In essence, the arbitration system stipulated by the Arbitration Law of the People’s Republic of China is entirely different from the labor dispute “arbitration” system stipulated by the Regulations on Settlement of Labor Disputes in Enterprises. The arbitration system stipulated in the Arbitration Law is a legal system uniformly established for civil and commercial matters in China in accordance with international common practices, while the current labor dispute “arbitration” system is a specialized system for settlement of labor disputes established by China in light of the particularity of labor disputes. The “arbitration” referred to in the Regulations has nothing to do with the arbitration referred to in relevant international conventions. It is stipulated specifically in the Article 77 of the Arbitration Law of the People’s Republic of China that arbitration over labor disputes is subject to separate provisions, not the Arbitration Law. To sum up, the two are different mainly in the following aspects:

1. Organization setting: instead of a hierarchical structure in line with administrative division, arbitration commissions may be established in municipalities directly under the Central People's Government, and cities where people’s governments of provinces and autonomous regions are located, or in other districted cities as needed; labor dispute arbitration commissions are special institutions for settlement of labor disputes established in counties, cities and municipal districts in accordance with administrative division, and the permanent office of a labor dispute arbitration commission is located in the administrative authority of labor at the same level.

2. Scope of jurisdiction: disputes in most civil and economic fields, including various contract disputes and other disputes over rights and interests in and/or to properties, may be submitted for arbitration; only labor disputes may be submitted for labor dispute arbitration.

3. Type of jurisdiction: arbitration is subject to agreed jurisdiction, in which case the parties may, at their discretion, choose litigation or arbitration, and if the latter, an arbitration commission; labor dispute arbitration is subject to regional jurisdiction and hierarchical jurisdiction, and after a labor dispute arises, neither parties may directly file a lawsuit with a people’s court before applying for labor dispute arbitration, and no arbitration agreement between the parties is required.

4. Effect of award: An arbitral award shall be final and binding, and shall become legally effective immediately after it is made; however, the award in a labor dispute arbitration is not final, and either party may file a lawsuit with a people’s court if such party is dissatisfied with the award.