In December 2019, in BNA v BNB and another  SGCA 84 [R1] the Singapore Court of Appeal (“SGCA“) discussed the interpretation of an arbitration agreement that provided for disputes to be submitted to the Singapore International Arbitration Centre (“SIAC”) for an ‘arbitration in Shanghai’. The SGCA ruled that ‘arbitration in Shanghai’ referred to the arbitral seat and concluded that People’s Republic of China (“PRC”) law governed the arbitration agreement. The SGCA however did not decide whether the arbitration agreement was valid under PRC law.
Technically, PRC Arbitration Law has been widely interpreted by the courts to effectively to mean that foreign arbitral institutions must not administer arbitrations seated in China. Following the above SGCA’s ruling, it is uncertain whether under PRC law, an arbitration agreement involving foreign-related disputes is valid if it provides for arbitration in China administered by a foreign arbitral institution.
In January 2020, the claimant brought the case to the Shanghai No. 1 Intermediate People’s Court (“Shanghai Court“), asking it to decide on the validity of the arbitration agreement under PRC law.
The Shanghai Court affirmed the validity of the arbitration agreement and held as follows:
Anhui Longlide has spearheaded the more liberal view that foreign arbitral institutions may administer arbitrations of foreign-related disputes in China. The Shanghai Court’s recent decision in BNA v BNB is another strong indication that Chinese courts are inclined to align China’s international arbitration rules with prevailing standards in other leading international arbitration hubs.