CHINA Law and Practice Contributed by: Peibing Qi, Na Gao and Shanshan Heng, Fangda Partners
liquidated damages amount in assessing the extent of losses; however, if the liquidated damages fall below the actual losses or excessively exceed the actual losses, the court shall adjust the compensation amount in accordance with the actual losses. Damages Assessment Where losses involve complex facts that are heav- ily disputed between the parties, rendering the court unable to make a direct determination based on the evidence presented, PRC courts will typically initiate judicial appraisal procedures, and render a neutral and objective determination of the loss amount based on the expert opinions provided by professional appraisal institutions. In China, arbitration is a widely utilised mechanism for resolving commercial disputes. On 1 March 2026, China commenced implementation of the newly revised Arbitration Law, in response to the growing demand for arbitration as a means of dispute resolu- tion in practice. Disputes Commonly Referred to Arbitration The categories of disputes most frequently submitted to arbitration include disputes arising from sales con- tracts, loan contracts, lease contracts, construction project contracts, technology contracts, financial and securities matters and intellectual property contracts, among others. 3.2 Restrictions on Use of Arbitration In China, arbitrable disputes are limited to contract disputes and other property rights disputes between parties of equal standing. The following disputes may not be submitted to arbitration. 3. Arbitration 3.1 Prevalence Prevalence of Arbitration • Personal rights disputes, which include disputes concerning marriage, adoption, guardianship, maintenance and succession. • Administrative disputes that are required to be handled by administrative organs in accordance with the law.
• Labour dispute arbitration, arbitration of disputes concerning rural land contracting and sports arbi- tration are governed by separate legal provisions and are not subject to the rules governing commer- cial arbitration. 3.3 Advantages of Arbitration Compared to litigation proceedings, the principal advantages of arbitration as a dispute resolution mechanism are as follows. • Procedural flexibility and respect for party auton- omy – parties are at liberty to freely choose the arbitral institution, arbitrators, seat of arbitration, language of arbitration and arbitral procedural rules. • Confidentiality – arbitration proceeds on the princi- ple of non-public hearings, which serves to protect the trade secrets and commercial reputation of parties to commercial disputes. • Specialisation – for disputes in specific industries, such as complex technology agreement disputes and customised equipment contract disputes, par- ties may select arbitrators with specialised exper- tise in the relevant industry, thereby facilitating the professional and efficient resolution of disputes. 3.4 Disadvantages of Arbitration Reliance on Courts for Interim Measures In arbitrations conducted in mainland China, the arbi- tral tribunal itself lacks the authority to issue orders for the preservation of assets, evidence or conduct; such matters must be referred to the courts through the arbitral institution. However, there are variations in the speed with which local courts respond to appli- cations for interim measures in arbitration. See 3.10 Relief regarding restrictions on a tribunal’s power to grant interim relief and the related practice progress. Cost Considerations Depending on the specific arbitral institution and the amount in dispute, arbitration fees may, in some cas-
es, exceed court filing fees. 3.5 Arbitral Institutions
Currently, there are 285 arbitration institutions throughout China. Based on annual caseload and the
105 CHAMBERS.COM
Powered by FlippingBook