Unit 8 Trade Disputes
Lesson One Related Words ,Expressions, Phrases and Terms
arbitration n. The process by which the parties to a dispute submit
their differences to the judgment of an impartial person or group appointed by mutual
consent or statutory provision.
disinterested adj. Free of bias and self-interest; impartial.
binding adj. Imposing or commanding adherence to a commitment, an
obligation, or a duty.
wherein conj. In which location; where.
obstinate adj. Stubbornly adhering to an attitude, an opinion, or a course
of action; obdurate.
self-interest n. Selfish or excessive regard for one's personal
advantage or interest.
sanction n. Authoritative permission or approval that makes a course of
ethical adj. Being in accordance with the accepted principles of right and
wrong that govern the conduct of a profession.
ad hoc arbitration 临时仲裁
institutional arbitration 机构仲裁
designation n. The act of designating; a marking or pointing out.
tribunal n. A seat or court of justice; A committee or board
appointed to adjudicate in a particular matter.
oftentimes adv. Frequently; repeatedly.
jurisdiction n. The right and power to interpret and apply the law;
the extent of authority or control.
administer v. To have charge of; manage.
oversight n. An unintentional omission or mistake.
ambiguity n. Doubtfulness or uncertainty as regards interpretation.
purloin v. To steal, often in a violation of trust.
affluent adj. Generously supplied with money, property, or possessions;
prosperous or rich.
UNCITRAL .the abbreviation of United Nations Commission on International Trade
Law . 联合国国际贸易法
onus n. A difficult or disagreeable responsibility or necessity; a burden or
venue n. The locality where a crime is committed or a cause of action
permanent adj. Lasting or remaining without essential change.
prestigious adj. Having prestige; esteemed.
pertinent adj. Having logical, precise relevance to the matter at hand.
requisite adj. Required; essential.
compel v. To force, drive, or constrain.
conscience n. The awareness of a moral or ethical aspect to one's
conduct together with the urge to prefer right over wrong.
predetermine v. To determine, decide, or establish in advance.
settlement n. An arrangement, adjustment, or other understanding
reached, as in financial or business proceedings.
rational adj. Having or exercising the ability to reason.
recognition n. Official acceptance of the national status of a new
government by another nation.
body n. A number of persons, concepts, or things regarded as a group
capacity n. The ability to receive, hold, or absorb.
temporary adj. Lasting, used, serving, or enjoyed for a limited time
extensive adj. Large in extent, range, or amount.
adjustment n. The act of adjusting or the state of being adjusted.
authority n. The power to enforce laws, exact obedience, command,
determine, or judge.
lockout n. The withholding of work from employees and closing down of
a workplace by an employer during a labor dispute.
phase n. A distinct stage of development.
resort n. The act of turning to for aid or relief; recourse.
disturbance n. The condition of being disturbed.
disturbance adj. Harmful to one's reputation; blameworthy.
conference n. A meeting for consultation or discussion.
mediation n. attempt to bring about a peaceful settlement or
compromise between disputants through the objective intervention of a neutral party.
apathy n. Lack of emotion or feeling; impassiveness.
benevolence n. An inclination to perform kind, charitable acts.
tyranny n. Absolute power, especially when exercised unjustly or cruelly.
antagonism n. The condition of being an opposing principle,
force, or factor.
enumerate v. To count off or name one by one; list.
vice versa adv. With the order or meaning reversed; conversely.
train n. A string of gunpowder that acts as a fuse for exploding a charge
endeavor n. A conscientious or concerted effort toward an end; an
intervene v. To come in or between so as to hinder or alter an action.
abide by . To conform to; comply with.
amicable adj. Characterized by or exhibiting friendliness or goodwill;
antagonist n. One who opposes and contends against another; an
panacea n. A remedy for all diseases, evils, or difficulties; a cure-all.
makeshift n. A temporary or expedient substitute for something else.
eradicate v. To tear up by the roots.
without reference to . no matter what ;having nothing to do with.
invoke v. To resort to; use or apply.
subpoena v. To serve or summon with such a writ.
umpire n. A person appointed to settle a dispute that mediators have
been unable to resolve; an arbitrator.
unanimous adj. Sharing the same opinions or views; being in
complete harmony or accord.
testimony n. Evidence in support of a fact or an assertion; proof.
interstate adj. Involving, existing between, or connecting two or
recoil v. To shrink back, as in fear or repugnance.
thereby adv. By that means; because of that.
adulterate v. To make impure by adding extraneous, improper, or
scrutiny n. A close, careful examination or study.
corroborate v. To strengthen or support with other evidence; make
enter upon . To set out; begin.
archbishop n. A bishop of the highest rank, heading an archdiocese or
Protestant Episcopal Church n.圣公会
endorsement n. The act of endorsing.
emphatic adj. Standing out in a striking and clearly defined way.
dead letter . A law, directive, or factor still formally in effect but no longer valid or
decree n. An authoritative order having the force of law.
amendment n. Formal revision of, addition to, or change, as in a
bill or a constitution.
controversy n. A dispute, especially a public one, between sides
holding opposing views.
impartial adj. Not partial or biased; unprejudiced.
FTAC . Foreign Trade Arbitration Commission (中国)对外贸易仲裁委员会
MAC . China Maritime Arbitration Commission 海事仲裁委员会
cognizance n. Acknowledgment, recognition, or jurisdiction; the
assumption of jurisdiction in a case.
stipulate v. To make an express ,demand or provision in an agreement.
submission n. The act of submitting something for consideration.
correspondence n. The letters written or received.
negotiation n. The act or process of negotiating.
China Council for the Promotion of International Trade. 中国国际贸易促进委员会
tribunal n. A seat or court of justice.
sole arbitrator . 独任仲裁员
singly adj. Without the presence of others; alone.
presiding arbitrator 仲裁庭庭长
authorize v. To grant authority or power to.
eminent adj. Outstanding, as in character or performance;
partiality n. The state of being partial.
in accordance with 与...一致, 依照
plaintiff n. The party that institutes a suit in a court.
defendant n. The party against which an action is brought.
claim v. To demand or ask for as one's own or one's due; assert one's right
n. A demand for something as rightful or due.
statement n. Something stated; a declaration.
contract n. An agreement between two or more parties, especially one
that is written and enforceable by law.
equivalent adj. Equal, as in value, force, or meaning.
deposit n. A sum of money given as security for an item acquired for
hear v. To listen to in an official, professional, or formal capacity
consultation n. The act or process of consulting.
attorney n. A person legally appointed by another to act as his or her agent
in the transaction of business, specifically one qualified and licensed to act for
plaintiffs and defendants in legal proceedings.
Power of Attorney( P.A or P/A ).A legal instrument authorizing one to act as another's
attorney or agent 委托书，授权书
on behalf of 代表
in respect of 关于
prevail adj. To be greater in strength or influence; triumph.
render v. To give or make available; provide.
appeal n. The transfer of a case from a lower to a higher court for a new
expiration n. The act of coming to a close; termination.
award v. To give as legally due
n. A decision, such as one made by a judge or arbitrator.
The International Court of Arbitration of International Chamber of
British London Court of International 英国伦敦仲裁院
British Arbitration Association 英国仲裁协会
American Arbitration Association 美国仲裁协会
Japan Commercial Arbitration Association 日本国际商事仲裁协
The Arbitration Institute of the Stockholm Chamber of Commerce 瑞典斯德哥尔摩商
Court of Arbitration of the Zurich Chamber of Commerce 瑞士苏黎世商会仲裁院
Hong Kong International Arbitration Center 香港国际仲裁中心
China International Economic and Trade Arbitration Commission 中国国际经济贸易
China Council for the Promotion of International Trade 中国国际贸易促进委员会
Court of Arbitration of China Chamber of International Commerce 中国国际商会仲
China Maritime Arbitration Commission 中国海事仲裁委员会
International Chamber of Commerce 国际商会
Bureau of Secretaries 秘书局
corporate organization 法人组织
take cognizance of 受理
The International Center for the Settlement of Investment Disputes.解决国际投资争
chamber n. A legislative or judicial body.
headquarters n. A center of operations or administration.
arbitrate v. To judge or decide in or as in the manner of an arbitrator.
nonprofit adj. Not seeking or producing a profit or profits.
respectively adv. Singly in the order designated or mentioned.
liaison n. An instance or a means of communication between
different groups or units of an organization, especially in the armed forces.
legislation n. The act or process of legislating; lawmaking.
reshuffle v. To arrange or organize anew.
tenure n. A period during which something is held.
neutral adj. Belonging to neither side in a controversy.
transportation n. The act or an instance of transporting; the
business of conveying passengers or goods.
legitimate adj. Being in compliance with the law; lawful.
salvage n. Compensation given to those who voluntarily aid in such a
collision n. The act or process of colliding; a crash or conflict.
charter v. The hiring or leasing of an aircraft, a vessel, or other vehicle,
especially for the exclusive, temporary use of a group of travelers.
mortgage n. A temporary, conditional pledge of property to a creditor
as security for performance of an obligation or repayment of a debt.
towage n. A charge for towing.
demolition n. The act or process of wrecking or destroying,
especially destruction by explosives.
Arbitration Law of the People's Republic of China 中华人民共和国仲裁法
National People's Congress 全国人民代表大会
Standing Committee 常务委员会
promulgate v. To put (a law) into effect by formal public
Arbitration Commission 仲裁委员会
Arbitration Association 仲裁协会
Arbitration Agreement 仲裁协议
Arbitration Procedure 仲裁程序
Foreign-Related Arbitration 涉外仲裁
formulate v. To express in systematic terms or concepts.
jurisdiction n. The extent of authority or control.
in relation to 关于，涉及
municipality n. A political unit, such as a city or town,
incorporated for local self-government.
autonomous n. Independent of the laws of another state or
Chamber of Commerce 商会
domicile n. One's legal residence.
Articles of Association 公司章程
a legal person 法人
Civil Procedure Law 民事诉讼法
duress n. Constraint by threat; coercion
thereof adv. Of or concerning this, that, or it
waive v. To give up (a claim or right) voluntarily
nominate v. To designate or appoint to an office, a responsibility, or
mandate n. A command or an authorization given by a political
electorate to its representative.
withdraw v. To remove from consideration or participation.
liable adj. Legally obligated; responsible.
defense statement 答辩书
due adj. In accord with right, convention, or courtesy; appropriate.
appraisal n. An expert or official valuation.
In the event 在......情况下
basic-level people's court 基层人民法院
affix v. To place at the end; append.
fall back on 回头再说，反悔
set forth 阐明，宣布
in relation to 关于，涉及
typographical error 印刷错误
intermediate people's court .中级人民法院
graft n. To gain by or practice unscrupulous use of one's position
perverted adj. Deviating from what is considered right and correct
collegiate bench .合议庭
evidence preservation .证据保全
hearing an arbitration case in session 开庭审理
hearing an arbitration case according to the submitting written materials.书面审理
principle n. A basic truth, law, or assumption.
public hearing 公开审理
affirm v. To declare positively or firmly; maintain to be true
significance n. The state or quality of being significant.
to a great extent 在很大程度上
institution of law 法律制度
lawsuit n. An action or a suit brought before a court, as to
recover a right or redress a grievance.
by means of 依靠
the law of procedure 诉讼法
cases of first instance 一审案件
arbitration instrument 仲裁文书
conciliation document 调解书
third party 第三方
flexible adj. Responsive to change; adaptable.
for that matter 关于那一点
single ruling system 一裁终局制
verdict of the trial of second instance will be the final verdict 二审终审制
court of Cassation 上诉法院
appeal system 申诉制度
law-abiding adj. Adhering to the law.
tempered adj. Adjusted or attuned by the addition of a counterbalancing
element; moderated or measured.
solemn adj. Deeply earnest, serious, and sober.
the long robe 法官袍
court clerk 书记员
antagonism n. Hostility that results in active resistance,
opposition, or contentiousness.
transaction n. The act of transacting or the fact of being transacted
New York Convention 纽约公约
New York Convention on the Recognition and Enforcement of Foreign Arbitral
jurist n. One who has thorough knowledge and experience of law,
especially an eminent judge, lawyer, or legal scholar.
mediation n. An attempt to bring about a peaceful settlement or
compromise between disputants through the objective intervention of a neutral
facilitate v. To make easy or easier.
prior to adv.在前, 居先
employee n. A person who works for another in return for financial or other
mediator n. One that mediates, especially one that reconciles differences
ADR .abbreviation for The Alternative Dispute Resolution 非诉讼纠纷解决程序
authority n. The power to enforce laws, exact obedience, command, determine, or
referral n. a recommendation to consult the (professional) person referred
appropriate adj. Suitable for a particular person, condition, occasion,
acouple of . 两个，几个
circumstance n. A condition or fact that determines or must be considered
in the determining of a course of action.
polarize v. To cause to concentrate about two conflicting or contrasting
ultimately adv . At last; in the end; eventually.
exception n. One that is excepted, especially a case that does not conform to a
rule or generalization.
by and large 大体上，基本上
in connection with 与…有关，连同
substantial adj. Considerable in importance, value, degree, amount, or
nominal a. Existing in name only ; Insignificantly small; trifling.
a fraction of 一小部分
full-scale adj. Of actual or full size; not reduced.
ownership n. Legal right to the possession of a thing.
custody n. The act or right of guarding, especially such a right granted by a court
estranged adj. caused to be unloved; unloved.
disputant n. One engaged in a dispute.
forward-looking a. Concerned with or making provision for the future
hostility n. The state of being hostile; antagonism or enmity.
proceed v. To go forward or onward, especially after an interruption;
address v. To deal with.
caucus n. A closed meeting of party members within a legislative body to decide
on questions of policy or leadership.
closure n. A bringing to an end; a conclusion.
representation n. An account or a statement, as of facts, allegations, or
judicial adj. Of, relating to, or proper to courts of law or to the administration
EEOC Equal Employment Opportunity Commission 均等就业机会委员会
lengthy adj. Of considerable length, especially in time; extended
underlying adj. Basic; fundamental.
voluntary adj. Arising from or acting on one's own free will.
respondent n. Being a defendant.
litigant n. A party engaged in a lawsuit.
verdict n. The finding of a jury in a trial.
compliance n. The act of complying with a wish, request, or demand;
aggression n. The act of initiating hostilities or invasion.
formalize v. To give a definite form or shape to; To make formal.
constitution n. The system of fundamental laws and principles that
prescribes the nature, functions, and limits of a government or another institution.
supplement n. Something added to complete a thing, make up for a deficiency,
or extend or strengthen the whole.
publicize v. To give publicity to.
enthusiastic adj. Having or demonstrating enthusiasm.
supervise v. To have the charge and direction of; superintend.
audit n. An examination of records or financial accounts to check their accuracy.
escalate v. To increase, enlarge, or intensify.
collegiate adj. Of, relating to, or held to resemble a college.
entity n. Something that exists as a particular and discrete unit.
stipulate v. To lay down as a condition of an agreement; require by contract.
contravene v. To act or be counter to; violate .
adjudicate v. To hear and settle (a case) by judicial procedure.
retract v. To take back; disavow.
commence v. To begin; start.
injunction n. The act or an instance of enjoining; a command, a
directive, or an order.
prosecution n. The act of prosecuting.
common law n. The system of laws originated and developed in England and based
on court decisions, on the doctrines implicit in those decisions, and on customs and
usages rather than on codified written laws. 普通法，习惯法，判例法
statutory law n.成文法
joinder n. A joining of parties in a suit.
pleading n. A formal statement, generally written, propounding the cause
of action or the defense in a case.
notify v. To give notice to; inform.
allegation n. Something alleged; an assertion.
appearing pro se :自行代理
premature adj. Occurring, growing, or existing before the
customary, correct, or assigned time.
remand v. To send back (a case) to a lower court with instructions about
vacate v. To make void or annul.
res judicata n : a matter already settled in court; cannot be raised again
indigent adj. Experiencing want or need; impoverished.
outlaw v. To declare illegal.
courteous a. Characterized by gracious consideration toward others.
assertive a. Inclined to bold or confident assertion; aggressively
specify v. To state explicitly or in detail.
defective adj. Having a defect; faulty.
warranty n. A guarantee given to the purchaser by a company stating
that a product is reliable and free from known defects and that the seller will, without
charge, repair or replace defective parts within a given time limit and under certain
substantiate v. To support with proof or evidence; verify.
claimant n. A party that makes a claim.
reiterate v. To say or do again or repeatedly.
performance n. The act of performing or the state of being
on the first grounds ,to our advantage and with restraint : 有理，有利，有节。
Lesson Two Arbitration and Mediation
Dialogue: Talking about arbitration
A: I made a very close study of the draft contract last night.
B: Any questions?
A: Yes. There are a few points which I'd like to bring up. First, the packing
it's stipulated in the contract that all the machine parts should be packed in wooden
cases. This can be done with the machine parts, but it's impossible to pack a truck
base like that.
B: I see.
A: Second, about the terms of payment. Your draft contract says that payment
is to be made by D/P. This is not our practice. We prefer to have the payment made
by L/C through a negotiating bank in France.
A: And the third point is about arbitration. It's stipulated that arbitration shall
take place in China. In all our past contracts signed with you, it was stipulated that
arbitration took place in a third country.
B: Yes, that's right.
A: But how is it that this time you wish to have it carried out in China?
