Arbitration in China (2): How Do Arbitration Cases Operate in China

If you have a arbitration clause in the contract with your Chinese counterpart providing that you will use China arbitration institution as the dispute resolution approach, then if any dispute occurs, you will need to commence an arbitration case in China.

In this article, we will use Shenzhen Court of International Arbitration (“SCCIETAC”) as an example to show you how the procedure of arbitration works in China.

Abitration Claim and Process.

1.Pursuant to the agreement and the arbitration rules of SCCIETAC, you need first confirm what is your arbitration claim.

2. To support your claim, you need to collect (or engage a law firm) all the relevant documentation and evidence. You then submit the request for arbitration to the SCCIETAC, and pay the arbitration fees.

3. Once the arbitration accepted by SCCIETAC, it would send the notification of arbitration to the parties, and the counterpart shall produce a statement of defense (and a statement of counterclaim, if it wishes to bring a counterclaim) within 30 days of the date of receving the notice.

4. Subsequently, the parties will appoint the arbitrator from the panel of arbitrators to constitute the arbitral tribunal; once the arbitral tribunal is formed, the tribunal will notify the parties 10 days before the hearing.

5. At the hearing, the arbitral tribunal will inquire the case, hear statement of the parties, and review the original copy of all evidence submitted. The tribunal will render its award.

Risk Involved in Arbitration.

1. It is still possible that one or more of your claims may be rejected by the arbitral tribunal.

2.It is likely that the counterpart would not perform its obligation pursuant to the arbitral award (once rendered). If so, you can apply to the local court for enforcement after the award has been rendered. However, the counterpart may transfer all its assets out of his legal title before the enforcement and leaves the award unenforceable.

3. In the event that the award is unenforceable, there are ways you could pressure the counterpart: you could apply to list the counterpart and its controlling persons under the national list of defaulters for restricting its daily expense (such as traveling by plan and high speed train); alternatively, declare bankrupty against the Counterpart before the Intermediate People’s Court of the place of residence, so that the shareholders of the Counterpart’s company would be liable to repay the sum. However, even you do so, there are chances they the counterpart still do not perform the award.