Lijun Cao The Foundation for Law, Justice and Society CIETAC as a Forum for Resolving Business Disputes Bridging the gap between academia and policymakers Rule of Law in China: Chinese Law and Business The Foundation for Law, Justice and Society in collaboration with The Centre for Socio-Legal Studies, University of Oxford www.fljs.org 5 The Foundation for Law, Justice and Society CIETAC AS A FORUM FOR RESOLVING BUSINESS DISPUTES . 1 Executive Summary ■ The China International Economic and Trade the infrequent appointment of third country Arbitration Commission (CIETAC) is a leading nationals as tribunal chairs and restriction on international arbitration centre in mainland China counsel, are indicative of the enduring impact and in the world. Most disputes are between of the planned economy. The prohibition of ad Chinese and foreign counterparts, and there hoc arbitration in China, and CIETAC practices such have been lingering doubts about the fairness of as staff assisting arbitrators in drafting arbitral CIETAC arbitration among foreign scholars and awards, the institutional scrutiny of awards, and practitioners. Statistical data, however, indicate the combination of arbitration and conciliation, that CIETAC arbitration is substantively fair. while not necessarily unique to China, are In cases involving US parties, for example, US characteristic of Chinese culture and practices. parties’ winning percentage is approximately equal to their losing percentage. ■ CIETAC charges a low arbitration fee on an ad valorem basis, and collects a modest ‘special fee’ ■ CIETAC has also enacted many reforms to enhance to cover a foreign arbitrator’s fee and expenses. the fairness of its procedures. CIETAC’s 2005 The Chinese government currently exerts control Rules include a large number of changes and over revenues and expenditures of arbitration innovations, and are generally in line with the institutions, but hopefully will lift the control for international norms and standards. The most CIETAC; reform of the fee system necessary to important changes include: the possibility of encourage foreign-related arbitration will only be appointing arbitrators from outside the panel, a possible once this step is taken. new approach for appointing tribunal chairs, the option of using an adversarial approach for oral ■ CIETAC has long required arbitrators to draft the hearings, the introduction of dissenting opinions, arbitral awards. Scrutiny of awards is not peculiar and the removal of the cap on recoverable to CIETAC, and has proved to be a valuable tool for expenses. CIETAC has also taken measures to reducing errors and enhancing enforceability of ensure arbitrators’ independence and impartiality. awards. This being the case, scrutiny is unlikely to be abolished. ■ The criticism of some of the CIETAC practices is attributable largely to two main factors: the impact ■ Many are doubtful about the practice of arbitrators of the planned economy and the neglect by some acting as conciliators, but it is a consensual observers of cultural differences. Practices such as process and parties are at liberty to forego the low and unequal compensation of arbitrators, conciliation. CIETAC also accommodates requests the occasional appointment of staff as arbitrators, from parties for conciliation by independent conciliators in the course of arbitration. 2 . CIETAC AS A FORUM FOR RESOLVING BUSINESS DISPUTES CIETAC as a Forum for Resolving Business Disputes The nature of the problem The United States is the second most represented For years, the China International Economic and Trade foreign jurisdiction after Hong Kong in foreign-related Arbitration Commission (CIETAC) was the only institution disputes. According to CIETAC’s official statistics, from that arbitrated international commercial disputes in 2004 to 2006, the Beijing headquarters accepted China. Although its monopoly was abolished in 1996 eighty-one cases involving US parties. Of the eighty- when local arbitration institutions established under one cases, US parties were involved as claimant in the 1994 Arbitration Law were allowed to accept thirty-five cases and as respondent in forty-six cases. international cases (also called ‘foreign-related’ cases In terms of outcomes, US parties prevailed in twenty- in China), CIETAC today still handles a majority of the seven cases and lost in twenty-five cases, with the foreign-related arbitrations in China. In 2006, CIETAC remainder settled or still pending by March 2007.1 accepted 442 new foreign-related cases, roughly eight The statistics indicate that the winning percentage of times as many as that of the Beijing Arbitration US parties is about equal to the losing percentage, Commission, reportedly the second largest number even though US parties are more often the defendant among People’s Republic of China (PRC) institutions. than the plaintiff. Statistics on