Validity of an Arbitration Agreement

Valid Arbitration Agreement

A request for arbitration must be accompanied by a valid arbitration agreement reached between and by the disputing parties in written form either before or after their dispute arises. A request for arbitration without a valid arbitration agreement will be rejected by the arbitration commission.

Absence of an Arbitration Agreement

In the absence of an arbitration agreement, the disputing parties may choose to enter into a valid arbitration agreement in written form and refer to arbitration or file a lawsuit before a people’s court of competent jurisdiction.

Designated Arbitration Commission

The arbitration commission to which a dispute will be referred for arbitration shall be agreed upon by the disputing parties. An arbitration agreement should clearly state the exact name of a specific arbitration commission. If the name of an arbitration institution specified in an arbitration agreement is inaccurate but is sufficient to determine a specific arbitration institution, it is deemed that the arbitration institution has been selected by the parties. If an arbitration agreement only specifies the arbitration rules applicable to arbitration of the disputes, it is deemed that no arbitration institution has been specified unless the parties reach a supplementary agreement or an arbitration institution can be determined according to the arbitration rules specified in the arbitration agreement.

If the arbitration agreement does not designate a specific arbitration commission or lists two or more optional arbitration commissions, or the clauses of the arbitration agreement are not clear enough to determine a specific arbitration commission, the disputing parties may agree to refer their disputes to one of the arbitration commissions designated, modify their arbitration agreement, or reach a new one. Otherwise, their arbitration agreement will be deemed invalid, and the disputing parties will have to solve their disputes by other means, e.g., negotiation, mediation, or litigation.

If an arbitration agreement specifies that arbitration shall be conducted by an arbitration institution in a certain place and there is only one arbitration institution in the place, the arbitration institution shall be deemed as selected by the parties. Provided, however, that if there are two or more arbitration institutions in the place, the parties may agree to choose one of them for arbitration, and the arbitration agreement will be held to be invalid if the parties fail to reach an agreement on the choice of an arbitration institution.

If an arbitration agreement specifies that either party may file a request for arbitration with an arbitration institution or a lawsuit with a people's court, the arbitration agreement will be deemed invalid. Provided, however, that the arbitration agreement will be deemed valid if either party files a request for arbitration with an arbitration institution and the other party fails to challenge the validity of the arbitration agreement before the arbitral tribunal proceeds with the first hearing.

An arbitration commission is an independent entity. Arbitration in China is not subject to hierarchical or territorial jurisdiction, and serves the purpose of settling disputes in impartial and reasonable manners based on facts and according to law without being interfered by any administrative authority, social entity, or individual.