CHINA DAILY HONG KONG
THURSDAY, NOVEMBER 27, 1997

By Lu Hongyong

HONG KONG - A multinational law firm suggests that in China, it is better to take business disputes before a court of law rather than seek arbitration.

Too many cases inundated most Chinese arbitration tribunals, making it impossible for them to function as they should, observed David Buxbaum, a senior partner of Brand Farrar Buxbaum.

Disputing business partners prefer arbitration to court ruling to preserve their business ties, and it was the best way out for business litigation in the past, but not any longer, he said.

The growing capital inflow to China is creating mounting needs for foreign-related business arbitration and revenue thus generated has become a major source of income for the China Council for the Promotion of International Trade, which is a dominant player in business arbitration.

Its regional arbitration outlets mushroomed in provinces, with the Hong Kong International Arbitration Centre being its most prominent branch.

Flooded by the growing number of cases in the past years, most Chinese arbitration tribunals have had to recruit new hands who had to start work without thorough training, he said.

And the tribunals barely have time to implement their decision, he said.

Also, disputing parties forfeit the right to appeal to a court of law if they do not agree with the arbitration tribunal's decision, he said.

Buxbaum also blamed the overload on the Chinese arbitration sector on a lack of uniform decision-making procedure. Also, tribunals often appear at a loss dealing with types of problems that have come up only recently, he added.

Legislation and law enforcement in China have improved tremendously over the past two decades, while exposure to foreign legal systems has greatly enhanced the expertise of Chinese lawyers, he said. However, Buxbaum remained sceptical about the performance of some Chinese judges.

The fundamental problem lies in the fact that hundreds of thousands of local courts rely on local governments for salary and housing for their staff, he explained, and local courts are under great pressure not to tarnish the credibility and economic position of firms attached to local governments, he said.

Buxbaum said it will be extremely hard for China to finalize the building of market-based financial system and legislation within this century, adding that achieving this target will be "the greatest feat of the century."