With the continuous growth of China's foreign trade scale, trade disputes between export enterprises and foreign buyers have become intricate and frequent. International trade arbitration, as a way to handle international trade disputes, has been increasingly accepted by both buyers and sellers in recent years and is often included in sales contracts as a dispute clause.
International trade arbitration (Arbitration) refers to an agreement reached by both the buyer and the seller, voluntarily submitting relevant disputes to an arbitration institution agreed upon by both parties for an award. Compared with settlement and mediation, arbitration is final. If one party fails to execute the award, the other party has the right to apply to the court for compulsory execution. Compared with judicial litigation, international trade arbitration is based on the voluntariness of both parties. The two parties can choose the arbitration institution and arbitration rules on their own, and the arbitration process is more timely and not made public. This will effectively ease the tense relationship between the two parties and is conducive to future trade cooperation.
I. Content of the Arbitration Clause in the Contract
The arbitration clause in the contract mainly includes provisions on the arbitration location, selection of the arbitration institution, application of arbitration rules, and the validity of the arbitration award, etc.
For example: All disputes in connection with this contract or the execution thereof shall be settled friendly through negotiations in case no settlement can be reached. The case may then be submitted for arbitration to Shanghai International Economic and Trade Arbitration Commission. In accordance with the provisional rules of procedures promulgated by the said Arbitration Commission. The arbitration shall take place in Shanghai and the decision of the Arbitration Commission shall be final.
II. Provisions on the Arbitration Location
In the arbitration clause, the determination of the arbitration location by both parties is not only directly related to the issue of arbitration jurisdiction but also directly related to the application of the arbitration procedural law and substantive law, as well as the recognition and enforcement of the arbitration award.
When negotiating the arbitration clause, both trading parties generally prefer to conduct arbitration in their own country. The main reason is that the parties are more familiar with their own country's arbitration institutions and relevant procedures, and there is no language barrier. In addition, there is a close relationship between the procedural law applied in arbitration and the substantive law applied in the sales contract. According to the interpretation of the laws of many countries, issues related to procedures generally apply the law of the place of trial. As for the substantive law, if no other provisions are made in the contract, it is generally determined by the arbitrator according to the conflict - of - laws rules of the country where the arbitration location is located.
III. Selection of the Arbitration Institution
The so - called arbitration institution refers to the institution that accepts arbitration cases and makes awards. There are two options for arbitration institutions: One is that the two parties stipulate a permanent arbitration institution in the arbitration agreement. This kind of arbitration institution is selected for the vast majority of international arbitration dispute cases due to its stable organization, sound system, complete personnel, and convenient selection. The other is a temporary arbitration institution composed of arbitrators appointed by both parties, which will be automatically dissolved after the dispute is resolved.
The permanent arbitration institutions in China are the China International Economic and Trade Arbitration Commission located in Beijing, and its branches located in Shanghai and Shenzhen respectively. In international trade operations, frequently encountered foreign arbitration institutions include: the London Court of International Arbitration in the UK, the Arbitration Institute of the Stockholm Chamber of Commerce in Sweden, the Zurich Chamber of Commerce Arbitration Institution in Switzerland, the Japan International Commercial Arbitration Association, the American Arbitration Association, the Italian Arbitration Association, etc.
IV. Application of Arbitration Rules
Arbitration rules refer to the procedural rules that both the parties and the arbitration tribunal must abide by during the arbitration process. It includes the submission and acceptance of the arbitration application, the selection of arbitrators and the formation of the arbitration tribunal, the hearing of arbitration matters, the making and validity of the arbitration award, etc. To ensure the smooth progress of the arbitration process, the parties should clearly stipulate the arbitration rules in the arbitration agreement.
Regarding the determination of arbitration rules, the arbitration legislation of various countries and relevant international treaties generally allow the parties to decide independently in the arbitration agreement. In addition, permanent arbitration institutions in various countries have formulated their own arbitration rules for the selection of parties from all over the world.
V. Validity of the Arbitration Award
According to Article 9, Chapter 1 of the "Arbitration Law of the People's Republic of China": "Arbitration shall adopt a system of final award. After the award is made, if a party applies for arbitration again or files a lawsuit with the people's court regarding the same dispute, the arbitration commission or the people's court shall not accept it." In short, the parties shall not apply for arbitration again regarding the matters that have already been awarded, nor shall they file a lawsuit regarding these matters.
If you are involved in an international trade dispute and are considering arbitration, our team of experienced Chinese lawyers is here to assist you. We have in - depth knowledge of international trade arbitration regulations and rich practical experience. Whether it's drafting arbitration clauses, participating in arbitration proceedings, or dealing with issues related to the recognition and enforcement of arbitration awards, we can provide you with professional legal advice and high - quality legal services. Please don't hesitate to contact us to protect your legitimate rights and interests in international trade.
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