China: Chinese Arbitration Law & Practice – F.A.Q.

Arbitration is very important for non-Chinese businesses dealing with Chinese businesses, because it is the most common mechanism for resolving Sino-foreign contractual disputes. There are good reasons for this, given the relative weakness of the Chinese court system and the restrictions on enforcing foreign judgments in China. However, businesses familiar with arbitrating disputes in Europe, North America or Australia often find Chinese arbitration law and practice rather confusing and, in some cases, objectionable.

The arbitration options recognised by Chinese law are more restrictive than in the countries from which most foreign investment in China originates. The process is significantly different as well. However, much published material on the subject does not help much in getting to grips with the reality, in that it tends to be (at one extreme) idealised and unrealistic, refusing to acknowledge problems or (at the other) rather jaded and skeptical, giving the impression that the system is hopeless (which it is not).

Our aim here is to give a balanced and realistic portrait - within the limits of what is possible in a short introductory piece about a complex reality - neither minimising nor exaggerating the problems and (most importantly) with a view to giving non-Chinese businesses an insight into what are real issues, what are not, and the options for useful action which flow from all of this. This piece is, of course, simply general information, not a substitute for legal advice in making business decisions.1 It will, however, we hope, flag some of the major issues and serve as an inspiration for possible courses of action upon which legal advice can then be taken from those qualified to do so.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.