Remaining observations

The Chinese allocation of power under the CAL, generally, runs counter to the overall efficiency of the arbitration proceeding and leads to the waste of human resources.³⁵² Interestingly, the findings of the China Arbitration Survey suggest that concerning the time needed for dealing with the objections, the arbitration institution takes least time, the arbitration tribunal slightly more, but still considerably less than the state court.³⁵³ Following the observation made in the context of the CIETAC practice, whereby CIETAC tasks the tribunal with more complicated jurisdictional questions requiring a hearing, this could be a possible explanation as to why the survey’s findings reflected the shortest time taken by the arbitration institution.

The Chinese approach, with the enlarged powers of the court and the arbitration institution, is mentioned as being aimed at the promotion of consistency and accuracy of decisions, keeping in mind the limited development of arbitration in China.³⁵⁴ However, a question to be asked is whether such reasoning holds true today. If one of China’s concerns when deciding how to allocate the power to

349 Yuen, McDonald, and Dong, 213.

350 In addition to CIETAC and the BAC, some other institutions, including the GZAC, the WAC, and the SHIAC provide for the delegation mechanism as well.

351 Gu, Arbitration in China: Regulation of Arbitration Agreements and Practical Issues, 113.

352 See Hou and Zhao, 189.; Gu, Arbitration in China: Regulation of Arbitration Agreements and Practical Issues, 46.

353 See Chapter 9 on the China Arbitration Survey p. 196-197, as well as Appendix 1 p. 271-273.

354 Yuen, McDonald, and Dong, 212.

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address jurisdictional objections was the lack of competency of arbitrators to deal with this matter, then having in mind: the restrictive criteria provided by the CAL for being an arbitrator in China,³⁵⁵ the closed-panel system of arbitrators,³⁵⁶ the general lack of permission for ad hoc arbitration in China,³⁵⁷ as well as the overall development of arbitration over the last 24 years since the enactment of the CAL, this concern seems to be less justified today. This is also relevant when comparing the competence of arbitrators with the competence and requirements toward judges in China, as well as when taking into consideration the judges’ familiarity with arbitration-related matters, which is not assessed as high across the country.³⁵⁸

Looking at the problem specifically from the perspective of the stakeholders of international commercial arbitration, it should be noted that one of the reasons as to why arbitration is frequently chosen by parties is to avoid, or at least to minimize, the involvement of particular state courts in

355 See Art. 13 of the CAL: “[…] An arbitrator shall meet one of the following requirements:

1. At least eight years of work experience in arbitration.

2. At least eight years of experience as a lawyer.

3. At least eight years of experience as a judge.

4. Engaging in law research and teaching, with a senior academic title.

An arbitration commission shall prepare the list of arbitrators according to different specialities.”;

and Art. 67 of the CAL: “Members of a foreign arbitration commission may appoint arbitrators from among foreign nationals with specialized knowledge in law, economy and trade, science and technology.”

356 See Chapter 6 p. 143.

357 See Chapter 2 p. 35-36.

358 The general requirements for a judge in China are lower than the requirements for an arbitrator. See Art. 9 of Judges Law of the People's Republic of China issued on 28 February 1995, effective from 1 July 1995 (with 2001 and 2017 amendments); [ 中华人民共和国法官法, 颁布时间1995年2月28日, 实施时间: 1995年7 月1日起施行 (2001和2017修正)].

Article 9: “A judge shall possess the following qualifications: (1) to be of the nationality of the People’s Republic of China; (2) to have reached the age of 23; (3) to endorse the Constitution of the People’s Republic of China;

(4) to have fine political and professional quality and to be good in conduct; (5) to be in good health; and (6) to have engaged in the legal work for at least two years in the case of graduates of law major of colleges or universities or from non-law majors of colleges or universities but possessing the professional knowledge of law, and among whom those to assume the posts of judges of superior People's Courts and of the Supreme People's Court shall have engaged in the legal work for at least three years; or to have engaged in the legal work for at least one year in the case of those who have Master's Degree of Law or Doctor's Degree of Law, or those who have Master's Degree or Doctor's Degree of non-law majors but possess the professional knowledge of law, and among whom those to assume the posts of judges of superior People's Courts and of the Supreme People's Court shall have engaged in the legal work for at least two years. […]”

However, as noted above, the situation differs across the country, and especially in major coastal cities, like Beijing, Shanghai, or Shenzhen, the courts and judges are better prepared to perform their arbitration-related tasks than the judges in more remote areas. See also Shizhou Wang, Civil Procedure in China (Wolters Kluwer, 2014), 36-38.

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resolving disputes.³⁵⁹ Unfortunately, in China, it can happen that the very first place, where an arbitration case lands is exactly in a Chinese court – the place to be avoided. It happens when a party raises a jurisdictional objection before the court, which then has the exclusivity to deal with the issue.

Overall, the Chinese atypical allocation of power in the area discussed leads to placing China among countries, where legislation is seen as “reserved or even hostile to the doctrine [of competence-competence]”.³⁶⁰ This certainly is not a category that an arbitration-friendly jurisdiction wants to belong to. It is also important to note that the division of power shared among the arbitral tribunal, the state court, and the arbitration institutions in China in this regard happens at the very expense of the arbitral tribunal. As to one other possible consequence, this can potentially discourage non-Chinese arbitrators, who are used to having a more extensive range of powers, from accepting the appointments in China-seated cases. This can then contribute to limiting the further internationalization of arbitration in China.³⁶¹

The allocation of power under the CAL and the recent efforts to improve the situation by the leading arbitration institutions reflect the transitional struggle of a socialist market economy in China.

Arbitration is said to be a product of a free market economy with its contractual, privately-oriented approach. However, China’s arbitration was born in a planned economy environment, where there were no individual market subjects, the government-appointed authorities were the only authoritative power in arbitration proceedings, and the tribunal’s role was limited to assisting in handling individual cases.³⁶² Therefore, the lack of full recognition of the principle of competence-competence in China and the limited role of the arbitral tribunal are attributable to a general administrative dominance of the state in arbitration in China, with a significant role played by the court and the arbitration institution.

Also, the traditional reliance of Chinese people on the power of office and preference for institutions (especially governmental ones) over individuals in resolving problems has been cited as a source of such allocation of power in China.³⁶³ Chinese parties have been believed to tend to treat arbitration

359 See Chapter 1 p. 1-2.

360 Born, 1064.

361 This is in addition to a financial disincentive. Arbitrators in China are paid less than their counterparts in the cases administered by other major arbitration institutions. See Tao, Arbitration Law and Practice in China, 134.;

Matthias Scherer, "Arbitral Institutions under Scrutiny," Kluwer Arbitration Blog (5 October 2011),

http://arbitrationblog.kluwerarbitration.com/2011/10/05/arbitral-institutions-under-scrutiny/. (last accessed:

20 November 2018).

362 Gu, Arbitration in China: Regulation of Arbitration Agreements and Practical Issues, 99-100.

363 Ibid., 23-24 & 98-101.

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proceedings as led by the arbitration institution, which in a consequence, diminishes the role of the tribunal and subordinates it to the arbitration institution.³⁶⁴ As such, in China, the court is given the priority in deciding jurisdictional objections in arbitration, and if the court is to share this power, it is to be done with another institution – the arbitration institution, and not with individual arbitrators.

4.2.4. Recommendations