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Copyright © International Chamber of Commerce (ICC). All rights reserved. ( Source of the document: ICC Digital Library )
by HAN Jian and WEN Yanhua
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Since the 1980s, and the inception of the “open the door to the world” policy and the consequent increases of international commercial transactions and foreign investment in China, it is not surprising to find that the number of disputes has been growing as well. To avoid or at least mitigate losses, efficient and speedy dispute resolution is essential.
An attribute traditionally associated with Chinese culture is an aversion for settling disputes by recourse to the courts. But in recent years, legal awareness has been spreading within Chinese society, which now attaches greater importance to legalistic, or “Western”, approaches to dispute settlement.
As elsewhere around the world, the primary techniques used in China for resolution of business disputes are arbitration, litigation and various techniques of so-called alternative dispute resolution (ADR) including conciliation and mediation, but they manifest unique features when utilized in China.
Almost all contracts with respect to foreign investment in China contain arbitration clauses.
Since 1995, Chinese arbitration institutions have been enjoying greater independence.
Chinese law recognizes only arbitrations conducted under the auspices of arbitration institutions, whether domestic or foreign.1 Accordingly, agreements for ad hoc arbitration are not enforceable by Chinese courts. On the other hand, awards of foreign ad hoc arbitrations are generally enforceable in China pursuant to the country’s treaty commitments.
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Foreign and Chinese parties are equal before the law in dispute resolution proceedings, except where reciprocal treatment is imposed on foreign parties, to the extent that their national courts do not recognize rights for Chinese citizens or organizations comparable to those in the Administrative Procedural Law2 and the Civil Procedure Law.3
Foreign parties may be represented by agents in any dispute resolution proceedings. Chinese lawyers, foreign lawyers as well as any individual with full civil capacity may be appointed.4 Only Chinese lawyers may plead in judicial proceedings in China, though foreign lawyers appear as agents ad litem.5
As the Special Administrative Regions of Hong Kong and Macao have their own legal systems, the conduct of arbitration on their territories is usually governed by local law. Similarly, the conduct of arbitration in Taiwan is governed by its law.
China has adopted the reciprocal enforcement treaty provisions of the New York Convention,6 which has a wide geographical application covering more than 140 countries. By contrast, China’s network of treaties providing for enforcement of judgments only covers some 20 jurisdictions.7
The principle of the autonomy of the parties’ will entitles them to determine most elements of the dispute resolution process, including the place of arbitration and the composition of the tribunal. Freedom in the selection of the place of arbitration and of the arbitrator(s) reduces the risk of unequal treatment, as compared with litigation, in which one of the parties may file pre-emptive law suits to bias the result in its favour. Usually, arbitrators may be chosen for their experience in commercial arbitration and expertise in specific fields, whereas comparable experience and expertise among judges is less reliable.
Rules adopted by the parties are binding on arbitrators and other litigants involved in arbitration proceedings. In principle, the rules adopted by the parties will be applied by the arbitrators, except where their agreement so modifies the arbitration institution’s rules that the latter is led not to apply it and/or where their agreement conflicts with a mandatory provision of the law of the place of arbitration.8
Arbitration awards are final and enforceable once rendered.
These advantages of arbitration have been proved in commercial practice in China and elsewhere, as have its shortcomings. The powers of arbitrators are usually adequate for the purpose of resolving the matters in dispute, but fall short of those conferred upon a court of law. For example, one particular weakness for arbitration arises in multi-party disputes. Because arbitration is a contractual arrangement, as a matter of principle, only the parties to the contract are bound, or indeed entitled, to take part, and an arbitral tribunal generally has limited power to order the consolidation of actions, even though this would seem to be necessary or desirable in the interests of justice. Another perceived drawback is that the arbitral tribunal lacks the power to compel the testimony of witnesses and the communication of evidence.
On the contrary, according to article 70 of the Civil Procedure Law, in China all units and individuals who have knowledge of a case have a duty to give testimony in court. Moreover, where any unit, which is under an obligation to assist in investigations by the people’s court, refuses or obstructs an investigation and the collection of evidence, the people’s court may, apart from enjoining it to perform its obligation, also impose fines.9
In a word, in China as elsewhere, the choice between arbitration and judicial recourses for business dispute resolution is best made in light of the circumstances of each case.
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The Arbitration Law provides national and comprehensive directions for the conduct of commercial arbitration and forms the basis of the current arbitration system. Its important principles include:
Other laws play an important role due to their indirect references to arbitration:
In addition, the regulations of the State Council, such as the Notice concerning the Clarification of Several Issues Arising from the Implementation of the Arbitration Law,19 also have an important influence.
Arbitral commissions in China adopt rules governing the conduct of proceedings under their competence, which complement, but may not contradict, the Arbitration Law or other applicable laws and regulations.
The rules of the various arbitration commissions vary mostly as to their lists of arbitrators, their application forms and the time limits they impose for processing the applications.
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To clarify some uncertainties that have arisen in practice, the Supreme People’s Court (SPC) has issued a series of judicial interpretations.20 The major judicial interpretations issued in recent years concerning the Arbitration Law are the following:
The Notice of the SPC on the People’s Courts’ Handling of Several Issues concerning Foreign-Related Arbitration and Foreign Arbitration, August 29, 1995, No. 18 Judicial Notices (1995);
The Notice of the SPC concerning the Implementation of the Arbitration Law and Enforcement of Arbitration Awards in Pursuance of Law, October 4, 1995, No. 21 Judicial Notices (1995); The Reply of the SPC on the People’s Court Rejections of Retrial Applications against Refusals to Enforce Arbitration Awards, June 26, 1996, No. 8 Judicial Replies (1996);
The Reply of the SPC to the High Court of Shandong Province concerning the Validity of an Arbitration Clause Choosing Two Arbitration Institutions, December 12, 1996, No. 176 Judicial Letters (1996);
The Reply of the SPC to the Supreme Court of Inner Mongolia Autonomous Region concerning the Determination of Court Jurisdiction over a Contract involving Inner Mongolia, which has not Directly Incorporated an Arbitration Clause, December 14, 1996, No. 177 Judicial Letters (1996);
The Reply of the SPC concerning the Validity of an Arbitration Agreement Which has only Chosen the Place of Arbitration, but Failed to Agree on an Arbitration Institution, March 19, 1997, No. 36 Judicial Letters (1997);
The Notice of the SPC concerning Several Issues Arising from the Enforcement of the Arbitration Law, March 26, 1997, No. 4 Judicial Notices (1997);
The Notice of the SPC Prohibiting a Court for Setting Aside an Arbitration Award on the Ground that the Time for its Service Exceeds the Limitation Period, April 6, 1997, No. 120 Court Documents(1997); The Reply of the SPC to the High Court of Guangxi Autonomous Region concerning Whether a Party is Entitled to Appeal Against a Court Ruling to Set Aside an Arbitration Award or a Ruling to Refuse an Application to Set Aside an Arbitration Award, April 23, 1997, No. 5 Judicial Replies (1997);
The Provisions of the SPC on Recognition by the People’s Courts of Civil Judgments Rendered in Taiwan, adopted on January 15, 1998 at the 957th Session of the Judicial Committee of the SPC, No. 11 Judicial Interpretations (1998);
The Notice of the SPC concerning the Setting Aside of Foreign-Related Arbitration Awards, April 23, 1998, No. 40 Court Documents (1998);
The Reply of the SPC on Several Specific Issues concerning Applications for Setting Aside of Arbitration Awards, adopted on June 11, 1998 at the 992nd Session of the Judicial Committee of the SPC, No. 16 Judicial Interpretations (1998);
The Reply of the SPC Confirming the Enforcement of an Arbitration Award Signed by an Arbitrator who had not been Reappointed as Arbitrator by the Arbitration Commission concerned after the Determination of the Case, adopted on July 13, 1998 at the 1001st Session of the Judicial Committee of the SPC, No. 21 Judicial Interpretations (1998);
The Reply of the SPC on Several Issues Arising from the Determination of the Validity of an Arbitration Agreement, adopted on October 21, 1998 at the 1029th Session of the Judicial Committee of SPC, No. 27 Judicial Interpretations (1998);
The Decision of the SPC on the Fees and the Time for Determining Whether to Recognize and Enforce a Foreign Arbitration Award, adopted on October 21, 1998 at the 1029th Session of the Judicial Committee of the SPC, No. 28 Judicial Interpretations (1998);
The Reply of the SPC on Whether a Court Should Hear an Application for Reviewing a Court Ruling to Set Aside an Arbitration Award, adopted on January 29, 1999 at the 1042nd Session of the Judicial Committee of the SPC, No. 6 Judicial Interpretations (1999);
The Arrangement Concerning Mutual Enforcement of Arbitration Awards Between the Mainland and the Hong Kong Special Administrative Region (SAR), adopted on June 18, 1999 at the 1069th Session of the Judicial Committee of SPC, No. 3 Judicial Interpretations (2000);
The Reply of the SPC on Whether an Arbitration Award Made by a Chinese Arbitration Institution Can be Partially Set Aside, adopted on June 26, 1999 at the 1071st Session of the Judicial Committee of SPC, No. 16 Judicial Interpretations (1999);
The Reply of the SPC on the Question of Which Level of Court Has Jurisdiction over a Party’s Challenge to the Validity of Arbitration Agreements, adopted on July 20, 2000 at the 1126th Session of the Judicial Committee of SPC, No. 25 Judicial Interpretations (2000); and
The Interpretations of the SPC on Several Issues concerning the Application of the Arbitration Law, adopted on December 26, 2005 at the 1375th Session of Judicial Committee of SPC, No.7 Judicial Interpretations (2006).