B: As for arbitration, in our dealings with many countries, arbitration is to be
carried out in China. The Arbitration Commission of CCPIT enjoys a high prestige
among friendly companies. Personally I hope you'll accept this clause. Further
more, the disputes that have arisen from our business transaction were all settled
through friendly consultations. Very rarely was arbitration restored to.
A :How much do you know about China Council for the Promotion of
B: Oh , I know a lot about it ,then let me tell you , it was Established in May
1952, China Council for the Promotion of International Trade (CCPIT) comprises
VIPS, enterprises and organizations representing the economic and trade sectors in
China. It is the most important and the largest institution for the promotion of foreign
trade in China. The aims of the CCPIT are to operate and promote foreign trade, to
use foreign investment, to introduce advanced foreign technologies, to conduct
activities of Sino-foreign economic and technological cooperation in various forms, to
promote the development of economic and trade relations between China and other
countries and regions around the world, and to promote the mutual understanding and
friendship between China and peoples and economic and trade circles of all nations
around the world, in line with law and government policies of the People's Republic
A: I see. OK. The new arbitration clause is acceptable. Is there anything else?
B: As far as the contract stipulations are concerned, there is nothing more.
Thank you very much.
A: When should we sign the contract?
B: We'll revise the contract this evening, and have it ready to
be signed tomorrow morning at ten. How's that?
Arbitration and mediation are time-tested, cost-effective alternatives to litigation.
Arbitration is the submission of a dispute to one or more impartial persons for a final
and binding decision, known as an "award." Awards are made in writing and are
generally final and binding on the parties in the case. Mediation, on the other hand, is
a process in which an impartial third party facilitates communication and negotiation
and promotes voluntary decision making by the parties to the dispute. This process
can be effective for resolving disputes prior to arbitration or litigation. A growing
number of companies, organizations, and agencies throughout the world have
recognized the value of mediation to resolve disputes with their employees, customers,
and business partners. Mediation allows parties to work together with the aid of a
neutral facilitator -- a mediator -- who assists them in reaching a settlement of their
What Is Arbitration
Arbitration in a general sense, is a method of arranging differences between two
parties by referring them to the judgment of a disinterested outsider whose decision
the parties to a dispute agree in advance to accept as in some way binding. The whole
process of arbitration involves the reference of issues to an outside party,
investigation, decision, acceptance or enforcement of it. The condition which invites
arbitration is one wherein a number of persons of equal, or nearly equal power,
disagree obstinately concerning a right, privilege, or duty, and refuse to come to terms
themselves. The underlying assumptions are that the sense of fairness is dulled in the
opponents by advocacy of self-interest, and by obstinacy, and that the judgment of a
capable disinterested third party will more nearly approximate justice and equity. The
motive which prompts appeal to arbitration is found finally in society's desire to
eliminate force as a sanction of right, and to introduce effectively the principles of the
ethical order into the settlement of disputes among its members. Courts, rules of law
and procedure have as purpose the protection of order and justice by compelling men
to settle vital differences in a peaceful manner. In the main, society must always trust
to the common sense, honor, and conscience of men to arrange peacefully the
differences which arise in everyday life. When, however, differences of actual or
possible grave social consequences arise, wherein high principles or great interests are
involved, and the parties of themselves fail to agree, society attempts to secure order
by creating institutions to decide the situation according to predetermined rules of law.
The movement to introduce arbitration in the settlement of disputes is an effort in
society to lift conflicts from the plane of brute force to the level of the ethical order; to
provide a rational method of settling such disputes as fail to be resolved by other
peaceful means. The object of arbitration is to provide fair and impartial resolution of
disputes without causing unnecessary delay or expense and at the same time, it allows
freedom to the parties to agree upon the manner in which their disputes should be
resolved, subject only to safeguards imposed in public interest. Today, arbitration is a
very popular mode of alternate dispute resolution in the commercial world and one
can find an arbitration clause incorporated in the majority of business contracts.
Kinds of arbitration According to different standards, arbitration can be divided
into different kinds ,such as ad hoc arbitration and institutional
arbitration ,international arbitration and internal arbitration ,and so on. Then let us
compare ad hoc arbitration with institutional arbitration in detail.
The project deals with two forms of arbitration namely, ad hoc and institutional
arbitration, their advantages and disadvantages over each other. Parties are entitled to
choose the form of arbitration, which they deem appropriate in the facts and
circumstances of their dispute. This necessarily involves the consideration &
evaluation of the various features of both forms of arbitration and this can be a
daunting task, as both forms have their own merits and demerits.
Ad hoc arbitration An ad hoc arbitration is one which is not administered by an
institution and therefore, the parties are required to determine all aspects of the
arbitration like the number of arbitrators, manner of their appointment, procedure for
conducting the arbitration, etc.
Ad hoc arbitration is a proceeding that is not administered by others and
requires the parties to make their own arrangements for selection of arbitrators and for
designation of rules, applicable law, procedures and administrative support. Provided
the parties approach the arbitration in a spirit of cooperation, ad hoc proceedings can
be more flexible, cheaper and faster than an administered proceeding. The absence of
administrative fees alone make this a popular choice.
The arbitration agreement, whether arrived at before or after the dispute arises,
might simply state that "disputes between the parties will be arbitrated", and if the
place of arbitration is designated, that will suffice. If the parties cannot agree on
arbitral detail, all unresolved problems and questions attending implementation of the
arbitration, for example "how the arbitral tribunal will be appointed", "how the
proceedings will be conducted" or "how the award will be enforced" will be
determined by the law of the place designated for the arbitration, i.e., the "seat" of the
arbitration. Such an abbreviated approach will work only if the jurisdiction selected
has an established arbitration law. The ad hoc proceeding need not be entirely
divorced from its institutional counterpart. Oftentimes the appointment of a qualified
and/or impartial arbitrator (actual or perceived) constitutes a sticking point in ad hoc
proceedings. In such case, the parties can agree to designate an institutional provider
as the appointing authority. Further, the parties can at any time in the course of an ad
hoc proceeding decide to engage an institutional provider to administer the arbitration.
Parties wishing to include an ad hoc arbitration clause in the underlying
contract between them, or seeking to arrive at terms of arbitration after a dispute has
arisen, have the option of negotiating a complete set of rules, establishing procedures
which fit precisely their particular needs. Experience has shown that this approach can
require considerable time, attention and expense without providing assurance that the
terms agreed will address all eventualities.
Other options available to parties wishing to proceed ad hoc, who are not in
need of rules drawn specially for them, or of formal administration and oversight,
include: (i) adaption of the rules of an arbitral institution, amending provisions for
selection of the arbitrator(s) and removing provisions for administration of the
arbitration by the institution, (ii) incorporating statutory procedures such as the United
States Federal Arbitration Act (or applicable state law) or the English Arbitration Act
1996, (iii) adopting rules crafted specifically for ad hoc arbitral proceedings such as
the UNCITRAL Rules (U.N. Commission on International Trade Law) or CPR Rules
(International Institute for Conflict Prevention and Resolution), which may be used in
both domestic and international disputes, and (iv) adopting an ad hoc provision copied
from another contract. Risks accompanying two of the available options are worthy of
Incorporating rules drawn by an institutional arbitration provider, amending
provisions for appointment of the arbitrator(s) and excising provisions requiring
administration by the provider, carries with it the risk of creating ambiguities in the
institutional rules as amended, despite efforts to redraw them to suit an ad hoc
proceeding. It is also possible that in the adaptation process the parties may
inadvertently create an institutional process. Copying an ad hoc arbitration clause
from another contract may also result in later grief if the purloined clause was
originally crafted for a particular, possibly unique, set of circumstances and/or was
drafted taking into account different applicable arbitration law.
Advantages Properly structured, ad hoc arbitration should be less expensive than
institutional arbitration and, thus, better suit smaller claims and less affluent parties.
Ad hoc arbitration places more of a burden on the arbitrator(s), and to a lesser extent
upon the parties, to organize and administer the arbitration in an effective manner. A
distinct disadvantage of the ad hoc approach is that its effectiveness may be
dependent upon the willingness of the parties to agree upon procedures at a time when
they are already in dispute. Failure of one or both of the parties to cooperate in
facilitating the arbitration can result in an undue expenditure of time in resolving the
issues. The savings contemplated by use of the ad hoc arbitral process may be
somewhat illusory if delays precipitated by a recalcitrant party necessitate repeated
recourse to the courts in the course of the proceedings.
1. The primary advantage of ad hoc arbitration is flexibility, which enables the
parties to decide upon the dispute resolution procedure. This necessarily requires a
greater degree of effort, co-operation and expertise of the parties in determination of
the arbitration rules. Very often, the parties may misunderstand each other since they
are of different nationalities and come from different jurisdictions, and this can delay
the arbitration. Also, once a dispute arises, parties tend to disagree and lack of
co-operation required may frustrate the parties’ intention of resolving their dispute by
ad hoc arbitration.
Such situations can be avoided, if the parties agree that the arbitration should be
conducted under certain arbitration rules. This results in reduced deliberation and
legal fees and also facilitates early commencement of the arbitration, as the parties do
not engage in the time consuming process of determining complex arbitration rules.
There are various sets of rules suitable to ad hoc arbitration, of which the UNCITRAL
rules are considered most suitable.
2. By reason of its flexibility, ad hoc arbitration is preferred in cases involving
state parties who consider that a submission to institutional arbitration devalues their
sovereignty and they are therefore reluctant to submit to institutional control. Ad hoc
arbitration also permits the parties to shape the arbitration in a manner, which enables
quick and effective resolution of disputes involving huge sums of public money and
public interest. In the Aminoil arbitration, conducted ad hoc, the flexibility permitted
the parties to define issues in a manner, which enabled quick resolution of the dispute.
Further, the adopted procedure provided that the parties would file their pleadings at
the same time. Consequently, neither party was a respondent, a title that parties resent
when they believe that they have justifiable claims against the other party. Also, the
tribunal directed the state party to lead the case on some issues and Aminoil to lead on
other issues, depending on whom the onus of proof laid11.
3. Another primary advantage of ad hoc arbitration is that it is less expensive
than institutional arbitration. The parties only pay fees of the arbitrators’, lawyers or
representatives, and the costs incurred for conducting the arbitration i.e. expenses of
the arbitrators, venue charges, etc. They do not have to pay fees to an arbitration
institution which, if the amount in dispute is considerable, can be prohibitively
expensive. In order to reduce costs, the parties and the arbitrators may agree to
conduct arbitration at the offices of the arbitrators. It can be argued that such proposal
would not be acceptable to an institution, lest their reputation be tarnished.
4. In ad hoc arbitration, parties negotiate and settle fees with the arbitrators
directly, unlike institutional arbitration wherein the parties pay arbitrators’ fees as
stipulated by the institution. This allows them the opportunity of negotiating a
reduction in fees. But this involves an uncomfortable discussion & in certain cases,
the parties may not be able to negotiate a substantial reduction or for that matter, any
reduction at all. The arbitrators are the judges in the cause and no party desires to
displease the judge, even before the proceedings have commenced.
Ad hoc arbitrations may not be less expensive than institutional arbitration for a
number of reasons.
Firstly, the parties are required to make arrangements to conduct the arbitration
but they may lack the necessary knowledge and expertise. It has been said that many
laymen have to participate in arbitration and many arbitrations have to be conducted
by persons who are not lawyers. This would result in misinformed decisions,
especially in international commercial arbitration as the parties come from different
countries and consequently, in increased costs.
Secondly, where there is lack of co-operation between the parties or delay on
part of the tribunal in conducting the arbitration or in writing the award16, a party
may seek court intervention and the litigation costs negate not only the cost advantage
of ad hoc arbitration but also the parties’ intention to arbitrate.
Thirdly, the tribunal may, in complex cases involving considerable
administrative work, appoint a secretary to administer the arbitration, whose fees will
be borne by the parties and this adds to the cost burden of the arbitration.
It can therefore, be said of ad hoc arbitration that if the required co-operation is
forthcoming and the parties are conversant with arbitration procedures or the
arbitration is conducted by experienced arbitrators, “the difference between ad hoc
and institutional arbitration is like the difference between a tailor-made suit and one
that is bought off-the-peg”. That is to say, ad hoc arbitration is tailored to the needs of
the parties and is more cost effective than institutional arbitration.
Institutional arbitration An institutional arbitration is one in which a specialized
institution with a permanent character intervenes and assumes the functions of aiding
and administering the arbitral process, as provided by the rules of that institution. It is
pertinent to note that these institutions do not arbitrate the dispute, it is the arbitrators
who arbitrate, and so the term arbitration institution is inappropriate and only the rules
of the institution apply.
Often, the contract between the parties will contain an arbitration clause which
will designate an institution as the arbitration administrator. If the institutional
administrative charges, which may be substantial, are not a factor, the institutional
approach is generally preferred. The primary disadvantages attending the institutional
approach are: (i) administrative fees for services and use of facilities may be high in
disputes over large amounts, especially where fees are related to the amount in dispute.
For lesser amounts in dispute, institutional fees may be greater than the amount in
controversy; (ii) the institution's bureaucracy may lead to added costs and delays and
(iii) the disputants may be required to respond within unrealistic time frames.
In institutional arbitration, the first issue arising for agreement of the parties is
choice of the institution, appropriate for the resolution of disputes, arising out of their
contract. Whilst making such choice, there are various factors to be considered i.e.
nature & commercial value of the dispute, rules of the institution as these rules differ,
past record and reputation of the institution and also that the institutional rules are in
tune with the latest developments in international commercial arbitration practice.
There are many institutional arbitration administrators, some of which are associated
with a trade association and many of which are independent. The London Court of
International Arbitration, The Chartered Institute of Arbitrators (UK), The National
Arbitration Forum (USA) and The International Court of Arbitration (Paris) are four
Care should be taken in the selection of an arbitral institution. There are
approximately 1,200 institutions, organizations and businesses worldwide offering
institutional arbitral services. Some are excellent. Some are not as good. Some are bad.
Many arbitral institutions are operating under rules not artfully drawn or rules which
may be applicable to a particular trade or industry, but not to the existing or
prospective needs of one or more of the parties. The greatest threat presented by the
less prestigious arbitral institutions is the possibility that the institutional provider will
be unable to deliver what motivated the parties to select institutional arbitration over
ad hoc proceedings, i.e., a proper degree of supervision, which often is the key to
whether the arbitration will prove successful.
Advantages The advantages of institutional arbitration to those who can afford it are
apparent. Foremost are: (i) availability of pre-established rules and procedures which
assure that arbitration will get off the ground and proceed to conclusion with dispatch;
(ii) administrative assistance from institutions providing a secretariat or court of
arbitration; (iii) lists of qualified arbitrators, often broken out by fields of expertise;
(iv) appointment of arbitrators by the institution should the parties request it; (v)
physical facilities and support services for arbitrations; (vi) assistance in encouraging
reluctant parties to proceed with arbitration and (vii) an established format with a
proven record. In detail:
1. A merit of institutional arbitration is that it saves parties and their lawyers the
effort of determining the arbitration procedure and also the effort of drafting an
arbitration clause, which is provided by the institution. Once the parties choose the
institution, all they need to do is incorporate the draft clause of that institution into
their contract. This expresses their intention to arbitrate under the institution’s rules,
which provide for every conceivable situation that can arise in an international
2. Another merit of the draft clause is that it is revised periodically by the
institution, drawing on experience in conducting arbitrations regularly and approved
by arbitration experts, taking account of the latest developments in arbitration practice.
This ensures that there is no ambiguity in relation to the arbitration process. On the
other hand, ambiguous arbitration clauses in ad hoc arbitration compel parties to seek
court intervention in order to commence or continue the arbitration.
3. Another merit of institutional arbitration relates to selection of the arbitrators.
In institutional arbitration, the arbitrators are selected by the parties from the
institution’s panel of arbitrators. This panel comprises of expert arbitrators, drawn
from the various regions of the world and from across different vocations. This
enables selection of arbitrators possessing requisite experience and knowledge to
resolve the dispute, thereby facilitating quick and effective resolution of disputes.
Whereas in ad hoc arbitration, the appointment of arbitrators is generally
based on the parties’ faith & trust in the arbitrators and not necessarily on the basis of
their qualifications and experience. Thus, an incompetent arbitrator may not conduct
the proceedings smoothly and this could delay dispute resolution, lead to undesirable
litigation and increased costs.
However, it is pertinent to note that the parties do not appoint the arbitrators.
They only select and nominate the arbitrators for appointment by the institution,
which may refuse to appoint a nominated arbitrator if he lacks the requisite
qualifications or impartiality or independence, in order to avoid its reputation being
tarnished. Consequently, a party whose nominated arbitrator was refused appointment,
being dissatisfied, may turn hostile and refuse to participate or attempt to stall the
4. Another merit of institutional arbitration is that the parties and the arbitrators
can seek assistance and advice from the institutional staff, responsible for
administrating international commercial arbitrations under the institutional rules. Thus,
doubts can be clarified or a deadlock can be resolved without court intervention.
Whereas in ad hoc arbitration, the parties would be compelled to approach the Court,
in order to take the arbitration forward and consequently, the perceived cost
advantage of ad hoc arbitration would be negated by the litigation expenses. Also, the
institutional staff constantly monitors the arbitration to ensure that the arbitration is
completed and an award is made within reasonable time and without undue delay.
