Originally from Business Disputes In China - 3rd Edition

1 Arbitration is typically the dispute resolution mechanism of choice in Sino-foreign contracts, given the unattractiveness of the Chinese litigation process to most non-Chinese companies and the difficulties of enforcing foreign judgments in China.2 The matter is made more complicated, however, by two factors:

• There are significant legal and practical restrictions on parties’ ability to choose arbitration outside China in China-related matters.

• The arbitral process in China is quite different from that typically encountered in North America, Europe or in the leading “offshore”3 Asian arbitration centres (Hong Kong and Singapore).

This article seeks to provide a practical guide to this matter for non-Chinese businesses, focusing on four issues:4

1. When is arbitration outside China possible, in the eyes of Chinese law?

2. What is a typical Chinese arbitral process really like in a Sinoforeign case? This section will concentrate not on formalities or technical details but, instead, seek to sketch the major differences of substance from the offshore arbitral processes frequently chosen in China-related cases.

3. To what extent can an American business lawfully and usefully seek to vary the typical Chinese process?

4. Is there potential for useful reform, and if so what?