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Article 65 of the Arbitration Law provides that Chapter Seven applies to the arbitration of disputes arising from foreign economic, trade, transportation or maritime matters. The Arbitration Law itself, however, does not give any particular indication as to the meaning of the term “foreign-related”.
According to the definition in article 170 of the SPC’s Several Opinions on the Implementation of the General Principles of Civil Law and article 304 of its Several Opinions on Implementation of the Civil Procedure Law of 1992,21 foreign-related cases are those in which:
Consequently, whereas the arbitration of foreign-related cases is covered by Chapter VII of the Arbitration Law, its provisions do not apply to cases without foreign connections.
Cases involving sino-foreign equity joint ventures, sino-foreign contractual cooperative joint ventures or exclusively foreign-owned enterprises are not ipso facto foreign-related cases since these enterprises are Chinese legal persons.
The China International Economic and Trade Arbitration Commission (CIETAC),22 and the China Maritime Arbitration Commission (CMAC), operate under the aegis of the China Council for the Promotion of International Trade (CCPIT).23
2.3.1. The China International Economic and Trade Arbitration Commission (CIETAC)
CIETAC was established in 1956. It is headquartered in Beijing. Two branches of CIETAC, the South China Sub-Commission (in Shenzhen) and the Shanghai Sub-Commission, were established respectively in 1984 and 1990. CIETAC is one of the major international commercial arbitration institutions in the world24 and parties from more than 40 countries and regions have conferred upon it the arbitration of disputes.25 CIETAC has signed cooperation agreements with 24 international arbitration institutions and organizations.26
Formerly, CIETAC confined its activities to international or foreign-related disputes arising from economic and trade transactions. Since CIETAC amended its Rules in 2000, its jurisdiction has been extended to domestic disputes,27 whether contractual or not. CIETAC has adopted specific rules for domestic arbitration.28 In domestic arbitrations, time limits are shorter than in international arbitrations and different requirements on evidence and hearing records are applicable. In addition, the guidelines on arbitration fees vary depending on whether the procedure is domestic or international.
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CIETAC formulates its model arbitration clause in the following manner: Any and all disputes arising from or in connection with this contract shall be submitted to the China International Economic and Trade Arbitration Commission for arbitration, which must be conducted in accordance with the Commission’s arbitration rules in effect at the time of applying for arbitration. The arbitration award is final and binding upon both parties.29
In May 2003, CIETAC promulgated a set of special arbitration rules, the Financial Disputes Arbitration Rules (FDAR), which cover all disputes in domestic and international financial transactions.30 The FDAR accomplish significant reductions in the time spent on arbitration while improving its flexibility. In addition, the arbitration fees are lower than those under CIETAC Rules31 and some financial experts appear only among the Panel of Financial Arbitrators working under the FDAR.
As financial disputes are in any case subject to arbitration before the CIETAC, parties seeking to submit their disputes to the specialized panel must expressly indicate such intention in the arbitration clause.32
Matters not covered in the FDAR are governed by the CIETAC Rules, but conflicts between the FDAR and the CEITAC Rules are resolved in favour of the former within the limits of the applicable laws and regulations.33
According to article 2 of the FDAR, the term “financial transaction” refers to transactions arising between financial institutions, or arising between financial institutions and other natural or legal persons in the currency, capital, foreign exchange, gold and insurance markets that relate to financing in both domestic and foreign currencies, and the assignment and sale of any and all types of financial instruments and documents denominated in both domestic and foreign currencies, including but not limited to loans, deposit certificates, guarantees, letters of credit, negotiable instruments, fund transactions, fund trust, bonds, collection and remittance of foreign currencies, factoring and reimbursement agreements between banks and securities and futures.
CIETAC formulates as follows its model arbitration clause under the FDAR.
Any disputes arising from or in connection with this Contract or this transaction shall be submitted for arbitration to the China International Economic and Trade Arbitration Commission and such arbitration shall be conducted in accordance with the Financial Arbitration Rules of the Arbitration Commission.34
In cases involving securities and futures disputes, arbitrators are chosen from CIETAC’s Panel of Arbitrators in the Securities and Futures Industry.35
FDAR proceedings are to be completed within 45 days from their opening.36
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According to article 21 of the FDAR, and subject to mandatory provisions of law, the parties to financial disputes involving a foreign-related element may agree upon the law to be applied to the merits of the dispute. Failing such agreement, the arbitral tribunal applies the law that it determines to be appropriate. In all cases, the arbitral tribunal takes into account the “general usages and standard practices of specific business sectors” and respects the principles of fairness and reasonableness.
2.3.2. China Maritime Arbitration Commission (CMAC)
The CMAC is headquartered in Beijing. It was established in 1959. In January 2003, the CMAC established its first Sub-commission in Shanghai. The CMAC has focused on arbitrations of domestic and international maritime-related disputes. It has earned a good reputation around the world.
The last revision of the CMAC’s rules was adopted on July 5, 2004 by the China Chamber of International Commerce with effect as of October 1, 2004.
Under CMAC’s rules, there is no separation between domestic and international cases.37
The CMAC’s jurisdiction includes all admiralty, maritime, logistic disputes and other contractual or non-contractual disputes, involving more particularly:38
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The model arbitration clause recommended by CMAC is the following:
Any dispute arising out of or in connection with this contract shall be submitted to China Maritime Arbitration Commission for arbitration in Beijing in accordance with the existing Rules of the Commission. The arbitration award shall be final and binding upon the parties.