One of the advantages of arbitration is that it provides for final & binding
determination of the dispute between the parties. In other words, no review or appeal
lies against an arbitral award to ensure finality. This involves an inherent risk that
mistakes committed by the tribunal cannot be corrected, whereby one party would
inevitably suffer. However, some institutional rules provide for scrutiny of the draft
award before the final award is issued and some provide for a review procedure. The
latter entitles the dissatisfied party to appeal to an arbitral tribunal of second instance,
which can confirm, vary, amend or set aside the first award and such decision in
appeal is considered to be final and binding upon the parties. Contrasting this to ad
hoc arbitration where there is no opportunity for appeal or review and the parties have
to be prepared to suffer for the mistakes of the arbitrators, this is a redeeming feature
of institutional arbitration as it allows the parties a second chance of presenting their
case and also permits the rectification of mistakes made by the tribunal of first
instance. It also serves as a check on the actions of the arbitrators and restrains them
from making arbitrary awards.
It is also perceived that national courts tend to grant enforcement of awards
made in institutional arbitration, though doubts have been raised, since international
arbitration institutions enjoy worldwide recognition and their professional expertise
adds to the certainty and finality of the proceedings. Courts are more likely to even
enforce an award obtained in default of the other party, which they would refuse had
it been obtained in ad hoc arbitration, in view of the strict arbitration procedures
followed by these institutions. One of the criticism of institutional arbitration is that,
parties need to comply with the procedural requirements, resulting in unnecessary
delays in the arbitration. One may argue that such requirements, in fact, avoid delay.
For instance, the ICC draws up the terms of reference, criticised as being time
consuming and unnecessary, containing provisions to ensure that default of a party
does not stall arbitration. In default of a party in ad hoc arbitration, the other party
may seek court intervention to compel the defaulting party to commence or continue
the arbitration and this may result in longer delays, than that involved in complying
with these procedural requirements, intended to ensure smooth and effective dispute
Conclusion It is said that the parties are the masters of the arbitration but in
institutional arbitration, the institutions virtually acquire certain powers of the parties’
such as appointment of arbitrators, etc. and are in a position to impose their will upon
the parties. This seems to be against the very spirit of arbitration and one may say that
this is not arbitration in the true sense. Though ad hoc arbitration would then be
preferred, it can be argued that in today’s modern and complex commercial world, ad
hoc arbitration is suitable only to disputes involving smaller claims and less affluent
parties and to domestic arbitrations, excepting where state parties are involved, for the
reasons stated hereinabove. One may quote in support thereof that “Whatever its
merits in a purely domestic situation, ad hoc arbitration in an international setting
frequently frustrates the party seeking to enforce the contract” since international
commercial arbitrations involve complicated legal issues, which parties coming from
different jurisdictions may be unable to deal with.
In the context of international commercial disputes, one may argue that
institutional arbitration is more suitable, even though apparently it is more expensive,
time consuming and rigid than ad hoc arbitration, keeping in mind the fact that it
provides established & updated arbitration rules, support, supervision & monitoring of
the arbitration, review of awards and most importantly, strengthens the credibility of
the awards. In conclusion, it is must be said that it is hard to claim that institutional
arbitration is superior to ad hoc proceedings or vice versa.
Limits of arbitration It would be a mistake to assume that arbitration is a panacea.
It is not necessarily effective beyond the term for which a decision is made. While the
elements of conflict remain in society the possibility of dispute remains also. Hence,
at best, arbitration is a makeshift, one of the highest importance no doubt, but it does
not eradicate the evils to which it is applied. There are certain issues between
employers and laborers which will not be submitted to arbitration; fundamental rights
claimed by each party and held to be beyond the realm of dispute. Thus, for instance,
the labor union will not submit to arbitration the question of the right of the laborer to
join a union or the right of the union to represent its members. On the other hand, the
employer would not submit to arbitration his right to manage his own business. The
Industrial Commission remarks: "Whether it is as wise ordinarily to submit general
questions to arbitration as questions of interpretation is perhaps doubtful. It is
certainly the case that minor questions are more often arbitrated than those of great
importance involving general conditions of future labor."
As international commerce increases, so does the volume of international
business disputes. Arbitration permits parties from different countries to do business
together without having to resort to one another's legal systems. Not to exaggerate
arbitration plays a more and more important role in international commerce. We shall
study the detailed information about arbitration in the following chapters.
Major Arbitration Agencies in the World
A lot of countries and international organizations in the world establish
organizations exclusively which are engaged in international commerce disputes, such
as ICC (The International Court of Arbitration
of International Chamber of Commerce), British London Court of International,
British Arbitration Association, American Arbitration Association, Japan Commercial
Arbitration Association，The Arbitration Institute of the Stockholm Chamber of
Commerce, Court of Arbitration of the Zurich Chamber of Commerce, and Hong
Kong International Arbitration Center, China International Economic and Trade
Arbitration Commission, China Maritime Arbitration Commission, and so on.
In fact ,arbitration agency does not belong to the department of justice of a
country , it is just a civil organization which is established according to the law .Then
let us look at some major arbitration agencies in the world.
1) The International Court of Arbitration of International Chamber of
The International Court of Arbitration of International Chamber of Commerce,
which is usually abbreviated to ICC in English, is the most influential arbitration
organization. It was established in 1923 and it is one part of the
International Chamber of Commerce. The International Chamber of Commerce itself
was established in Paris, France in 1919, its main purpose is to promote the execution
of international commerce activities. It is an international chamber of commerce and
it has accepted more than 60 countries as its members until now. The establishment of
its Court of Arbitration continues to carry out the task of promoting and maintaining
the execution of international commerce activities.
The headquarters of The International Court of Arbitration of International
Chamber of Commerce lies in Paris, France ,together with its Bureau of
Secretary .Although it was established according to the French law ,it has nothing to
do with any country. The committee members of The International Court of
Arbitration of International Chamber of Commerce come from more than 40 countries
and they all have professional experience of solving controversies and law
background. The members of Arbitration of International Chamber of Commerce
come from every country in the world and one of its main characteristics of
arbitration is to arbitrate any controversy in any place all over the world. The staff
members of the International Court of Arbitration of International Chamber of
Commerce also come from different countries, they can use various languages to
carry out their work.
We should not neglect a fact that The International Court of Arbitration of
International Chamber of Commerce is deeply influenced by the European laws and
cultures without any doubt.
2) American Arbitration Association.
The American Arbitration Association（which is commonly abbreviated to
AAA） ，was established in 1926, it is a nonprofit-making organization for public
service. The main purpose of The American Arbitration Association lies in the solving
of commerce controversies by way of arbitration, intermediation, consultation,
democratic choices and so on in the scope of the permission of the law . The
American Arbitration Association can deal with a variety of cases, which includes the
international trade disputes, the labor disputes, consumer disputes, securities disputes,
and so forth. Correspondingly, the American arbitration association contains many
different types of arbitration rules which are applicable to different types of disputes
The headquarters of American Arbitration Association lies in New York and it
has branches in some main states in the United States. In 1990s, in order to expand
Asia-Pacific business, the American Arbitration Association set up an Asia-Pacific
controversy center. In recent years, the American Arbitration Association aims at
Europe and sets up branches in Europe.
The arbitrators of American Arbitration Association also come from a lot of
countries, it has thousands of arbitrators. The parties can also appoint the other
arbitrators outside its arbitrator list. In most cases, when solving the disputes there
will be only one arbitrator, that is to say, the sole arbitrator. But if the Arbitration
Association thinks that the dispute is too complicated, he can chooses three arbitrators
to form an arbitration tribunal.
Speaking from the amount of the cases, the American Arbitration Association
takes the first place in the aspect of receiving cases. But the overwhelming majority of
the cases are the internal labor disputes and other internal disputes.
3) China International Economic and Trade Arbitration Commission
China International Economic and Trade Arbitration Commission is usually
abbreviated to CIETAC.
The China International Economic and Trade Arbitration Commission (CIETAC)
is the most important permanent arbitration institution in China. Formerly known as
the Foreign Trade Arbitration Commission, the CIETAC was set up in April 1956
under the China Council for the Promotion of International Trade (CCPIT). To meet
the needs of the continuing development of China's economic and trade relations with
foreign countries after the adoption of the "reform and opening-up" policy, the
Foreign Trade Arbitration Commission was renamed as the Foreign Economic and
Trade Arbitration Commission in 1980, and then finally settled down as the China
International Economic and Trade Arbitration Commission in 1988. Since 2000, the
CIETAC is also known as the Arbitration Court of the China Chamber of International
The CIETAC independently and impartially resolves economic and trade
disputes by means of arbitration and conciliation (mediation).
The CIETAC' s headquarters is located in Beijing with two sub-commissions in
Shanghai and Shenzhen, respectively known as the CIETAC Shanghai
Sub-Commission and the CIETAC South China Sub-Commission. In order to meet
the needs of the development of the arbitration practices, the CIETAC also
successively established 19 liaison offices in different regions and specific business
sectors to provide parties with handy arbitration advice.
After nearly 50 years continuous endeavor, the CIETAC is now one of the
busiest arbitration centers in the world. With its arbitration practices and academic
activities, the CIETAC has also made great contributions to the legislation of the
Chinese arbitration law and the development of the arbitration practice in China. Not
only does CIETAC maintain positive relations and cooperation with all the major
arbitration institutions throughout the world, it also upholds a respectable reputation at
home and abroad for its independence, impartiality and efficiency.
4) The London Court of International Arbitration
London Court of International Arbitration (which is usually abbreviated to
ICIA , established in 1892) ,is the oldest arbitration agency in the world .Its old name
was London Chamber of Arbitration, and it adopted its new name from the year of
1903. From 1986 London Court of International Arbitration was reshuffled to be a
limited liability company and the board of directors administers its activities.
London Court of International Arbitration is located in London, its main
function in arbitrating cases is to appoint the arbitrators and administer the cases
supportingly. It also provides the list of arbitrators, and the arbitrators have different
backgrounds in order to meet the needs of different kinds of cases.
5) The International Center for the Settlement of Investment Disputes
The International Center for the Settlement of Investment Disputes, which is
commonly abbreviated to ICSID, was established in 1965 according to Washington's
convention. The headquarters of the International Center for the Settlement of
Investment Disputes lies in Washington. it is an absolute international corporate
The purpose of the establishment of the International Center for the Settlement
of Investment Disputes is to strengthen the confidence of the investors coming from
the developed countries in order to make them invest in the developing countries, and
use arbitration and intermediation methods to solve the investment controversies .It
requests that the parties of controversy are member countries of the convention, and
the dispute bodies are countries, national organizations or agencies .The controversy
that it solves must be caused by the investment directly .
The International Center for the Settlement of Investment Disputes has its own
arbitration rules, and the center is sure to apply its own rules when arbitrating. The
arbitrators and the mediators must be chosen from its arbitrator list and the mediator
list .The award is final, and the parties must accept the result.
6) The Arbitration Institute of the Stockholm Chamber of Commerce
The Arbitration Institute of the Stockholm Chamber of Commerce was
established in 1917 and its arbitration agency was established in 1949.The purpose of
its establishment lies in the solving of industry disputes, trade disputes and
transportation disputes. The headquarters of The Arbitration Institute of the
Stockholm Chamber of Commerce Lies in Stockholm, Sweden. It includes a bureau
of secretaries and a committee made up of three members, the tenure of the three
members who are appointed by the Chamber of Commerce is 3 years. Among the
three members, one should have rich experience of solving the industry and
commerce controversies, one should be an experienced lawyer, and the rest one must
have the ability to communicate with the commercial organizations.
The advantage of the Arbitration Institute of the Stockholm Chamber of
Commerce in the realm of solving international disputes lies in its neutral position. It
is famous for solving the disputes relating to the Far East or China. Of course, there
are also many other arbitration agencies, they play different roles in different realms
or different countries .
7) China Maritime Arbitration Commission
China Maritime Arbitration Commission (formerly known as Maritime
Arbitration Commission of the China Council for the Promotion of International
Trade, and hereinafter referred to as the "Arbitration Commission")independently and
impartially resolves, by means of
arbitration, contractual or non-contractual maritime disputes arising from, or in the
process of, transportation, production and navigation by or at sea, in coastal waters
and other waters connected with sea, in order to protect the legitimate rights and
interests of the parties and promote the development of the domestic and international
shipping industry and economy and trade.
The Arbitration Commission shall take cognizance of cases of following
(1)Dispute arising from salvage and general average；
(2)Dispute arising from collision between vessels, or from damage caused by a
vessel to the structure and installation on the sea, waterways connected with sea, in
the harbor as well as the submarine or underwater installation；
(3)Dispute arising from management, operation, chartering, mortgage, agency,
towage, raising, sale, repair, building, demolition, of sea-going/river vessel, as well as
carriage by sea in virtue of contracts of affreightment, bill of lading or other
documents, and marine insurance；
(4)Dispute regarding the utilization of the marine resources and pollution
damages to the marine environment ；
(5)Dispute arising from contract of freight forwarding, supply of ship's stores,
employment of seaman aboard a foreign vessel, fishery production and fishing；
(6)Other maritime dispute submitted for arbitration by agreement between the
8) Hong Kong International Arbitration Center
Hong Kong International Arbitration Center (Usually abbreviated to HKIAC)
was established in 1985 to assist disputing parties to solve their disputes by arbitration
and by other means of dispute resolution. It was established by a group of the leading
business and professional people in Hong Kong to be the focus for Asia of dispute
resolution. It has been generously funded by the business community and by the Hong
Kong Government but it is totally independent of both and it is financially self
HKIAC is a non-profit making company limited by guarantee. It operates under
a Council composed of business and professional people of many different
nationalities and with a wide diversity of skills and experience. Administration of
HKIAC arbitration activities is conducted by the Council through the Centre ' s
Secretary-General who is its chief executive and registrar.
Of course, there are also many other arbitration agencies, they play different
roles in different realms or different countries ,which we should not neglect.
The Characteristics and the Significance of the Arbitration
As a unique way to solve the disputes, arbitration has great significance.
Arbitration has formed its own distinct characteristics during the long term practice of
solving the disputes. Comparing with the other ways in solving the disputes, the
characteristics of the arbitration are the advantages of the arbitration over the other
ways to a great extent. At present arbitration is used as a way of solving the disputes
between the parties, it is not only confirmed by the law of majority countries in the
world, but also has been accepted as an institution of law to solve a variety of disputes.
Moreover, arbitration is highly valued by the people in the world more and more .This
is because the arbitration has many unique characteristics and advantages over the
lawsuit, the mediation, the reconciliation and so on .
I. Adopting the way of arbitration is favorable for the autonomy of the parties.
Generally speaking, favorable for the autonomy of the parties means
respecting the wishes of the parties. Autonomy of the parties is the basic characteristic
of arbitration, and this is also the main difference between the arbitration and the
lawsuit. When compared with the parties of the lawsuit, the parties of the arbitration
have more autonomy than the parties of the lawsuit .When disputes arise, the two
parties have the right to decide whether to solve the disputes by means of arbitration,
to decide which arbitration agency they will choose, to choose the arbitrators that they
want to use, to choose the arbitration procedure in the process of arbitration and the
way they like to adopt to solve the dispute. When disputes arise, whether to adopt
the way of arbitration to solve the dispute is absolutely decided by the parties. That is
to say ,the arbitration agency will not accept to hear the case until the two parties
reach an agreement to solve the dispute by way of arbitration .In addition, the two
parties also have the right to decide which arbitration agency has the right to arbitrate
the case . Taking China as an example, the two parties can choose Shanghai
Arbitration Commission, Beijing Arbitration Commission, Guangzhou Arbitration
Commission or Shenzhen Arbitration Commission and so on to arbitrate. If they like,
they can also appoint a foreign arbitration agency, such as the Arbitration Institute of
the Stockholm Chamber of Commerce, Court of Arbitration of the Zurich Chamber of
Commerce and so on.
As for the procedures of the arbitration, the two parties can reach an agreement
to choose what they like .Although the arbitration laws and the arbitration rules made
by different arbitration agencies regulate the procedures of the arbitration, the
procedures of the arbitration are also optional only if an appointment exists between
the two parties. According to the arbitration law, there are two types of procedures of
arbitration, one is the general procedures, and the other is simplified procedures. The
time limit of the general procedure is four months, and the time limit of the simplified
procedure is just two months. In the general procedures, the arbitration tribunal is
made up of three arbitrators. While in the simplified procedures, the arbitration
tribunal is made up of one arbitrator. To the parties , if they can reach an agreement ,
they can choose the simplified procedures to solve the disputes which should be
solved by way of the general procedures, or they can even shorten the time limit or
cancel certain step(s) ,such as the time limit of the defense ,the two parties have the
right to ask for the arbitration tribunal to shorten the time length .As for the hearing ,
according to the law of procedure，the cases of first instance must be heard in public.
Although the arbitration law also stipulates that the arbitration cases should be heard
in public, yet the cases can be heard not in public according to the two parties’
If we compare the arbitration with the lawsuit, in the process of hearing of
lawsuit, the parties do not have the right to choose the judge, and which collegial
panel has the right to hear the case and the judges in this collegial panel, all these have
to be decided by the court. While in arbitration, the parties have the right to choose
the arbitrator. In the general procedure of arbitration the arbitration tribunal is made
up of three arbitrators, if the general procedure of arbitration is applicable to the case,
each party has the right to choose one arbitrator that they believe according to their
own will respectively .If they don not want to appoint the arbitrators, they can consign
the arbitration agency to appoint the arbitrators. The rest arbitrator is the presiding
arbitrator, and the presiding arbitrator is chosen by the two parties .If the two parties
could not reach an agreement to decide the presiding arbitrator, the arbitration agency
will appoint the presiding arbitrator.
