Case Studies of China International Economic and Trade Arbitration: International Trade Disputes (review)

412 China Review International: Vol. 4, No. 2, Fall 1997 richer study.1 These reservations aside, Goto-Shibata's work is commendable for its opening up of a neglected aspect of Shanghai history between the wars. Nicholas R. Clifford Middlebury College Nicholas Clifford is an emeritus professor ofhistory, who has studied Shanghai in the years between the wars. NOTES1. 1 mentioned earlier the "explosion" ofbooks about Shanghai's past, and here I have in mind not only such studies as Jean Chesneaux's classic The Chinese Labor Movement, 1919-1927 (Stanford, 1968), but the more recent work by Elizabeth Perry, Shanghai on Strike (Stanford, 1993), which challenges some of Chesneaux's conclusions; Parks Coble, The Shanghai Capitalists and the Nationalist Government (Harvard, 1980); Joseph Fewsmith, Party, State, and Local Elites: Merchant Organizations and Politics in Shanghai, ¡890-1930 (Hawai'i, 1985); Marie-Claire Bergère, The Golden Age ofthe Chinese Bourgeoisie (Cambridge, 1991); Christian Henriot, Shanghai , 1927-193/: Municipal Power, Localities, and Modernization (University ofCalifornia, 1993); Jeffrey Wasserstrom, Student Protests in Twentieth Century China: the View ofShanghai (Stanford , 1991), and my own Spoilt Children ofEmpire: Westerners in Shanghai and the Nationalist Revolution ofthe 1920s (University Press ofNew England, 1991). Though only the last ofthese takes Shanghai's place in foreign policy as a major theme, all of them shed valuable light on Shanghai's internal political and social life, and help to set the stage for an understanding ofthe role the city played during these years. Guo Xiaowen, editor in chief. Case Studies ofChina International Economic and Trade Arbitration: International Trade Disputes. Hong Kong: FT Law and Tax Asia Pacific, 1996. xvii, 325 pp. Paperback, isbn 962-661-945-x. In an interesting op-ed piece on U.S.-China policy following the death of Deng Xiaoping, Thomas Friedman wrote: [W]hile human rights and business groups were screaming at each other [concerning the U.S. threat of MFN withdrawal], they both lost sight of developments in China. Many Chinese reformers started reacting negatively to the U.S. human rights debate because it was so focused on a few dissidents that it ig-© 1997 hv Univers'tv nored those Chinese who were working within the system—bureaucrats, law- /¦TT ¦<¦ ? yers, factory managers—to advance the rule oflaw, something the Chinese Government, for its own reasons, also had an interest in doing.1 Reviews 413 In addition to everything else it accomplishes so well, Case Studies ofChina International Economic and Trade Arbitration: International Trade Disputes, edited by Guo Xiaowen, provides additional evidence in support of Friedman's point. A major concern offoreign investors in China over the past two decades has been how fairly and efficiently disputes arising out oftheir investments might be resolved . Arbitration in China has become an increasingly popular vehicle for resolving business disputes. In 1995 alone, the China International Economic and Trade Arbitration Commission (CIETAC) handled over nine hundred cases involving forty-five countries, more than any other arbitration body in the world. The bad news from this observation may be its illustration of the frequency with which disputes arise in China requiring resolution. The good news, illustrated by the volume under review, is how quickly procedural mechanisms have evolved for handling such disputes in China in a fashion that by now has become regularized. The volume collects thirty-two important decisions ofthe Shenzhen Commission of CIETAC from the more than five hundred cases it has handled during the past decade. Following Dong Yougan's very effective six-page summary ofthe evolution ofcommercial arbitration in China from 1949 to the present,2 the volume proceeds directly to the thirty-two cases. Each case follows a common format . First, the basic questions raised by the case are noted. This is followed by a summary ofthe Arbitration Decision, in which, first, the Facts of the Case are summarized, then the Views of the Arbitration Tribunal are described, and finally the Decision is summarized. Each case then concludes with the commentator's Discussion of the major issues raised. The total length ofthe coverage devoted to each case ranges from four to twelve pages, depending largely on the complexity ofthe facts and issues involved . Some variation also results from the fact that the thirty-two cases are prepared by nine different commentators, all ofwhom are either lawyers or professors with experience in arbitration. Some go into more detail than others in their description ofthe claims and defenses ofthe parties and supporting arguments, but none omits any matters that are genuinely significant to the outcome. In all cases, the facts are effectively woven into the fabric ofeither the arguments ofthe parties or the analysis ofthe tribunal. Laws and regulations cited in the cases are italicized for ease ofreference, and there is good attention to referencing the particular sections or articles being addressed. As might be expected, the laws most frequently involved are the UN Convention on International Sale of Goods Contracts, China's Economic Contract Law and Foreign Economic Contract Law, the General Rules ofthe Civil Law, and Shenzhen's Provisions on Foreign Economic Contracts. But some cases involve a member ofother laws, rules, and regulations and their application, including Customs, Trademark, Joint Ventures, and Import Approval. 