention, the court said.

The investigation into the disputed case has been completed, the court said.

In May, the World Bank issued a new Business Ready Methodology Handbook, mentioning that the court's support for arbitration is included in the evaluation of the business environment.

According to the latest International Arbitration Survey launched by the Queen Mary University of London and School of International Arbitration in 2021, Shanghai comes in eighth in the most preferred arbitral seats in the world.

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