A Study on the Innovative Legal System for Ad Hoc Arbitration in China’s Free Trade Zones

Abstract

Ad hoc arbitration is one of the most important means to resolve civil and commercial disputes and bring considerable amount of foreign exchange income in many oversea jurisdictions. Mainland China’s Supreme Court issued a judicial opinion to give a limited admission of ad hoc arbitral awards concerning Pilot Free Trade Zones（PFTZ）. That opinion has been undoubtedly an important progress in the history since the Communist Party took control of China. However, that opinion not only uses three vague terms named as a specific place, specific persons and specific arbitration rules, but also keep silent on other issues concerning ad hoc arbitration. As far as the seat of arbitration, China should allow the parties to select freely in accordance with international practice and authorize the ad hoc arbitral tribunal to make the decision in the absence of a choice by the parties. As for the issue of the ad hoc arbitration rules, the innovative provisions of our country can be as follows: under the premise of not violating the mandatory rules of law, the parties are allowed to independently formulate or choose appropriate arbitration rules for them; if the parties do not make or choose, the arbitral tribunal shall determine the appropriate arbitration procedure on the same premise. In terms of arbitrators” norms, the corresponding innovations should be that, with the exception of a few serious offenders and specific categories of persons, all those with civil capacity are eligible to act as ad hoc arbitrators; at the same time, if the parties do not have a specific choice, it is stipulated that according to the default rules, the people’s court appoints arbitrators according to certain standards. The interim arbitration measures of protection have different significance for the claimants & the respondents, and the relevant innovations should include: to give the ad hoc arbitration tribunal the power to issue interim measures of protection. In addition, with regard to the system of setting aside ad hoc arbitral awards, innovative measures should base the jurisdiction of people’s courts upon the arbitral seat whether or not that seat involving the ad hoc arbitration is located within PFTZ. Finally, in order to make ad hoc arbitration go smoothly, China’s Standing Committee of National Congress should empower province-level congresses or their standing committees to create further innovative provisions on the seat of arbitration, arbitrators, arbitral rules, judicial review of arbitral awards related to the above-mentioned type of arbitration.