1. Historical evolution of law relating to arbitration
Before the enactment of the Arbitration Law in 1994 (the “Arbitration Law”), arbitration in China was essentially regulated by the laws and regulations relating to domestic disputes. Some of this legislation still remains. In addition, general laws such as the Civil Procedure and Contract Law remain applicable for general principles for contractual disputes.
The promulgation of the Arbitration Law in 1994 defines the framework for both domestic and international arbitration disputes. The Arbitration Law was meant to set up a legal framework for international arbitration. The Arbitration Law was a requirement by the World Trade Organization to grant China membership status. In China’s planned economy, authorities usually prefer to keep control of disputes arising from trade within China. To do so, China needed an internal arbitration centre and a legal framework that met international standards.
The development of arbitration in China is quite recent. The main arbitration centre was set up in 1956 and although the Arbitration Law has been in force since September 1st, 1995, few contracts opted for arbitration in China until 2000. Nowadays, arbitration clauses designating arbitration centres in China are not uncommon, and many foreign arbitrators sit on panels of the main arbitration centres and the arbitral proceedings can be conducted in English.