Traditionally, arbitration has been regarded as a preferred method for dispute resolution between PRC companies and foreign companies including foreign investment companies (“FIE”) set up within PRC. Nevertheless, in recent years, more and more foreign companies and FIEs actually litigated their disputes in the PRC courts.
According to a recent report, during 2002 to 2005 there were 68,172 foreign-related disputes heard in the first instance proceedings in the PRC courts, among which 30,577 cases involved parties from Hong Kong, Macau and Taiwan accounting for 44.85%. of the total. Compared with the caseload of CIETAC, which is one of the busiest arbitration institutions in the world and usually handles about 500 to 900 cases each year, PRC court has gained significant experiences over the years and became more sophisticated.
Since 2003, taking the judicial examination has become compulsory for anyone who wants to be qualified to practice in PRC courts. The exam is one of the most difficult professional qualification tests in the country with the passing rate of around 5% to 7%. Such a measure has been adopted to improve the quality of judiciary, which proved to be effective.