Talking of the ways of arbitration, that is to say, the ways of solving the disputes, it
can be divides into two types. The first one is intermediation and the second one is
arbitration, choosing which way to solve the dispute is absolutely decided by the
parties. When the disputes arise, the two parties like to solve the disputes in a very
proper way in order to not to spoil the relationship between them. So the arbitration
tribunal tries its best to compromise. Sometimes the two parties apply for the
arbitration to settle the dispute, but they also make great efforts to solve the dispute by
way of compromise outside the arbitration tribunal, they hope that the arbitration
tribunal will give them some time for them to compromise. In that case, the arbitration
tribunal will prolong the time length of the hearing in order to make the parties solve
the dispute in a compromising way.
The two parties can also choose the style of the arbitration instruments.
Generally speaking, if the dispute is solved by way of arbitration, the two parties will
be given an award, if the dispute is solved by way of intermediation the parties are
sure to get the conciliation document. Both of these two types of arbitration
instruments are legal, and they have the same legal force. But to those who solve the
dispute by way of intermediation, if they want to get an award, that will be practical,
the arbitration tribunal will make an award according to the conciliation document.
Sometimes the two parties can solve the disputes just by themselves by way of
intermediation, yet they want to get an award to make the agreement legal, that is also
practical. Of course, the arbitration agency will investigate their behaviors to make
sure that they don not break the law in order to prevent them from doing harm to the
public advantages and the advantages of the third party deliberately and corporately
In one word, the parties of the arbitration have full power of autonomy, only if
they make an agreement and the agreement don not break the law, don not do harm to
the public advantages and the advantage of the third party.
II. Adopting the way of arbitration to solve the dispute is very flexible and
When disputes arise between the parties, they both like to solve the disputes in
a very quick and efficient way, especially in the time of the market economy, because
the time is equal to money .If the two parties spend a lot of time in solving the dispute,
suppose they can win a lawsuit, they are sure to suffer a great loss in finance. For that
matter, the arbitration can meet the needs of the parties fully.
As a single ruling system, the arbitration commission shall not accept any
application for arbitration, nor shall a people's court accept any action submitted by
the party in respect of the same dispute after an arbitration award has already been
given in relation to that matter. As soon as the award is given, it becomes legal, the
parties have to fulfill the items in the award, if one party refuses to fulfill the award，
the other party can gain assistance by applying for compulsory execution from the
court. No second hearing in arbitration, because the award in the first hearing is the
final award, you can not overthrow the award by way of appeal, nor by way of claim.
When compared with the arbitration, the lawsuit of our country carries out the
principle of the verdict of the trial of second instance will be the final verdict. If the
parties do not accept the verdict of the first hearing ,they can appeal to the Court of
Cassation, and the Court of Cassation must accept and hear the case,the verdict that
the Court of Cassation makes will be effective and legal .Besides that ,in the law of
procedure of our country , if the parties still don not accept the verdict made by the
court of cassation ,they can ask for the claim .The court has to check the case ,if
mistakes exist in the verdict ,the court will hear the case once more .Although the law
stipulates that the claim does not affect the enforcement ,the long term uncertainty
status of the case will take a lot of parties’ energy in this long process .
By comparing the arbitration with the lawsuit, we find that the single ruling system of
the arbitration has such advantages as flexible and handy over the second and final
verdict system and the appeal system.
The time limit of hearing the case in the arbitration is shorter .According to the law of
arbitration, the time limit of the general procedure of the arbitration is 4 months and
the time limit of the simplified procedure of arbitration is 2months .While in the
process of lawsuit, according to the law of procedure, the time limit of the general
procedure of lawsuit in the first hearing is 6months, and the time limit of the
simplified procedure of lawsuit is 3 months. That is to say, if you adopt the way of
arbitration to solve the dispute rather than the way of lawsuit that will save one third
of your time .If we compare the arbitration with the whole process of the lawsuit ,the
arbitration could save us much more time .
The procedures of the arbitration are not only flexible, but also simple. In
arbitration the parties have the right to reach an agreement to cancel certain steps in
the process of arbitration, such as they can give up the time limit of the defense , they
can shorten the time limit of forming the arbitration tribunal ,they can apply for the
hearing ahead of the arbitration schedule , or they can even reach an agreement not to
solve the dispute by way of holding a court ,and so on .By doing these ,the arbitration
agency can solve the cases in a comparatively short period of time within the
tolerance range of the laws.
Most arbitration disputes can be solved very soon , some cases can be solved just
during one week, because of the arbitration’s simple and flexible procedures.
III. In the process of arbitration, the arbitrators are the experts in certain fields,
that will help to improve the scientificalness and the authority of the award.
All the disputes which are solved by way of arbitration are civil and
commercial disputes, these disputes not only involve the application of the law, but
also the specialized knowledge in specific fields. To deal with the disputes properly
requires both rich knowledge in the field of law and the specific knowledge in the
other fields. The arbitrators who are experts in certain field own rich knowledge in the
arbitration field, they are also familiar with the related laws, rules of the laws and the
conventions. Besides, they also have very rich practical arbitration experience, which
makes them have the abilities to understand the cases relating to specific fields
properly and arbitrate the cases promptly, accurately and justly. Arbitrating the
disputes by the experts makes the arbitration process more specialized, and this
guarantees the scientificalness and the authority of the award, thus the parties could
accept the award easily.
IV. Adopting the way of arbitration to solve the disputes is fair and reasonable .
The power that the arbitration agency performs is the social power, the right the
arbitration agency owns come from the authorization of the two parties absolutely. So
the two parties may not be restricted by the area control and at the same time, they
also have the right to refuse the interference of other powers including administration
power. The two parties can choose the arbitration tribunal and submit their dispute to
the arbitration tribunal which has nothing to do with either party to arbitrate the
dispute, or they can even submit the dispute to the arbitration agency which lies in the
third party to arbitrate in order to avoid partiality and to solve the dispute justly and
reasonably .So when significant international trade disputes arise ,maybe some of
them touch upon the interests of the whole country ,to avoid the occurrence of the
partial verdict ,the two parties like to submit the dispute to the arbitration agency
which lies in the third country having nothing to do with either party .
In the process of arbitration, the arbitration agency puts emphasis not only on
the equality but also the rightfulness. According to the law of arbitration, disputes
shall be fairly and reasonably settled by arbitration on the basis of facts and in
accordance with the relevant provisions of law. When arbitrating the case, the
arbitration agency follows this basic notion: arbitration should not only be legal but
also fair and reasonable. The arbitration agency tries its best to make a distinction
between right and wrong, the arbitration agency not only solves the dispute definitely
and positively, but also makes the two parties continue to cooperate .By way of
arbitration, the arbitration agency not only supports the law-abiding people ,but also it
should take the two parties’ interests into consideration to minimize the loss.
To sum up, adopting the way of arbitration to solve the dispute does good to the
cooperation, manufacture and management of the two parties.
V. Adopting the way of arbitration to solve the dispute is in favor of keeping the
secrets of the parties.
The main difference between arbitration and lawsuit and intermediation is not
hearing the case in public. The basic principle of the lawsuit is hearing the case in
public, the crowd are allowed to be present at the hearing, and the media are allowed
to report the hearing . As for the intermediation, it also allows the relevant units,
organizations to participate in the intermediation .but an arbitration shall not be
conducted in public. If the parties agree to a public hearing, the arbitration may
proceed in public, except those concerning the country’s secrets. And the evidence
materials provided by the two parties will not be displayed in public without the
parties’ permission. Not hearing the case in public will help to keep the trade secrets
of the parties’ and maintain the reputations of the parties. Of course, to the outsider
the arbitration is not in public, the two parties have the equal right to know the details
of the arbitration and they will be treated equally. At the present time, a lot of famous
enterprises like to adopt the way of arbitration.
VI. Adopting the way of arbitration to solve the dispute helps to create a
The obvious difference between the lawsuit and the arbitration is the
atmosphere of the arbitration is tempered. The lawsuit is conducted in the court, and
chaired by the tribunal .The tribunal is an important component of a country,
jurisdiction is the symbol of the force of a country. In the process of lawsuit, the
tribunal has to safeguard the country's authority, so the atmosphere is very solemn,
and the judge wears the long robe. At the beginning of the session, the court clerk will
announce the discipline of the court and the participants must follow the disciplines.
The arbitration agency is a nongovernmental organization, the source of its arbitration
power lies in the authorization and trust of the two parties. When arbitrating , the
arbitration agency sticks to the principle of people foremost and the two parties
foremost, and all the things that the arbitration does aim at solving the dispute
properly. So in the arbitration process, the atmosphere in the arbitration tribunal is
comparatively tempered, and the surrounding of the arbitration tribunal is mild, gentle
and peaceful. These help to lessen the two parties’dysphoric mood caused by the
dispute, and to create a good environment for the two parties to negotiate. When the
arbitration tribunal hears a case, the two parties and the arbitrators are sitting together,
and they have equal status. All these help to lessen the antagonism between the two
The equal atmosphere that the arbitration agency creates is helpful to solve the
disputes and it is also helpful to promote the two parties to continue the relationship
of economic transaction and cooperation.
VII. arbitration is acknowledged and carried out all over the world
The award of the arbitration can be carried out not only at home but also
overseas ,if one party does not fulfill the award ,the other party can ask the court at
home for applying to compulsory execution. The arbitration award made at home is
acknowledged and executed by most major courts all over the world. The 1958 New
York Convention on the Recognition and Enforcement of Foreign Arbitral Awards
(abbr." the New York Convention") lays down a convenient and generally accepted
framework for the recognition and the enforcement of international arbitral awards.
Under the Convention, the arbitral awards made in any signatory countries can be
recognized and enforced through the competent courts of 145 countries and regions.
Because of the characteristics of the arbitration ,arbitration plays an important
role in solving the civil disputes and trade disputes .Some jurists believe that the
arbitration is a better way to solve the civil disputes than lawsuit and
intermediation .Some parties admit that solving the disputes by means of arbitration
can save them more time and money and lower the possibility of conflict ,at the same
time ,it is helpful to maintain the relationship of economic association and
The Ways the Arbitration Agency Used
When the disputes are submitted to the arbitration agency, the arbitration
tribunal usually adopts the following two ways to solve the disputes.
(1)Hearing an arbitration case in session
Hearing an arbitration case in session is the major way that the arbitration
tribunal adopts in solving the disputes .It means when the arbitration tribunal wants to
solve a dispute, it should hold a tribunal session to hear the arbitration case. More
specifically, the arbitration tribunal will chair the hearing of the case ;and the two
parties and the other relevant persons should participate in the session. They should
behave according to the legal proceedings of the arbitration to hear the case then
make an award.
The arbitration law prescribes the principle of hearing an arbitration case in
session .At the same time, the arbitration law also prescribes that the arbitration
should not be conducted in public. If the parties agree to a public hearing, the
arbitration may proceed in public, except those concerning a country’s secrets. This
provision affirms the principle of not hearing an arbitration case in public further, but
hearing an arbitration case in public is an exception. What we call not hearing an
arbitration case in public means when hearing the case the arbitration tribunal will not
allow the crowd to be present at the hearing and not allow the journalists to interview
and report the things relating to the case .The purpose of not hearing a case in public
lies in the protection of the two parties’ trade secrets, maintaining the parties’
commercial standing .Because the main characteristic of the arbitration is to respect
the wishes of the two parties ,if the two parties agree to a public hearing, the
arbitration may proceed in public, except those concerning a country’s secrets.
(2) Hearing an arbitration case according to the submitting written materials.
Generally speaking, an arbitration tribunal shall hold a tribunal session to hear
an arbitration case. But if the parties agree not to hold a hearing, the arbitration
tribunal may render an award in accordance with the arbitration application, the
defense statement and other documents. More specifically, the arbitration tribunal
has the right to make an award according to the arbitration application, the defense
statement, and other documents without the participation of the both parties and the
other relevant persons. As a necessary supplement to hearing an arbitration case in
session, hearing an arbitration case according to the submitting written materials
plays an important role in the realm of arbitration.
The above two ways are the most common ways to handle different arbitration
cases under different circumstances.
Although most business activities are completed without any problem, disputes
and controversies will occasionally arise. Such disputes and controversies can be
solved by impartial arbitration.
Taking China as an example if you want to solve the disputes by way of
arbitration you should follow the following procedures of hearing:
The FTAC and the MAC take cognizance of a dispute on the condition that there
is an arbitration agreement concluded between the disputing parties prior or
subsequent to the arising of the dispute.
The arbitration agreement should be a written agreement which means the
arbitration clause stipulated in the original contract from which the dispute has arisen
or any other form of agreement in respect of submission to arbitration (such as special
agreement ,correspondence between the parties or any specific stipulation contained
in other relevant documents).
The contracting parties may include in their contract the following arbitration
clause as an agreement for the submission of disputes to the FTAC or the MAC:
“Any disputes arising from the execution of or in connection with this Contract,
shall be settled amicably through friendly negotiation. In case no settlement can be
reached through negotiation, the case shall then be submitted to the Foreign Trade,
Arbitration Commission (or the Maritime Arbitration Commission) of the China
Council for the Promotion of International Trade .Beijing for arbitration in accordance
with its Provisional Rules of Procedure .The arbitral award is final and binding upon
The Chinese courts of law do not seize cases of foreign trade and maritime
disputes where an arbitration agreement is in force.
Arbitrators shall be chosen from among the members of the FTAC or the MAC.
The FTAC is composed of a number of members selected and appointed by the
China Council for the Promotion of International Trade among persons having special
knowledge and experience in foreign trade ,commerce,
industry ,agriculture ,transportation, insurance and other related matters as well as in
law .The MAC is composed of a number of members selected and appointed by the
China Council for the Promotion of International Trade from among persons having
special knowledge in navigation ,ocean transport, foreign trade, insurance and
When a case of dispute is submitted for arbitration, the disputing parties shall
each choose an arbitrator from among the members of the FTAC or the MAC. The
arbitrators so chosen shall jointly select from among the members of the FTAC or the
MAC a presiding arbitrator to form an arbitration tribunal to examine and hear the
case .The disputing parties may also jointly choose from among the members of the
FTAC or the MAC a sole arbitrator to arbitrate singly. If one of the parties fails to
choose an arbitrator within the prescribed time-limit, the chairman of the FTAC or the
MAC shall, upon the request of the other party, appoint the arbitrator on the former’s
behalf. If the arbitrators so chosen or appointed can not agree upon the choice of the
presiding arbitrator within the prescribed time-limit, the Chairman of the FTAC or the
MAC shall elect a presiding arbitrator for them .
Either of the parties in dispute may authorize the Chairman of the FTAC or the
MAC to choose for him an arbitrator .If both parties authorize the Chairman of the
FTAC or the MAC to choose for them the arbitrators, the chairman may, with the
consent of the both parties, appoint a sole arbitrator from among the members of the
FTAC or the MAC to arbitrate the case singly.
Whether the disputing parties may challenge the arbitrators is not mentioned in
the rules of procedure of the FTAC and the MAC and no such case has ever turned up
in practice .This is because all the members of the FTAC and the MAC are carefully
chosen by the China Council for the Promotion of International Trade among persons
of eminent reputation .And what is more ,there are policies of the Chinese Communist
Party and Government under which every arbitrator is required to deal with cases in a
fair ,reasonable and truth-seeking way. No partiality is allowed .In principle, of course,
if a disputing party insists in his challenge against an arbitrator with justified reasons,
the FTAC or the MAC has the right to make a decision on the change of the
arbitrator .No specific time-limit has been set for challenging arbitrators. The FTAC
and the MAC may decide according to circumstances.
The arbitration tribunal or sole arbitrator takes cognizance of a case where an
arbitration agreement is in existence .If a disputing party raises an objection upon the
validity or other matters relating to the arbitration agreement, the FTAC or the MAC
may make a decision upon it .
The FTAC and the MAC seize cases of disputes in accordance with the
arbitration agreements concluded between the disputing parties upon written
application of one of the disputing parties.
The following items must be specified in the application for arbitration:
1. the name and address of the plaintiff and those of the defendant ;
2. the statement of facts;
3. the claim of the plaintiff and the facts and evidence upon which the claim is
4. the name of an arbitrator chosen by the plaintiff from among the members of
the FTAC or the MAC or a statement authorizing the Chairman of the FTAC or the
MAC to appoint an arbitrator for the plaintiff .
Original relevant documents (such as contracts, arbitration agreements,
correspondence between the parties concerned, etc.) or certified duplicates or copies
thereof in sufficient number must accompany the application for arbitration.
When submitting an application for arbitration ,the plaintiff shall pay a sum
equivalent to 0.5﹪of the amount of the claim as a deposit for the fee of maritime
The date for hearing the case shall be set by the chairman of the FTAC or the
MAC in consultation with the presiding arbitrator or the sole arbitrator as the case
may be. The FTAC or the MAC shall notify the parties in time of the date of hearing
to be held by the arbitration tribunal.
