More and more foreign multinationals are now resorting to arbitration in China to solve economic disputes with domestic firms, rather than recourse to law.

Foreign-related cases made up 50 percent of the 174 received by the Shanghai Commission of the China International Economic and Trade Arbitration Commission last year.

Overseas applicants applying for arbitration came from more than 30 countries and regions, including the United States, Japan, Singapore, Germany and Britain.

The remaining half handled by the Shanghai commission were economic disputes involving China-based joint ventures and domestic enterprise.

Of those, 80 percent concerned disputes between joint ventures or foreign investors with their Chinese partners, said Huang Wen, arbitrator from the Court of Arbitration of the China Chamber of International Commerce.

Arbitration reached according to international rules has helped improve the investment environment of Shanghai and its neighboring provinces, said Zhang Hengde, secretary-general of Shanghai Chamber of Commerce.

There are three ways to solve disputes at the moment. Mediation is not legally binding, and lawsuits are costly and open proceedings take a long time. It is for those reasons that arbitration has become a popular way of dealing with international disputes.

Arbitration costs less than a lawsuit, and what is more, arbitration determined in China is accepted by the courts of 145 members of the New York Convention and can be implemented by them.

(China Daily March 21, 2003)