Circular of the General Office of the State Council Regarding Some Problems Which Need to Be Clarified for the Implementation of the Arbitration Law of the People's Republic of China

(June 8, 1996)

With the consent of the State Council, several problems with regard to the implementation of the Arbitration Law of the People's Republic of China (hereinafter referred to as the Arbitration Law) are hereby clarified with a view to ensuring the correct implementation of the Arbitration Law, guaranteeing the continuity of the work of arbitration, protecting the legitimate rights and interests of parties to economic disputes and maintaining the economic order.

1. The provisions in the Plan for the Reorganization of Arbitration Organs (Guobanfa No.[1995] 44) issued on August 1, 1995 by the General Office of the State Council concerning the merger of newly established arbitration commissions and the original arbitration organs with regard to acceptance of cases shall be amended as: Arbitration agreements concluded according to law by parities concerned before the implementation of the Arbitration Law shall remain valid; cases to be arbitrated by the original arbitration organs at various levels in municipalities directly under the central government, capital cities of provinces and autonomous regions or other districted cities according to the original arbitration agreements or the state's provisions concerning arbitration which were in force before the implementation of the Arbitration Law shall be respectively handled by the arbitration commissions newly established in the aforesaid cities where the original arbitration organs are located; if, in areas where the original arbitration organs are located, no arbitration commission may be established according to law or no arbitration commission is established though it may be established according to law, the cases shall be handled by arbitration commissions newly established in the capital cities of the provinces or autonomous regions. Where parties concerned form a new arbitration agreement and thereby choose another newly established arbitration commission, the arbitration shall be conducted by the newly established arbitration commission chosen by the parties; where parties concerned agree to abandon arbitration and resort to legal proceedings, the case shall be handled by the people's court.

2. Where any party to a domestic arbitral case applies for economic preservative measures in accordance with Article 28 the Arbitration Law, the arbitration commission shall, in accordance with relevant provisions of the Civil Procedure Law of the People's Republic of China, refer the application to the basic people's court at the place where the party has his residence or where the property related is located.

3. The functions and duties of newly established arbitration commissions are mainly to arbitrate domestic disputes; they may accept foreign-related cases if the parties concerned make such choice. Newly established arbitration commissions shall adopt identical charging standards for arbitration of either domestic or foreign-related disputes.

4. Relevant administrative departments shall, within two months after the issuance of this Circular and in accordance with the provisions of the Arbitration Law, revise the clause for treatment of contractual disputes in their standard (form) contracts or model texts of contracts made before the implementation of the Arbitration Law. The revised form shall be: The method for settlement of contractual disputes shall be any one chosen from the two following methods by the parties concerned through contract:

(1) Disputes arising from the performance of this contract shall be settled through compromise between the parties or, if it fails to be settled through compromise, be submitted to ____ Arbitration Commissions for arbitration;

(2) Disputes arising from the performance of this contract shall be settled through compromise between the parties or, if it fails to be settled through compromise, a lawsuit may be instituted with the people's court.

The Supreme People's Court consents to issue another document with regard to the problems within the scope of functions and powers of people's courts which are involved in this Circular.