Hearings are generally held in Beijing where the FTAC and the MAC are
seated .Where necessary, hearing may, upon the approval of the Chairman of the
FTAC or the MAC, be held at other places within the Chinese territory.
The disputing parties may confer with the FTAC and the MAC on matters
relating to the arbitration proceedings in person or through appointed attorneys. Such
attorneys may be citizens of the People’s Republic of China or foreign citizens. The
attorneys must have Power of Attorney issued by the disputing parties concerned. The
authorized attorneys may attend the hearings on behalf of the authorizing parties.
The arbitration tribunal may have oral or written examination. The arbitration
tribunal generally hear cases in open sessions, but it may, upon the request of both
or either of the parties ,decide to hold the hearings in closed sessions.
The arbitration tribunal may consult experts for the correct examination of cases
and such experts may be chosen from among citizens of People’s Republic of China
or foreign citizens.
The chairman of the FTAC or the MAC may, upon the request of one of the
parties, make decision in respect of measures of security and determine the amount
and form of the security for the claim. If the amount and form of the required security
have already been agreed upon between the parties, such amount and form shall be
Should one of the disputing parties or his attorney fail to appear at the hearing
held by arbitration tribunal, the tribunal may, upon the request of the party present,
proceed with the hearing and render an award.
The arbitration fee shall be written in the award, the amount of which shall in no
case exceed 1﹪ of the claim in the case of arbitration by the FTAC and 2﹪of the
amount of the claim in the case of arbitration by the MAC.
(4) Arbitral Award
The award of an arbitration tribunal composed of three arbitrators, is decided by
majority vote and minority opinion may be made in writing and docketed into the file.
The arbitration tribunal may render provisional award or part award.
The conclusion of the award shall be read to the parties at the closing session of
The award shall be made in writing within in fifteen days from the date of the reading
of the conclusion part .It shall include the reasons for the decision and shall be signed
by the presiding arbitrator and the arbitrators or by the sole arbitrator as the case may
The award is final and neither party shall bring an appeal for revision before a
court of law or any other organization.
An arbitration award once made has the force of law and there is no need to
register and keep it in a court of law.
The award issued by the FTAC or the MAC shall be executed by the parties
themselves within the time fixed in the award .In case an award which is to be
executed in China is not executed by one party after the expiration of the fixed time,
the other party may petition the people’s court of the People’s Republic of China to
enforce it in accordance with law. In the twenty years and more since the founding of
New China, there has never been a single case that has to be enforced by the People’s
Court. The Chinese foreign trade and maritime enterprises are state-owned
enterprises .They respect the arbitration awards. Where it is their obligation to execute
an award, they will do it themselves.
A clause of mutual assurance of enforcement of arbitral awards can be found in
some of the bilateral trade agreements and navigation treaties signed between the
Chinese and foreign government.
As to the enforcement of foreign arbitral award in China, although China is not a
member of international conventions for the enforcement of foreign arbitral
award ,the Chinese corporation and enterprises will, In fact ,execute foreign arbitral
awards so long as they are fair and not in violation of the Chinese laws and
policies .In case of non-execution ,the party requesting enforcement of the award may
petition the relevant government departments of China or the China Council for the
Promotion of International Trade to push the enforcement or appeal to the Chinese
court to enforce it in accordance with law
Arbitration Law of the People's Republic of China
With the development of the society, more and more special laws are made to
regulate people’s behaviors in different fields. In order to ensure that economic
disputes could be impartially and promptly arbitrated and protect the legitimate rights
and interests of the relevant parties ，many countries make their own arbitration law,
just like the other countries, China also makes arbitration law to guarantee the healthy
development of the socialist market economy. We call it Arbitration Law of the
People's Republic of China, and the law was adopted at the 8th Session of the
Standing Committee of the 8th National People's Congress and promulgated on
August 31, 1994. The Arbitration Law of the People's Republic of China includes the
following eight chapters:
Chapter I General Provisions
Chapter II Arbitration Commissions and Arbitration Association
Chapter III Arbitration Agreement
Chapter IV Arbitration Procedure
Chapter V Application for Cancellation of an Award
Chapter VI Enforcement
Chapter VII Special provisions on Foreign-Related Arbitration
Chapter VIII Supplementary Provisions
Now comes the detailed articles included in each chapter.
Chapter I General Provisions General Provisions
This Law is formulated to ensure that economic disputes shall be impartially and
promptly arbitrated, to protect the legitimate rights and interests of the relevant parties
and to guarantee the development of the socialist market economy.
Disputes over contracts and disputes over property rights and interests between
citizens, legal persons and other organizations as equal subjects of law may be
submitted to arbitration.
The following disputes shall not be submitted to arbitration:
1.disputes over marriage, adoption, guardianship, child maintenance and
2.administrative disputes falling within the jurisdiction of the relevant
administrative organs according to law.
The parties adopting arbitration for dispute settlement shall reach an arbitration
agreement on a mutually voluntary basis. An arbitration commission shall not accept
an application for arbitration submitted by one of the parties in the absence of an
A people's court shall not accept an action initiated by one of the parties if the
parties have concluded an arbitration agreement, unless the arbitration agreement is
An arbitration commission shall be selected by the parties by agreement. The
jurisdiction by level system and the district jurisdiction system shall not apply in
Disputes shall be fairly and reasonably settled by arbitration on the basis of
facts and in accordance with the relevant provisions of law.
Arbitration shall be conducted in accordance with the law, independent of any
intervention by administrative organs, social organizations or individuals.
The single ruling system shall be applied in arbitration. The arbitration
commission shall not accept any application for arbitration, nor shall a people's court
accept any action submitted by the party in respect of the same dispute after an
arbitration award has already been given in relation to that matter. If the arbitration
award is canceled or its enforcement has been disallowed by a people's court in
accordance with the law, the parties may, in accordance with a new arbitration
agreement between them in respect of the dispute, re-apply for arbitration or initiate
legal proceedings with the people's court.
Chapter II Arbitration Commissions and Arbitration Association
Arbitration commissions may be established in the municipalities directly
under the Central Government, in the municipalities where the people's governments
of provinces and autonomous regions are located or, if necessary, in other cities
divided into districts. Arbitration commissions shall not be established at each level of
the administrative divisions. The people's governments of the municipalities and cities
specified in the above paragraph shall organize the relevant departments and the
Chamber of Commerce for the formation of an arbitration commission. The
establishment of an arbitration commission shall be registered with the judicial
administrative department of the relevant province, autonomous region or
municipalities directly under the Central Government.
An arbitration commission shall fulfill the following conditions:
1. it must have its own name, domicile and Articles of Association;
2. it must possess the necessary property;
3. it must have its own members; and
4. it must have arbitrators for appointment.
The articles of association of the arbitration commission shall be formulated in
accordance with this Law.
An arbitration commission shall comprise a chairman, two to four
vice-chairmen and seven to eleven members. The chairman, vice-chairmen and
members of an arbitration commission must be persons specialized in law, economic
and trade and persons who have actual working experience. The number of specialists
in law, economic and trade shall not be less than two-thirds of the members of an
The arbitration commission shall appoint fair and honest person as its
Arbitrators must fulfill one of the following conditions:
1. they have been engaged in arbitration work for at least eight years;
2. they have worked as a lawyer for at least eight years;
3. they have been a judge for at least eight years;
4. they are engaged in legal research or legal teaching and in senior positions;
5. they have legal knowledge and are engaged in professional work relating to
economics and trade, and in senior positions or of the equivalent professional level.
The arbitration commission shall establish a list of arbitrators according to
Arbitration commissions are independent of administrative organs and there are
no subordinate relations with any administrative organs nor between the different
The China Arbitration Association is a social organization with the status of a
legal person. Arbitration commissions are members of the China Arbitration
Association. The Articles of Association of the China Arbitration Association shall be
formulated by the national general meeting of the members. The China Arbitration
Association is an organization in charge of self-regulation of the arbitration
commissions. It shall conduct supervision over the conduct (any breach of discipline)
of the arbitration commissions and their members and arbitrators in accordance with
its articles of association. The China Arbitration Association shall formulate
Arbitration Rules in accordance with this Law and the Civil Procedure Law.
Chapter III Arbitration Agreement
An arbitration agreement shall include the arbitration clauses provided in the
contract and any other written form of agreement concluded before or after the
disputes providing for submission to arbitration. The following contents shall be
included in an arbitration agreement:
1. the expression of the parties' wish to submit to arbitration;
2. the matters to be arbitrated; and
3. the Arbitration Commission selected by the parties.
An arbitration agreement shall be invalid under any of the following
1. matters agreed upon for arbitration are beyond the scope of arbitration
prescribed by law;
2. an arbitration agreement concluded by persons without or with limited
capacity for civil acts;
3. one party forces the other party to sign an arbitration agreement by means of
If the arbitration matters or the arbitration commission are not agreed upon by
the parties in the arbitration agreement, or, if the relevant provisions are not clear, the
parties may supplement the agreement. If the parties fail to agree upon the
supplementary agreement, the arbitration agreement shall be invalid.
An arbitration agreement shall exist independently. Any changes to, rescission,
termination or invalidity of the contract shall not affect the validity of the arbitration
agreement. An arbitration tribunal has the right to rule on the validity of a contract.
If the parties object to the validity of the arbitration agreement, they may apply
to the arbitration commission for a decision or to a people's court for a ruling. If one
of the parties submits to the arbitration commission for a decision, but the other party
applies to a people's court for a ruling, the people's court shall give the ruling .If the
parties contest the validity of the arbitration agreement, the
objection shall be made before the start of the first hearing of the arbitration tribunal.
Chapter IV Arbitration Procedure
Section 1: Application and Acceptance for Arbitration
The parties applying for arbitration shall fulfill the following conditions:
1. they must have an arbitration agreement;
2. they must have a specific claim with facts and argument on which the claim
3. the arbitration must be within the jurisdiction of the arbitration commission.
The party applying for arbitration shall submit to an arbitration commission
the arbitration agreement, an application for arbitration and copies thereof.
An arbitration application shall state clearly the following:
1. the name, sex, age, occupation, work unit and address of the party, the name,
address and legal representative of the legal person or other organization and the
name and position of its person-in charge;
2. the arbitration claim and the facts and argument on which the claim is based;
3. evidence and the source of evidence, the name and address of the witness.
Within 5 days from the date of receiving the arbitration application ,the
arbitration commission shall notify the parties that it considers the conditions for
acceptance have been fulfilled, and that the application is accepted by it. If the
arbitration commission considers that the conditions have not been fulfilled, it shall
notify the parties in writing of its rejection, stating its reasons.
Upon acceptance of an arbitration application, the arbitration commission shall,
within the time limit provided by the Arbitration Rules, serve a copy of the
Arbitration Rules and the list of arbitrators on the applicant, and serve a copy of the
arbitration application, the Arbitration Rules and the list of arbitrators on the
respondent. Upon receipt of a copy of the arbitration application, the respondent shall,
within the time limit prescribed by the Arbitration Rules, submit
its defense to the arbitration commission. Upon receipt of the defense, the arbitration
commission shall, within the time limit prescribed by the Arbitration Rules, serve a
copy of the reply on the applicant. The failure of the respondent to submit a defense
shall not affect the proceeding of the arbitration procedures.
Where the parties had agreed on an arbitration agreement, but one of the parties
initiates an action before a people's court without stating the existence of the
arbitration agreement, the people's court shall, unless the arbitration agreement is
invalid, reject the action if the other party submits to the court the arbitration
agreement before the first hearing of the case. If the other party fails to object to the
hearing by the people's court before the first hearing, the arbitration
agreement shall be considered to have been waived by the party and the people's court
shall proceed with the hearing.
The applicant may abandon or alter his arbitration claim. The respondent may
accept the arbitration claim or object to it. It has a right to make a counterclaim.
A party may apply for property preservation if, as the result of an act of the
other party or for some other reasons, it appears that an award may be impossible or
difficult to enforce. If one of the parties applies for property preservation, the
arbitration commission shall submit to a people's court the application of the party in
accordance with the relevant provisions of the Civil Procedure Law. If a property
preservation order is unfounded, the applicant shall compensate the party against
whom the order was made for any losses sustained as a result of the implementation
of the property preservation order.
The parties and their legal representatives may appoint lawyers or engage
agents to handle matters relating to the arbitration. In the event that a lawyer or an
agent is appointed to handle the arbitration matters, a letter of authorization shall be
submitted to the arbitration commission.
Section 2: Composition of the Arbitration Tribunal
An arbitration tribunal may comprise three arbitrators or one arbitrator. If an
arbitration tribunal comprises three arbitrators, a presiding arbitrator shall be
If the parties agree to form an arbitration tribunal comprising three arbitrators,
each party shall select or authorize the chairmen of the arbitration commission to
appoint one arbitrator. The third arbitrator shall be selected jointly by the parties or be
nominated by the chairman of the arbitration commission in accordance with a joint
mandate given by the parties. The third arbitrator shall be the presiding arbitrator. If
the parties agree to have one arbitrator to form an arbitration tribunal, the arbitrator
shall be selected jointly by the parties or be nominated by the chairman of the
arbitration commission in accordance with a joint mandate given by the parties.
If the parties fail, within the time limit prescribed by the Arbitration Rules, to
select the form of the constitution of the arbitration tribunal or fail to select the
arbitrators, the arbitrators shall be appointed by the chairman of the arbitration
After the arbitration tribunal is constituted, the arbitration commission shall
notify the parties in writing of the composition of the arbitration tribunal.
In any of the following circumstances, an arbitrator must withdraw from the
arbitration, and the parties shall have the right to apply for his withdrawal if
1. is a party or a close relative of a party or of a party's representative;
2. is related in the case;
3. has some other relationship with a party to the case or with a party's agent
which could possibly affect the impartiality of the arbitration;
4. meets a party or his agent in private, accepts an invitation for dinner by a
party or his representative or accepts gifts presented by any of them.
When applying for the withdrawal of an arbitrator, the petitioning party shall
state his reasons and submit a withdrawal application before the first hearing. A
withdrawal application may also be submitted before the conclusion of the last
hearing if reasons for the withdrawal only became known after the start of the first
Whether an arbitrator is withdrawn or not shall be determined by the
chairman of the arbitration commission. If chairman is serving as an arbitrator, the
withdrawal or not shall be determined collectively by the arbitration commission.
If an arbitrator is unable to perform his duties as an arbitrator as a result of
the withdrawal or any other reasons, another arbitrator shall be selected or appointed
in accordance with the provisions of this Law. After a replaced arbitrator has been
selected or appointed following the withdrawal of an arbitrator, the parties may apply
to resume the arbitration procedure. The arbitration tribunal shall determine whether
the resumption of the procedure may be allowed. The arbitration tribunal may
determine on its own whether the arbitration procedure shall be
An arbitrator involved in one of the circumstances described in Item 4,
Article 34, if it is serious, or those described in Item 6, Article 58, such arbitrator shall
be legally liable in accordance with the law. The arbitration commission shall remove
his name from the list of arbitrators .
Section 3: Hearing and Arbitral Awards
An arbitration tribunal shall hold a tribunal session to hear an arbitration case.
If the parties agree not to hold a hearing, the arbitration tribunal may render an award
in accordance with the arbitration application, the defense statement and other
An arbitration shall not be conducted in public. If the parties agree to a public
hearing, the arbitration may proceed in public, except those concerning state secrets.
The arbitration commission shall notify the two parties within the time limit
provided by the Arbitration Rules of the date of the hearing. Either party may request
to postpone the hearing within the time limit provided by the Arbitration Rules if
there is a genuine reason. The arbitration tribunal shall decide whether to postpone the
If the applicant for arbitration who has been given a notice in writing does
not appear before the tribunal without good reasons, or leaves the tribunal room
during a hearing without the permission of the arbitration tribunal, such applicant
shall be deemed as having withdrawn his application .If the party against whom the
application was made was served with a notice in writing but does not appear before
the tribunal without due reasons or leaves the tribunal room during a hearing without
the permission of the arbitration tribunal, an award by default may be given.
The parties shall produce evidence in support of their claims .An arbitration
tribunal may collect on its own evidence it considers necessary.
For specialized matters, an arbitration tribunal may submit for appraisal to an
appraisal organ agreed upon by the parties or to the appraisal organ appointed by the
arbitration tribunal if it deems such appraisal to be necessary. According to the claim
of the parties or the request of the arbitration tribunal, the appraisal organ shall
appoint an appraiser to participate in the hearing. Upon the permission of the
arbitration tribunal, the parties may question the appraiser.
Any evidence shall be produced at the start of the hearing. The parties may
challenge the validity of such evidence.
In the event that the evidence might be destroyed or if it would be difficult to
obtain the evidence later on, the parties may apply for the evidence to be preserved. If
the parties apply for such preservation, the arbitration commission shall submit the
application to the basic-level people's court of the place where the evidence is located.
The parties have the right to argue during an arbitration procedure. At the end
of the debate, the presiding arbitrator or the sole arbitrator shall ask for the final
opinion of the parties.
An arbitration tribunal shall make a written record of the hearing. If the
parties or other participants to the arbitration consider that the record has omitted a
part of their statement or is incorrect in some other respect, they shall have the right to
request correction thereof. If no correction is made, the request for correction shall be
noted in the written record .The arbitrators, recorder, parties and other participants to
the arbitration shall sign or affix their seals to the record.
