The Misconception of an Arbitration Agreement’s Scope under Chinese Law: Controversial Interpretation by Chinese Courts

Abstract The scope of an arbitration agreement shapes and determines an arbitrator’s jurisdiction, making it a key issue in international arbitration theory and practice. Courts in pro-arbitration countries usually interpret the scope of an arbitration agreement broadly to cover all disputes related to the contract between the parties. This ensures that arbitration can function as an effective and efficient ‘one-stop’ forum for business entities. China is a crucial player in the international arbitration system. Despite having maintained an overall pro-arbitration stance, the Supreme People’s Court of China (SPC) misconceptualises the scope of an arbitration agreement by equating it with the boundaries of the contract between the parties. This misconception leads the SPC to adopt two problematic legal doctrines. First, it develops a literal approach to interpretation that focuses on an arbitration agreement’s exact wording. Second, it conflates the existence of an arbitration agreement with its scope. As a result, the SPC frequently interprets scope narrowly, and wrongly applies the New York Convention and the relevant Chinese law. These problematic approaches stand in stark contrast to the international trend to interpret scope broadly and the SPC’s otherwise consistent pro-arbitration stance. So far, this has not received the necessary attention from legal academics. This article identifies the SPC’s misconception and the problematic doctrines it has developed, and argues that the SPC should reconsider its case law. Only by doing so can the SPC bring its jurisprudence in line with international practice, strengthen its pro-arbitration stance, and further facilitate economic cooperation between China and other countries. In addition, by exposing the misconception of the SPC, this article will inform business entities around the world and enable them to avoid possible pitfalls when engaging in commercial dealings with China. At the same time, courts in countries striving to build a pro-arbitration reputation can learn from the mistakes of their Chinese counterparts and reflect on how best to interpret the scope of arbitration agreements.