Zhejiang High People’s Court,

Your Court’s Request for Instruction on the Recognition and Enforcement of a Foreign Arbitral Award between the Applicant, Tianrui Hotel Investment Co., Ltd., and the Respondent, Hangzhou YiJu Hotel Management Co., Ltd., No. [2010] Zhe Shangai Wai Ta Zi No. 3, has been received. After deliberation, we reply as follows:

The award concerned was made within British territory by the London Court of International Arbitration. As China and U.K. are both Contracting States to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (hereinafter, the “New York Convention”), the award shall be reviewed in accordance with Art. 267 of Civil Procedure Law of the People’s Republic of China and relevant provisions of the New York Convention.

Tianrui Hotel Investment Co., Ltd. and Hangzhou Yiju Hotel Management Co., Ltd. entered into a “Unit System Agreement” on 28 October 2004, which was a commercial franchise agreement. According to the regulations on the operation of commercial franchise then in force, a foreign company which intends to operate a commercial franchise within the Chinese territory should establish a foreign-invested enterprise and should obtain approvals from the competent administrative authority. However, the State Council’s “Regulations on the Administration of Commercial Franchise”, effective from 1 May 2007, only requires the parties to register the commercial franchise agreement with the administrative authority for record. An approval is not necessary. The registration requirement is a provision jure gestionis, which does not affect the effectiveness of the civil contract between the parties. The conclusions of the award concerning the “Unit System Agreement” do not violate the compulsory laws and public policy of our country. The requirements under Art. V(2)(b) of the New York Convention are not fulfilled in the present case. As to the disputes between SuBoAiTe (Beijing) International Hotel Management Co., Ltd. and Hangzhou Yiju Hotel Management Co., Ltd., they belong to a different legal relationship between different parties, whether the conclusion as to their disputes is consistent with the award of the present case is not a ground provided by Art. V of the New York Convention.

In conclusion, the award does not fall into any of the grounds under Art. V of the New York Convention. The People’s Court should rule to recognize the award.

We reply as above.