The Sword of Damocles for Foreign Arbitrators in China

【Abstract】 On February 25， new amendment of criminal law happened in China mainland which might forget to explain or change some unclear parts of criminal law. On June 29， 2006， National People’s Congress of the People’s Republic of China added “crime of law-bending arbitration” as a new part of Criminal Law. However， there are not detail rules or explanations for the new crime and no Chinese courts have made any judgments on it. Establishing unclear criminal responsibility for arbitrator is not a good way while the arbitration is useful in China. There are three main theories on immunity of arbitrator in the world while China does not choose any or set up a new kind. This comment suggests Chinee government to abundant the “crime of law-bending arbitration”. And it is time to establish details and regulations on responsibility of foreign arbitrator or arbitrator immunity.

【Key words】arbitration immunity responsibility China

【中圖分類號】G819-4【文獻(xiàn)標(biāo)識碼】A【文章編號】1009-8585(2011)05-0-02

1 Introduction

1.1 New Amendment of Criminal Law of the People’s Republic of China

On February 25， 2011， Standing Committee (SC) of the National People’s Congress (NPC) published the Amendment Ⅷ of Criminal Law of the People's Republic of China (hereinafter “Criminal Law”) which shall come into force from May 1， 2011. Among the eight amendments of Criminal Law， Amendment Ⅷ has the most articles and first establishes that the death penalty excludes any criminal who is more than seventy-five except that he or she kills or murders someone in atrocity means. However， it is a pity that the National People’s Congress (hereinafter “NPC”) or its Standing Committee forgot to edify or change some negative points of other amendments before， for example， the “crime of law-bending arbitration”， which could be the Sword of Damocles for foreigner arbitrators in China.

1.2 Increasing Number of Foreign arbitrators in China

Arbitration is an important and frequently-utilized dispute resolution tool in China. As global interactions increase， parties often rely on arbitration to deal with economic and commercial disputes. Though under the Arbitration Law of the People's Republic of China (hereinafter “Arbitration Law”)， which is effective from September 1， 1995， arbitrations performed outside arbitration commissions are prohibited. In addition， a valid arbitration agreement must designate an arbitration commission. However， more and more foreign arbitrators appear in both Beijing and Shanghai. Take the lists of arbitrators of China Maritime Arbitration Commission in both Beijing and Shanghai as examples， the foreign arbitrators are originated from more than ten countries respectively.

2 Criminal Responsibility of Foreign Arbitrators in China

2.1 Rules of Criminal Responsibility

On June 29， 2006， NPC added “crime of law-bending arbitration” as a new part of Chapter Ⅸ “Crimes of dereliction of duty” by Amendment Ⅵ to Criminal Law.

From the Amendment Ⅵ of Criminal Law， person to undertake the responsibility of arbitration shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention if the violation circumstance is serious; and if the violation circumstance is especially serious， to fixed-term imprisonment of not less than three years and not more than seven years.

According to Article 6 of Criminal Law， all rules of it apply “where a person commits a crime in the territory of the People's Republic of China， except as specially provided by law; and if， among the acts or results of a crime， one of them takes place in the territory of the People's Republic of China， it shall be deemed a crime committed in the territory of the People's Republic of China”. Thus a foreign arbitrator is also under the risk of penalty of “crime of law-bending arbitration”.

One clause is not enough and even it has some misunderstandings. How to make sense of intent needs more detail. If an award is decided outside Chinese， the investigation will cost a lot. And， what is the scope of “l(fā)aw” in this clause? As a foreigner， he or she has different law knowledge and information. It is possible that a Chinese judge is good at American company law while he or she doubts an arbitrator’s judgment by Canadian company law. And is the arbitrator guilty? From the name of crime， reader can knowledge the violation under arbitration， however what is the meaning of “person to undertake the responsibility of arbitration” and whether the penalty is for arbitrator or employee of arbitration commission. Last but not the least， the phrase of “bending law and fact” will affect the attitude of both Chinese and foreign arbitrator. Usually， an arbitrator is not liable for anything done or omitted in the discharge or purported discharge of his or her functions as arbitrator unless the act or omission is shown to have been in bad faith， which draws a line between arbitration and procedure.

