Arbitration and Litigation: Comparison of Solutions to Foreign-related Disputes - China

Generally, an economic contract would be concluded in foreign-related economic activities; however the contestable clauses tend to be important terms in such economic contract. Before the contestable clauses are determined, the first question is whether to choose arbitration or choose litigation once there is dispute in the future. Thereby, this essay aims to compare foreign-related arbitration and litigation, hoping to offer some help to the parties involving foreignrelated economic contract.
1. The bases for jurisdiction are different
The jurisdiction in arbitration agency is optional, which is based on the agreement between both parties. Only when both sides agree to submit the dispute, can the jurisdiction agency have the rights to judge. However, the jurisdiction of court is fitted by law, so both parties can only stipulate jurisdiction within the scope determined by the Civil Procedure Law of the People's Republic of China and its relevant provisions, e.g. the place，where contract is signed, performed and so on.
2. The trail grade systems are different
Arbitral awards in various countries commonly apply the system that the first instance is final, the adjudication of arbitral court is the end, and both parties can not sue to the court or request other organs to change the award. However, litigation in court usually needs more than second instance, so using litigation to settle dispute will take a long period, about half a year from registering to the final instance.
3. The organizations are different
Arbitration institutions are generally folk organizations, and arbitrators are not appointed by the state, but listed by the standing body usually. The arbitrators are appointed by both parties, thus, the arbitration proceeding is more flexible for both parties. However court is the judicial organ of the state, judges of courts are selected or appointed by the state, both parties having no freedom to choose the judge.
4. The procedures are different
The parties could request for renewing the arbitration proceeding since new arbitrators are appointed or selected due to obviation, and the arbitrators decide whether to approve or not. The arbitration tribunal may also decide exclusively whether the arbitration procedure would be renewed. In the process of the proceedings, if you decide to evade, the litigation procedure will continue after the personnel is changed. That is to say, the obviation will not affect the procedure of litigation. Arbitration will not be disclosed to the public unless it is engaged through agreement. In addition, the peace settlement both parties reach can be written into the arbitration award. While litigation is based on the principle of public trial and trail in camera is exception. The court must ascertain the facts and then make the judgment.
5. The differences between foreign arbitral awards and the court in acknowledgement and execution
The domestic executions of the arbitration award or court judgment in a country make no difference. Both of them can be enforced, and if one party does not execute the arbitration or court judgment, the other party may apply to the court for compulsory execution. However, if the arbitral award or court judgment needs to get another country's recognition and enforcement, must base on the treaty between the two countries or the prerequisite of mutually beneficial relationship. Currently, the most important international treaty which admits and execute foreign arbitral award is Convention of the Recognition and Enforcement of Foreign Arbitration Awards, which took effect on June 7th, 1959. More than 70contries and reigns accessed, and china accessed to this convention in December of 1986. But multilateral conventions which admit and enforce foreign judgments are seldom, and the applicable scope of these conventions is narrow. Moreover, these conventions with considerable length regulate the conditions can refuse recognition and enforcement of foreign judgments. On the contrary, relevant bilateral conventions of recognition and enforcement of foreign judgments are more than multilateral conventions.
Above all, arbitration is characterized for highly respecting the party's autonomy, good secrecy, and thus becomes more and more popular. While civil litigation is the final settlement of the dispute, which also has a very important position. The parties can make the choice from the above aspects combined with the actual situation in China, and finally choose a better way of solving disputes in the future. 1
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1. Refer to the Differences and Choice Between Foreign-related Arbitration and Litigation, which is from: http://www.chinalawedu.com/news/18500/189/2004/11/ma92843193410111400249764_138912.htm
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