By Tian Baicheng
ITH THE OPEN DOOR POLICY being carried out in China, disputes arise between foreign and Chinese citizens or organizations from time to time. So, how to settle them so as to do the business smoothly becomes a hot topic mentioned by foreign businessmen frequently. And the law, as the final method of settling the disputes, becomes more and more important. The purpose of this article is trying to make an initial illustration of the Chinese trouble settling system on commercial and economic matters.
Generally to say, there are three ways to settle the disputes arising from Chinese and foreign partners, which are mediation, arbitration and litigation, and now they will be introduced briefly one by one.
As an important means of resolving disputes arising from international commercial and maritime transactions, with advantage of time and expense-saving, confidentiality and flexibility, conciliation is now attached more and more important to the parties, and playing a greater role in settlement of international commercial disputes.
To meet the development of the conciliation business, China Council for the Promotion of International Trade (CCPIT) established Beijing Conciliation Center in 1987, and from 1992 to the end of 1997, CCPIT has set up altogether 34 conciliation centers in other cities, which cover the main areas of China. All the centers apply the uniform conciliation rules, and under the leadership of Beijing Conciliation Center in vocational work.
The conciliation centers take cognizance of cases in accordance with a conciliation agreement, or in the absence of such an agreement, upon application from one party with the consent of the other party. The Centers all maintain a Panel of Conciliators for which the parties to a certain cases could make the nomination. The conciliators in the Panel are selected and appointed by CCPIT from among the impartial personages with special knowledge and/or practical experiences in international economy, trade, finance, investment, technology transfer, project contracting, transportation, insurance and other fields of international commerce, maritime issues and/or law.
In the conciliation proceedings, the conciliators shall observe the principle of parties' autonomy and conduct conciliation on the basis of ascertaining the facts, distinguishing right from wrong and determining the liabilities, while respecting the terms of the contract, abiding by the law, referring to the international practice, and adhering to the principle of fairness and reasonableness so as to help bringing about mutual understanding and mutual concession between the parties and reach an amicable settlement of the disputes.
Beijing Conciliation Center has established relation with Beijing-Hamburg Conciliation Center, the American Arbitration Association, the International Federation of Commercial Arbitration Institute and London Court of International Arbitration.
CCPIT also established China International Economic and Trade Arbitration Commission (CIETAC) and China Maritime Arbitration Commission (CMAC) so as to resolve international or foreign-related contractual or non-contractual, economic and trade, maritime and admiralty disputes, by means of arbitration independently and impartially.
The working organizations of the two Commissions are the secretariats located in Beijing. The Commissions take cognizance of arbitration cases in accordance with the arbitration agreement on submission of disputes to the Commissions for arbitration concluded between the parties prior to or after the occurrence of disputes and upon a written application for arbitration submitted by one of the parties. The two Commissions have the Panels of Arbitrators separately, who are selected and appointed from Chinese and Foreign personages with special knowledge in the fields of law, economics and trade, science and technology, maritime and admiralty and so on.
The Commissions have their Rules so as to ensure the proceedings carry out smoothly. The Commissions have persisted in the principle of taking facts as the basis and law as the criterion, taking international practices as reference, knowing the stipulation in the contract and independently and impartially resolving the disputes. Combination of arbitration with conciliation is a salient feature of the two Commissions. Moreover, the summary procedure can be applied if the amount of the claim in dispute totals less than RMB. 500,000. In any case, the award will be made with 9 months, which is enforceable as China is member country of New York Convention.
The people's courts of People's Republic of China are divided into four levels: the basic court, the intermediate court, the high court and the supreme court. Generally, the basic people's court shall have jurisdiction as courts of first instance over civil and commercial cases, unless otherwise provided in the civil procedure law. And the court of second instance is that of last instance. If a foreign citizen or organization has a dispute with a Chinese citizen or organization, he can take action in the relevant people's court as per the stipulations of jurisdiction of civil procedure law.