The parties may add additional information to the above CIETAC- or CMACrecommended arbitration clauses. For instance, the parties might wish to stipulate the number of arbitrators (one or three), the nationalities of the arbitrators, the place of arbitration, the applicable law, the language or languages of arbitration and the applicable procedure (ordinary procedure or summary procedure).
On February 1, 2004, the Logistics Disputes Resolution Centre was established with headquarters in Beijing. Its scope of intervention covers disputes involving logistics within or outside China’s borders. The Logistics Dispute Resolution Centre is competent if the parties to a logistics contract include a valid arbitration clause or reach a separate arbitration agreement after the occurrence of a dispute, designating the Logistics Disputes Resolution Centre.
The Logistics Dispute Resolution Centre of the CMAC accepts all cases involving logistics dispute, including in ocean shipping, land transportation (highway, railway) and air transport, combined transport, container transport, LCL, FCL, express service, storage, processing, allocated delivery, storage distribution, agency, management of logistics information, transportation, handling, loading and discharging, production, sale and lease of storage equipment and establishment, design and consultation of logistics plans, insurance relating to logistics and enterprises concerned and torts in respect of logistics services, etc.
In 2003, the CMAC established the Fishery Dispute Resolution Centre (FDRC) within the Shanghai Sub-commission, which accepts fisheriesrelated disputes. Such cases cover disputes arising from recovery of marine traffic accidents, fishing and cultivating, and fishing nets; and disputes arising from ship-building, repairs, sale, insurance, leasing, mortgage and loan of fishing vessels; and disputes arising from the contract and management of forelands; and other disputes involving fishery.
The CMAC appoints experts from fisheries and relevant fields to a special FDRC Panel of Arbitrators. CMAC has formulated the Special Provisions on Fishery Disputes Cases, which simplify arbitration procedures and reduce the levels of arbitration fees.
It is expected that the CIETAC will issue an increasing number of parallel rules for specific types of arbitrations.
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2.3.3. Local arbitration commissions
Local arbitration commissions in China mean those that were originally organized by local governments and then gradually became independent. Currently, there are more than 170 arbitration commissions in China, most of which were established in the last seven years.40 In 1996, the General Office of the State Council released its Notice of Clarification of Several Issues arising from the Implementation of the Arbitration Law.41
The local arbitration commissions are intended to handle domestic arbitration. However, if the parties to a foreign-related dispute were to choose a local arbitration commission, the commission would hear the case. Many people doubt whether the domestic arbitration bodies are competent to conduct international arbitration, given that they do not usually have experience in international commerce or international arbitration.
2.3.4. Foreign arbitration commissions
There remains the question of whether arbitrations of international arbitral institutions can be conducted in China. For example, the International Chamber of Commerce (ICC) International Court of Arbitration is an arbitration institution established in France, but most of its cases have a seat located in other countries. Neither the Arbitration Law nor other Chinese legislation prohibits the conduct of ICC arbitration proceedings conducted in the PRC.
On the contrary, the Civil Procedure Law, the Law on Chinese-Foreign Equity Joint Venture, the Regulations for the implementation of the Law on Chinese-Foreign Equity Joint Venture, the Law on Chinese-Foreign Contractual Joint Venture and the Contract Law all clearly provide that the parties to a contract involving foreign interests may agree on arbitration not only before Chinese arbitration institutions, but also before other arbitration institutions.42 Obviously, the «other arbitration institutions» refers to foreign arbitration institutions. Indeed, Chapter 7 of the Arbitration Law does not provide that all foreign-related arbitrations must be conducted before Chinese arbitration commissions.
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Arbitration proceedings in China are fundamentally based on documentation (pleadings and evidence) whereas oral argumentation plays a secondary role.
Arbitration proceedings in China are launched by filing applications in writing with supporting documentation, and counterclaims are introduced in a similar manner.43
From seizure of the arbitration commission to rendering of an award, a period of one year is likely to elapse. Some arbitration commissions’ rules provide for summary proceedings where the amounts of the claims are relatively low or where the parties opt for them by agreement.44
Parties may request arbitration commissions to adopt measures to protect property if, as the result of an act of the other party or for some other reason, it appears that an award may be impossible or difficult to enforce. If one of the parties applies for property preservation, the arbitration commission transmits its application to a people’s court in accordance with the Civil Procedure Law.45
A valid arbitration agreement is a condition for the commencement of an Arbitration proceeding. According to the Arbitration Law, an arbitration agreement refers to a clause included in contracts or other written agreements,46 whether concluded before or after the occurrence of a dispute, which contains at least:
By an extensive interpretation of the documents incorporated by reference into the contract containing the arbitration clause, third parties, such as agents of the parties, or their suppliers or customers, may also be drawn into arbitrations.
Arbitration agreements are invalid if:
A valid arbitration agreement is considered independent in that modification, rescission or termination of the concerned contract or its being declared invalid do not affect the arbitration agreement’s validity.49 If a party wants to take exception to the validity of the arbitration agreement, it may turn to a court or to the prospective arbitration commission. Where a party seizes a court while the other seizes the arbitration commission, the court’s jurisdiction will prevail.50 A challenge to the validity of an arbitration agreement must be raised before the first hearing of the case.51
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To have a court decide the validity of an arbitration agreement designating a Chinese arbitration commission, an application should be filed before the intermediate court at the place where the arbitration commission is located. If an arbitration clause omits to designate an institution, any party may seize an intermediate court in the place of domicile of the defendant.52
By respect for the autonomy of the will of the parties, the Notice of the SPC on the People’s Courts’ Handling of Several Issues concerning Foreign-Related Arbitration and Foreign Arbitration of 1995 established procedures for judicial nullification of arbitration agreements concerning foreign-related or maritime disputes. The Notice requires that, in cases of arbitration agreements or clauses either involving a foreign element (including an element from Hong Kong, Macao or Taiwan) or involving maritime disputes, where courts consider them invalid, they must report their opinions to the competent provincial high courts before announcing their decisions to hear the cases concerned. If the relevant provincial high courts agree with the opinions of the first courts, they must report their affirmations to the SPC. Until the SPC replies, the applications may not be accepted.
Chinese law does not set down any precondition that the parties must stipulate a place of arbitration within China, so the parties to international commercial arbitrations are free to determine the place of arbitration.
CIETAC’s Rules as revised in 2005 provide that, where the parties agree in writing on the place of arbitration, that agreement is implemented. Otherwise, it is deemed to be the premises of the CIETAC or those of its Sub-Commissions.53
When parties submit their disputes to the CIETAC and the arbitration is to be held in China, the proceedings are usually conducted at its headquarters in Beijing or in the offices of its branches in Shenzhen or Shanghai.
In the absence of the seizure of an identifiable arbitration commission, references to either a location (such as “arbitration in Paris”) or to the rules of a foreign arbitration commission (such as “arbitration under the rules of the Court of Arbitration of the ICC”) may be judged too vague by Chinese courts.
Arbitration awards are deemed as rendered at the place of arbitration.54
According to article 126 of the Contract Law, “the parties to a foreign-related contract may choose the law applicable to the settlement of their contractual disputes”.55 The choice may be made either at the time of signing of the contract or after a dispute has arisen.56 The arbitral tribunal is obliged to apply the parties’ chosen law in hearing and deciding their case.
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However, in some circumstances, the autonomy of the will of the parties is not respected in China. Above all, the parties’ choice is not acceptable where the application of a foreign law would be contrary to the fundamental principles of Chinese law.57 Secondly, contracts for the establishment and operation of sino-foreign equity joint and contractual joint ventures, and for sino-foreign cooperative exploration and development of natural resources to be performed within the territory of the PRC are necessarily subject to its laws.58
Where parties choose a foreign law, they are required to provide the proof of its relevant provisions. Arbitration tribunals will apply Chinese law where they consider that they are unable to determine with sufficient reliability the relevant foreign norms.
