1. Definition of Arbitration
Arbitration refers to the process of arbitration in which an arbitrator makes a ruling on the dispute between the two parties in accordance with the arbitration procedure. The arbitrator’s ruling is binding. If the losing party does not execute the ruling, the winning party has the right to apply to the court for compulsory execution. The court may, at the request of the winning party, force the losing party to execute the arbitration award.
2. Advantages of Arbitration
The arbitration award has the same effect as the court award, and arbitration has the following advantages.
(1) Rapid resolution. Article 48 of the China International Economic and Trade Arbitration Commission Arbitration Rules stipulates that the arbitration tribunal shall make an award within 6 months after the formation of the tribunal; upon the request of the arbitration tribunal, the president of the Arbitration Court of the China International Economic and Trade Arbitration Commission may extend the time limit if he deems that there is a legitimate reason and necessity.
(2) Confidentiality. Business disputes often involve the commercial secrets of the parties. If the dispute is brought to court, it is tantamount to making the commercial secrets public, which is not what the parties want. Business arbitration is a private dispute resolution based on a contract. The parties do not need to appear in court and the case can be conducted in secret without being known to the public.
(3) Cost saving. Commercial arbitration can save both parties time, money and energy. Generally speaking, the arbitration fees of the arbitrators that the parties need to bear are much less than the litigation costs.
(4) Expert arbitration. Arbitrators are usually notaries with rich theoretical and practical experience, who understand trade practices better than judges. Therefore, arbitration is more suitable for resolving trade disputes than litigation.
(5) Validity of the judgment. Article 9 of the Arbitration Law of the People’s Republic of China stipulates that arbitration shall be based on the system of one final ruling. After the ruling is made, if the parties apply for arbitration again or file a lawsuit with the People’s Court on the same dispute, the arbitration commission or the People’s Court shall not accept it.
3. Arbitration agreement
Article 5 of the Arbitration Rules of the China International Economic and Trade Arbitration Commission stipulates that an arbitration agreement refers to an arbitration clause stipulated in the contract by the parties or a written agreement reached by other means to submit to arbitration. An arbitration agreement has the following characteristics.
(1) The arbitration agreement must be made in writing. Written form includes contracts, letters, telegrams, telexes, faxes, electronic data interchange and e-mails, etc., which can tangibly express the contents contained therein.
(2) An arbitration agreement can only be concluded by two interested parties or their qualified agents. Otherwise, the two parties are not bound by the arbitration agreement. The arbitration agreement is the basis for the parties to apply for arbitration and exclude the jurisdiction of the court.
(3) An arbitration agreement has relative independence. The arbitration clause in a contract should be regarded as a clause that is separated from the other clauses of the contract and exists independently. The arbitration agreement attached to the contract should also be regarded as a part that is separated from the other clauses of the contract and exists independently. The modification, cancellation, termination, transfer, invalidation, invalidity, non-effectiveness, revocation and establishment of a contract shall not affect the validity of the arbitration clause or arbitration agreement.
Article 16 of the Arbitration Law of the People’s Republic of China stipulates that an arbitration agreement includes an arbitration clause stipulated in a contract and an agreement to request arbitration reached in other written forms before or after the occurrence of a dispute.
An arbitration agreement refers to a separate agreement between the parties, expressing their willingness to submit any disputes that have occurred or may occur between them to arbitration for settlement. The characteristic of this arbitration agreement is that it is a separate arbitration agreement, which is an agreement signed by the two parties to specifically agree on the content of arbitration when there is no arbitration clause in the contract. Moreover, the parties can enter into the agreement before or after the dispute occurs.