Relations Between Arbitration and Litigation

Today, many civil disputes that do not need to be settled through litigation can often find arbitration a way out. According to the law in China, arbitration can be divided into two categories: commercial arbitration and labor arbitration, and the latter is more commonly seen. When disputes arises due to salary and benefits or compensation for work-related injuries since there is no agreement could be made through negotiation, it is often necessary to for laborers to apply for labor arbitration.
　　
Arbitration refers to a dispute resolution system and method for both parties to voluntarily reach an agreement, submit the dispute to a designated authority, and make arbitration award that is binding on both parties. Arbitration disputes that accepted by arbitration institutions include contract disputes and other property rights disputes. Both parties applying for arbitration shall meet the following conditions: an arbitration agreement; a specific arbitration request and facts and reasons; and the case falling within the scope of business of the arbitration commission.

　　
According to the principle of party autonomy, both parties may choose to apply to an arbitration institution or to file a lawsuit to the court to resolve the dispute between them. However, under certain circumstances, the right to choose resolving disputes method is not decided by both parties.
　　

For labor disputes, both parties may apply to the labor dispute mediation commission formed by his/her organization or company for mediation, or directly apply to the Labor Dispute Arbitration Commission for arbitration. If there is any disagreement to the arbitral award, they may sue to the court within 15 days from the date of receiving the award. Arbitration of labor disputes shall be a necessary procedure for litigation.
　　

If there are arbitration clauses stated in the contract, the parties shall apply to the arbitration institution for arbitration and shall not sue to the court. If there are arbitration clauses in the contract, but one party did not declare it when suing to the court, the court has the right of jurisdiction even if the other party respond to it.

If the arbitration institution selected by the parties in the arbitration clause or agreement does not exist, or the requests for arbitration exceeds the authority of the arbitration institution, the court has the right to accept the prosecution of the party concerned according to laws.

If either party can submit evidences to prove one of the following circumstances, it may apply to the Intermediate Court where the arbitration commission is located to revoke the award: no arbitration agreement; cases not falling within the scope of business under the arbitration agreement or within the authority of the arbitration commission; the composition of the arbitral tribunal or the arbitral procedure is illegal; the evidence on which the award is based is forged; the party conceals evidence that is sufficient to influence the award; the arbitrator has a claim for bribery or malpractice during the process of giving the award.