After the submission of an arbitration application, the parties may settle the
dispute among themselves through conciliation. If a conciliation agreement has been
reached, the parties may apply to the arbitration tribunal for an award based on the
conciliation agreement .Then may also withdraw the arbitration application.
If the parties fall back on their words after the conclusion of a conciliation
agreement and the withdrawal of the arbitration application , application may be made
for arbitration in accordance with the arbitration agreement.
Before giving an award, an arbitration tribunal may first attempt to conciliate.
If the parties apply for conciliation voluntarily, the arbitration tribunal shall conciliate.
If conciliation is unsuccessful, an award shall be made promptly.
When a settlement agreement is reached by conciliation, the arbitration
tribunal shall prepare the conciliation statement or the award on the basis of the
results of the settlement agreement. A conciliation statement shall have the same legal
force as that of an award.
A conciliation statement shall set forth the arbitration claims and the results
of the agreement between the parties. The conciliation statement shall be signed by
the arbitrators, sealed by the arbitration commission, and served on both parties. A
conciliation statement shall have legal effect once signed and accepted by the
parties .If the parties fall back on their words before the conciliation statement is
singed and accepted by them, an award shall be made by the arbitration tribunal
An award shall be based on the opinion of the majority arbitrators .The
opinion of the minority arbitrators shall be recorded in writing. If an opinion of the
minority arbitrators shall be recorded in writing. If an opinion of the majority
arbitrators can not be constituted at the tribunal, the award shall be given according to
the opinion of the presiding arbitrator.
The arbitration claims, the matters in dispute, the grounds upon which an
award is given, the results of the judgement, the responsibility for the arbitration fees
and the date of the award shall be set forth in the award. If the parties agree not to
include in the award the matters in dispute and the grounds on which the award is
based, such matters may not be stated in the award. The award shall be signed by the
arbitrators and sealed by the arbitration commission. The arbitrator who disagrees
with the award may select to sign or not to sign it.
During the course of arbitration by an arbitration tribunal, where a part of
facts has been made clear, a partial award may first be given in relation to that part.
The parties may, within 30 days of the receipt of the award, request the
arbitration tribunal to correct any typographical errors, calculation errors or matters
which had been awarded but omitted in the award.
An award shall be legally effective on the date it is given.
Chapter V Application for Cancellation of an Award
The parties may apply to the intermediate people's court at the place where
the arbitration commission is located for cancellation of an award if they provide
evidence proving that the award involves one of the following circumstances:
1. there is no arbitration agreement between the parties;
2. the matters of the award are beyond the extent of the arbitration
agreement or not within the jurisdiction of the arbitration commission;
3. the composition of the arbitration tribunal or the arbitration procedure is
in contrary to the legal procedure;
4. the evidence on which the award is based is falsified;
5. the other party has concealed evidence which is sufficient to affect the
impartiality of the award;
6. the arbitrator(s) has (have) demanded or accepted bribes, committed graft
or perverted the law in making the arbitral award .The peoples' court shall rule to
cancel the award if the existence of one of the circumstances prescribed in the
preceding clause is confirmed by its collegiate bench .The people's court shall rule to
cancel the award if it holds that the award is contrary to the social and public interests.
If a party applies for cancellation of an award, an application shall be
submitted within 6 months after receipt of the award.
The people's court shall, within 2 months after receipt of the application for
cancellation of an award, render its decision for cancellation of the award or for
rejection of the application.
If the people's court holds that the case may be re-arbitrated by the arbitration
tribunal after receipt of the application for cancellation of an award, the court shall
inform the arbitration tribunal of re-arbitrating the case within a certain period of time
and rule to suspend the cancellation procedure. If the arbitration tribunal refuses to
re-arbitrate, the people's court shall rule to resume the cancellation procedure.
Chapter VI Enforcement
The parties shall execute an arbitration award. If one party fails to execute the
award, the other party may apply to a people's court for enforcement in accordance
with the relevant provisions of the Civil Procedure Law, and the court shall enforce
A people's court shall, after examination and verification by its collegiate
bench, rule not to enforce an award if the party against whom an application for
enforcement is made provides evidence proving that the award involves one of the
circumstances prescribed in Clause 2, Article 217 of the Civil procedure Law.
If one party applies for enforcement of an award while the other party applies
for cancellation of the award, the people's court receiving such application shall rule
to suspend enforcement of the award .If a people's court rules to cancel an award, it
shall rule to terminate enforcement. If the people's court overrules the application for
cancellation of an award, it shall rule to resume enforcement.
Chapter VII Special provisions on Foreign-Related Arbitration
The provisions of this Chapter shall apply to all arbitration of disputes arising
from foreign economic, trade, transportation or maritime matters . In the absence of
provisions in this Chapter, other relevant provisions of this Law shall apply.
A foreign arbitration commission may be organized and established by the
China International Chamber of Commerce .A foreign arbitration commission shall
comprise one chairman, several vice-chairmen and several committee members .The
chairman, vice-chairmen and committee members may be appointed by the China
International Chamber of Commerce.
A foreign arbitration commission may appoint foreigners with professional
knowledge in such fields as law, economic and trade, science and technology as
If the parties to a foreign-related arbitration apply for evidence preservation, the
foreign arbitration commission shall submit their applications to the intermediate
people's court in the place where the evidence is located.
The arbitration tribunal of a foreign arbitration commission may record the
details of the hearing in writing or record the essentials of the hearing in writing. The
written record of the essentials shall be signed or sealed by the parties and other
participants in the arbitration.
A people's court shall, after examination and verification by its collegiate bench,
rule to cancel an award if a party to the case provides evidence proving that the
arbitration award involves one of the circumstances prescribed in Clause 1, Article
260 of the Civil Procedure Law.
A people's court shall, after examination and verification by its collegiate bench,
rule not to enforce an award-if the party against whom an application is made
provides evidence proving that the arbitration award involves one of the
circumstances prescribed in Clause 1, Article 260 of the Civil Procedure Law.
Where the party subject to enforcement or its property is not within the territory
of the People's Republic of China, a party applying for the enforcement of a legally
effective arbitration award shall apply directly to the foreign court having jurisdiction
for recognition and enforcement of the award.
Foreign arbitration rules may be formulated by the China International
Chamber of Commerce in accordance with this Law and the relevant provisions of the
Civil Procedure Law.
Chapter VIII Supplementary Provisions
If the law has stipulated a time limitation of arbitration, such provisions of the
law shall apply. If the law has not stipulated a time limitation of arbitration, the
provisions on the limitation of actions shall apply.
The arbitration Commission may formulate provisional arbitration rules in
accordance with this Law and the relevant provisions of the Civil Procedure Law
before the formulation of the arbitration rules by the China Arbitration Association.
The parties shall pay arbitration fees in accordance with the relevant provisions.
The methods for the collection of arbitration fees shall be submitted to the commodity
prices administration department for approval.
Arbitration of labor disputes and disputes over contracts for undertaking
agricultural projects within agricultural collective economic organizations shall be
In the event of conflict between the provisions on arbitration formulated before
the coming into effect of this Law and the provisions of this Law, the provisions of
this Law shall prevail.
Arbitration organs established before the coming into effect of this Law in the
municipalities directly under the Central Government, in the municipalities where the
people's governments of the provinces or autonomous regions and in other cities
divided into districts must be re-organized in accordance with the relevant provisions
of this Law. The arbitration organs which are not re-organized shall be terminated at
the expiration of one year after the date of effectiveness of this Law. All other
arbitration organs established before the implementation of this Law and not
conforming to the provisions of this Law shall be terminated on the date of
effectiveness of this Law.
This Law shall be effective as of September 1, 1995.
The above provisions provide the basis for people to guide their behaviors ,and
the Arbitration Law of the People's Republic of China is the principle of Chinese
Successful mediation as an alternative method of dispute resolution, has the
following five elements:
1)an impartial third party facilitator
The third party neutral, the mediator, is the person who makes the entire process
work. As long as there is a neutral facilitator, the parties can trust that they have some
safety and are not being abused by an interested party. All of these programs work
because the mediator in them is known to either be neutral or supportive of the parties
and not an involved party. Thus the first thing that makes a process one of mediation
(and not something else) is a third party who facilitates -- aids the parties in a neutral
fashion to find the parties own best interests.
2)a third party who protects the integrity of the proceedings .
Usually this means that the facilitators or mediators protect the confidentiality of
the proceedings. Thus, not only does the mediator not take sides against any party to
the mediation, the mediator does not usurp the parties' rights to disclose, or not
disclose information. The mediator preserves the integrity of the proceedings in all
ways. Generally this means many things -- such as there are no records kept by the
mediator. When there is no record, it becomes much harder to breach confidentiality
or to try to use the mediator to prove or force a particular point not finalized in the
parties’ agreement. In fact, some ADR groups and centers require the parties to take
all notes on provided paper and then take and destroy even the notes after each
Confidentiality also means that the facilitator is not subject to subpoena and
thus cannot be made a witness. Without notes or the facilitator, the only method to
breach the confidentiality is the testimony of an interested party who is usually bound
by law (and thus subject to being quashed) not to disclose more than is agreed.
3)good faith from the participants .
Good faith includes not only entering into the ADR method with the intent to
work towards a resolution, it also includes not using the process for outside purposes.
Thus there are rules that provide for no service of process during ADR, and for
similar bars to the abuse of the mediation process by attorneys and non-attorneys alike.
What makes all of the proceedings mediation is that the parties are in the process to
seek solutions rather than for an ulterior purpose (e.g. to abuse the other party by use
of the process). Both the behavior and integrity of the neutral are important in creating,
and preserving good faith.
4)the presence of the parties
Those with full authority to act for the parties must attend so that the parties can
work towards resolution. If the decision makers do not attend the process becomes
something other than mediation. All parties necessary to resolve the problems should
interact with the mediator. In a family dispute, if a party always checks with his
parents before acting, the parents should attend (and may need a referral to additional
counseling). In a labor matter, if a company president always checks with the majority
shareholder, the majority shareholder should attend. It is the parties who are being
resolved as much as it is the problem that is being settled.
5)An appropriate site or venue.
Generally this means a neutral site that is conducive to the process. It must mean a
place where neutrality, confidentiality and inclusiveness may be obtained. The place
is sometimes as important as the persons and is a part of the process often overlooked.
Why consider mediation?
Compared to a lawsuit, mediation is swift, confidential, fair, and low cost. Here's
a full explanation of its advantages.
If you've given up on negotiating a settlement of your dispute directly with the
other party, mediation may be the most painless and efficient way to solve
it. Mediation is quick, private, fair, and inexpensive compared to a lawsuit. Mediation
sessions are usually scheduled within a few weeks or, at most, a couple of months
from the time of a request -- and most sessions last only a few hours or a day,
depending on the type of case. In contrast, lawsuits often take many months, or even
years, to resolve.
Mediation is particularly valuable when your dispute involves another person
with whom -- either by choice or circumstance -- you need to remain on good terms.
This may include family members, co-workers, business partners, your landlord,
neighbors, or others with whom you have a continuing personal or business
relationship. Lawsuits polarize and ultimately ruin relationships, so a huge advantage
of mediation is its ability to get a dispute resolved without destroying a relationship.
Another advantage of mediation is confidentiality. With very few exceptions
(for example, where a criminal act or child abuse is involved), what you say during
mediation cannot legally be revealed outside the mediation proceedings or used later
in a court of law. By contrast, one of the drawbacks of going to court is that, by and
large, everything said or submitted in connection with a lawsuit becomes available to
the public. Only by a special order of a judge can information be "sealed" from public
exposure. So whether your desire is to protect your trade secrets or just to avoid airing
your dirty laundry in public, your privacy will be substantially greater with mediation
than with litigation. In addition, mediation will nearly always save you money. In
many parts of the country, nonprofit community mediation centers handle relatively
minor consumer, neighborhood, workplace, and similar disputes for free or for a
nominal charge. Private dispute resolution companies tackle more complex cases for a
fraction of the cost of bringing a lawsuit. A half-day mediation of a personal injury
claim, for example, may cost each side about $500. By comparison, a full-scale court
battle could cost $50,000 or more, sometimes much more.
If you're already involved in a lawsuit, mediation offers a huge benefit: It gives
you a way to resolve the dispute and leave the court system behind. Believe it or not,
mediation often works even if the parties have hired lawyers and the dispute has
progressed to all-out litigation warfare. Because parties can speak for themselves in
mediation, they can bring up creative ideas, personal feelings, and practical solutions
that litigation might discourage. And mediation allows the parties to escape the full
force of the lawyers' approach to the lawsuit. Sometimes, lawyers are so focused on
winning a case that they lose sight of opportunities for resolution that could include
repairing the parties' relationship. The mediator can point out, in different terms than
lawyers would use, the strengths and weaknesses of each side's position -- which may,
in turn, change each party's view of the prospects of winning (or losing) at trial, and
open the door to a mutually acceptable settlement.
Finally, agreements reached through mediation are more likely to be carried out
than those imposed by a judge. When folks go to court, the losing party is almost
always angry and often prone to look for ways to violate the letter or spirit of any
judgment. In contrast, a number of studies show that people who have freely arrived
at their own solutions through mediation are significantly more likely to follow
through on them.
What kinds of cases can be mediated ?
Most non-criminal matters can be mediated. And sometimes mediation is
available even when courts are not. Most civil (non-criminal) disputes can be
mediated, including those involving contracts, leases, small business ownership,
employment, and divorce. For example, a divorcing couple might mediate to work out
a mutually agreeable child custody agreement, or estranged business partners might
choose mediation to work out an agreement to divide their business. Nonviolent
criminal matters, such as claims of verbal or other personal harassment, can also be
Although there are hundreds of thousands of laws on the books, many types of
common disputes simply do not raise a legal claim that you can take to court.
Disputes between family members, employees, or neighbors are sometimes of this
type. Fortunately, mediation is available even when courts are not. For example, a
suburban homeowner might find that the formal legal system offers no realistic way
to deal with his neighbor's overly bright driveway lights that shine in his bedroom
window. The neighbors could mediate the disagreement, however. Mediation gives
the participants an opportunity to raise and discuss any issues they might wish to hash
out. For example, it might turn out that the neighbor lit his driveway because the
homeowner's dog went on his lawn, or because the homeowner's tree was encroaching
on his property. Because mediation can handle any number of outstanding gripes or
issues, it offers a way to discuss (and solve) the problems underlying a dispute -- and
create a truly lasting peace.
The six stages of mediation
Mediation is much less formal than going to court, but it does involve distinct
stages designed to lead to a mutually beneficial compromise. Here's what to expect. In
mediation, two or more people come together to try to work out a solution to their
problem. A neutral third person, called the mediator, is there to help them along. Most
mediators have some training in conflict resolution, although the extent of their
training varies greatly. Unlike a judge or an arbitrator, the mediator does not take
sides or make decisions. The mediator's job is to help the disputants evaluate their
goals and options and find their own mutually satisfactory solution.
Mediation is forward-looking; the goal is for all parties to work out a solution
they can live with and trust. It focuses on solving problems, not uncovering the truth
or imposing legal rules. This, of course, is a far different approach than courts take. In
court, a judge or jury looks back to determine who was right and who was wrong,
then imposes a penalty or award based on its decision.
Because the mediator has no authority to impose a decision, nothing will be
decided unless both parties agree to it. Knowing that no result can be imposed from
above greatly reduces the tension of all parties -- and it also reduces the likelihood
that someone will cling to an extreme position. And if mediation does not produce an
agreement, either side is free to sue.
Typically, neighbor-to-neighbor or other personal issues are resolved in a few
hours. Negotiations between divorcing couples or small businesses often involve
several half-day sessions, spread out over a month or two.
Many people think that mediation is an informal process, in which a friendly
mediator chats with the disputants until they suddenly drop their hostilities and work
together for the common good. In fact, mediation is a multi-stage process designed to
get results. It is less formal than a trial or arbitration, but there are distinct stages to
the mediation process. Most mediations proceed as follows:
Stage 1: Mediator's Opening Statement. After the disputants are seated at a
table, the mediator introduces everyone, explains the goals and rules of the mediation,
and encourages each side to work cooperatively toward a settlement.
Stage 2: Disputants' Opening Statements. Each party is invited to describe, in
his or her own words, what the dispute is about and how he or she has been affected
by it, and to present some general ideas about resolving it. While one person is
speaking, the other is not allowed to interrupt.
Stage 3: Joint Discussion. The mediator may try to get the parties talking
directly about what was said in the opening statements. This is the time to determine
what issues need to be addressed.
Stage 4: Private Caucuses. The private caucus is a chance for each party to
meet privately with the mediator (usually in a nearby room) to discuss the strengths
and weaknesses of his or her position, and new ideas for settlement. The mediator
may caucus with each side just once, or several times, as needed. These private
meetings are considered the guts of mediation.
Stage 5: Joint Negotiation. After caucuses, the mediator may bring the parties
back together to negotiate directly.
Stage 6: Closure. This is the end of the mediation. If an agreement has been
reached, the mediator may put its main provisions in writing as the parties listen. The
mediator may ask each side to sign the written summary of agreement or suggest they
take it to lawyers for review. If the parties want to, they can write up and sign a
legally binding contract. If no agreement was reached, the mediator will review
whatever progress has been made and advise everyone of their options, such as
meeting again later, going to arbitration, or going to court.
Advantages of Mediation
1)Free Mediation is available at no cost to the parties.
