Originally from Dispute Resolution Journal

The growing globalization of the world, and China’s increasing importance as a trading partner has increased interest in China’s arbitration law and its arbitral institutions. This article provides an overview of arbitration in China, covering both the domestic law and the special provisions that apply to foreign-related awards. In addition, the author clarifies a number of important issues, including the procedure for setting aside awards, and he reports on the latest developments by the Chinese government to ensure that these procedures are not abused by the courts.

Chinese culture has fostered the fine tradition of resolving disputes through arbitration. As early as 1979, Chinese law (for example, the Law of the People’s Republic of China on Joint Venture Using Chinese and Foreign Investment 1979) has endorsed arbitration as a useful method for resolving international commercial and investment disputes. Indeed, companies throughout the world have demonstrated a strong preference to arbitrate disputes arising out of international business transactions. The importance of arbitration in the international community can be expected to grow with the increasing globalization of the world economy. This article provides an introduction to the arbitration law of China and how arbitration proceedings in China are carried out.

Arbitration Before 1994

Before 1994, there was no arbitration law to regulate the arbitration activities throughout China. Yet there were mandatory domestic arbitrations conducted by numerous domestic arbitration institutions attached to the State Administration of Industry and Commerce and its subordinate agencies. No arbitration agreement was required in order to arbitrate. Moreover, the arbitral award was not final. These proceedings passed as arbitration but they were, in effect, administrative proceedings to settle economic disputes, combining arbitration, administration and adjudication. This is far from the proper concept of arbitration.

In the international arena, since the 1950s, China has adopted, as a matter of international practice, the system of voluntary arbitration with its final, binding award. In 1956 and 1959, respectively, the first two Chinese international arbitration institutions—the China International Economic and Trade Arbitration Commission (CIETAC) and the China Maritime Arbitration Commission (CMAC)—were founded under the auspices of the China Council for the Promotion of International Trade (CCPIT) and the China Chamber of International Commerce (CCOIC). Since their founding, CIETAC and CMAC have heard all international arbitration cases.