2.2 Practice

For its part， the Standing Committee (SC) of the NPC is empowered to interpret and supervise the implementation of the Chinese Constitution and laws， while the Supreme Court in Beijing has the power of interpretation of laws when application in cases.

Five years passed and government branches keep silent， and there is not any case about the “crime of law-bending arbitration”， which makes the arbitrators confused and afraid since they do not know the standard for the crime.

3 It is Time to set up Chinese arbitrator immunity

3.1 Legal background of arbitral immunity

If there is not detailed regulations for criminal responsibility of arbitrator， and why not set up immunity for arbitrator? Outside the scope of immunity of arbitrator is violation. No matter a Chinese or foreigner， the principles for he or she are the same while certain parts of rules could be different. I consider it is good that the next Amendment of Criminal Law cancel the crime of law-bending arbitration and the Amendment of Arbitration law add the rules of arbitrator immunity.

Arbitral immunity serves four important functions in China. First， as a dispute solution， it can relieve the burden of Chinese judge. In a decade， the number of cases accepted by China International Economic and Trade Arbitration Commission (hereinafter “CIETAC”) was from 829(1994) to 1482(2009). Secondly， as with judges， immunity ensures arbitrators remain independent a neutral decision-makers who are uninfluenced by the threat of legal reprisal from their decisional acts. Thirdly， it shields arbitrators from collateral attack on behalf of disgruntled parties who seek to challenge the arbitration awards. Last but not least， immunity incentivizes individuals to serve as arbitrators， thereby promoting the general policy in favor of arbitration.

3.2 Doctrines of arbitrator immunity

Like the concept of International law， terminology of modern arbitration is from abroad. Historically， arbitration agreements primarily involved parties of relatively equal bargaining power who voluntarily chose to resolve disputes out of court.

Several jurisprudential theories have influenced how arbitral immunity viewed in different jurisdictions. The contractual theory originated in the nineteenth century and is followed by some civil law European countries， such as France. A contractual theory views arbitration and the arbitrator's authority purely as a creation of the parties. In contrast， the jurisdictional theory asserts that the arbitrator， like the judge， ultimately draws his power and authority from the national law in force at the seat of the adjudication. The last relevant theory， and the theory which supports qualified immunity， is the hybrid theory. The hybrid theory maintains that the international arbitrator's authority is both private and jurisdictional. China does not publish which theory it chooses and there are some vital conflicts inside the Arbitration Law.

4 Conclusion

In general terms， arbitration is a form of alternative dispute resolution where a third party issues a final decision. Making decision via foreigner can be away from the domestic control or disrupting. Chinese welcome more foreign arbitrators now and in future.

It is time to make detail of “crime of law-bending arbitration” in Criminal Law. Meanwhile， more interpretations are called for relevant clauses on Criminal Law and Arbitration Law. I consider qualified immunity is a nice choice for Mainland since foreign arbitrators are not governmental officers and should not be confronted administrative penalty. If they are considered as officers， it will totally destroy the Chinese legal system and ground for arbitration.

Reference

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[2]David T.Wang，Judicial reform in China: improving arbitration award enforcement by establishing a federal court system，48 SANCLR 649，655 (2008).

[3] Liu xiaohong，Research on responsibility of arbitration，5 Journal of East China University of Political Science and Law 82， 88 (2007).

[4]Susan D. Franck:The Liability of international arbitrators: a comparative analysis and proposal for quality immunity，20 NYLSJICL 1，41 (2000).

[5]Sara Roitman，Beyond Reproach:Has the Doctrine of arbitral Immunity Been Extended Too Far for Arbitration Sponsoring Firms，51 B.C.L.Rev.557，569 (2010).

[6]Jenny Brown，The expansion of arbitral immunity:is absolute immunity a foregone conclusion?2009 JDR 225，230 (2009).