CHINA: An Introduction to Dispute Resolution (PRC Firms)
Developments in Dispute Resolution in China
In the realm of arbitration in China, robust support from legislative, administrative, and judicial authorities persists, demonstrating a steadfast commitment to propel its development. Ongoing legislative initiatives, dedicated efforts to fortify the infrastructure of the arbitration system, and the systematic standardisation of judicial review processes underscore the nation’s dedication to fostering a thriving arbitration landscape.
Firstly, the revision of the Arbitration Law of the People’s Republic of China (“Arbitration Law”) has been accelerated. The revision process commenced in 2018 when it was included in the legislative plan, leading to the release of a draft for public opinion by the Ministry of Justice in 2021. Subsequently, in April 2022, the National People’s Congress Standing Committee included the revision of the Arbitration Law in its annual legislative review, steadily progressing the reform amid widespread anticipation and attention from various sectors of society.
Secondly, as information technology continues to advance, Chinese arbitration institutions are widely adopting new technologies such as internet information transmission, blockchain, and cloud storage to enhance the efficiency of case adjudication. Influenced by the COVID-19 pandemic, there has been a significant increase in the demand for online arbitration proceedings facilitated by information technology, particularly in recent years. Some arbitration institutions have responded by modifying arbitration rules and issuing online arbitration guidelines to standardise the online arbitration process. For example, the revised Beijing International Arbitration Center Arbitration Rules, which came into effect on 1 February 2022, expressly stipulate that hearings can be conducted online. The rules empower arbitral tribunals to determine the mode of hearings based on the circumstances of each case. The Shanghai Arbitration Commission also released the Shanghai Arbitration Commission Online Arbitration Guidelines (Interim) in 2022 along with corresponding operational guidelines. Additionally, information technology has been extensively applied in trial practices, with several arbitration institutions leveraging blockchain technology, 5G, and other innovations to address challenges related to evidence fixation and cross-examination. Currently, arbitration institutions and parties involved are gradually becoming more receptive to internet arbitration. The continuous updates and improvements to corresponding arbitration rules and procedures are deemed necessary. Internet arbitration may evolve into a routine form of arbitration in the future, effectively reducing arbitration costs and enhancing efficiency in the arbitration process.
Furthermore, the construction of the arbitration system in China is gradually improving. The establishment of the China Arbitration Association, with its anticipated functions of formulating industry norms and enhancing the supervision of practitioners, represents a significant step forward. Under the guidance of the Ministry of Justice, the China Arbitration Association was officially registered on 14 October 2022. The establishment of the China Arbitration Association is a crucial component in enhancing the supervision system of the arbitration industry, contributing to the development of a diversified and three-dimensional supervision framework. In addition, the Supreme People’s Court has released a series of judicial interpretations, guidance opinions, and exemplary cases, strengthening judicial protection for arbitration and adhering to the principle of judicial restraint. For instance, the Arrangement on Mutual Assistance in the Preservation of Arbitration Proceedings between the Mainland and the Macao Special Administrative Region has come into effect, marking a new development in the successful practice of “One Country, Two Systems” in the judicial field. These measures collectively foster a favourable judicial atmosphere for the substantial development of arbitration in China.
Moreover, efforts have been made to establish a comprehensive platform for the diverse resolution of international commercial disputes in support of international commercial arbitration cases. After considering factors such as the caseload, amount in dispute, international influence, information technology infrastructure, and the effectiveness of supporting the Belt and Road Initiative, five arbitration institutions, including the Beijing Arbitration Commission, have been among the first to be included in this platform. Cases handled by these institutions with a disputed amount exceeding CNY300 million or those with significant international impact are integrated into the system, allowing for online interaction and providing more comprehensive and robust judicial assistance to the current civil procedure system. Relevant assistance includes measures such as interim relief, annulment of arbitration awards, and centralised jurisdiction for case enforcement. According to the Civil Procedure Law, for applications of interim relief in foreign-related arbitration, the intermediate court in the domicile or location of the respondent’s property has jurisdiction. In practice, due to procedural requirements from different arbitration institutions and the courts involved, parties may need to communicate with the court for interim relief. The China International Commercial Court’s (CICC) provision of a “one-stop” support system for interim measures undoubtedly significantly enhances the efficiency of judicial assistance. By consolidating the review of annulment and enforcement of arbitration awards under the jurisdiction of the CICC, the need for higher review is lessened, which reduces communication costs, improves the efficiency of judicial review, and decreases the likelihood of annulment or non-enforcement of arbitration awards.
On 28 June 2022, the Supreme People’s Court issued a notice on the inclusion of the second batch of international commercial arbitration institutions in the “one-stop” international commercial dispute resolution mechanism. Five institutions, including the Guangzhou Arbitration Commission, were included in this batch, with the noteworthy addition of the Hong Kong International Arbitration Centre. The Hong Kong International Arbitration Centre fully meets the requirements of the “one-stop” dispute resolution platform since it qualifies as a domestic arbitration institution. With its international recognition, especially in the Asia-Pacific region and worldwide, its inclusion significantly enhances the international visibility of the “one-stop” dispute resolution platform and strengthens mutual support between mainland and Hong Kong litigation and arbitration. At a more local level, the implementation of the Regulations on the Promotion of the Construction of the Shanghai International Commercial Arbitration Center as of 1 December 2023, marks a pivotal moment in Shanghai’s commitment to fostering a thriving global arbitration ecosystem. With a strategic focus on becoming a pre-eminent Asia-Pacific arbitration centre, these regulations not only signal a dedication to refining the arbitration development environment, but also underscore Shanghai’s ambition to propel arbitration services onto the world stage. By fostering international co-operation, nurturing top-tier arbitration institutions, and diligently promoting the Shanghai arbitration brand, the city aims to bolster the public trust, influence, and global competitive edge of its arbitration sector. As Shanghai endeavours to elevate its standing in the international community, these regulations represent a forward-looking initiative, poised to make significant contributions to the city’s emergence as a distinguished player in the realm of international commercial arbitration.
In conclusion, the dynamic developments in China’s arbitration landscape reflect a proactive and multifaceted approach toward creating a robust and internationally competitive dispute resolution framework. From legislative amendments and the establishment of the China Arbitration Association to the effective co-ordination with entities like the Hong Kong International Arbitration Centre, these initiatives showcase a commitment to innovation, efficiency, and global collaboration. The recent enactment of relevant laws further solidifies China’s position in the international arbitration arena, emphasising its aspirations to become a pivotal hub for Asia-Pacific arbitration. As China continues to refine its arbitration system domestically, it signals a promising trajectory for the growth, recognition, and influence of Chinese arbitration on the global stage.