outcomes of cases involving parties of other countries, such as Australia CIETAC currently handles more arbitration cases and Germany, are also similar. annually than any arbitration centre in the world. Although CIETAC, in response to the loss of its Some critics have argued that substantively monopoly over foreign-related disputes, started to fair decisions do not necessarily mean that the handle domestic disputes since 1998, its annual procedures were fair. To evaluate whether foreign international caseload remains stable at a number parties receive equal and fair treatment in CIETAC comparable to that of the International Chamber of arbitration, a closer look at its proceedings, Commerce (ICC) International Court of Arbitration, particularly the most controversial practices, and the International Center for Dispute Resolution is therefore necessary. (ICDR) of the American Arbitration Association (AAA). Arbitration is increasingly popular in China as a Procedural integrity of CIETAC arbitration Structural integrity mechanism for resolving business disputes. Chinese CIETAC is not subordinate to any government agency. companies negotiating transnational transactions will Instead, CIETAC is affiliated with the China Council for usually propose resolving disputes through arbitration the Promotion of International Trade (also known as at CIETAC. However, their foreign counterparts, which ‘China Chamber of International Commerce’), a non- often lack prior experience with CIETAC, have expressed governmental organization. For this reason, CIETAC concerns about the fairness of arbitrating in China. itself is also a non-governmental, non-profit institution, and its arbitrations are free from Substantive fairness of CIETAC arbitration administrative intervention. CIETAC is domiciled in Notwithstanding lingering doubts among foreign Beijing and has offices (known as sub-commissions) companies regarding the fairness of CIETAC arbitration, statistics demonstrate that there is no bias against foreign parties. 1. These figures were released in a speech by CIETAC Vice Chairman and Secretary General Yu Jianlong at a Juris Conference in New York on 26 March 2007. CIETAC AS A FORUM FOR RESOLVING BUSINESS DISPUTES . 3 in Shanghai and Shenzhen. Location in the capital inquisitorial approach. Although China’s legal system city and the two economic hubs of China insulates is historically influenced by the civil law tradition, the institution from local protectionism, which is CIETAC made the innovation because it realized that widely perceived to be a major problem for local a large number of parties in CIETAC arbitrations are courts and local arbitration commissions. from common law jurisdictions and prefer an adversarial approach. Reforms to the arbitration rules Over the years, CIETAC has striven to offer a fair To promote transparency and enhance the quality and flexible arbitral procedure. Established in 1956, of reasoning in the awards, the 2005 Rules now CIETAC has updated its Rules frequently (six times) allow the dissenting arbitrator (of a three-member in order to meet the growing needs of the business tribunal) to attach a dissent to the arbitral award. community for a fair and transparent procedure. The dissenting opinion shall not form a part of the CIETAC continually consults with experts, both in award, and the dissenting arbitrator may or may not China and overseas, while updating Rules and sign his or her name on the award. introducing reforms to its procedure. Previously, a winning party’s recoverable expenses, The current Arbitration Rules (‘2005 Rules’), in force including legal fees, were limited to no more than since 1 May 2005, reflect CIETAC’s commitment to 10 per cent of the amount of the award. The 2005 improving the arbitral procedure. The goals of the Rules have removed the 10 per cent cap, although 2005 revisions were to enhance party autonomy and the recovery of expenses is subject to a test of procedural flexibility, to foster transparency, and reasonableness in which the tribunal shall take into to streamline the arbitral procedure. As a result, account ‘such factors as the outcome and complexity CIETAC’s Rules are now in general compliance with of the case, the workload of the winning party the international norms and standards. and/or its representative(s), and the amount in dispute, etc.’ Under the 2005 Rules, parties are free to agree of arbitration, the seat of arbitration, the applicable Measures taken to ensure arbitrators’ independence and impartiality law, and nationality of arbitrators. A few changes Unlike a court judge, who serves on the bench full- that demonstrate the trend toward convergence time, arbitration is usually a part-time job. It is not with international best practices and differentiate unusual that arbitrators run their own businesses, CIETAC from other arbitration bodies in the PRC and have to deal with others in the arbitration world are summarized below. in their day-to-day activities. Moreover, for many upon a variety of matters, such as the language lawyer-arbitrators, their role in arbitrations is dual, The 2005 Rules have removed the previous strict ‘panel in that they are arbitrators in some cases and system’, under which arbitrators could only be appointed advocates in other cases, and they are repeat from a list of arbitrators approved by CIETAC, to allow players in either context. In order to safeguard parties to appoint arbitrators from outside the panel of impartiality in the arbitration process, under the arbitrators. Further, the 2005 Rules allow the parties 2005 Rules, an arbitrator is required to disclose each to submit a list of up to three recommended conflicts of interest before accepting a case. A party candidates for the tribunal chair so as to increase may challenge an arbitrator based on disclosures chances of finding a mutually acceptable candidate. from the arbitrator or information obtained through other channels. CIETAC also established a Supervisory The 2005 Rules also allow parties the option of Department in 2004 to check arbitrators’ compliance using an adversarial approach for the hearing. with these guidelines. Previously, CIETAC hearings were conducted using an 4 . CIETAC AS A FORUM FOR RESOLVING BUSINESS DISPUTES Independence of arbitrators the foreign arbitrator’s fee and expenses. Complaints There have been allegations that CIETAC arbitration, about the ‘special fee’ not only come from foreign though fair in most cases, is under undue influence arbitrators who still feel they are being underpaid, of factors such as local protectionism, government but also from Chinese arbitrators who are upset that intervention, and corruption of arbitrators, where they are not paid equally for the same work. the dispute involves a high amount. It is conceivable However, in light of the inquisitorial nature of most that for any commercial disputes being litigated or CIETAC proceedings, the ‘special fee’ is not as low as arbitrated, the higher the amount involved, the supposed. In recent years, CIETAC has tried to satisfy more likely a party is to exhaust whatever means a foreign arbitrator’s request for higher pay, and will available in pursuit of an outcome in his/her favour. often make appointment of a foreign arbitrator subject to the appointing party’s agreement to pay It was indeed true that some arbitrators in the requested amount. China used to neglect ethical requirements upon themselves, and there were allegations of ex parte CIETAC’s ability to raise fees and control its budget is contact between arbitrators and parties. The subject to certain constraints. Before 2002, CIETAC situation culminated when an arbitrator at a case in was financially independent from any government Tianjin Arbitration Commission was videotaped having agency, and could freely expend and allocate all its dinner with the claimant’s counseli the ensuing revenues. However, a government regulation issued in widely publicized scandal leading to the arbitrator’s 2002 requires all arbitration institutions to submit removal from the panels of five institutions for which their revenues and annual expenditure budget to the he served as arbitrator, including CIETAC. This was an Ministry of Finance for approval. This practice gives epoch-making event in China’s history of arbitration, rise to doubts about CIETAC’s independence, and and in 2006 the legislature incorporated a provision serves to undermine the development of CIETAC and into the Sixth Amendment of the Criminal Code that arbitration in China as a whole. Arbitration institutions subjects arbitrators who pervert law in making in China have been in dialogue with the Ministry for decisions to up to seven years’ imprisonment. some time, and hopefully the restriction upon arbitration institutions will be lifted in the near future. In CIETAC arbitration, disclosure by, challenges to, and withdrawals of arbitrators are now increasingly Reform recommendations with regard to frequent, and confidence in the fairness of CIETAC compensation of arbitrators and allocation of arbitration is growing. arbitration fees include: Compensation of arbitrators ■ elimination of the financial restrictions such that Currently, CIETAC charges an arbitration fee on an CIETAC regains control over its revenues and ad valorem basis, which amounts to much less than expenses; that charged by the ICC, the London Court of ■ improved transparency through division of the International Arbitration (LCIA), or the Hong Kong arbitration fee into the administrative fee paid to International Arbitration Centre (HKIAC), for example, the institution and the arbitrators’ fees and making CIETAC a much lower cost option, but also expenses; a less attractive proposition for foreign arbitrators. ■ increased party autonomy through revision of the Arbitration Rules or national legislation to allow To reconcile the low ad valorem arbitration fee that parties to specify by agreement on what basis (ad CIETAC charges and a foreign arbitrator’s expected valorem or hours expended combined with hourly compensation, when a foreign arbitrator is appointed (and the arbitration fee becomes inadequate), CIETAC charges the appointing party a ‘special fee’ to cover rate) arbitrators’ fees are to be collected; and ■ the adoption of uniform practice with regard to compensation of Chinese and foreign arbitrators. CIETAC AS A FORUM FOR RESOLVING BUSINESS DISPUTES . 