By Laprès, Daniel Arthur
The China Business Review , Vol. 36, No. 3
When considering arbitration in China, it helps to know what foreign lawyers may and may not do under PRC law
There is general, though not unanimous, agree- ment that foreign lawyers may represent clients in proceedings before the China International Economic and Trade Arbitration Commission (CIETAC) in disputes that do not involve "Chinese legal affairs." Debate arises because pleading a case on Chinese territory, even in foreign law might amount to practicing law in China without a local license. Violations of mandatory local rules or criminal laws that govern the involvement of foreign lawyers in legal disputes could expose practitioners to difficulties in recovering legal fees and - in cases of malpractice - rejections of insurance claims, as well as administrative and professional sanctions.
The CIETAC framework
According to CIETAC s constituting documents, "Parties may appoint attorneys to defend their interests during the proceedings of a case before the Arbitration Commission. Such attorneys may be citizens of the People's Republic of China or foreign citizens." Under CIETACs Arbitration Rules, the parties may act through designated "representatives," who may be either Chinese or foreign citizens.
At several stages of the proceedings, the parties are entitled to the services of their designated "representatives," who may file applications and defenses on their behalf, accompany them at oral hearings, and receive communication of their decisions and documents. Once an application is complete, the commission decides whether CIETAC has jurisdiction before setting up an arbitration tribunal to handle the matter.
According to Article 3 of the CIETAC Arbitration Rules, the cases over which CIETAC arbitration tribunals may accept jurisdiction are classified into three cat- egories: domestic disputes; those related to Hong Kong, Macao, or Taiwan; and inter- national or foreign- related disputes. This threefold distinction may explain why the rules governing the qualifications of the parties' representatives in arbitration pro- ceedings vary depending on whether the dispute is domestic. In domestic cases, for- eign lawyers may not intervene on behalf of their clients, but in non- domestic dis- putes they may. According to the Supreme People's Court, international or foreign- related disputes are those in which:
At least one of the parties is a foreign or stateless individual or a foreign legal person;
A civil relationship is created, modified, or terminated outside China; or
The subject matter of the dispute is outside China. China's Supreme People's Court has stated that in some "international or foreign-related disputes" PRC law could apply. An example is a dispute between a Chinese and a foreign party over an object located in the foreign country under a contract in which the parties have chosen to apply PRC law. In such a scenario, foreign lawyers would, under China's regulations, be unable to represent their foreign clients in arbitration proceedings in China. In short, the domestic and non-domestic dichotomy is not a fully functional criterion for determining when foreign lawyers may represent clients in arbitration proceedings in China.
In the end, arbitral tribunals decide whether to recognize the parties' representatives during the proceedings. According to Article 29 of the Arbitration Rules, a CIETAC arbitration tribunal may "examine the case in any way that it deems appropriate unless otherwise agreed by the parties." The major specified constraint on arbitration tribunals is that they must act "impartially and fairly and afford reasonable opportunities to all parties for presentations and debates." If a foreign lawyer introduces an argument based on PRC law in his or her oral or written pleadings, the arbitrators in CIETAC proceedings would consider whether the foreign lawyer was acting jointly with a Chinese practitioner and whether the arguments based on PRC law were supported by opinions of Chinese legal practitioners. …