Think About Your Future Disputes Ahead

• Pages: 6-7

There is one special issue worth paying attention to when

choosing where to arbitrate. Namely, the access to interim

measures. An interim measure means a temporary decision that

helps preserve the property or evidence, or orders the party to

act or stop acting in a particular way – before the main dispute

is decided, which can take some time, while it may be urgent to

have such a temporary decision. By way of example, an interim

measure can be helpful if the case claimant is concerned about

the other party trying to hide its assets, which could undermine

the subsequent execution of the arbitral award (again: parties

want money and not a piece of paper). The other example

could be an injunction ordering the infringing party to stop its

infringing behavior until the dispute is decided. In China, interim

measures can only be ordered by Chinese courts. In this context,

as of today, Chinese courts will provide their assistance only to

arbitration conducted in mainland China and Hong Kong.

So We Have a Dispute – What Next?

Once a dispute occurs and there is an arbitration agreement

between the parties, the party initiating the dispute (claimant)

les its request for arbitration, in which it describes its claims

and introduces the evidence to support its position. The other

party (respondent) will then le its response to that request. At

this stage, the parties also select their arbitrators. Next, there

typically is a hearing in which the parties meet in front of

arbitrators to discuss the disputed matters and evidence, as well

as answer the arbitrators’ questions. Aer that, the arbitrators

make a decision and render an arbitral award. The award is

binding upon the parties. Either the losing party pays voluntarily

what it is due or, if it does not happen, the winning party needs

to approach the court in the place where the losing party has its

assets, and the court will assist it with the coercive execution of

the award.

Special Features of Arbitrating in China

• You need to designate an arbitration institution for an

arbitration agreement to be valid. While in other countries,

it is possible to have, so called, ad hoc arbitration, without

the involvement of an arbitration institution, this is not

available in China.

Furthermore, this needs to be a Chinese institution. This

is because, as of today, China, generally, does not support

arbitration taking place in China, but administered by

a foreign arbitration institution. Therefore, by way of

example, a clause selecting the France-based Arbitration

Court at the International Chamber of Commerce (ICC) and

the arbitration place in China (“The parties shall have their

disputes resolved by the ICC in China”) will likely lead to

problems. The other party may challenge the validity of

such a clause and instead – seek to resolve the dispute in

other forum. Therefore, these types of clauses should be

avoided.

• Arbitration in China is largely document-based. That means

that parties prepare their evidence to support their own

claims and submit them for the arbitrators’ assessment. It is,

therefore, a good practice to keep well all documents related

to a particular business, professional email exchanges etc.

• There is typically one hearing, unless there is a need to

have more of them.

• According to arbitration rules of the leading Chinese

arbitration institutions (CIETAC, BAC/BIAC, SHIAC), an

arbitral award should be rendered within 6 months aer

the tribunal of arbitrators was formed.

• The elements of mediation are common in arbitration

practice in China. This means that arbitrators may try to see

whether there is a chance to resolve the dispute through

mediation. In mediation, parties try to reach a settlement

themselves, with the assistance of a third party. Using

mediation within the arbitration procedure can help save

time and money, as well as preserve a good relationship

between the parties.

5. Think About Your Future Disputes Ahead

Arbitration is a popular method of resolving disputes in the

Sino-foreign context. This results from the key advantages

of arbitration: its neutrality, expertise, exibility, nality,

condentiality and enforcement regime. Arbitration can be a

viable solution also for IP-related disputes specically.

Among other possible methods to resolve Sino-foreign IP

disputes are mediation and litigation (also in front of specialized

Chinese IP courts). They all have their its own advantages and

disadvantages, the analysis of which, however, is beyond this

guide’s content.

In any case, it is advisable to consider the mechanism for

resolution of disputes right at the beginning of a new business

relationship. Although nobody likes to think about the divorce

strategies before getting married – one saying is of particular

relevance here: “better safe than sorry”.

How to Search for Basic Chinese Company Information to

Protect your IP

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