DIALOGUE

A Chinese corporation has decided to import valuable medical equipment from France.Since the inspection of the equipment is very complicated,both sides agree to discuss in detail the possible problems in connection with the arbitration clause.Mr.Chirac,the French representative of the sellers,attends the negotiation.Mr.Hong,the Chinese representative of the buyer,is a staff member of the China Medical Equipment Import and Export Corporation.

Hong:Good morning,Mr.Chirac.

Chirac:Good morning,Mr.Hong.Very glad to see you again.

H:Mr.Chirac,the medical equipment we discussed yesterday is quite valuable.

C:Yes,the equipment is of high quality,and very useful.So it’s certainly valuable.

H:The design of the equipment is sophisticated,and therefore,the inspection is no easy job.When I think of the inspection,I am worried that there might be some disputes over the results of inspection.

C:You needn’t worry about that.There is an arbitration clause in the contract,isn’t there?Shall we discuss the arbitration clause now?

H:All right.We always attach importance to the arbitration clause of a contract.

C:OK.As the Chinese saying goes “To get prepared against a rainy day”,we had better think more of the possible problems which might happen afterwards.

H:You are right.In case of any dispute,we should try to iron out our differences through amicable negotiations.If we fail to reach a settlement,we will then submit the case in dispute for arbitration to an international arbitration organization.

C:Where do you think the arbitration will be held?

H:Would it be agreeable to you to adopt the customary practice that has been used in the Sino-France trade?

C:I don’t know the customary practice in Sino-France trade regarding the place for arbitration.Will you enlighten me in this regard?

H:It is in the country of the defendant.That is to say,if we submit the case for arbitration,the place for arbitration is in France and if you submit the case for arbitration,the place for arbitration is in China.

C:That’s O.K.The International Commercial Arbitration Association of France is well-known for its impartiality.They are professionally competent,and in a position to arbitrate these kinds of problems arising from the quality inspection of the medical equipment.But I am wondering if arbitration is to take place in China,what procedural rules will apply?

H:The CIETAC procedural rules will apply.CIETAC stands for China International Economic and Trade Arbitration Commission.

C:Oh,I see.Then,what about the applicable substantive law?

H:Generally speaking,the parties to a sales contract are free to choose the applicable law and specify it in their contract.But so far as the contracts involving foreign investment in China are concerned,the Chinese substantive law will apply.

C:Is that so? Well,when arbitration is to take place in France,I suppose we can submit it to a standing French arbitration commission.Is it all right with you?

H:I’m sorry,Mr.Chirac.We don’t agree with you to submit it to a standing arbitration organization in France.It’s better to submit the case to a temporary arbitration tribunal.

C:In that case,arbitrators are to be nominated by both parties.The arbitrators will then form a temporary arbitration tribunal.Soon after the case is settled,the tribunal is dissolved.It is a bit annoying,I think.

H:For a big sum of money involved,we have to face this trouble.I think such a tribunal consisting of arbitrators from both sides will be fair and able to handle any dispute without bias or partiality.

C:How about the appointment of arbitrators,if arbitration is to take place in China?

H:According to the Chinese Rules for Arbitration,one or three arbitrators can be appointed.We may hold consultation to appoint a sole arbitrator.In case three arbitrators are to be appointed each party may nominate one arbitrator from the CIETAC Panel of Arbitrators.Then the third one is to be appointed by the Chairman of CIETAC as the presiding arbitrator.The three arbitrators so appointed will form an arbitration tribunal to hear the case.

C:If so,which party will pay the arbitration fee?

H:Well,generally speaking,all the fees for arbitration shall be borne by the losing party unless otherwise awarded by the tribunal.

C:And how is the arbitral award made?

H:By the decision of the majority of the arbitrators.

C:And the arbitral award is final and binding on the parties,isn’t it?

H:Yes,it is.

C:I have another question.Is an arbitral award made in China enforceable in another country?

H:Yes.China is a signatory to the 1958 New York Convention.

C:Well,personally I should say it’s so much better to resolve the dispute through friendly negotiations between the two parties.

H:I agree with you.Arbitration is only the last resort.Now let us go over the stipulations of the arbitration clause of the contract.

C:That’s right.I agree.