2)Fair and Neutral Parties have an equal say in the process and decide
settlement terms, not the mediator. There is no determination of guilt or innocence in
3)Saves Time and Money Mediation usually occurs early in the charge process,
and many mediations are completed in one meeting. Legal or other representation is
optional but not required.
4)Confidential All parties sign a confidentiality agreement. Information
disclosed during mediation will not be revealed to anyone, including other EEOC
investigative or legal staff.
5)Avoids Litigation Lengthy litigation CAN be avoided. Mediation costs less
than a lawsuit and avoids the uncertainty of judicial outcome.
6)Fosters Cooperation Mediation fosters a problem solving approach to
complaints and workplace disruptions are reduced. With investigation, even if the
charge is dismissed by EEOC, the underlying problems may remain, affecting others
in the workforce and human resources staff.
7)Improves Communication Mediation provides a neutral and confidential
setting where both parties can openly discuss their views on the underlying dispute.
Enhanced communication can lead to mutually satisfactory resolutions.
8）Discover the Real Issues in your Workplace Parties share information,
which can lead to a better understanding of issues affecting the workplace.
9）Design your own Solution A neutral third party assists the parties in
reaching a voluntary, mutually beneficial resolution. Mediation can resolve all issues
important to the parties, not just the underlying legal dispute.
10） Everyone Wins An independent survey showed 96% of all respondents and
91% of all charging parties who used mediation would use it again if offered.
Types of Mediation
There are currently four types of mediation practices in China:
1）Civil mediation: Mediation by People's Mediation Committees outside the
2）Judicial mediation: Mediation by a court of law in civil and economic
disputes and minor criminal cases inside the court. For marital cases, inside-court
mediation is a necessary procedure. Whether or not to seek judicial mediation is for
litigants to decide. Mediation is not a necessary procedure. A court's mediation
document is as valid as its verdict.
3）Administrative mediation: This can be outside-the-court mediation by
grassroots governments such as a township government in ordinary civil disputes, or
outside-the-court mediation by government departments in compliance with legal
provisions in specific civil disputes, economic disputes or labor disputes.
4）Arbitration mediation: Mediation by arbitration bodies in arbitration cases.
Arbitration is called upon only if mediation fails to resolve the differences. This is
also an outside-the-court mediation. Now let us study the above two types in detail.
1. Nature, Mission and Principles
This system originated in ancient China and took shape in the 1930s when
China was locked in a war against Japanese aggression. It was formalized in the early
1950s when the People's Republic was founded.
Article 111 of the Constitution of the People's Republic of China states,
"People's Mediation Committees are a working committee under grassroots
autonomous organizations - Residents Committee, Villagers Committee whose
mission is to mediate civil disputes." Essentially, these committees are a supplement
to the judicial system, an autonomous arrangement for citizens to resolve their own
disputes. It is a legal practice with Chinese characteristics.
Article 5 of the Regulations for the Organization of People's Mediation
Committees states, "The mission of People's Mediation Committees is to mediate civil
disputes and, through such mediation, publicize laws, regulations, rules and policies
and educate citizens to abide by laws and respect universally accepted morals."
c) Basic principles
1) Reasonable and legal;
3)Respect for the right to sue.
2. Form of Organization
a) People's Mediation Committee
The Constitution and laws provide that the People's Mediation Committees are
non-governmental organizations under Villagers Committees and Residents
Committee for mediating civil disputes. They operate under the guidance of
grassroots government and courts.
b) People's Mediators
According to law, People's Mediators should have the following qualifications:
1)Impartiality; 2) Close to the people; 3)Enthusiastic about mediation;
4) Knowledgeable about legal and policy issues; 5)Be adult citizens
c) Judicial Assistants
According to the Regulations for the Organization of People's Mediation
Committees, People’s Mediation Committees work under the guidance of grassroots
governments and courts. Grassroots governments are set up at the township level.
Judicial assistants are responsible for helping People's Mediation Committees in their
Grassroots courts supervise mediation committees through their tribunals. They invite
members of the committee to participate in court-mediated cases, audit trials, help
analyze cases and exchange experiences.
a) Mediation procedures
1) Accept a dispute; 2） Prepare for mediation; 3） Mediation;
4） Reach an agreement; 5）Close of mediation
b) Ways of mediation
Mediation can be direct, open, common or joint. Mediation techniques include
role-modeling, reasoning and resort to law. People's Mediation Committees should
not just passively mediate disputes; rather, they should actively seek to prevent and
reduce civil disputes and prevent such disputes from escalating.
Article 35 of the Law on Civil Procedures of the People's Republic of China
states, "When handling civil cases, courts of law should, based on consent of the
litigants, mediate the cases on the merits of the cases themselves."
1. Ways of Mediation
Article 86 of the above-mentioned law provides that when mediating cases,
courts may be presided over by a sole judge or by a collegiate panel and mediation
should take place on the spot as much as possible. Courts may notify, in a simple way,
the litigants and witnesses to appear in court.
Article 87 also specifies that courts may invite relevant entities or individuals to assist,
and the invited entities or individuals should assist the courts in mediation.
2. Mediation Agreement
Article 88 stipulates that an agreement between the litigants must be arrived at
through the consent of all parties and should not be imposed on them; the contents of
the agreement should not contravene the law.
3. Mediation Document
a) Generation of the mediation document
Article 89 of the Civil Procedure Law says that if an agreement is reached
between the parties after mediation, the court should prepare a mediation document,
which should specify what the dispute is about, the facts, and the result.
The mediation document should be signed by the judge and the clerk and
affixed with an official seal of the court. Then, it should be delivered to the parties. It
becomes legally binding after the parties sign it.
b) When a mediation document is not required
Article 90 of the Civil Procedure Law says that the court may choose not to
prepare a mediation document under any of the following circumstances:
A divorce case that ends up with reunion through mediation;
Adoption cases where the relation of adoption is sustained through mediation;
Cases that are enforceable immediately;
Other cases where a mediation document is not required.
Agreements for which a mediation document is not needed should be recorded
in the court log and will become legally binding upon signature of the parties, judges
and the clerk.
4. Failure of Mediation
Article 91 of the Civil Procedure Law provides that a court of law should
adjudicate in a timely fashion if mediation fails to produce an agreement or if one
party retracts before the mediation document arrives.
How is Arbitration Different from Mediation? How do I Choose Between
Mediation and Arbitration?
Arbitration and mediation represent two methods of alternative dispute
resolution (ADR) that may assist parties in resolving their disputes. These two dispute
resolution methods are alternatives to litigation, or the process of resolving a claim in
court, hence the term alternative dispute resolution. Because litigation can be a long,
complicated, expensive process, some parties are increasingly turning to alternative
dispute resolution to avoid the courts when a conflict arises. Arbitration and mediation
allow parties to bring their cases to neutral third parties for resolution. Arbitration is
more formal than mediation and the arbitrator's decision is usually binding on the
parties, whereas mediation focuses on negotiation and the mediator seeks to facilitate
an agreement between the parties. In some states, litigants must first participate in
arbitration or mediation before they can proceed to trial.
The main differences between mediation and arbitration include:1）The role of
the neutral in the process. The mediator remains neutral throughout the whole
process, and has little input to the ultimate agreement reached between the parties
whereas the arbitrator is solely responsible for determining the ultimate agreement.
2）The outcome. During mediation, the parties are responsible for coming up
with potential solutions to their challenges. The parties negotiate with each other to
create an agreement that is both do-able and durable through the necessary time to
satisfy the terms of the agreement. In arbitration, the parties may make suggestions
as to the outcome, but the arbitrator will determine the ultimate outcome.
Choosing between mediation and arbitration may occur in a couple of different
scenarios. Sometimes a prior agreement such as a contract between the parties may
specify a particular style of alternative dispute resolution. If there is a desire to foster
a solution, which will allow the parties to continue a positive relationship afterward,
mediation may be the better alternative since many complex issues can be addressed
and a new understanding reached which will allow the parties to relate to each other
on a new level afterward. Arbitration may be chosen if the parties are seeking a
quick resolution out of court and do not believe they can work with the other party to
create potential solutions.
Ⅰ. Explain each of the following in English:
2. ad hoc arbitration
5. Judicial mediation
Ⅱ.Fill in the blanks:
1. Properly structured, ad hoc arbitration should expensive than
institutional arbitration and, thus, better suit claims and less affluent parties.
2. is the most important permanent arbitration institution in China,
formerly known as the Foreign Trade Arbitration Commission.
3. is the oldest arbitration agency in the world .
4.The two ways ,which an arbitration tribunal usually adopts are
______________ and _____________
5.Successful mediation as an alternative method of dispute resolution, has the
following five elements: _________________ ,_________________,
Ⅲ.choose the correct answers to each of the following questions :
1. Compared to a lawsuit, mediation is ( ).
A. swift B. confidential C. fair D. high cost
2. Which of the following about mediation is not true? ( )
A. Most civil (non-criminal) disputes can be mediated, including those involving
contracts, leases, small business ownership, employment, and divorce.
B. Nonviolent criminal matters, such as claims of verbal or other personal
harassment, can also be successfully mediated.
C. The goal of mediation is for all parties to work out a solution they can live
with and trust.
D. Agreements reached through mediation are not more likely to be carried out
than those imposed by a judge.
3. Which of the following is not the arbitration agency ? ( )
A. CIETAC B. ICIA C. HKIAC D. UNCITRAL
4. Basic principles of the civil mediation include ( )?
A. reasonable and legal B. voluntary, equal
C. respect for the right to sue D. flexible
5. Who has the right to authorize the Chairman of the FTAC or the MAC to
choose for him an arbitrator ?( )
A. Plaintiff B. defendant C. both D. neither
Ⅳ. Questions for thought
1.What are the advantages of the institutional arbitration ,and under what
circumstances will it be preferred?
2.How many types of mediation in China ,and what are the advantages of
Lesson Three Lawsuit and Claims
（Mr. Green， representative of a European import firm， is on a visit to China.
He arrived in Guangzhou a few days ago and has been attending the Guangzhou Fair.
He has been instructed by his head office to get into contact with Miss Wu of Chinese
Trading Corporation， Guangzhou Branch， to talk over a claim case. Miss Wu is
handling the case on behalf of her Shanghai Branch. ）
（A： Miss Wu； B： Mr. Green）
A： Good afternoon， Mr. Green. I'm told that you've been waiting here for me
for quite some time. Sorry to keep you waiting. A talk with an importer from Europe
prevented me from coming here.
B： It does not matter， Miss Wu. I know you are always very busy.
A： Is there anything urgent？
B： Well， things are like these. I've just received a telex from my home office，
that the goods shipped in March by S. S. Victoria under Order No. 1043 have arrived
at Alexandria. But， to our great surprise， they are not in proper condition.
A： Yes， really？ What's the trouble then？
B： Quite a number of cartons were badly damaged. Many of the Men's Shirts
were water-stained and the majority of the others were severely soiled.
A： Where are the goods now？
B： The goods have been unloaded into the carrier's house. As they are in such a
damaged condition， we doubt we will be able to take delivery.
A： Do you know the percentage of the damaged portion？
B： Not exactly. The goods are now under inspection.
A： That's good. We should require a survey report， with that we may know the
extent of the damage.
B： My people say that they would send you some shirts drawn at random from
the shipment so that you can see yourselves the damaged condition and the reason
why they are unsaleable.
A： We should make it clear whether the damage was caused in transit or during
the unloading process， or by other reasons.
B： I hope it isn't due to the improper packing. As you know， if that being the
case， you will be held liable for the loss sustained.
A： No， it's impossible. The goods were carefully packed and shipped here in
excellent condition. I inspected them myself.
B： Then the damage must be caused at somewhere along the line where
the goods weren't handled properly.
A： If so， the insurance company or the shipping company should be held
responsible and as you know， the claim concerning insurance or transportation
should be referred to the insurance company or the shipping company.
B： I know. But so far we haven't got the detailed information yet.
A： So， we have to wait for the surveyor's report and at the same time， we
have to check the documents carefully. Only after receiving the detailed report， can
we work out the way to handle the problem. What do you say？
B： I agree with you. I think it won't be long before we get the information. I'll
advise you the result upon the conclusion of the investigation.
A： That's fine.
Lawsuit A lawsuit, also known as litigation, is a criminal or civil action brought
before a court in which the party commencing the action, the plaintiff, seeks a legal
remedy. Often, one or more defendants are required to answer the plaintiff's complaint.
If the plaintiff is successful, judgement will be given in the plaintiff's favor, and a
range of court orders may be issued to enforce a right, impose a penalty or sentence,
award damages, impose an injunction to prevent an act or compel an act, or to obtain
a declaratory judgment to prevent future legal disputes.
A lawsuit may involve dispute resolution of private law issues between
individuals, business entities or non-profit organizations. A lawsuit may also involve
public law issues in criminal cases, and in those jurisdictions that enable the
government to be treated as if it were a private party in a civil case, as plaintiff or
defendant regarding an injure), or that provide the government with a civil cause of
action to enforce certain laws rather than criminal prosecution. The conduct of a
lawsuit is called litigation.
(1)Rules of procedure and complications in lawsuits Rules of criminal or civil
procedure govern the conduct of a lawsuit in the common law adversarial system of
dispute resolution. Procedural rules are additionally constrained/informed by separate
statutory laws, case law, and constitutional provisions that define the rights of the
parties to a lawsuit (see especially due process), though the rules will generally reflect
this legal context on their face. The details of procedure will differ from jurisdiction
to jurisdiction, and often from court to court within the same jurisdiction. The rules
are very important for litigants to know, however, because they dictate the timing and
progression of the lawsuit — what may be filed and when to get what result. Failure
to comply with the procedural rules can result in serious limitations in conducting the
trial or even dismissal of the lawsuit.
Though the majority of lawsuits are settled and never even get to trial, they can
expand into a very complicated process. This is particularly true in federal systems,
where a federal court may be applying state law (e.g., the Erie doctrine in the United
States) or vice versa, or one state applying the law of another, and where it
additionally may not be clear which level (or location) of court actually has
jurisdiction over the claim or personal jurisdiction over the defendant. Domestic
courts are also often called upon to apply foreign law, or to act upon foreign
defendants, over whom they may not, as a practical matter, even have the ability to
enforce a judgment if the defendant's assets are outside their reach.
Lawsuits become additionally complicated as more parties become involved
(see joinder). Within a "single" lawsuit, there can be any number of claims and
defenses (all based on numerous laws) between any number of plaintiffs or defendants,
who each can bring any number of cross-claims and counterclaims against each other,
and even bring additional parties into the suit on either side after it progresses.
However, courts typically have some power to separate out claims and parties into
separate suits if it is more efficient to do so, such as if there is not a sufficient overlap
of factual issues between the various claims.
(2)the process of lawsuit The following is a generalized description of how a lawsuit
may proceed in a common law jurisdiction:
1)Pleading The lawsuit begins with the plaintiff filing a complaint with the court.
This complaint will state that the plaintiff is seeking damages or equitable relief from
a stated defendant, and what the legal and factual bases for doing so are. The clerk of
court then issues a summons , or serves process, upon the defendant to notify him that
he is being sued and provide him with the nature of the claims. Once the defendant
receives this notice, he has a time limit to file a response explaining his defenses to
the plaintiff's claims, including any challenges to the court's jurisdiction, though some
courts impose no limit on certain jurisdictional challenges.
Within the time limit, the defendant may choose to file an answer raising all
defenses and denying the plaintiff's allegations. Filing an answer "joins the cause" and
moves the case into the pre-trial phase. In the alternative, the defendant can dispute
the validity of the complaint by filing one or more "pre-answer" motions to dismiss. If
all such motions are denied by the trial court, and the defendant loses on all appeals
from such denials (if that option is available), then the defendant must file an answer.
Usually the pleadings are drafted by a lawyer, but in many courts a person can
file papers and represent themselves, which is called appearing pro se. Many courts
have a pro se clerk to assist people without lawyers.
The early stages of the lawsuit may involve discovery, which is the ordered
exchange of evidence and statements between the parties based on what they each
expect to argue during the actual trial. Discovery is meant to eliminate surprises and
clarify what the lawsuit is about, and perhaps to make a party realize they should
settle or drop the claim, all before wasting court resources. At this point the parties
may also engage in pretrial motion filing in order to exclude or include particular
legal or factual issues before trial, by blocking the other party from presenting a
particular witness or arguing a particular legal theory.At the close of discovery, the
parties may pick a jury and then have a trial by jury. Or, the case may proceed as a
bench trial heard only by the judge, if the parties waive a jury trial, or if the right to a
jury trial is not guaranteed for their particular claim (such as those under equity in the
U.S.) or for any lawsuits within their jurisdiction.
3)Trial and judgment
The lawsuit may then proceed similarly to a criminal trial, with each side
presenting witnesses and submitting evidence, at the close of which the judge or jury
renders their decision. Generally speaking, the plaintiff has the burden of proof in
making his claims, which means that it is up to him to produce enough evidence to
persuade the judge or jury that his claim should succeed. The defendant may have the
burden of proof on other issues, however, such as affirmative defenses.
There are numerous motions that either party can file throughout the lawsuit to
terminate it "prematurely" — before submission to the judge or jury for final
consideration. These motions attempt to persuade the judge, through legal argument
and sometimes accompanying evidence, that because there is no reasonable way that
the other party could legally win, there is no sense in continuing with the trial.
