Dispute Resolution doing business in China

Rapid change has taken place in China since 1978 when Deng Xiao Ping led plans to re-establish a judiciary and a legal system. Since then, there has been a systematic attempt to legislate in all areas and to create and promote a judiciary and legal profession – now 150,000 strong – for the country’s population of 1.3bn.

What can a foreign party expect in relation to dispute resolution when doing business in China? If a dispute arises, negotiation is the best initial method of resolution. Most business contracts in China will include a clause requiring negotiation before other dispute settlement mechanisms are pursued. Negotiation might require attempts to enlist the help of local government officials by emphasising the importance of the foreign company’s investment.

If negotiation fails, it is arbitration that has for many years been the preferred method of resolution for foreign-related commercial disputes in China. Arbitrators have, at least until recently, been more experienced and better qualified in the subject matter than judges, and procedures have been more flexible and predictable. Arbitration also has the advantage of finality, in that awards are not subject to appeal whereas court rulings may result in a lengthy appeal process. Continue reading Dispute Resolution doing business in China

Labor disputes arbitration in China

Labor disputes arbitration in China

China‘s top legislature started to read the draft law on labor dispute mediation and arbitration amid an increasing number of labor disputes that emerged in the country. The draft law was submitted Sunday to the seven-day 29th session of the Standing Committee of the National People’s Congress (NPC), or China’s top legislature, for the first reading. Arbitration in labor dispute cases will be important because in China are continuously increasing in recent years. Statistics show that labor dispute arbitration organizations at various levels dealt with 1.72 million labor dispute cases involving 5.32 million employees from 1987 to the end of 2005, with a growth rate of 27.3 percent annually.

Xin Chunying, vice Chairman of the Legislative Affairs Commission of the NPC Standing Committee said on the legislative session that excepting the increasing number of labor disputes, other problems also exist. For instance, the personnel in arbitration organizations are not professional and thus lack credibility and the process of arbitrating labor disputes is long, making the cost of arbitration high. Continue reading Labor disputes arbitration in China