5 Neutrality of arbitral tribunal The practice of appointing staff members as Unlike international arbitration elsewhere, where an arbitrators is likely to be completely abolished in the arbitral tribunal is to be neutrally constituted, with near future. one arbitrator being appointed by each party, and one third country national being appointed to chair Restriction on counsel the three-member tribunal, tribunal chairs in CIETAC It has been well settled in most jurisdictions that the arbitrations are usually Chinese nationals. local bar enjoys monopoly over legal representation in judicial proceedings. By contrast, in most CIETAC justifies its practice regarding composition jurisdictions, foreign counsels are allowed under of tribunals by the fair outcomes achieved, alleging on national statutes or case precedents to appear the strength of statistics that there is no bias towards before an arbitral tribunal, although some foreign parties no matter what arbitrators’ nationalities jurisdictions narrow such allowance to international are. While that is true, subject to successful reform of arbitration. The rationale underlying the different its fee system, CIETAC might consider appointing more role of foreign attorneys in the context of arbitration, third country nationals as tribunal chairs when the as opposed to litigation, is that allowing foreign two party-appointed arbitrators are of different attorneys to represent parties in dispute is nationalities, so as to achieve neutrality in the compatible with the consensual nature of arbitration. composition of arbitral tribunals. The current legislation and CIETAC Rules do not Appointment of CIETAC staff as arbitrators exclude foreign attorneys from participating in The practice of appointing members of its staff as arbitration. However, in 2002, the State Council arbitrators started before the Cultural Revolution. promulgated the Regulation regarding the The practice was justified by the reality that the Representative Offices of Foreign Law Firms in China, country had only a small number of lawyers and and the Ministry of Justice subsequently introduced few persons other than its staff were knowledgeable an implementing regulation explicitly prohibiting about international arbitration. The 1994 Arbitration ‘representative offices’ and ‘representatives’ of Law does not expressly prohibit the practice, but foreign law firms from interpreting ‘Chinese legal rather implicitly allows staff members of arbitration matters’ in, among other things, arbitration activities.2 commissions to act as arbitrators. Subsequently, foreign attorneys involved in CIETAC arbitration often had to face challenges from Chinese Most arbitration commissions in China today still counterparts for alleged violation of the regulations. appoint staff members as arbitrators. CIETAC hires staff members from among graduates of top law To ease the anxiety of foreign attorneys, CIETAC sent schools in China, and it is indeed true that senior an official letter to the Ministry in September 2002, staff members of CIETAC make excellent arbitrators. suggesting revisions of the two regulations so as However, in 2005 CIETAC imposed some restrictions to lift the restrictions upon foreign attorneys in upon the appointment of staff in response to claims arbitration activities. A few months later, the Ministry that the practice involves staff in conflicts of interest. later confirmed through an official reply to CIETAC Nowadays, CIETAC staff members are no longer that the regulations do not serve to prohibit allowed to accept party appointment; they can only be appointed as arbitrator by the chairman of CIETAC, usually when a party defaults in making an appointment. Furthermore, CIETAC staff members are 2. Under the regulations, a representative office of a foreign law firm shall have a chief representative and a number of representatives who are bar members of a foreign jurisdiction. only appointed for small-claim disputes. In practice, Qualified Chinese lawyers can be employed as staff, but are not such appointments are limited in number. allowed to practice Chinese law. 6 . CIETAC AS A FORUM FOR RESOLVING BUSINESS DISPUTES ‘representative offices’ or ‘representatives’ of foreign CIETAC has been open-minded