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CIRCULAR OF THE GENERAL OFFICE OF THE STATE COUNCIL REGARDING SOME PROBLEMS WHICH NEED TO BE CLARIFIED FOR THE IMPLEMENTATION OF THE ARBITRATION LAW

    With the consent of the State Council, several problems with regard to
the implementation of the Arbitration Law of the People's Republic of China
(hereinafter referred to as the Arbitration Law) are hereby clarified with a
view to ensuring the correct implementation of the Arbitration Law,
guaranteeing the continuity of the work of arbitration, protecting the
legitimate rights and interests of parties to economic disputes and
maintaining the economic order.

    1. The provisions in the Plan for the Reorganization of Arbitration
Organs (Guobanfa No.[1995] 44) issued on August 1, 1995 by the General Office
of the State Council concerning the merger of newly established arbitration
commissions and the original arbitration organs with regard to acceptance of
cases shall be amended as: Arbitration agreements concluded according to law
by parities concerned before the implementation of the Arbitration Law shall
remain valid; cases to be arbitrated by the original arbitration organs at
various levels in municipalities directly under the central government,
capital cities of provinces and autonomous regions or other districted cities
according to the original arbitration agreements or the state's provisions
concerning arbitration which were in force before the implementation of the
Arbitration Law shall be respectively handled by the arbitration commissions
newly established in the aforesaid cities where the original arbitration
organs are located; if, in areas where the original arbitration organs are
located, no arbitration commission may be established according to law or no
arbitration commission is established though it may be established according
to law, the cases shall be handled by arbitration commissions newly
established in the capital cities of the provinces or autonomous regions.
Where parties concerned form a new arbitration agreement and thereby choose
another newly established arbitration commission, the arbitration shall be
conducted by the newly established arbitration commission chosen by the
parties; where parties concerned agree to abandon arbitration and resort to
legal proceedings, the case shall be handled by the people's court.

    2. Where any party to a domestic arbitral case applies for economic
preservative measures in accordance with Article 28 the Arbitration Law, the
arbitration commission shall, in accordance with relevant provisions of the
Civil Procedure Law of the People's Republic of China, refer the application
to the basic people's court at the place where the party has his residence or
where the property related is located.

    3. The functions and duties of newly established arbitration commissions
are mainly to arbitrate domestic disputes; they may accept foreign-related
cases if the parties concerned make such choice. Newly established
arbitration commissions shall adopt identical charging standards for
arbitration of either domestic or foreign-related disputes.

    4. Relevant administrative departments shall, within two months after the
issuance of this Circular and in accordance with the provisions of the
Arbitration Law, revise the clause for treatment of contractual disputes in
their standard (form) contracts or model texts of contracts made before the
implementation of the Arbitration Law. The revised form shall be: The method
for settlement of contractual disputes shall be any one chosen from the two
following methods by the parties concerned through contract:

    (1) Disputes arising from the performance of this contract shall be
settled through compromise between the parties or, if it fails to be settled
through compromise, be submitted to ____ Arbitration Commissions for
arbitration;

    (2) Disputes arising from the performance of this contract shall be
settled through compromise between the parties or, if it fails to be settled
through compromise, a lawsuit may be instituted with the people's court.

    The Supreme People's Court consents to issue another document with regard
to the problems within the scope of functions and powers of people's courts
which are involved in this Circular.