Motions for summary judgment, for example, can usually be brought before, after, or
during the actual presentation of the case. Motions can also be brought after the close
of a trial to undo a jury verdict that is contrary to law or against the weight of the
evidence, or to convince the judge that he should change his decision or grant a new
trial. Also, at any time during this process from the filing of the complaint to the final
judgment, the plaintiff may withdraw his complaint and end the whole matter, or the
defendant may agree to a settlement, which involves a negotiated award followed also
by the plaintiff withdrawing his complaint and the settlement entered into the court
After a final decision has been made, either party or both may appeal from the
judgment if they are unhappy with it (and their jurisdiction grants the ability). Even
the prevailing party may appeal, if, for example, they wanted an even larger award
than was granted. The appellate court (which may be structured as an intermediate
appellate court and a higher supreme court) will then affirm the judgment, refuse to
hear it (which effectively affirms), reverse, or vacate and remand, which involves
sending the lawsuit back to the lower trial court to address an unresolved issue, or
possibly for a whole new trial. Some lawsuits go up and down the appeals ladder
repeatedly before finally being resolved.
When a final judgment is entered, the plaintiff will likely be barred under res
judicata from trying to bring the same or similar claim again against that defendant,
or from relitigating any of the issues, even under different legal claims or theories.
This prevents a new trial of the same case with a different result, or if the plaintiff
won, a repeat trial that merely multiplies the judgment against the defendant.
If the judgment is for the plaintiff, then the defendant must comply under
penalty of law with the judgment, which will usually be a monetary award. If the
defendant fails to pay, the court has various powers to seize any of the defendant's
assets located within its jurisdiction. If all assets are located elsewhere, the plaintiff
must file another suit in the appropriate court to seek enforcement of the other court's
previous judgment. This can be a difficult task when crossing from a court in one state
or nation to another, though courts tend to grant each other respect when there is not a
clear legal rule to the contrary. A defendant who has no assets in any jurisdiction is
said to be "judgment-proof." In most cases, nothing can be done to collect an award
from a moneyless defendant.Indigent judgment-proof defendants are no longer
imprisoned; debtor's prisons have been outlawed by statute, constitutional amendment,
or international human rights treaties in the vast majority of common law
History of the term “lawsuit”During the 18th and 19th centuries, it was
common for lawyers to speak of bringing an "action" at law and a "suit" in equity.
The fusion of common law and equity in the Judicature Acts of 1873 and 1875 led to
the collapse of that distinction, so it became possible to speak of a "lawsuit".
In England and Wales the term "claim" is far more common; the person
initiating proceedings is called the claimant. American terminology is slightly
different, in that the term "claim" refers only to a particular count (or cause of action)
in a lawsuit. Americans also use "claim" to describe a demand filed with an insurer or
administrative agency. If the claim is denied, then the claimant (or policyholder or
applicant) files a lawsuit with the courts and becomes a plaintiff.
In medieval times, both "action" and "suit" had the approximate meaning of
some kind of legal proceeding, but an action terminated when a judgment was
rendered, while a suit also included the execution of the judgment.
Claims may sometimes arise in spite of our well planned and careful work in
the performance of a contract .There are two main kinds of claims made by buyers.
The first kind of claims :It is a genuine claim, which arises from the situations
as follows :1)The wrong goods may have been delivered ; 2)The quality may have
been found unsatisfactory;3)The shipment may have been found damaged ,short,
missing or late;4)The prices charged may be excessive or not as agreed.
The second kind of claim: It is a false claim, which is made by buyers who find
fault with the goods as an excuse to escape from the contract, either because they no
longer want the goods or because they have found they can get them cheaper
How to write a claim letter:
If a claim has to be made by the buyers ,the matter should be investigated in
details and these details should be laid off before the party charged .we must handle
claims in accordance with the principle of “on the first grounds ,to our advantage and
with restraint” and settle them amicably to the satisfaction of all parties concerned.
usually a claim letter should follow the under-mentioned outlines:
1)The opening states the claim with regret ,and mentions the date of the
order ,the date of delivery and the goods claimed about;
2)The body tells why and how you are inconvenienced ,etc., in order to state
your reasons for being dissatisfied and ask for an explanation;
3)The body also states what you want to be done ,i.e. the reasonable demand to
satisfy your claim.
When writing a claim letter ,be sure to :
Remain courteous and respectful. Even if you feel you have been wronged,
maintain a professional, though assertive, tone at all times.
Send your claim letter within the prescribed time period so that the claim will be
If there are any necessary forms, etc., that you need to fill out or send, include
them with your letter for faster approval.
Clearly state what it is that you hope to accomplish in sending your claim
Tips for writing effective claim letters:
At the beginning of your letter, indicate that you are making a claim and
specify the type of claim that you are making (e.g., an insurance claim).State the
policy number, if applicable. Describe the specific circumstances or details of the
claim (for example, that a product is defective or the details of an accident). Give all
relevant facts concerning the claim. Indicate the amount that you are claiming or what
action you would like the reader to take and the date by which you expect the action
to be taken. Refer to any documents that you are including with your letter, including
claim forms, repair estimates, warranty, or records or receipts. Ask if there is any
other information or documents or forms that you need to send. If you are using some
of the enclosed documents as evidence to substantiate your claim, specifically
mention the content of the documents and illustrate how they support your claim.
Indicate by when you would like to receive a reply to your letter and include contact
information that will allow the person to easily reach you. You may want to thank the
reader for his/her (anticipated) help before ending your letter.
When denying a claim you should :
Open by stating your regret that the claim must be denied. Include the policy
number, if applicable. Give the reasons why the claim was denied or rejected. Include
any documents that provide evidence to support this action. Include information about
what the claimant must do or change to have the claim approved, if desired. Include
any important dates, such as the date by which an appeal or resubmission must be
made, if applicable. Include the contact information for the person to whom an appeal
would be made, if appropriate. Reiterate your regret that the claim must be denied and
express your willingness to discuss the matter further or work to resolve the problem,
if necessary. Close by stating that you value the reader’s business or that you
appreciate him/her as a customer.
1. Explain each of the following in English:
2. false claim
2． Interpret the following sentences into Chinese
1) You may be assured that if it’s our fault, we’ll certainly put the matter right.
2) Perhaps we can compromise on this.
3) I’ve seen the consignment and agree to replace the defective items as soon as I
return to London
4) To my regret, we cannot accept your claim.
5) I’m afraid you should compensate us by 5% of the total amount of the contract.
A: We understand your problem, and regret for bringing you the troubles. Mr. Liu,
what about your suggestions?
L: 我们要求赔偿￥50，000， 不能再少了
A： Well, Mr. Liu, if you can help us to sell out the wrong goods in Container No.18,
we will compensate you $50,000.
4. Questions for thought
1.What is the process of lawsuit?
2.When writing a letter ,what should we do to make it effective ?
Lesson Four Practical Writing
Part A A Sample Letter for Claims (Claim on Inferior Quality)
Dear Sirs :
According to your Sales Confirmation No.2556, the machine we bought is
damaged completely .We have had a mechanic look it over .He reports that rotators
appear to have cracked before the machine was installed .
Since you have no serviceman here , we are obliged to return the machine to
you together with the inspection report. We hope you will replace it and send us a new
one within a few days .Your prompt reply will be appreciated.
Yours sincerely ,
Part B Application for Arbitration (Chinese and its corresponding English
F.T. Arbitration Commission
Application for Arbitration
The Plaintiff: M. M. Corp.
Address: A city
The Defendant: V. V. Co., Ltd.
Address: B city
I. Statement of Facts:
申诉人 MM 公司和被诉人 VV 有限公司之间的争议的原因在于被诉人没有
履行于 1992 年 5 月 14 日缔结的由其提供 8,000 公吨铝锭的 470E 和 471E 号合同
This dispute existing between the Plaintiff, M. M. Corp. and the Defendant, V. V.
Co., Ltd was brought about by the Defendant’s failure to commit itself to the contracts
470E and 471E concluded on the 14th of May, 1992 for the supply of 8000 metric
tons of Aluminum Ingots.
根据上述两个合同规定，8,000 公吨铝锭本应在 1992 年 7 月至 12 月期内从
1992 年 6 月 7 日通过中国银行伦敦分行开出了 E25520 和 E25733 两张信用证。
According to the stipulations of the said contracts, 8000 metric tons of
Aluminum Ingots should have been completely delivered from European ports during
a period from July to December, 1992, and each month a quantity specified thereby
should have been shipped. This Corporation, the Plaintiff, issued letters of credit
E25520 and E25733 on the 7th of June, 1992 through the Bank of China, London.
As these two contracts stipulate Hamburg/Rotterdam/Antwerp and
Hamburg/Rotterdam respectively for the port of loading, the Plaintiff had therefore
sent faxes on many occasions to the Defendant, asking them to advise the Plaintiff of
the exact name of this Corporation to send vessels. But, the Defendant had failed to
reply to those faxes dispatched by the Plaintiff by taking an evasive attitude.
被诉人才于 1992 年 11 月 26 日通过我方驻某某城商务代理处递交给申诉人一封
1993 年 1 月 6 日期间内才能全部发出。
It was not until the Plaintiff sent faxes and letters time and again to urge on and
with the help of our Commercial Office in …city to negotiate with the Defendant, that
the Defendant finally forwarded a letter on the 26th November, 1992 to the Plaintiff
through our Commercial Office in …city, informing the Plaintiff to the new
arrangement for shipment. As being indicated by this new arrangement for shipment,
the delivery of 8000 metric tons of Aluminum Ingots would have to be completed
within a period from January to June, 1993.
In spite of suffering significant losses caused by the Defendant’s failure to fulfill
its contractual obligation, the Plaintiff still accepted the new arrangement for
shipment presented by the Defendant. Whereas the Defendants had neither kept its
original promise nor committed itself again to the subsequent arrangement for
shipment put forward by itself, thus bringing even greater losses to the Plaintiff.
1994 年 11 月 16 日通过一名英国律师 A 先生向被诉人转交了一封信函，说明准
许被诉人在收到该信函起的 45 天之内履行其提交合同所规定货物的义务，如被
诉人不履行义务，申诉人将依据上述两合同第 16 条的规定，正式将该争议提交
Nevertheless, in order to enable the Defendant to meet its contractual obligation
ultimately, the Plaintiff passed a letter on the 16th of November, 1994, through a
British lawyer named Mr. A to the Defendant, stating that the Defendant was
permitted to meet its obligation to deliver the contracted goods within 45 days from
the date it received the said letter, and that if the Defendant failed to do so, the
Plaintiff would, according to the provision of Clause No. 16 of the contracts, formally
submit the dispute to the F. T. Arbitration Commission for arbitration, asking the
Defendant to compensate for all the losses sustained by this Corporation.
被诉人收到我信函的日期为 1994 年 11 月 28 日。 天期限截止之日为 1995 45
年 1 月 12 日，该期限如今已过，但被诉人根本没有履行其合同义务，也没有提
出任何解决该争议的建议。他们甚至还在 1995 年 2 月 7 日写信无理指责申诉人
The date on which the Defendant received our letter was the 28th of November,
1994. The deadline of the 45 days period was on the 12th January, 1995, which has
now passed, but the Defendant has done nothing at all to meet its contractual
obligation, nor has it produced any proposal for the settlement of this dispute. It has
even gone so far as to make a false charge through a letter dated the 7th of February,
1995, against the Plaintiff with failure to open a new letter of credit after its expiry,
and has therefore assumed no responsibility whatsoever for its commitment to
delivery for Aluminum Ingots concluded.
该争议的真实情况是：在收到被诉人 1992 年 11 月 26 日提供的新的装货安
物已备好待运， 但被诉人却对我方的电传和信件拒不答复， 且拒绝承担合同义务，
The true nature of this dispute is evident in the following fact: After the receipt
of the new arrangement for shipment presented by the Defendant on the 26th of
November, 1992, the Plaintiff sent many faxes and letters requesting the Defendant to
inform the Plaintiff of the exact name of port of loading and the Advice of Goods
ready for shipment, while the Defendant gave no answer at all to the Plaintiff’ faxes
and letters and refused to meet its obligations under the contracts entered into, thus
making it impossible for the Plaintiff to proceed with the procedures of sending
vessels and extending the validity of letters of credit. Obviously, the liability for the
non-execution of the contracts rests entirely with none other than the Defendant itself.
The Plaintiff is therefore applying formally to the F. T. Arbitration Commission for
arbitration of this dispute.
申诉人提出总金额为 748,000 英镑的索赔主张。
The claimed amount called for by the Plaintiff comes totally to ￡748,000.
II .The background of this claim
6,000 公吨纯度为 99.5%的铝锭， 根据 470E 号合同， 其价格为每吨 152 英镑，
而当时（1993 年 6 月 29 日）的市场通价为每公吨 243 至 248 英镑，价差为每公
吨 93.50 英镑，6,000 公吨铝锭的总价差为 561,000 英镑。
6,000 metric tons of Aluminum Ingots of 99.5% purity, under contract 470E,
were priced at ￡152 per metric ton. The market price prevailing at that time (the
29th of June, 1993) ranged from ￡243 to ￡248 per metric ton. The Price difference
per metric ton is ￡93.50, giving a total difference of ￡561,000 for 6,000 metric
另有 2,000 公吨纯度为 99.7%的铝锭，按 471E 号合同的规定，价格为每吨
154 英镑，当时（1993 年 6 月 29 日）的市场通价为每公吨 245 至 250 英镑，价
差为每公吨 93.50 英镑，故 2,000 公吨铝锭的总价差便为 187,000 英镑。
Another 2000 metric tons of 99.7% purity Aluminum Ingots, under contract
471E were priced at ￡154 per metric ton. The market price on the 29th of June 1993,
was between ￡245 and ￡250 per metric ton. The price difference per metric ton
indicates ￡93.50, resulting in a total difference of ￡187,000 for 2000 metric tons.
上述两个合同规定的 8,000 公吨铝锭的总价差为 784,000 英镑（即 561,000
英镑加 187,000 英镑） 。
The above-mentioned two contracts aggregate a sum of ￡ 748,000 (=
￡561,000+ ￡ 187,000) for the price difference of totally 8000 metric tons of
The Plaintiff hereby requests that it be compensated by the Defendant not only
with an amount of losses totaling ￡748,000 (in Pound Sterling of Seven hundred and
Forty Eight Thousands) caused by the Defendant’s failure to execute the contracts
concluded, but also with all costs arising from this arbitration.
随仲裁申请书附上 3,740（三千七百四十）英镑，折合人民币 15,729（一万
五千七百二十九）元，用作仲裁费，预付《对外贸易仲裁委员会规则》第 6 条所
Enclosed ￡3,740 for filing fees (in Pound Sterling of Three Thousand Seven
Hundred and Forty), equivalent to the Chinese currency RMB15,729 (Fifteen
Thousand Seven Hundred and Twenty Nine Yuan), paid in advance in compensation
for the costs of arbitration in accordance with Clause 6 of the F. T. Arbitration
Enclosure: Statement of Appointing Arbitrator
Plaintiff: M. M.
1995 年 5 月 20 日
May 20, 1995
兹委托 F.T.仲裁委员会主任在我公司 （申诉人）与… … 国 V. V. Co., Ltd. 被
诉人）之间关于被诉人未履行 8 000 公吨铝锭合约争议案中，代我公司指定仲裁
1995 年 5 月 20 日
Statement of Appointing Arbitrator
This serves to authorize the Chairman of the F.T. Arbitration Commission to
appoint an arbitrator on behalf of this corporation to settle the dispute existing
between the plaintiff, M.M.Corp. and the defendants, V.V. CO., Ltd. concerning the
Defendants’ failure to meet their obligation under contracts concluded for the supply
of 8 000 metric tons of Aluminium Ingots.
Should the Defendants fail to appoint an arbitrator within time specified by the
Rules of F.T. Arbitration Commission, this Corporation would then ask the Chairman
of the F.T. Arbitration Commission to appoint an arbitrator for the Defendants.
M. M. Corp
May 20, 1995
Part C Arbitration Agreement (English and its corresponding Chinese version).
BY THIS AGREEMENT
HEREBY AGREE TO REFER
all disputes and differences whatever between them
all disputes and differences between them arising out of or in connection with
a contract between them dated the ＿＿,20＿＿
the disputes and differences set out in the Schedule to this Agreement
a single arbitrator who failing agreement shall be appointed by the president of
the＿＿＿on the application of either party.
a single arbitrator who failing agreement shall by appointed by the chairman
for the time being of The London Common Law Bar Association under The London
Bar Arbitration Scheme.
MR. ＿＿＿ and MR.＿＿＿ together, if they disagree, with an umpire to be
appointed by them.
MR. ＿＿＿, MR.＿＿＿ and MR.＿＿＿
one arbitrator to be appointed by each party together (if they disagree) with an
umpire who failing agreement between such arbitration shall by appointed by the
president of the ＿＿＿ on the application of either party.
提交由当事双方各自指定的一名仲裁人共同裁定， （如他们意见不一） ，则
DATED THIS ＿＿ DAY OF ＿＿,20＿＿
SIGNED ON BEHALF OF＿＿＿ SIGNED ON BEHALF OF＿＿＿
(BY) ＿＿＿ (BY) ＿＿＿
(NAME) ＿＿＿ (NAME) ＿＿＿