about opening the law firms from representing clients in arbitration arbitration market to outsiders, including ad hoc proceedings, but to disallow them from providing tribunals. However, it is unlikely that the Chinese opinions or comments in relation to the application legislators will accept ad hoc arbitration at this of Chinese law. The reply further states that foreign stage, for a variety of reasons. Firstly, the persistent attorneys shall cooperate with Chinese attorneys emphasis on institution instead of individuals is when the interpretation of Chinese law arises and the cultural root for neglect of ad hoc arbitration; that the methods of cooperation can be flexible, that is, arbitration by a small group of individuals. suggesting that ‘representatives’ may either seek a Secondly, the legislature and judiciary still hold a written legal opinion before an oral hearing, or conservative stance toward ad hoc arbitration for engage a local co-counsel in the oral hearing. fear that such a flexible proceeding might get out Where international conventions, trade usages, or of control and unduly harm the legal system of foreign laws apply, there is no restriction on foreign China. Thirdly, the judiciary lack the maturity and attorneys at all. knowledge about international commercial arbitration necessary to ensure the success of an ad hoc The aforesaid regulations came as a surprise to arbitration system, especially for the purpose of the legal community as they repealed China’s long- interim measures of protection, or in order to break standing policy of allowing parties free choice of the impasses caused by a recalcitrant respondent counsel. The restriction on counsel not only runs who refuses to nominate arbitrators or to submit counter to world norms, but also harms CIETAC’s an arbitration fee. foreign-related business and China’s chances of being selected as the seat of arbitration.3 Local Given that party autonomy as the overriding principle attorneys may have a competitive advantage for for the arbitration process is widely respected in some time, but will perceivably lose out to foreign China, in the long term, the Chinese legislature counterparts in arbitration business in the long term. might well expand its programme of reforms to allow ad hoc arbitration. For the foregoing reasons, the current restriction on counsel must be lifted, especially with regard to Drafting of the arbitral award international commercial arbitration. CIETAC arbitrations are fully administered. Chinese culture shows a high degree of respect Restriction on ad hoc arbitration for institutions, and people feel comfortable with In most jurisdictions, parties to an arbitration agreement institutions playing an active role. For each CIETAC may opt for either institutional arbitration or ad hoc case, the Secretariat nominates a staff member to arbitration, but in China, ad hoc arbitration is banned. take care of procedural matters, with this role The 1994 Arbitration Law provides in Article 16 that a continuing even after the tribunal is constituted. valid arbitration agreement shall include, among other Most staff members, though referred to as 4 things, designation of an arbitration commission. ‘secretaries’, are comparable to ‘counsels’ at the ICC Court. In the past, the ‘secretaries’ drafted all 3. Japan and Singapore used to restrict foreign attorneys’ role in arbitral awards under guidance of arbitrators, but international arbitration conducted within their territories, but has in since 2000 or so, arbitrators have been required to recent years eased such restriction. The shift of attitudes in these draft awards. ‘Secretaries’ are still responsible for jurisdictions illustrates the necessity of freedom to counsel. drafting procedural rulings on behalf of the 4. In practice, the court recognizes the validity of an arbitration agreement calling for ad hoc arbitration outside mainland China institution, such as rulings on jurisdiction issues, so long as the law applicable to the validity of the arbitration agreement and for drafting procedural correspondence under or the law of the place of arbitration allows ad hoc arbitration, following the guidance of the arbitrators. a recent judicial interpretation of the Supreme Peoples’ Court in 2006. CIETAC AS A FORUM FOR RESOLVING BUSINESS DISPUTES . 