The Supreme People’s Court disagreed with the proposal of the first instance and appellate courts and instructed them to grant enforcement of an LCIA award rendered in respect of a franchise dispute. The Court explained, contrary to the opinion of the lower courts, that, while the parties had not complied with mandatory provisions of Chinese administrative regulations – which required that foreign companies such as the petitioner establish foreign-funded enterprises in order to engage in the franchising business in PR China, and register them with the competent administrative authorities – this violation did not constitute a violation of public policy within the meaning of Art. V(2)(b) of the 1958 New York Convention. The Court further held that the possible inconsistency between the award and the outcome of a pending court action in respect of a related agreement was not one of the grounds for refusal of enforcement listed in Art. V of the Convention.