According to Article 6 of the Arbitration Law of the People’s Republic of China: “An arbitration commission shall be selected by the parties by agreement through negotiation. Arbitration is not subject to hierarchical jurisdiction or regional jurisdiction”. This provision means that the parties may, at their discretion, select an arbitration institution for dispute resolution, which is an important feature that distinguishes arbitration from litigation. The parties to arbitration are most concerned about whether the dispute can be resolved fairly and promptly at low cost, so it is extremely important to correctly select an arbitration institution. As of 2005, there were more than 180 arbitration institutions in China alone, as well as many abroad. When selecting an arbitration institution, the parties had better:

1. Choose an arbitration institution with low arbitration costs. For a dispute between the parties who are located within the territory of China, it is generally not appropriate to choose a foreign arbitration institution, in view of arbitration costs. This is because: First, foreign arbitration institutions are far away, and traveling to and from them not only requires a lot of manpower and financial resources, but also makes timing difficult; Second, foreign arbitration institutions charge high arbitration fees, and arbitrators in many countries charge arbitrator’s fees at hourly rate; Third, communication is difficult due to language barriers, while legal statements must not be vague, so it is necessary to specifically hire translators/interpreters and pay high fees to them. Relatively speaking, after years of development, arbitration institutions in China have not only developed adequate capacities to handle various disputes, but also made great progress in the building of arbitrator teams and hardware facilities, so the parties can have full confidence in domestic arbitration institutions.

2. Choose an arbitration institution in a large city. When selecting from domestic arbitration institutions, the parties should give priority to arbitration institutions in some economically developed large cities for the following reasons: First, developed economy in large cities means arbitration institutions there have extensive experience in handling civil and economic disputes; Second, arbitration institutions in large cities are superior to those in small and medium-sized cities in aspects such as work environment and overall quality of arbitrator team, which is a strong guarantee for high-quality hearing of and award-making on cases (better hardware facilities and case management staffing lead to better services to the parties); Third, relatively convenient transportation in large cities means it is convenient for the parties to participate in arbitration activities there.

3. Choose a nearby arbitration institution. After an arbitration institution is selected, this arbitration institution will arrange and organize the resolution of the dispute between the parties, and the parties shall participate in the arbitration activities in accordance with the rules of the selected arbitration institution, as well as its notices and arrangements. If the arbitration institution selected by the parties is far from the place where the parties are located, it might cause many inconveniences. Therefore, the parties had better choose an arbitration institution in the place where they are located or a nearby arbitration institution, which has the greatest advantage of reducing arbitration costs, and saves the parties from traveling back and forth between the two places.

    If the foregoing three advices are still not enough for the parties to decide on the selection of arbitration institution, the parties may select a reputable arbitration institution based on trust. In addition, the parties should specify the selected arbitration institution in the arbitration clause of the contract. An example of such clause is: “all disputes arising from this contract shall be submitted to ×× Arbitration Commission for arbitration in accordance with its rules”.