Criminal Liability of Arbitrators in China: Analysis and Proposals for Reform

By Xiaosong, Duan | Washington International Law Journal, April 2014 | Go to article overview

Criminal Liability of Arbitrators in China: Analysis and Proposals for Reform


Xiaosong, Duan, Washington International Law Journal


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I. INTRODUCTION

Although international commercial arbitration in China started in the 1950s,1 it stood still until the adoption of the "reform and opening-up" policy of the late 1970s.2 China's accession into the World Trade Organization ("WTO") in December 2001 and the growing globalization of the world economy have greatly increased international trade and investment in China.3 In the wake of the modern explosion of international trade and transnational investment, arbitration has become "the accepted method for resolving international business disputes."4 Arbitration has also become a preferred method for foreign parties to resolve their legal disputes in China, due in large part to the distrust these parties have of Chinese courts.5

Nonetheless, parties must recognize that China's arbitration system is very young. Although commercial arbitration started in the 1950s, the first arbitration law, the Arbitration Law of the People's Republic of China, hereinafter Arbitration Law, is only twenty years old.6 In contrast, the United States has a long history of arbitration. The U.S. Congress passed the Federal Arbitration Act ("FAA") in 1925.7 The FAA provides that if there is an arbitration clause, the court shall, on application of one of the parties, stay the trial of the action until such arbitration has taken place.8 In recent years, U.S. courts have expanded the range of enforceable arbitration agreements to include agreements that cover areas of law previously thought to be within the exclusive domain of courts.9

Parties from different nations tend to seek arbitration in order to prevent an abundance of jurisdictional problems. 10 Unlike litigation, arbitration provides a neutral venue for international disputes and aims to ensure procedural fairness for both parties.11 Arbitration permits parties from different countries to exercise a great deal of control over how a dispute will be resolved.12 The parties are free to tailor the proceedings to meet their needs. Specifically, parties can contract to govern all disputes by a certain set of laws or procedures.13 They decide the scope and content of the arbitration, define its procedures, and choose the location of the arbitration by specifying these stipulations in the arbitration agreement.14 Most importantly, parties have the power to choose the decision maker.15 This freedom to select the arbitrator is why arbitration has been described as "hiring your own private judge."16 Arbitration benefits parties not only by ensuring procedural fairness, but also by providing predictability, lowering attorney fees, and increasing the privacy and expertise in decision making.17 The finality of arbitration is another advantage, which is often attractive for its speed and cost-effectiveness.18 Arbitral awards are final and binding, and can be enforced in the same manner as court judgments.19 Particularly with the well-functioning international enforcement system under the 1958 New York Convention,20 arbitral awards are often easier to enforce than court judgments. 21 With its acceptance and popularization, international commercial arbitration now plays a very important role in settling private conflicts.

Arbitrator bias, however, negates many of the benefits of arbitration to commercial parties. 22 In China, where bribery of public officials is prevalent, arbitral awards might also be tainted by bribery.23 For instance, Jiang Hanwu, the former vice chairman of the Arbitration Commission in Lian Yun Gang city, Jiangsu Province, was charged with bribery in 2001.24 The increased risk that Western parties may incur in this aspect of relations with Chinese parties increases the importance of ensuring the impartiality of the arbitrators deciding their disputes.25 The issue of arbitrator impartiality is therefore critical to the development of arbitration rules and cannot be ignored in the process of international private dispute resolution. …

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