Originally from Dispute Resolution in China - Second Edition

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I. Introduction

Arbitration as a means of resolving disputes arising from foreign trade is well established in China. The PRC government took the first steps in developing a domestic arbitration venue for foreign-related cases when in 1956 it created the China International Economic and Trade Arbitration Commission (“CIETAC”), then known as the Foreign Trade Arbitration Commission (“FTAC”).

The initial purpose of FTAC was to provide a forum to settle disputes arising from contracts and transactions in foreign trade, “particularly disputes between foreign firms, companies or other economic organizations, on the one hand, and Chinese firms, companies or other economic organizations on the other.”  Developing in parallel to FTAC and CIETAC has been the growth of the domestic arbitration commissions, some of which are increasingly seen as viable alternatives to CIETAC. They include the Beijing Arbitration Commission (“BAC”), and more recently the Shanghai International Arbitration Centre (“SHIAC”) and the Shenzhen Court of International Arbitration (“SCIA”), which are discussed elsewhere in this volume.

Since 1987, China has been a party to the Convention on the Recognition of Enforcement of Foreign Arbitral Awards (the “New York Convention”). Although concerns have been expressed about the difficulties of enforcing foreign arbitral awards in China, Chinese awards have frequently been enforced outside China under the New York Convention. China’s accession to the Convention, therefore, has contributed to the growing number of investors choosing to resolve their disputes through arbitration.