In Brentwood Industries Inc. v. Guangdong Faanlong Co, Ltd and Others (2015 Sui Zhong Min Chu Si Zi No. 62), the Guangzhou People’s Intermediate Court (“Guangzhou court”) ruled that an award rendered by the International Court of Arbitration (“ICC”) in China should be regarded as a domestic award which can be enforced under the local procedural rules, demonstrating China’s opening-up trend towards international commercial arbitration.

The case involved a Sale and Purchase Agreement (“SPA”) along with a supplementary agreement signed between Brentwood Industries Inc., a USA based company, and three Chinese companies (colletively, “Respondents”).  Art 16 of the SPA provided that any dispute between the parties “shall be submitted to ICC for arbitration in the place where the project is located”.

Because Guangzhou was the project site, Brentwood brought a case before the Guangzhou Court seeking for the annulment of the arbitration clause, which was rejected. Subsequent to the Court’s ruling confirming the validity of the arbitration clause, Brentwood commenced arbitration proceedings before the Arbitration Court of International Chamber of Commerce Hong Kong Office against the Respondents. After the award was rendered, Brentwood applied for its recognition and enforcement before the Guangzhou Court.

Ruling on the award’s nationality and enforceability, the Court held that, even if rendered by a foreign institution, it shall be regarded as a domestic award, thus enforceable under the local Civil Procedural Law rather than under the New York Convention, as argued by Brentwood.

Thus, the Court denied the enforcement of the award stating that Brentwood had invoked the wrong legal basis and directed the latter to re-apply for enforcement under the Civil Procedural Law.