Arbitration and Conciliation: Resolving Commercial Disputes in China
Shi Weisan, Arbitration and Conciliation: Resolving Commercial Disputes in China
Arbitration and Conciliation: Resolving Commercial Disputes in China
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SHI WEISAN*
I.
ARBITRAL BODIES
In order to meet the needs of China's developing foreign trade
and ocean shipping business, the China Council for the Promotion of
International Trade (CCPIT) set up the Foreign Trade Arbitration
Commission (FTAC) in 1956 and the Maritime Arbitration
Commission (MAC) in 1959. These agencies were set up in accordance with
two decisions adopted by the former Government Administration
Council in 1954 and the State Council in 1958, respectively. In
February 1980, to keep pace with the further expansion of China's
economic and trade relations with foreign countries, the State Council
renamed the Foreign Trade Arbitration Commission as the Foreign
Economic and Trade Arbitration Commission (FETAC). Along with
the name change, FETAC's jurisdiction was enlarged, and its
members increased in number. FETAC handled disputes arising from
foreign trade and economic transactions with foreign countries. It also
resolved any disputes arising from foreign trade with agencies created
to purchase or sell merchandise. Among the disputes under
FETAC's jurisdiction were those regarding material processing, parts
assembly, compensation and trade. Although FETAC was allowed to
handle a wide scope of disputes, it heard only those cases in which an
arbitration agreement had been concluded between the disputing
parties.
On June 21, 1988, the State Council of the People's Republic of
China approved the renaming of FETAC as the China International
Economic and Trade Arbitration Commission (CIETAC).
CIETAC's jurisdiction covers all disputes arising from international
economic and trade transactions. t On the same date, the Maritime
Arbitration Commission was renamed as the China Maritime
Arbitration Commission (CMAC).
* Vice President & Associate Professor of Law, University of International Business &
Economics, Beijing, China.
1. See Appendix, infra, for a more detailed discussion and comparison of the rules under
FETAC and CIETAC.
Practice
Arbitration is rather popular in China. Most sales contracts and
investment contracts signed between Chinese and foreign parties
include arbitration clauses. Many arbitration cases between Chinese
and foreign parties occur inside and outside of China.
Two arbitration commissions and one conciliation center exist in
China for the purpose of settling international commercial and
maritime disputes. They are CIETAC, CMAC, and the Beijing
Conciliation Centre (BCC).
CIETAC currently has a subcommission in the Shenzhen Special
Economic Zone in the south of China which handles local cases
involving foreign interests. It will soon have another subcommission in
Shanghai. CIETAC is now handling more than 250 arbitration cases.
This figure exceeds the number of cases being handled by most of the
other international arbitration bodies. In addition, CMAC is
arbitrating thirty cases and BCC is conciliating eleven cases. These cases are
all international cases involving parties from the United States, West
Germany, the United Kingdom, Canada, France, Japan, Italy,
Poland, Czechoslovakia, Yugoslavia, Norway, Cuba, Liberia, Singapore,
Peru, Pakistan, India, Spain, Hungary, East Germany, Austria,
Thailand, Fiji, Lebanon, Panama, Hong Kong and the Macao regions.
Under Chinese law, an arbitration agreement can be made in any
form, but it must be expressed in writing. Letters, telexes, telegrams
or telefaxes are all sufficient writings. An agreement to submit an
existing dispute to arbitration and an arbitration clause in a contract
relating to future disputes are both recognized as valid arbitration
agreements. In practice, however, the Chinese arbitration
commissions exercise jurisdiction over any case in which one party applies for
arbitration and the other party responds. This is true even if the
parties have not previously concluded an arbitration agreement.
The claimant and the respondent may each appoint an arbitrator,
or entrust the chairman of CIETAC to appoint one on their behalf.
Both parties, however, must use an arbitrator from CIETAC's Panel
List. The Panel List of CIETAC is a list of arbitrators who have
special expertise or practical experience in the fields of international
trade, scientific technology, or law. These arbitrators may be of either
Chinese or foreign citizenship.
The use of foreigners as arbitrators is a major development in the
new rules. According to the old Provisional Rules of Arbitration,
only Chinese citizens could be arbitrators. The new amendment,
howe (...truncated)