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Kim Van der Borght, Research Chair Asia-Pacifi c Studies and Professor of International Economic Law and Diplomacy at the Centre forEconomic Law and Governance at the Vrije Universiteit Brussel (Belgium) and Reader in Law at the University of Westminster (England).,
Saisai Wang, Lecturer in the Law School of Shandong University of Finance and Economics and a lawyer of Shandong Jointide Law Firm
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.
This book offers different perspectives on China’s business and law. It aims to offer an introduction into both theoretical and practical aspects of China’s law on foreign related business affairs. This comprises economic and political background information, including China’s economic evolution and China-EU trade relations, in addition to more detailed information on selected subject areas important to foreign related business affairs in China, namely commercial arbitration law, contract law ,company law , IPR protection, financial law, foreign direct investment law, and also the establishment of overseas branches of Chinese companies in the EU. Perspectives on Chinese Business and Law thus introduces the reader to the current Chinese legislations on foreign related business.Dr Łukasz Gołota is Assistant Professor at the Institute of International Relations, Warsaw University, Section of Political Economy, Poland.Dr Jiaxiang Hu is Professor of Law at KuGuan Law School, Shanghai Jiao Tong University, China.Dr Kim Van Der Borght is Professor of International Economic Law & Diplomacy at the Vrije Universiteit Brussel, Belgium. Saisai Wang is a Lecturer of Law at the Law School of the Shandong University of Finance and Economics, China and a lawyer at Shandong Jointide Law Firm, China.
Lei Zhang, Researcher at the Centre for Private & Economic Law at the Vrije Universiteit Brussel (VUB) and a lecturer at VUB Confucius Institute,
Kim Van der Borght, Research Chair Asia-Pacific Studies and Professor of International Economic Law and Diplomacy at the Centre forEconomic Law and Governance at the Vrije Universiteit Brussel (Belgium) and Reader in Law at the University of Westminster (England).
Economic and trade relations between Europe and China have developed for a long time. The two sides have conducted goods exchange for over two thousand years. The clearest proof of this is the Silk Road, which dates back to the Han Dynasty (B.C. 202 – A.C. 8) stretching from Chang'an (currently Xi'an) to Ancient Rome. This chapter discusses bilateral economic and trade relations after the EEC, and later the EU after its formation in 1993, and China established their official diplomatic relations in 1975.
START AND FIRST DEVELOPMENT OF EEC/EU-CHINA RELATIONS
On 4 May 1975, the Vice-President of the European Commission, Christopher Soames, visited China and met Chinese Premier, Zhou Enlai. At that time, China made a decision to accredit an ambassador from the European Economic Community (EEC). On 16 September 1975 the EEC and China established official relations, opening a new chapter of bilateral relations.
The EEC and China established diplomatic relations in the Cold War era. At that time, the USA considered China as an “enemy ”, but European countries continued trading with China. Furthermore, a number of European countries established formal diplomatic relations with China even before 1975, e.g. Italy (1970), Belgium (1971), the Federal Republic of Germany (1972) and Luxemburg (1972). The EEC and China established their diplomatic relations in the Cold War era mainly because they desired to develop economic cooperation and anticipated economic and political mutual benefits. From this point of view, we can see EEC-China relations were pragmatic from the very beginning.
Notwithstanding the establishment of diplomatic relations, trade between the EEC and China did not see significant changes in the first three years, from 1975 to 1977 (see Figure 3. 1).
Trade volume had small increase in 1976 but declined in 1977. Generally speaking, there was not significant stable growth in trade. The USA and European countries restricted relations with China. The USA did not even establish official diplomatic relations with the People's Republic of China. Furthermore, there was the Cultural Revolution in China so the state's emphasis was on the class struggle rather than economic development and trade cooperation.
In the European media, China is present in daily reporting. Yet, a decade ago, it merely merited an occasional glance for its rapid economic change and expansion. Today, it is a central player in the international economic order. Indeed, according to some estimates, it is the biggest player in the international economic order. Economic relations between China and the European Union have grown in importance, yet a comprehensive new trade agreement is not in sight. This is a symptom of the unease of the international economic governance system where China's rise is resisted by organizations, structures and diplomatic and legal cultures emanating from a world order that has been dominated by the United States since the Second World War. Yet, this era is over. Not as Fukuyama has proclaimed with a confirmation of the American model as the sole successful model but through the emergence of an expected plurality of actors and variety of models that defies the comfortable realities of international organizations dominated by the interests of a small group of states led by the United States.
This book contributes to the debate and understanding on China by offering insights and perspectives from both Chinese and European scholars on themes related to business and economic aff airs. The double perspective avoids the familiarity paradox of a Chinese system that has drawn on European experiences in organizing and regulating its economic system since the 1970s when China relied on legal transplants from Europe to overhaul its legal system. Chinese civil and commercial law is largely inspired by, based on or completely copied from European legal systems. As such, these rules in themselves are neither Chinese nor socialist. However, in the interpretation, usage and development, these rules – ostensibly familiar – have become part and parcel of a governance system and an economic system that is Chinese and is socialist with Chinese characteristics. The blackletter laws are hence different from the law in reality and as it is applied. The same rules in Europe and in China create different legal and economic realities.