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Anti-Monopoly Disputes – Arbitration or Litigation?

posted 8 years ago

Background:

On 29 August 2016 the Jiangsu High People’s Court made a judgement that
anti-monopoly disputes between two companies are not arbitrable. In the said
case, the plaintiff as a distributor of the defendant initiated a lawsuit
against the defendant and claimed that the latter abused its dominant market
position and imposed vertical restrains. The defendant then argued that the
disputes shall be subject to arbitration to the exclusion of the jurisdiction of
the court pursuant to the distribution agreement. After two instances of
hearing lasting for around one year, the Jiangsu High People’s Court finally
rejected the argument of the defendant mainly based on the ground that
anti-competitive behaviours not only involve the interests of the contractual
parties but also the interests of the public, third parties and consumers. In
the opinion of the Jiangsu High People’s Court, unless the law clearly provides
that anti-monopoly disputes can be submitted to arbitration, the said disputes
are not arbitrable.

On 1 April 2016 the Shenzhen Intermediate People’s Court also made a similar
judgement in the case (Coolpad vs. Ericsson) by making reference to the Provisions of the Supreme People’s
Court on Several Issues Relating to Laws Applicable for Trial of Civil Dispute
Cases Arising from Anti-competitive Behaviours
(the “SPC Interpretations”).
According to the SPC
Interpretations
, where a plaintiff files a civil lawsuit in terms
of anti-monopoly disputes directly with a People’s Court, the People’s Court
shall accept such case.


Comments:

The above judgements raise debate on the scope of arbitration under PRC law.
Under the PRC Arbitration
Law
, contractual disputes and disputes over property rights between
citizens, legal persons and other organizations are arbitrable. Disputes
expressly excluded from arbitration are those related to (i) marriage,
adoption, guardianship, support and succession disputes; and (ii)
administrative disputes.

Given the above, anti-monopoly disputes between the independent business
operators are arbitrable, and therefore, the court should have no jurisdiction
over the case provided that arbitration has been agreed between the parties
under the agreement from which the anti-monopoly dispute arise.

Further, the SPC
Interpretations
quoted by the Shenzhen Intermediate People’s Court
in its ruling clearly provide that the acceptance of anti-monopoly dispute
cases shall be made upon the fulfilment of other criteria for acceptance of
lawsuit stipulated by the laws. Pursuant to the PRC Civil Procedure Law, where the parties
have concluded on arbitration agreement, the People’s Court shall not accept
the case, unless the arbitration agreement is void. Therefore, the SPC Interpretations do
not necessarily lead to the conclusion that only the courts have jurisdiction
over the anti-monopoly disputes.

Notwithstanding the above, it is noteworthy that there is a potential risk that
an arbitration clause so agreed may not be upheld for anti-monopoly disputes.
Due to the lack of clear guidance about the arbitrability of anti-monopoly
disputes, it cannot be excluded that courts in China may follow the existing
rulings of the Jiangsu High People’s Court and the Shenzhen Intermediate
People’s Court. It would be good if the above uncertainties can be solved by an
official interpretations from the Supreme People’s Court.

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