arbitration law

Arbitration of disputes has emerged as a workable alternative to reliance on the judicial system. Arbitration of disputes involving Chinese domestic enterprises is handled by various administrative departments with jurisdiction over the subject matter: for example, labour disputes are handled by the local Labour Administration, while contract disputes are under the authority of the State Administration for Industry and Commerce. Under both the revised Economic Contract Law (1993) and the Unified Contract Law (1999), significant encouragement was given to arbitration of contract disputes. Chinese courts have actively engaged in arbitration as a more flexible alternative to the litigation process requirements of the Civil Procedure Law. Maritime disputes are subject to the China Maritime Arbitration Commission. Under the Arbitration Law of the PRC (1995), arbitration of domestic commercial disputes has devolved from administrative agencies such as the State Administration for Industry and Commerce (SAIC) to local chambers of commerce and other quasi-civil organizations.

Arbitration and conciliation between Chinese and foreign parties in economic and trade matters were traditionally under the exclusive jurisdiction of the China International Economic and Trade Arbitration Commission (CIETAC) under the China Council for the Promotion of International Trade (CCPIT) in Beijing and its sub-councils in Shanghai and Shenzhen. The CIETAC Arbitration Rules have been amended several times over the past few years, to accommodate the concerns of foreign parties and to accord with the requirements of the PRC Arbitration Law (1995). Unlike the situation at the People’s Courts, CIETAC permits foreign lawyers to represent their clients directly in arbitration proceedings.

Pursuant to the Arbitration Law, local arbitration committees linked with local people’s governments are authorized to handle foreign-related disputes. While this has the potential to expand and diversify the venues available for foreign dispute settlement, concerns have been raised about the effectiveness and impartiality of the new provincial arbitration bodies.

CIETAC practices reflect the internationalization of China’s official legal culture. By virtue of its hearing process in which foreign lawyers can participate and at which foreign and international law can be pleaded as governing law, and through the inclusion of foreign specialists on its panel of arbitrators, CIETAC is constantly exposed to international norms. Moreover CIETAC’s audience includes foreign firms, which have the opportunity to select or reject CIETAC as an arbitration venue. These factors exercise a powerful influence, drawing CIETAC increasingly into the ambit of international norms. CIETAC arbitration decisions reflect an increased willingness to follow international legal norms in other cases where specific provisions of Chinese law are either unavailable or unclear. CIETAC’s rules for arbitrators proscribe ex parte contact and other improprieties. CIETAC arbitral awards are subject to enforcement internationally pursuant to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, to which China acceded effective 1987. Also influential has been the ‘Understanding on Rules and Procedures Governing the Settlement of Disputes’ appended to the Marrakech Agreement establishing the World Trade Organization. While practice in each of these areas remains inconsistent, the pattern is one of steady internationalization, mediated by norms of local legal culture.

PITMAN POTTER