7 Scrutiny of the draft award perform the two functions. In addition, an arbitrator Another example of CIETAC’s active role is the scrutiny of may through conciliation get to know new arbitral awards. Arbitrators in a CIETAC case are required information. For instance, the arbitrator might to submit the draft award for review of its form and learn the parties’ bottom line for concessions points of substance, in order to reduce clerical and legal (although such information is privileged and is errors that otherwise may affect the enforceability of given on a ‘without prejudice’ basis). As a result, arbitral awards. Scrutiny of awards is not unique to if conciliation fails, the arbitrator might consciously China. The ICC Court scrutinizes both draft awards and or subconsciously render an award that is safely draft Terms of Reference. The Singapore International within the acceptable range of both parties. Arbitration Center (SIAC) recently revised its Rules and introduced the scrutiny system. Proponents of the alternative view that an arbitrator should be allowed to act as a conciliator note that It might be questioned whether arbitrators’ an arbitrator is in a unique position to know the independence in adjudicating a pending dispute is facts and circumstances of the dispute, and therefore prejudiced by the scrutiny. In this regard, CIETAC’s Arb-Med is the most cost-effective option if practice is exemplary. Arbitrators are at liberty to conciliation is to be tried anyway. maintain their original position and disregard the suggestions of the scrutiny team, although most CIETAC rules reflect the second view. The 1994 arbitrators do consider them carefully. Arbitration Law also expressly endorsed the availability of conciliation in the course of arbitration. The scrutiny system is an instrument for balancing In almost all CIETAC arbitrations, conciliation, if any, is the institutional interests in producing quality arbitral conducted by arbitrators. The aforesaid concern that awards, and arbitrators’ independence in making an arbitrator may unduly use ‘without prejudice’ awards. Given the way the system currently operates, information for adjudication of the merits does not there is no need to abolish it as the results are, on seriously undermine CIETAC’s practice, as conciliation the whole, positive. by arbitrators is only feasible when both parties consent, and parties sensitive to the possible Arbitrators acting as conciliators negative impact of disclosing information are at The Confucian philosophy strongly supports the liberty to reject such conciliation in the first place. idea of ‘emphasizing moral behaviour and curbing litigation’, which accounts for China’s long history of From time to time, foreign attorneys allege that they using conciliation (also known as mediation) as an feel compelled to accept an arbitrator’s proposal for important channel for resolving conflicts throughout conciliation for fear that refusing would be perceived society. Notwithstanding an increase in litigation and as disrespect towards the arbitrators and thus result decline in mediation over the last thirty years, in an unfavourable award. This concern is overstated. mediation is still seen as an important tool for CIETAC arbitrators are well aware of the consensual building a ‘harmonious society’. nature of conciliation in the course of arbitration, and shall make awards only in accordance with the CIETAC has a long tradition of combining conciliation law and the proved facts. and arbitration, or Arb-Med. In recent years, parties settle their disputes through conciliation by Moreover, CIETAC now allows parties to request arbitrators in about 30 per cent of cases. conciliation by a panel of independent conciliators in Internationally, there are two conflicting views the course of arbitration, although 2005 Rules do not concerning arbitrators acting as conciliators. One is expressly provide for this practice, and as a result, many that an arbitrator should not act as a conciliator parties are unaware of this option. Future CIETAC Rule since different skills and qualities are required to reforms should make more explicit reference to this provision, to highlight this option available to parties. 8 . CIETAC AS A FORUM FOR RESOLVING BUSINESS DISPUTES Conclusion staff. CIETAC’s active involvement in arbitrations, such In terms of substantive outcomes, CIETAC arbitration as staff members assisting arbitrators in drafting is fair. Over the years, CIETAC has continually striven legal documents and institutional scrutiny of arbitral to enhance procedural fairness and to be responsive awards, can be traced to this cultural trait. Secondly, to foreign concerns. Consequently, CIETAC is historically, Chinese culture has emphasized resolving compliant with international best practices and, as disputes through amicable means rather than such, is a reliable forum for resolving China-related through litigation. This accounts in part for CIETAC’s transnational disputes. practice of combining conciliation and arbitration. Several practices of CIETAC remain controversial. Generally speaking, practices characteristic of These practices, however, are either the undesirable Chinese cultural norms will continue, but alternative legacies of the planned economy, or arise out of practices have been, and should continue to be, misconceptions about certain cultural features of developed at CIETAC to meet the demands of the Chinese