Where the parties are silent with respect to the applicable law, it is chosen under Chinese rules of private international law, which indicate the law of the State with which the contract has its closest connections.59
References by the parties to international customs are respected, at least as a complement to fill gaps in the law.
Article 7 of the Arbitration Law requires that disputes be settled “fairly and reasonably on the basis of the facts and in accordance with the relevant provisions of law”. In practice, this serves to introduce a possibility for arbitrators to render awards on considerations beyond legal or contractual requirements.
In China, an arbitral tribunal is composed, at the discretion of the parties, of either a single arbitrator or of three arbitrators.60 In tribunals composed of three arbitrators, there must be a presiding arbitrator, whose opinion is decisive when the tribunal cannot reach a consensus.
Where the parties decide on a three-arbitrator tribunal, each of the parties is entitled to appoint one arbitrator or to entrust the chairman of the arbitration commission to make such appointment. The third arbitrator is jointly appointed by the parties or appointed by the chairman of the arbitration commission upon the parties’ joint authorization.
Where the parties choose a sole arbitrator, they must appoint the arbitrator jointly or entrust the arbitration commission to do so.61
The choices of the composition of the arbitral tribunal and the designation of arbitrators must be made within the time stipulated by the rules of the arbitration commission,62 otherwise the chairman of the arbitration commission will act in their stead.63
In the past, the CIETAC confined the choice of arbitrators to within its own Panel. Since the revisions of the Rules in 2005, the parties may agree to appoint coarbitrators, presiding arbitrators or sole arbitrators not on the CIETAC Panel.64
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If they doubt their impartiality or independence,65 parties may request the replacement of arbitrators, Both CIETAC Rules and CMAC Rules require that such requests should be made in writing with supporting evidence. Challenges must be raised no later than the first oral hearing. Where the facts supporting the withdrawal occur or become known after the first oral hearing, the request for withdrawal may be made up to the end of the last hearing.66 Until a decision is made, the challenged arbitrators continue to carry out their duties. In the event of withdrawal and replacement of an arbitrator, the arbitral tribunal decides whether to start the proceedings again.67
It is the parties’ obligation to produce evidence in support of the facts on which the claims, defences or counterclaims are based. Evidence may consist of objects, documentary evidence, experts’ reports, audio-video tapes, photographs and so on. Evidence is produced during the course of the hearing and the parties may substantiate, question and contest evidence.68
The arbitration tribunal may undertake investigations and collect evidence itself when it considers it necessary.69 The Arbitration Law does not impose any restriction on the tribunal’s scope of investigation and evidence collection. Under CIETAC Rules and CMAC Rules, if the tribunal carries out investigations, it must promptly inform the parties to be present during the procedures, but their absence is without effect on their pursuit.70
If the arbitration tribunal considers expert appraisal to be necessary, the task may be submitted to the appraisal department designated by the parties or to that designated by the tribunal. At the request of the parties or of the arbitration tribunal, the appraisal department is obliged to send experts to the hearing. Parties may, with the permission of the arbitration tribunal, question the appraisers.71
According to article 46 of the Arbitration Law, if evidence is perishable or if it may be hard to obtain in the future, the parties may request measures for its preservation. The arbitration commission is then supposed to submit the request to the people’s court of the location where the evidence is obtained. In maritime cases, however, where a party applies for preservation of maritime evidence before the commencement of arbitration proceedings, it must, according to articles 63 and 64 of the Maritime Procedure Law, submit the application directly to the maritime court at the place where the evidence is located.72
Oral hearings are not required in arbitration proceedings in China. The parties may agree to allow the arbitral tribunal to decide the case completely based on the claims, counter-claims and other documents.73
Oral hearings may be conducted in any language(s) agreed by the parties. In the absence of agreement, Chinese is used.
When the parties have agreed on the place of arbitration, any hearings are held at that place. Otherwise, the arbitration is conducted at the location indicated by the applicable arbitration rules.
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The claimant must attend any hearing. Absences of the claimant without legitimate reason and withdrawals during a hearing without the tribunal’s approval are considered as abandonments of the claims. However, a respondent’s absence does not interrupt the hearing and an award may be rendered by default.74
Before opening a hearing, the arbitral tribunal carefully examines the arguments and evidence so as to determine how to address the facts and legal issues that need to be clarified.
The conditions in which the parties to a proceeding exchange their pleadings and the limits on tactical abuses, such as late communication of a new key element of evidence, are vague.
At the start of a hearing, the claimant is given an opportunity to present its claim and then the respondent replies. Once the parties finish their opening presentations, the president of the panel (or the sole arbitrator) directs questions to each of the parties.75 During the hearing, parties may, with the permission of the tribunal, crossexamine witnesses. The parties are entitled to present a final statement at the end of hearing.76 Arbitral tribunals may set deadlines for submitting evidence after the first hearing. Where any witness cannot attend a hearing, an affidavit may be filed.
When the basic facts and legal issues are elucidated, the tribunal will call a recess and decide how to proceed. If any opportunity for settlement exists, the tribunal may suspend the hearing and provide conciliation between the parties in the manner it considers appropriate. Where one of the parties requests that conciliation be terminated or where the tribunal no longer considers a settlement possible, the effort is stopped and the arbitration continues
During the hearing, a recording and written minutes are made for the use of the arbitral tribunal. Parties present, including agents, witnesses and/or other involved persons are required to sign the minutes and are entitled to make corrections.77
As a general rule, hearings are private and none of the participants may reveal the substance or the status of any pending case.78 But arbitration tribunals may, with the consent of the parties, open hearings to the public.
Arbitration tribunals may be led to initiate their own collection of evidence, such as when the parties have no professional assistance.
In China, arbitration commissions apply to the people’s courts to compel communication of evidence.79
Interim awards may be rendered where the part of the facts then ascertained makes it opportune to do so. Such awards are final and binding as regards the issues involved.80 The proceedings then continue toward a final award on the remaining matters.81
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An award may be rendered based on an amicable settlement or on the tribunal’s decision. If, after the submission of a dispute to arbitration, an amicable settlement is reached without the involvement of the arbitral tribunal, the parties may withdraw from the arbitration or request the tribunal to make an award based on the settlement.82 Under the CIETAC Rules and the CMAC Rules, in such circumstances, either party may request the CIETAC or CMAC to constitute an arbitral tribunal83 to render an award in accordance with the terms of the amicable settlement agreement.84 If an amicable settlement is reached during the course of conciliation conducted by the tribunal, no matter that the settlement is reached outside or inside the tribunal, it will be treated as having been reached through the conciliation of the tribunal and an award will be made on its basis unless otherwise agreed by the parties.85
If an arbitral tribunal is composed of three arbitrators and an award is made by a majority decision, the award will be rendered by all three arbitrators or the majority of the arbitrators. When the arbitration tribunal fails to produce a majority opinion, an award will be made according to the view of the president of the panel. Minority opinions are recorded in writing,86 but under the CIETAC and CMAC Rules, they are not made available to the parties.87
Though arbitration tribunals decide their awards independently, they must submit their awards in draft form to the commissions for communication to the parties. It seems that the commissions do in fact review and comment on their contents to avoid manifest errors that compromise their enforceability.
Awards are final and binding on the parties from the date of their issue by the commission. Parties have 30 days within which to request corrections of any material errors.88
Parties to arbitration proceedings before the Chinese commissions must pay their fees in advance. The amount of fees is a function of the amount of the claims of the parties. Where this amount is not clear, the competent arbitration commission makes a determination.
