Arbitration in China: Modern Dispute Resolution in Cultural Clothing

Abstract: Arbitration has for a long time been the common dispute resolution method used in commercial disputes relating to China. The Chinese arbitration system has developed from vastly different origins than its Western counterparts, and thus certain Chinese characteristics are prevalent in the system. This paper aims at identifying the cultural and historical roots for these characteristics and examine how they affect the modern arbitration practice in China today, specifically in regard to the recognition and enforcement of arbitral awards, as many legal practitioners allege that this is one of the greatest obstacles related to arbitration in China. The most prominent unique features of the Chinese arbitration system are the separation of domestic and foreign-related disputes into dual tracks in the legislation and arbitration practice, the substantial administrative intervention and governmental influence, the non-recognition of ad hoc arbitration and the fondness and promotion of amicable dispute resolution. There are also some peculiar legislation features such as vagueness and ambiguity as well as inconsistency in the implementation. The author identifies three main factors shaping the Chinese arbitration system: the Confucian heritage, influences from a communist era with planned economy, and a young modern arbitration system which is still in development. These factors explain virtually all the Chinese characteristics identified and addressed in this thesis. The author concludes that the Chinese characteristics in many ways limit several of the internationally recognised principles of arbitration, such as party autonomy and the independence of the proceedings. Due to the fondness of amicable dispute resolution, the practice of conciliation and mediation is much more widespread in China than in the West. As regards the recognition and enforcement of arbitral awards, the issue is not as severe as perceived by practitioners. The recognition and enforceability is, however, affected by the unique Chinese features in the arbitration system. The dual-track system comprises different regulations of and thus different conditions for the enforceability of an award, and the governmental intervention makes the possibility of recognition and enforcement vary depending on the attitude toward arbitration of the local government where the recognition or enforcement is sought.