The Arbitration Agreement Shall be Independent from Other Contracts

An arbitration agreement is the foundation of arbitration, the premise of arbitration procedures, and the basis for the parties to initiate an arbitration. An arbitration agreement is an agreement reached between the parties voluntarily on submission of the disputes to arbitration, including the arbitration clause concluded in a contract and the agreement on application for arbitration reached before and after the disputes in other written forms. An arbitration agreement shall exist independently from a contract and not be terminated or invalid due to the termination or invalidity of the contract.

The arbitration agreement has such forms as arbitration clauses and written arbitration agreements.

Arbitration clauses are signed in the contract by both parties agreeing to submit disputes concerning the contract for arbitration. It is the most important form of the arbitration agreement. As the arbitration clauses are concluded before the dispute takes place, the parties cannot fully predict what will happen later, so these clauses are often short and simple and it is easy for the parties to reach a consensus on the clauses. Signed in the contract, these clauses have a different nature and effect from other clauses in the contract; the invalidation of other clause does not necessarily lead to the invalidation of the arbitration clauses.

The written arbitration agreement is a kind of independent agreement signed by both parties on a voluntary basis before or after the dispute, who agreed to submit the dispute for arbitration. Such agreement is independent from other contracts, both in form and in content. Generally, the written arbitration agreement is more detailed; it may be the supplement or modification of the arbitration clauses, or signed by the parties through negotiation after the dispute for the purpose of resolution.

An effective arbitration agreement has three aspects of legal effects in general, i.e.: the binding force on the parties, the effect on the arbitration institution, and the constraining force on the court.

(1) The legal effects on the parties. This is the primary manifestation of the effect of arbitration agreements. First, when the dispute specified in the arbitration agreement takes place, the right of prosecution of the parties concerning the dispute is constrained; they can only submit the dispute for arbitration, but cannot unilaterally cancel the agreement and file a lawsuit to the court. Second, the scope, place, institution, etc. of arbitration must comply with those specified in the arbitration agreement, and shall not be altered at random. Third, the parties also have a collateral obligation based on the above two effects, i.e.: neither party shall cancel or alter the arbitration agreement in effect at random; the parties shall perform the verdict made by the arbitration commission by law, etc.

(2) The legal effects on the arbitration institution. An effective arbitration agreement is the one and only basis for an arbitration institution to exercise its jurisdiction and accept a case. The arbitration institution has no right to accept any case without an arbitration agreement even if one party applies for arbitration. The arbitration agreement also limits the arbitration jurisdiction and guarantees the effect of the award, while the arbitration institution certainly has the jurisdiction on the existence, effect and scope of the arbitration agreement.

(3) The legal effects on the court. First, an effective arbitration agreement excludes the jurisdiction of the court. Second, the court is responsible for executing the verdict made by the arbitration institution based on an effective arbitration agreement, which reflects the court’s support for the arbitration. Third, an effective arbitration agreement is a necessary document for applying for the execution of the arbitration award. According to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), in order to ensure the recognition and enforcement of the awards in another country, the winning party shall submit the original or certified copy of the arbitration award and those of the arbitration agreement. When a foreign arbitral award is executed, the effectiveness of the arbitration agreement is an important issue to be examined by the court.