The arbitration commissions pay arbitrators from the fees they receive. Travel expenses of the arbitrators and other expenses arising from the arbitration are also charged to the parties.
Under CIETAC Rules, fees and expenses awarded to the prevailing party, such as for lawyer’s fees and expert’s fees, are determined by the tribunals, provided that their total may not exceed 10% of the value of the award.89
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To guarantee the independence, impartiality and legality of arbitration, the legislator has established procedures for the courts to review awards.
If a party is not satisfied with an award by a Chinese arbitration commission or other arbitration tribunal in China, a challenge may be brought before the intermediate people’s court at the place where the arbitration commission is located.90 The burden of proof is on the claimant. When examining the case, the court must first determine whether or not the award is foreignrelated, and it then applies one or another set of criteria to make its decision.
For non-foreign-related awards, article 58 of the Arbitration Law lists the grounds on which a court may set aside an award at the request of a party:
The application must be filed with the court within six months of receipt of the award91 and the court must issue its judgment within two months from the date of the application.92
The Arbitration Law provides that the courts can set aside foreign-related awards under the circumstances provided in article 260 of the Civil Procedure Law, which are:
Accordingly, courts may set aside foreign-related awards on more grounds than those on which they may set aside non foreign-related awards. In particular, foreign-related awards may be set aside where the party against which the application for enforcement is made was not given notice of the appointment of an arbitrator or of the opening of the arbitration proceedings or was unable to present its case due to causes beyond its control.
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Awards which are set aside are considered void. They cannot be enforced in China and may not be enforceable in other countries either.93
Arbitration that rendered by Chinese arbitration institutions may be partially set aside. In cases where decisions in the award fall outside the scope of the arbitration agreement or the scope of the parties’ claims and such decisions can be separated from other decisions in the award, a court may set aside the part of award that contains those decisions.94
A panel of judges sits to hear and decide the case.95
On April 23, 1998, the SPC issued its Notice concerning the Setting Aside of Foreign-Related Arbitration Awards.96 Under the provisions of the Notice, any people’s court intending to set aside a foreign-related award must first obtain approval from the high people’s court in the same jurisdiction. Any high court that intends to uphold a lower court’s decision to set aside a foreign-related award must, in turn, report its intention to the SPC prior to finalizing the decision to set aside.
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Generally, a national legal system will contain two regimes for the enforcement of arbitration awards, one for domestic awards and other for foreign awards. In China, domestic awards are divided into non-foreign-related awards and foreign-related awards, which creates a threepronged mechanism for the enforcement of awards.
As stipulated by the SPC in its Trial Provisions on Several Matters of Enforcement by People’s Courts of 1998,97 enforcement of non-foreign-related awards is sought before the people’s court where the respondent is domiciled or possesses property (which are also criteria for determining a court’s jurisdiction under the Civil Procedure Law).
Article 217 of the Civil Procedure Law makes awards enforceable except in any of these circumstances:
In addition, if the people’s court determines that the execution of the arbitration award is against the social and public interest, it prohibits its enforcement.
A comparison with article 58 of the Arbitration Law governing the setting aside of domestic awards reveals similarities and differences.
Both provisions require a court to refuse to enforce a domestic award for want of a valid arbitration agreement, where the composition of the arbitration tribunal or the arbitration procedure are contrary to procedural requirements and where the matters are beyond the scope of the arbitration agreement or outside the jurisdiction of the arbitration commission, as well as where the arbitrators commit improprieties or the award violates social and public interests.
Under the Civil Procedure Law’s article 217, non-foreign related awards will not be enforceable where the evidence is insufficient or there is definite error of law.
Orders refusing enforcement are served on both parties and the arbitral organ.
If the execution of an arbitration award is disallowed, the parties may, in accordance with a written agreement on arbitration reached between them, apply for arbitration again or they may bring an action in a people’s court.
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For foreign-related awards, the Civil Procedure Law requires that applications for enforcement be made to an intermediate people’s court in the place where the defendant in the application for enforcement is domiciled or possesses property.98
Article 71 of the Arbitration Law provides that the grounds for refusals to enforce foreign-related arbitration awards are those stipulated in article 260 of the Civil Procedure Law, namely:
These requirements were applicable to enforcement of awards under article 58 of the Arbitration Law as well as under article 217 of the Civil Procedure Law for the enforcement of non-foreign-related awards.
Courts intending to deny enforcement of a foreign-related arbitration award must comply with the reporting system imposed by the SPC.99 In accordance with this system, where a party applies to a Chinese court for enforcement of a foreign-related arbitration award rendered by a Chinese arbitration institution, and where that court considers that one of the circumstances provided in article 260 of the Civil Procedure Law exists, the court must report to the high people’s court in its jurisdiction for review before ruling that the arbitration award will not be enforced; if the high people’s court agrees that the arbitration award should not be enforced, it reports its opinion to the SPC. Until receipt of the SPC’s approval, the lower courts will not pronounce a judgment that the arbitration award will not be enforced.
In deciding on the recognition and enforcement of a foreign arbitration award in China, the people’s courts apply the international treaties to which China is party as well as the principle of reciprocity.100
China has joined two important international conventions: the New York Convention and the Washington Convention instituting the International Centre for the Settlement of Investment Dispute (ICSID),101 which provides its own mechanism for the recognition and enforcement of arbitration awards rendered by tribunals established within member countries. In addition, China has signed a number of bilateral judicial assistance agreements providing for reciprocal recognition and enforcement of arbitration awards.
Article 269 of Civil Procedure Law defines “foreign awards” as those rendered by foreign arbitration institutions, whereas under the New York Convention they refer to those rendered on the territory of a State other than that where the recognition and enforcement are sought and those which are not considered as domestic awards in the State where their recognition and enforcement are sought.102
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Accordingly, a Chinese court will characterize as “foreign” arbitration awards either rendered by a foreign arbitration institution or rendered on the territory of a foreign country.
There is then debate about the appropriate qualification of awards rendered by foreign institutions in relation with arbitrations conducted in China, as well that of awards rendered by institutions in China but conducted outside its territory.
5.3.1. Competent court
According to article 269 of the Civil Procedure Law, to enforce a foreign arbitration award in China, an application is brought before the intermediate people’s court at the place where the party subjected to enforcement is domiciled or possesses property. According to the Notice of the SPC on the Implementation of the Convention on Recognition and Enforcement of Foreign Arbitration Awards,103 applications for recognition and enforcement of foreign awards should be filed with the intermediate people’s court in the following places:
5.3.2. Substantive conditions
In deciding whether to recognize and enforce a foreign arbitration award, China’s courts apply the international treaties to which China is party or, if there is no treaty or convention between China and the country where the award is rendered, they apply the principle of reciprocity.
There are some 140 contracting parties to the New York Convention and most of China’s bilateral treaties on mutual judicial assistance incorporate its provisions. Thus, in China, foreign arbitration awards are divided into two categories, depending on whether or not they fall within the scope of the Convention. In practice, the recognition and enforcement of foreign arbitration awards in China do almost always fall within the New York Convention.
When a party applies for enforcement of arbitration awards in China, two requirements must be satisfied for the New York Convention to be applied by the Chinese courts: the foreign award must have been rendered in another contracting state of the Convention, and the legal relationships concerned in the award must be commercial as understood in Chinese law.104
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According to the article 5(1) of New York Convention, Chinese courts will, at the request of the party concerned, refuse to recognize and enforce a New York Convention award, if it is established that:
China’s competent court may also refuse recognition and enforcement of a foreign award if it finds that:
The reasons in article 5 of the New York Convention for which the recognition and enforcement of foreign arbitration awards may be refused are virtually identical to the reasons for setting aside foreign-related arbitration awards under article 260 of the Civil Procedure Law.