Besides, to meet the situation that shipping and trade disputes are booming, the Standing Committee of the National People's Congress made the decision to establish maritime courts in the main port cities of China in 1984, which level is equal to the Intermediate Court. So far there have been 9 maritime courts in China, which are Tianjin, Dalian, Qingdao, Shanghai, Guangzhou, Wuhan, Ningbo, Xiamen and Haikou( It is said that the 10th is undergoing to establish in Beihai). The maritime courts have jurisdiction on the whole cases arising from shipping, water transportation and majority of trade cases as which always involve maritime factors. In consideration of specific characteristics of maritime lawsuit, the Standing Committee of People's Congress adopted Special Procedure for Maritime Lawsuit on 25th, December 1999, which will be put into force on 1st July 2000, which will governs the proceedings involving maritime factors, and the Civil Procedure law will be referred to the matters on which the Special Procedure Law keeps silence. Maritime Code of PRC and other civil and commercial laws will be applied for judgment making. The international practices will also be referred if Chinese laws keep silence on the matter.
According to the Chinese civil procedure law, a foreign organization might be sued in Chinese courts due to disputes with the complainant if the contract is signed or performed in the territory of the People's Republic of China, or if the object of the action is located within the territory of the PRC, or if the defendant has distrainable property within the territory of the PRC, or if the defendant has its representative office within the territory of the PRC.
Chinese government joined the Convention on the Service Abroad of Judicial and Extra-judicial Documents in Civil or Commercial Matters in 1992. As a result, foreign citizens or organizations outside of China should be served the judicial documents as per the stipulations of the Convention if they live or are registered in a contracting country of the Convention. Moreover, Chinese Government has also reached Judicial Assistant Agreement with some countries, so, the service will be performed as per the stipulations of the Agreement.
If the citizens or organizations do not live in or are registered in a contracting country or the country having agreement with China, but in a country has diplomatic relations with China, they should be served papers through diplomatic channels. The service of legal documents can be made by serving the agent authorized by the citizens or organizations. The citizens or organizations can also be served by post if their governments accept this method. If none of the above-mentioned methods can be applied, the service can be made by public notice.
The people's court shall conduct trials of civil cases involving foreign element in the spoken and written language commonly used in the PRC. Translation may be provided at the request of the parties concerned, and the expenses shall be borne by them.
The application for execution of a legally effective judgment or written orders in civil cases as well as other legal documents should be tendered within 6 months if the person subjected to execution of the order does not perform the obligation positively.
Could a foreigner sue Chinese organization or citizen in the court of foreign country? The answer is of course yes, because this is the matter of sovereign of the country in which the court located and the option of the foreigner. But one must keep in mind that if the country in which the lawsuit is pending has no any bilateral agreement or multilateral convention on enforcing the judgment with China, the judgment will not be enforced directly in China unless the action for the purpose of enforcement is taken in relevant Chinese court.
The last topic of this article is how to appoint a Chinese Lawyer. If the foreign citizen or organization needs lawyers as agents to act for and on behalf of them in the people's courts, they must appoint Chinese lawyers, and the power of attorney from outside the territory of the People's Republic of China for the appointment must be notarized by a notary office in the country of domicile and authenticated by the Chinese embassy or consulate accredited to the country.
The author recommends a quick way to appoint a Chinese lawyer is to mouse email@example.com, then, Mr. Tian Baicheng will contact and arrange everything well with you and if Mr. Tian is not satisfactory, ask him to introduce another lawyer/firm.
Hope this short essay will help foreign friends getting a summary understanding of how to settle trouble in China.
The Conventions in which China has joined (civil and commercial matter only):
The countries with which China have reached Judicial Assistant Agreements (Civil and commercial matter only):
The Information in this article is provided for general reference only and may not be totally accurate in a particular case. Questions involving interpretation of specific Chinese laws should be consult with Chinese lawyers on the base of whole of facts are disclosed.
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2000, Tian Baicheng
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