society and business practice. international business community. Although CIETAC’s foreign-related business has remained stable, CIETAC The enduring impact of China’s planned economy helps is now facing increased competition. Other explain the low and unequal compensation of arbitrators, international arbitration centres, especially the the occasional appointment of staff as arbitrators, the HKIAC, the SIAC and the ICC Court, have witnessed a infrequent appointment of third country nationals as rapid increase in China-related business. To remain tribunal chairs, and the restriction on counsel. competitive, both the Chinese authorities and CIETAC will need to introduce further reforms to better adapt Reform of practices that are legacies of the planned to the needs of diversified arbitration users. economy is difficult and will only be achieved in the long term. Problems inherent in the old economic system can Policy recommendations only be fixed through overhaul of the current arbitration Government reforms might profitably focus on giving legislation and reform of the financial system to give full parties and arbitration institutions more autonomy control to CIETAC over revenues and costs. On the and flexibility by reducing interference with whole, the pace of institutional change at CIETAC has arbitration activities. Specifically, this would include: been remarkably swift, as CIETAC has responded to the ■ an overhaul of the financial system of arbitration criticisms of legal scholars and investors, and sought to institutions to give them full control over their maintain a competitive edge in an increasingly dense finances; market of international arbitration. ■ abolishing the restriction on foreign counsel in foreign-related arbitrations to allow them to Cultural differences are also predominant factors in several of the more contested practices. At least two features of Chinese culture shed light on the comment on PRC law; ■ revised legislation to provide uniform guidelines for arbitrators’ conduct; and unique practices of CIETAC. Firstly, Chinese society ■ the lifting of restrictions on ad hoc arbitration traditionally was characterized by a strict hierarchy once the judiciary is sufficiently mature and that emphasized institutions over individuals. With competent to enable its effective implementation. regard to arbitration, the emphasis on institutions explains in part why ad hoc arbitration is banned CIETAC itself should instigate measures to ensure the in China, and why institutional arbitration in China neutrality of arbitral tribunal, by appointing third plays a significant role for the commission and its country nationals as tribunal chairs when necessary, and to avail parties of more autonomy and flexibility. TRAPPED IN TRANSITION BUT NOT SPINNING OUT OF CONTROL: THE CHINESE BANKING SECTOR . 9 The Foundation Lijun Cao graduated from the University of The mission of the Foundation is to study, reflect International Business and Economics (UIBE) School on, and promote an understanding of the role that of Law in Beijing with a Bachelor of Law degree and law plays in society. This is achieved by identifying from University of California at Berkeley School of and analysing issues of contemporary interest and Law (Boalt Hall) with an LLM degree. He has been importance. In doing so, it draws on the work of working with the Beijing Headquarters of CIETAC since scholars and researchers, and aims to make its work 1995, and is now the deputy director of CIETAC’s easily accessible to practitioners and professionals, Business Department I (Foreign-related Business whether in government, business, or the law. Department) and a research associate. Lijun Cao has worked on over thirty cases as arbitrator, and is Rule of Law in China: Chinese Law and Business The main objective of the programme is to study the ways in which Chinese law and legal institutions encounter and interact with the social environment, including economic and political factors, at local, regional, national, and international levels. The Foundation’s perspective in pursuing this objective is that of entrepreneurs considering investment in China, the lawyers advising them, executives of an international institution or nongovernmental authority, or senior public officials of another country. The combination of this objective and our particular perspective constitutes a unique approach to the study of the role of law and its relationship to other aspects of society in China. For further information please visit our website at www.fljs.org or contact us at: The Foundation for Law, Justice and Society Wolfson College Linton Road Oxford OX2 6UD T . +44 (0)1865 284433 F . +44 (0)1865 284434 E . info@fljs.org W . www.fljs.org on the panel of arbitrators of several international arbitration institutions, including CIETAC and the Hong Kong International Arbitration Centre (HKIAC).