Arbitration and Conciliation: Resolving Commercial Disputes in China

Loyola of Los Angeles International and Comparative Law Review, Dec 1989

By Shi Weisan, Published on 12/01/89

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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 Comparative Law Review 0 Recommended Citation 0 0 Thi s Symposium is brought to you for free and open access by the Law Reviews at Digital Commons @ Loyola Marymount University and Loyola Law School. It has been accepted for inclusion in Loyola of Los Angeles International and Comparative Law Review by an authorized administrator of Digital - 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)


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Shi Weisan. Arbitration and Conciliation: Resolving Commercial Disputes in China, Loyola of Los Angeles International and Comparative Law Review, 1989, Volume 12, Issue 1,