Challenges to local recognition or enforcement of foreign awards based on any of first five conditions must be raised by the parties.
The latter two challenges may also be raised by the court itself.
Upon receipt of an application for enforcement of a foreign award, the people’s court with jurisdiction over the case verifies whether:
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Pursuant to the provisions of the Arbitration Law, disputes arising from marriage, adoption, guardianship, raising of children and inheritance, as well as disputes attributed by law to the jurisdiction of administrative organs, are excluded from arbitration, and recognition and enforcement of such foreign arbitration awards would be refused in China.108
The concepts of “public policy”, “public interest” and “public order” are applied with circumspection by Chinese judges, who generally follow the international trend toward limiting the scope of judicial review of arbitration.
In China, there have been only a few cases in which courts have refused to recognize or enforce foreign arbitration awards and these refusals were based on the inexistence or invalidity of arbitration agreements.
5.3.3. Pre-reporting system
The SPC’s Notice of the People’s Court’s Handling of Several Issues concerning Foreign-related and Foreign Awards of August 29, 1995 imposes the reporting system for intended refusals to recognize and enforce foreign arbitration awards. It provides that, where a party applies to a people’s court for recognition or enforcement of an arbitration award by a foreign arbitration institution, if China’s court considers that recognition and enforcement are inconsistent with the Conventions adopted by China or the principle of reciprocity, the court must report to the high people’s court in its jurisdiction for review before ruling that the arbitration award will not be recognized and enforced. If the high people’s court agrees that the arbitration award should not be recognized or enforced, it must report its opinion to the SPC. The decision to refuse to enforce the arbitration award will not be pronounced until receipt of its response.
5.4.1. Hong Kong awards
Since the return of Hong Kong to Chinese sovereignty on July 1, 1997, the New York Convention ought not to be applied to enforcement of arbitration awards between the Mainland and Hong Kong. In Hong Kong, parties apply for enforcement according to local law.
Before Chinese courts, there has been a lack of legal basis for recognizing and enforcing Hong Kong arbitration awards, since they qualify as neither domestic, whether foreign-related or not, nor foreign.
The Arrangement Concerning Mutual Enforcement of Arbitration Awards between the Mainland and Hong Kong was concluded to address these issues. The arrangement was promulgated by the SPC in the form of a Judicial Interpretation on January 24, 2000, effective as from February 1, 2000.109 The Hong Kong Legislative Council also amended the Arbitration Ordinance in January 2000, incorporating the Arrangement and putting it into effect.
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Where a party fails to comply with an arbitration award, whether made on the mainland or in Hong Kong, the other party may apply to the relevant court in the place where the party against whom the application is filed is domiciled or possesses property. In the case of the Mainland, the competent level of court is the intermediate people’s court and, in the case of Hong Kong, the competent court means the High Court.
Where the party against whom the application is filed is domiciled and possesses property both on the mainland and in Hong Kong, the application may be filed with the competent courts of each place. Only when the result of the enforcement of the award by the court of one jurisdiction is insufficient to satisfy the liabilities may the applicant go to the court of the other jurisdiction for enforcement of what remains outstanding. The total amount recovered from enforcing the award in the courts of both jurisdictions may not exceed the amount of the award.
Applications for enforcement made on the mainland must be in Chinese. If the arbitration award or arbitration agreement is not in Chinese, the applicant must submit a duly certified Chinese translation.
The limitation period for applying to the competent court for enforcement of an arbitration award, whether made on the Mainland or in Hong Kong, is governed by the law of the place of enforcement.
Upon receipt of an application for enforcement, the competent court must process the application and enforce the award according to local procedures.
The party against whom an application is filed may, regardless whether the award was rendered on the Mainland or in Hong Kong, contest its enforcement by proving the existence of any of the following:
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If the competent court finds that under the law of the place of enforcement, the dispute is excluded from arbitration, it may refuse to enforce the award. Enforcement of the award is refused if it is judged to be contrary to the “public interest” by a mainland court or contrary to “public policy” if the court is in Hong Kong.
In addition to the awards of CIETAC and CMAC, the awards of about 100 local arbitration commissions are also enforceable in Hong Kong by virtue of being included on the list issued by the Legislative Office of the State Council, which revises it from time to time.
5.4.2. Macao awards
In Macao, a new domestic arbitration system was established in 1996111 and a new international arbitration system in 1998.112 After the transfer of sovereignty over Macao, the recognition and enforcement of arbitration awards rendered in any State or region, including mainland China, are subject to the international regime.
The international regime corresponds almost perfectly to the model law on international commercial arbitration prepared by the UNCITRAL. It covers international commercial arbitration in Macao , except for litigation concerning disputes under arbitration, for applications for interim protection and for recognition and enforcement of arbitration awards.
Arbitration awards, irrespective of the State or territory in which they were rendered, are recognized as binding and, upon application in writing to the competent court, may be enforced. Recognition or enforcement of an arbitration award may be refused only when one of the following situations is proved by a party:
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Where the court finds that one of the following situations exists, it may refuse to recognize or enforce the award:
In mainland China, Macao arbitration awards are neither foreign, nor mainland domestic, nor foreign-related. There is no relevant provision in this respect either in the Arbitration Law and or in the SPC’s interpretations. The competent authority in mainland China is expected to resolve this problem as soon as possible in order to avoid delays in recognizing and enforcing Macao arbitration awards.
5.4.3. Taiwan awards
To meet the needs of economic and trade development between the mainland and Taiwan and to facilitate the proper resolution of economic and trade disputes, the State Council has issued the Regulations on Encouraging Investments by Taiwan Compatriots in 1988.113 Taiwan investors on the mainland may submit disputes in connection with their contracts to arbitration institutions on the mainland or in Hong Kong.
In 1992, Taiwan issued the Act on Governing the People’s Relations between Taiwan Region and the mainland, which provides that “civil judgments or arbitration awards rendered on the mainland may be submitted to the courts for recognition, provided that they are not contrary to public policy in Taiwan.”114
On January 15, 1998, the SPC adopted its Provisions on the Recognition by the People’s Courts of Civil Judgments Rendered in Taiwan Region.115 The Provisions are applied in the recognition and enforcement of arbitration awards rendered by Taiwan arbitration institutions and of civil judgments of courts in Taiwan, where the relevant provisions in the Civil Procedure Law are followed.116 Taiwan’s civil judgments will not be recognized or enforced if:
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As in many other compartments of Chinese law, the challenges in the future lie less in the adoption of texts, which overall meet or surpass international standards, than in their actual implementation. In the arbitration context, the issue is alleged117 to manifest itself with particular acuity in the enforcement of awards where local economic and political interests are at stake.
For China’s international trade partners, the conditions of the New York Convention will most often apply to their arbitration agreements.
For operators of businesses in China, arbitration proceedings will be covered, as regards their foreign-related contracts by a regime not substantially different from that under the New York Convention and, for their contracts located in China, by a regime authorizing the courts to review not only for procedural unfairness but also on the merits. Whether the availability of recourses on the merits will prove overall advantageous or not to foreign businesses in China remains to be seen.
1 Article 18 of the Arbitration Law which was adopted at the Eighth Session of the Standing Committee of the Eighth NPC and promulgated on August 31, 1994, and which came into effect on September 1, 1995.
2 The Law was adopted at the Second Session of the Seventh NPC on April 4, 1989, promulgated on April 4, 1989, and entered into effect as of October 1, 1990.
