Two Types of Disputes that Shall Not Be Subject to Arbitration

Arbitration is a system and mode of dispute resolution where the relevant parties agree on a voluntary basis to submit the dispute to a non-judicial third party which gives a ruling binding on both parties. Arbitration is a contractual, autonomous, non-governmental, and quasi-judicial way of dispute resolution in nature.

Nowadays, many civil disputes without litigation may be settled by Hangzhou International Arbitration Court (HIAC). According to the Arbitration Law of China, arbitration shall focus either on commercial or labor cases, and the latter is more often. When a person and his/her employer cannot reach a consensus through negotiation on such issues as wages, benefits, or industrial injury compensation, labor arbitration is often required.

The arbitration system is directly related to the existence and development of arbitration and to whether the dispute can be settled in a just, timely and effective manner. The Arbitration Law has put forward three basic systems based on the domestic and international arbitration experience, i.e. agreement arbitration, arbitration or trial, and finality.

As the fundamental embodiment of the principle of voluntariness, as well as the basic guarantee of the realization of the said principle during arbitration, the Arbitration Law specifies that there must be a written arbitration agreement for the arbitration, which may be the arbitration clauses in the contract or an independent arbitration agreement (including other identifiable written ways). The content of the arbitration agreement shall include the declaration of intention of the request for arbitration, the agreed matters of arbitration, and the selected arbitration commission.

The system of arbitration or trial is a system which respects the parties’ choice for the approach to dispute resolution. It means that if the parties have reached a written arbitration agreement, they shall apply to the arbitration institution for arbitration instead of filing a lawsuit to the court. The people’s court will not accept any lawsuit with an arbitration agreement. If one party fails to keep the arbitration agreement or deliberately avoids arbitration and prosecutes the dispute to the court due to its own benefit or other reasons, the defendant party may propose jurisdiction objection to the court based on the arbitration agreement and ask the court to reject the prosecution; the court, according to the Arbitration Law, will reject the prosecution with an effective arbitration agreement and ask the relevant party to submit the dispute for arbitration.

According to the Arbitration Law, there are two types of disputes that shall not be subject to arbitration:

1. Disputes on marriage, adoption, guardianship, support and inheritance. This kind of disputes, though belonging to civil disputes and involving property rights and interests disputes to varying degrees, often has parties that cannot freely dispose their personal relationships and need the court or the government to make a decision. Hence they do not fall within the jurisdiction of arbitration institutions.

2. Administrative disputes. Administrative disputes are disputes due to administrative management between state administrative organizations, or between a state administrative organization and enterprises and public institutions, social organizations, and citizens. According to foreign laws, this kind of disputes shall be solved by administrative reconsideration or administrative litigation.