News

Victoria

PRC International Economic & Trade Arbitration

28 June 2010

ACBC Victoria joined with the Confucius Institute
at the University of Melbourne and event host,
Allens Arthur Robinson, for a lunchtime briefing
on judicial and administrative arbitration
processes in contemporary China on Monday,
28 June 2010.

The briefing was given by Professor of
Comparative Law & Jurisprudence at Qinghua
University Beijing, Professor Wang Chenguang.

As a special advisor to the Supreme People's 
Court in Beijing and a current international
arbitrator with the China International Economic
& Trade Arbitration Commission (CIETAC), Professor Wang was eminently qualified
to discuss the continuing development of both the judicial and administrative processes which operate in China to resolve business related disputes.

Given that the administrative rather than the judicial processes still offer the best avenue to the resolution of economic disputes, Professor Wang focussed his attention on the administrative aspect of arbitration.

Professor Wang said arbitration was still a relatively new concept in China, the first arbitration rules in China being issued by the Northern Warlord Government in
1912. These were followed by arbitration regulations covering wages disputes,
initiated by the Chinese Nationalist Government of Chiang Kai-Shek.

Following the establishment of the People's Republic of China in 1949, a two-track
arbitration system was introduced for domestic issues on the one hand, and
foreign or external related issues on the other. 

Over time, as the scale of foreign business activities grew in China, the separation
of domestic related issues from foreign or external issues became less meaningful.
So the two track system was merged into a single track system.

There have also been moves to make CIETAC an independent body rather than 
have it continue as part of tdhe central government's trade promotion infrastructure.

In 1994, an Arbitration Law (*) was promulgated in China for the first time. It came
into force on 1 December 1995. 

With the ongoing economic development of China, laws covering mediation and 
arbitration of labour issues (*) came into effect on 1 May 2008 and most recently
laws covering mediation and arbitration of rural issues (*) will come into force on 
1 October 2010.

The China International Economic and Trade Arbitration Commission (CIETAC) 
has expanded over the years to handle cases involving foreign or overseas
Chinese enterprises. CIETAC currently has 276 registered foreign arbitrators 
including Australian lawyers such as James Harrowell, currently President of
the ACBC's New South Wales Branch and Sir Laurence Street, as well as 689
Chinese arbitrators.

The number of local arbitration committees has also grown to handle the 
increase in the number of business related disputes. By the end of 2009, there
were 202 local arbitration committees in existence, with the best known one 
being the Beijing Arbitration Commission. However, the real point of issue 
remains - whether a particular arbitration committee or commission has the 
necessary depth of knowledge and understanding of a particular subject or 
area of expertise.

Another challenge which the Chinese arbitration system faces, is the time it
takes for disputes to be dealt with. Accordingly, the arbitration process can be
fast tracked, if the client wishes. Whilst cases being fast tracked are given to
permanent or full-time CIETAC arbitrators to handle - insofar as they are
likely to be more familiar with the arbitration process per se. However the 
depth of knowledge and understanding of the issues involved in the case 
by the arbitrator cannot be guaranteed. 

Whilst the arbitrator handling the case is at liberty to consult with other 
arbitrators to overcome any information gap that might exist, without revealing
the specific details of the particular case they are working on, they are 
nevertheless constrained by the amount of time at their disposal. As a result,
Professor Wang Chenguang suggested that companies considering fast 
tracking the arbitration, should only do so if the case is a relatively simple one
and one that is confined to a single location.

Cases covering a number of locations in China, especially in different provinces
and cities, pose problems through the different approaches to the arbitration
process followed in the different provinces and cities.          

(*) The complete text of the relevant Arbitration Law is available via the
References Section of the CIETAC Website [See below]
 

Key to Image

1. Professor Wang Chenguang -
Professor of Law, Qinghua University, Beijing


Background Material

China International Economic & Trade Arbitration Commission

Supreme People's Court of China