3 Article 71 of Administrative Procedure Law and Article 5 of the Civil Procedure Law.
4 On the other hand, Article 15 of the Foreign Lawyer Regulations issued by the State Council which came into effect on January 1, 2002, stipulates that “Chinese legal affairs” are to be handled by Chinese law firms, so arguably foreign lawyers may not advise on or plead Chinese law before arbitration commissions in China.
5 Article 308 of the Opinions of the Supreme People’s Court (SPC) on Several Issues concerning the Application of Civil Procedure Law, issued on July 14, 1992 and adopted at the 528th Session of the Judicial Committee of SPC, No.22 Judicial Notices (1992).
6 The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, to which China acceded on April 22, 1987.
7 Approximately 21 countries have signed bilateral judicial assistance agreements with China for reciprocal enforcement of civil judgements. (http://www.legalinfo.gov.cn/gb/sfxzws/node_218.htm2004, the website of Department of Judicial Assistance and Foreign Affairs, in Chinese)
8 For example, article 4(2) of the CIETAC Rules and article 7 of CMAC Rules.
9 Article 103 of the Civil Procedure Law.
10 Article 3 of the Arbitration Law excludes from its scope disputes over marriage (financial consequences), adoption, guardianship, child maintenance and inheritance; and administrative disputes falling within the jurisdiction of the relevant administrative organs. Nor does the Arbitration Law apply to labour disputes or disputes with agricultural collectives.
11 Article 5 of the Arbitration Law.
12 Article 9 of the Arbitration Law.
13 The Law was adopted at the Fourth Session of the Seventh NPC on April 9, 1991, promulgated on April 9, 1991, and became effective as of the date of promulgation.
14 The Law was adopted at the Fourth Session of the Sixth NPC, promulgated on April 12, 1986, and it became effective as of January 1, 1987.
15 The Law was adopted and promulgated by the Second Session of the Ninth NPC on March 15, 1999.
16 The Law was adopted by the Second Session of the Fifth NPC on July 1, 1979 and revised in accordance by the Resolution of Revision of the Law on Sino-Foreign Joint Ventures adopted at the Third Session of the Seventh NPC on April 4, 1990, revised for the second time in accordance with the Resolution on Revision of the Law on Sino-Foreign Joint Ventures adopted at the Fourth Session of the Ninth NPC on March 15, 2001
17 The Regulations was promulgated by the State Council on Sep. 20, 1983, amended by the State Council on Jan.15 1986, Dec.21, 1987, and amended by the State Council according to the Decision of the State Council on Amending the Regulations for the Implementation of the Law adopted at Joint Venture on July 22, 2001
18 The Law was adopted at the First Session of the Seventh NPC, and revised according to the Decision Modifying the Law on Sino-Foreign Contractual Joint Ventures adopted at the 18th Session of the Standing Committee of the NPC on October 31, 2000, and promulgated on October 31, 2000.
19 The Notice was promulgated in 1996.
20 The expression “judicial interpretation” refers to the interpretations, replies or notices of the SPC, articles 4 of 9 of the Several Provisions of the SPC on Judicial Interpretation, issued on June, 23, 1997, No. 15 Judicial Notices (1997).
21 Several Opinions of the SPC on Implementation of the General Principles of Civil Law (Trial), adopted on January 26, 1988 by the Judicial Committee of SPC and issued on April 2, 1988, No. 6 Judicial Notices (Office) (1988); the Several Opinions of the SPC on Implementation of the Civil Procedure Law, adopted at the 528th Session of the Judicial Committee of SPC and issued on July 14, 1992, No.22 Judicial Notices (1992).
22 It was originally designated as the Foreign Trade Arbitration Commission. In 1980, it was renamed the Foreign Economic and Trade Arbitration Commission and acquired its present designation as CIETAC in 1988. Since October 1, 2000, it is also known as the Court of Arbitration of the China Chamber of International Commerce.
23 It is also known as the China Chamber of International Commerce.
24 Annual Caseload Table in CIETAC http://www.cietac.org.cn/jieshao/jieshao_4.htm2004.
25 Xu et al., One Country, Two International Commercial Arbitration Systems, Journal of International Arbitration 2000.
26 At http://www.cietac.org.cn/jieshao/jieshao_4.htm. 2004
27 CIETAC’s amended Rules became effective as of October 1, 2000.
28 Chapter 5 of CIETAC’s Rules as amended in 2005.
29 Model Arbitration Clause, China International Economic and Trade Arbitration Commission Arbitration Rules, effective as of May 1, 2005, p. 7.
30 Revised and Adopted by the CCPIT on March 17, 2005 with effect as from May 1, 2005.
31 For example, if the amount of the claim is RMB 5,000,000 in an international financial dispute, the arbitration fee will be RMB 144,999.98 under CIETAC Rules 2000, while it only will be RMB 64,999.99 under FDAR. The fee schedule may be found at http://www.cietac.org.cn/english/fee/fee_3.htm 2004.
32 These appreciations are made by the CIETAC, article 3 of the FDAR. On the other hand, references to the FDAR without mention of CIETAC will be construed as seizing CIETAC of the dispute and the FDAR will be applied, article 4 of the FDAR.
33 Article 26 of the FDAR.
34 Appendix I, Model Arbitration Clause, China International Economic and Trade Arbitration Commission Financial Disputes Arbitration Rules, Effective as from May 1, 2005, p.21.
35 Article 6 of the FDAR.
36 Article 22 of the FDAR.
37 The CMAC Rules 2001 are effective as from the 1 January 2001.
38 Article 2 of CMAC Rules.
39 Article 2 of CMAC Rules.
40 http://www.bjbusiness.com.cn/20031119/shijian1.htm 2004 in Chinese.
41 Issued on June 8, 1996, No.22 Document of the General Office of State Council’s Issue (1996).
42 Article 257 of the Civil Procedure Law, article 15 of the Law on Sino-Foreign Equity Joint Ventures, article 25 of the Law on Sino-Foreign Contractual Joint Ventures, and article 128 of the Contract Law.
43 Under article 20 of the CIETAC Rules, claims must be filed in a number of copies corresponding to the number of opposing parties plus one copy for each arbitrator and one for the commission. Failure to provide the required number of copies may result in rejection of the application.
44 For instance, CIETAC has instituted summary proceedings for claims of less than RM 500,000, articles 50-58 of its Rules. These proceedings should be completed within 90 days, article 56 of the CIETAC Rules.
45 If a property preservation order is unfounded, the applicant may be obliged to compensate the party against whom the order was made for any losses sustained as a result of its implementation, article 28 of the Arbitration Law.
46 The agreement might well arise implicitly from the conduct of the parties to an exchange of unsigned standard forms.
47 Article 16 of the Arbitration Law. Parties should be careful in identifying the Chinese commission as, for instance, the Shenzhen Sub-Commission of CIETAC is not the same organization as the Shenzhen Arbitration Commission, which is operated by the Shenzhen Chamber of Commerce.
48 Article 17 of the Arbitration Law.
49 Article 19 of the Arbitration Law.
50 Article 20 of the Arbitration Law.
51 Article 20 of the Arbitration Law.
52 The Reply of the SPC on the Matter on Which Level of Court Has Jurisdiction over the Party’s Challenge to the Validity of Arbitration Agreement, adopted on July 20, 2000 at the 1126th Session of the Judicial Committee of SPC, No.25 Judicial Interpretations (2000).
