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  • Print publication year: 2018
  • Online publication date: January 2019

Foreign Related Commercial Arbitration in China

Summary

INTRODUCTION

Arbitration is one of the methods to solve international business disputes in China. Compared to court and other alternative dispute resolution systems, arbitration, in China as well as internationally, has two advantageous characteristics for business. First, the choice of arbitration is based on the autonomy of the parties who decide whether to use arbitration or not, which makes arbitration different from court procedure where one party can force another party to engage in proceedings. Second, the award of the arbitration body is binding, so one party can ask for the enforcement of the arbitration award where the other party refuses to implement the award. The second characteristic distinguishes arbitration from other alternative dispute resolution systems, such as mediation and conciliation. This chapter introduces commercial arbitration as regulated by the Arbitration Law of the People's Republic of China (PRC).

FOREIGN-RELATED COMMERCIAL DISPUTE

The disputes discussed in this chapter involve foreign-related commercial relations. They have the following common characteristics:

  • a. Foreign-related disputes require that at least one factor of the legal nexus is foreign related, and the factor may be the object of the legal relation, the subject of the legal relation and the content of the legal relation, including the legal rights and the legal obligations.
  • b. Commercial disputes include those arising from commercial relations, such as disputes relating to trade or investment. The Arbitration Law of the PRC explicitly excludes disputes related to family law and administrative law.
  • c. Commercial arbitration under the Arbitration Law of the PRC focuses on dispute settlements between legal person(s) and/or natural person(s) in China. Article 2 of the Arbitration Law of the PRC (1995) provides that citizens, legal persons and other organizations who have equal positions in law may submit their commercial disputes to arbitration. This excludes disputes between states and disputes between a state and foreigners.
  • NATURE OF FOREIGN-RELATED COMMERCIAL ARBITRATION

    The Arbitration Law of the PRC distinguishes between domestic arbitration and foreign related arbitration. The law regulates matters of foreign related arbitration in China in a dedicated chapter. However, this classification is more in academic writing than in practical application, since the Arbitration Law of the PRC does not strictly prohibit the jurisdiction of the Chinese domestic arbitration institution from hearing foreign-related disputes.