Originally from American Review of International Arbitration - ARIA

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INTRODUCTION

China’s decision to open itself to the outside world coincided with a dramatic increase in the globalization of the world economy. As a result of these circumstances, the question of whether contracts relating to investment in, or trade with, the People’s Republic of China are subject to arbitration has become a matter of considerable international interest. The People’s Republic of China abolished all laws from prior regimes when it was established in 1949.1 With the ensuing struggle over the direction the Chinese revolution should take, the introduction of new laws and stable courts was, for many years, very slow. Because formal legal systems had never played a large part in the way disputes were resolved in China, their absence was not particularly problematic to China.2 Even today, consistent with long-standing Chinese tradition, arbitration, mediation and negotiation are more culturally accepted methods of settling disputes in China than legal proceedings.3