53 Article 31 of the CIETAC Rules.
54 Article 31 of the CIETAC Rules.
55 Article 4 of the General Principles of Civil Law protects the will of the parties in civil transactions.
56 Han Jian, Theory and Practice of Modern International Commercial Arbitration Law, Law Press, China 2000, p. 278.
57 Article 150 of the General Principles of Civil Law.
58 Article 126 of the Contract Law.
59 Article of the 126 of the Contract Law.
60 Article 30 of the Arbitration Law.
61 Under the CIETAC Rules, unless the parties agree otherwise, the Chairman of the CIETAC appoints a sole arbitrator to form such arbitral tribunal, article 40(1) of CIETAC Rules. In the CMAC case, the parties may nominate a mutually agreed sole arbitrator, or request the Chairman of the CMAC to appoint one sole arbitrator to form such arbitral tribunal, article 51(3) of CMAC Rules.
62 For instance, under article 16 of the CIETAC Rules, the parties must propose arbitrators within 20 days from receipt of the arbitration notice.
63 Articles 31 and 32 of the Arbitration Law.
64 Article 21(2) of the Arbitration Law; however, such an appointment outside the Panel of Arbitrators must be confirmed by the Chairman of the CIETAC.
65 Article 34 of the Arbitration Law specifies the circumstances in which the arbitrator should withdraw: where he(she) is one of the parties in the arbitration, or he is a close relative of any one party, or a relative of an agent; where he has a vital interest in the arbitration; where he is related to the parties, or their agents, in other respects in the case and the relationship may affect an impartial arbitration; or where he has had private meetings with the parties or with their agents or when he has accepted the invitation of the parties or their agents to dine or accepted their gifts.
66 Article 35 of the Arbitration Law.
67 Article 37 of the Arbitration Law. Under CIETAC Rules (article 30), the Chairman of the Commission decides what consequences to attach to the removal application.
68 Article 45 of the Arbitration Law.
69 Article 43 of the Arbitration Law.
70 Article 37(2) of CIETAC Rules and article 36 of CMAC Rules.
71 Article 44 of the Arbitration Law.
72 There may be debate about whether a people’s court would hear a claim for an interim order in the face of an arbitration clause in the absence of a contractual attribution of competence to the people’s courts for imposing interim measures.
73 Article 39 of the Arbitration Law.
74 Article 42 of the Arbitration Law. Where a party cannot attend a scheduled hearing, it should notify the Commission within the time allowed under its rules and request a postponement.
75 In arbitration proceedings in China, etiquette requires that parties only express opinions once the opposing party has finished speaking or when the arbitrators have no further questions. Fierce argumentation between the parties or their representatives is avoided.
76 Article 47 of the Arbitration Law.
77 Article 48 of the Arbitration Law.
78 CIETAC Rules, article 37.
79 Applications involving foreign-related matters are brought before intermediate people’s courts whereas non-foreign related matters are submitted to courts of first instance.
80 Article 55 of the Arbitration Law.
81 Though arbitration tribunals have no powers to enforce such interim awards, the party at fault might seriously jeopardize the chances of prevailing in the proceedings.
82 Article 49 of the Arbitration Law.
83 In the CIETAC Rules, unless the parties agree otherwise, the Chairman of the CIETAC appoints a sole arbitrator to form the arbitral tribunal, article 40(1) of CIETAC Rules. In the CMAC case, the parties may nominate a mutually agreed sole arbitrator, or request the Chairman of the CMAC to appoint a sole arbitrator to form the arbitral tribunal, article 51(3) of CMAC Rules.
84 Article 40(1) of CIEAC Rules and article 51(3) of CMAC Rules.
85 Articles 40(5) and (6) of the CIETAC Rules and article 51(4) of the CMAC Rules.
86 Article 53 of the Arbitration Law.
87 Article 43(4) and (5) of the CIETAC Rules and Article 51(4) of the CMAC Rules.
88 Article 56 of the Arbitration Law.
89 Article 54 of the Arbitration Law and article 55 of the CIETAC Rules.
90 Article 58 of the Provisions of the SPC concerning Several Matters of the Jurisdiction of Foreign-related Civil and Commercial Case, adopted on December 25, 2001 at the 1203rd Session of the Judicial Committee of SPC, and issued on February 25, 2002.
91 Article 59 of the Arbitration Law.
92 Article 60 of the Arbitration Law.
93 For example, under French law, a foreign award may be enforceable despite having been set aside in the country of the seat of arbitration.
94 The Reply of the SPC on Whether an Arbitral Award Rendered by a Chinese Arbitration Institution Can be Partially Set Aside, adopted on June 26, 1999 at the 1071st Session of the Judicial Committee of the SPC, No. 16 Judicial Interpretations (1999).
95 Article 59 of the Arbitration Law.
96 The Notice of the SPC concerning the Matters of Setting Aside Foreign-Related Arbitral Awards, issued on April 23, 1998, No.40 Court Documents (1998).
97 Adopted on June 11, 1998, at the 992nd Session of the Judicial Committee of SPC, No.15 Judicial Interpretations.
98 Article 259 of Civil Procedure Law.
99 The Notice of the SPC on the People’s Court’s Handling of Several Issues concerning Foreign-Related Arbitration and Foreign Arbitration, issued on August 29, 1995, No. 18 Judicial Notices (1995).
100 Article 269 of the Civil Procedure Law 1991.
101 As of 2003, there were 139 member countries. China acceded to the treaty in 1993.
102 Article 1(1) of the Convention on the Recognition and Enforcement of Foreign Arbitration Awards, 1958.
103 The Notice of the SPC on the Implementation of the Convention on Recognition and Enforcement of Foreign Arbitral Awards Acceded to by China, issued on April 10, 1987, No. 5 Judicial (Economy) Notices (1987).
104 Commercial relationships under Chinese law mean those involving economic rights and obligations by reason of contracts, torts (such as fraud) or provisions of law, for instance, sales of goods, leases of property, construction projects, processing business, transfers of technology, equity joint ventures, contractual joint ventures, exploration and development of natural resources, insurance, loans, labour, agency, counselling services, carriage of passengers and goods by sea, by civil aviation, by railway and by road, and products liability, environmental pollution, marine accidents and disputes over ownership and so on, but not including disputes between foreign investors and the Government according to the Notice of the SPC on Implementation of the Convention on Recognition and Enforcement of Foreign Arbitral Awards to which China Has Acceded, 1987.
105 Whether a subject matter is capable of settlement by arbitration is normally called a question of “arbitrability”.
106 The Notice of the SPC on Implementation of the Convention on Recognition and Enforcement of Foreign Arbitral Awards, Acceded to by China, issued on April 10, 1987, No.5 Judicial (Economy) Notices (1987).
107 Article 268 of the Civil Procedure Law.
108 Article 3 of the Arbitration Law.
109 Adopted on June 18, 1999 at the 1069th Session of the Judicial Committee of SPC, No. 3 Judicial Interpretations (2000).
110 However, if the award contains decisions on matters submitted to arbitration that can be separated from those not so submitted, that part of the award that contains decisions on matters submitted to arbitration is enforced.
111 Decree-Law No. 29/96/M approved by the Governor on May 29, 1996 for publication on 11 July 1996.
112 Decree-Law No. 55/98/M approved by the Governor on November 13, 1998.
113 The Regulation on Encouraging Investments by Taiwan Compatriots was adopted on June 25, 1988 by the State Council on July 3, 1988.
114 Article 74.
115 The Provisions of the SPC on Recognition by the People’s Court of the Civil Judgments Rendered in Taiwan issued by the SPC, adopted on January 15, 1998 at the 957th Session of the Judicial Committee of SPC, No. 11 Judicial Interpretations (1998).
116 Articles 18 and 19.
117 Published reports of actual cases of unfair treatment of foreign enterprises are for the most part undocumented.