414 China Review International: Vol. 4, No. 2, Fall 1997 The end materials include an index of relevant regulations referred to, as well as appendixes with bilingual texts of the CIETAC Arbitration Rules and the Arbitration Law ofthe PRC. A subject index would have been a helpful addition. However, the Contents material effectively highlights the major issues and questions in each case for ease of reference. While the parties to the thirty-two arbitration proceedings covered in the volume remain anonymous, that is about the only detail omitted. The relevant portions of specific contract or letter-of-credit provisions under dispute are effectively summarized or quoted. Dates, monetary amounts, and products (including volumes and weights thereof) at issue in each case are finely detailed. Good attention is also given to the specific remedies sought by the parties and each element of the award made or refused by the tribunal and the accompanying rationale. The detailed coverage of remedies and their amounts gives us helpful insights into the scope of the transactions involved. The tribunal's flexibility in awarding damages is encouraging. In a case of nondelivery by the seller, for example, the tribunal supported the buyer's right to claim compensation based on the difference between the price of the goods under the contract and the market price of the goods. The tribunal reached this result not because of any provision in the laws of China for compensation on this basis, but based on the fact that "Chinese Law [did] not exclude compensation based on the market price of goods in its principles."3 The same case supplies very useful insights into the Chinese perception of the relationship between Chinese laws and the international treaties to which China is party.4 Equally important interpretations can be found on a number of other issues of substantive contract law. Contract formation issues of offer and acceptance receive considerable attention, as do issues of enforceability. The questions addressed range from such simple matters as whether a contract concluded by fax constitutes a writing5 to the impact of complex interrelationships arising from several sales and purchase contracts.6 The impact ofcontractual ambiguity on technical standards requirements and inspection practices on performance questions receive repeated attention. We also learn a great deal about tribunal evidentiary practices from discussions of materials received into or excluded from evidence. In his Foreword, Dong Yougan identifies the audience for this volume as the legal profession, arbitrators, and the business public. He expresses the hope that the volume's analysis of the major issues arising from the disputes covered "can provide international businesspeople with a source of instruction and insightful information for reference and that it can also provide academics with a highly useful source for further research" (p. viii). This volume's success in achieving its goals should whet our appetite for the appearance of the two additional volumes presently planned in the series, dealing with investment disputes and disputes arising from imported materials processing. This first entry in the series continues Reviews 415 the high level of quality and topical coverage we have come to expect from FT Law and Tax Asia Pacific. Clyde D. Stoltenberg University of Kansas Clyde Stoltenberg is a professor ofbusiness law and international business specializing in trade and investment issues in East and SoutheastAsia. N OTE 5 1. T. Friedman, "Rethinking China, Part I," New York Times, 3 March 1997, p. A15. 2.More complete recent descriptions of China's international arbitration process and the Arbitration Law ofthe PRC (effective September 1, 1995) may be found in Xiao Zhiming, "Recent Developments in International Arbitration Law," in Commercial Laws in the People's Republic ofChina: Regulation and Reform Affecting the Market, ed. Bryon S. Bachner and H. L. Fu (Hong Kong: Butterworths Asia, 1995), chap. 9, pp. 103-110; Xun Lihai, "Structure ofArbitration in China—General View and Prospects," ibid., chap. 10, pp. 111-122; Christian Salbaing, "Dispute Settlement in China," in Doing Business in China, ed. William P. Strong and Allen D. Wilcox (New York: Matthew Bender, 1992), chap. 21, pp. 21/1-78. The Arbitration Law triggered a sweeping reorganization ofChina's domestic arbitration bodies and the establishment ofnew domestic arbitration commissions. A Notice of the General Office of the State Council concerning Several Issues to be Clarified for the Thorough Implementation ofthe Arbitration Law of the PRC, issued on June 8, 1996, makes it clear that parties to a foreign-related arbitration case can voluntarily select a newly formed arbitration commission to conduct the arbitration, and the commission can accept the case. 3.The tribunal cited the following logic: When the seller does not make delivery of the goods, the buyer suffers losses even ifreplacement goods are sourced. Ifthe buyer does not source replacement goods pursuant to the contract, the seller still has the responsibility to compensate the buyer for the losses it suffered by reason ofthe seller's breach ofcontract, which would include losses due to price difference ofthe goods (Case 3, at p. 21.) 4.Ibid., at pp. 19-21. 5.The answer is yes (Case 1, at p. 6). 6.Case 17. ...