Labour disputes: Connecting arbitration and litigation

As a procedural requirement under the Chinese legal framework for labour dispute resolution, a labour dispute must be referred to the labour dispute arbitration commission before it can be submitted to a court of competent jurisdiction. The arbitral award for a labour dispute is not final, which is in sharp contrast to the awards for ordinary commercial disputes. The major purpose of this procedural requirement is to divert the large number of labour disputes to multiple channels, especially to mediators who are expected to play a dominant role in settlement of these cases.

Labour arbitration commissions and courts are different. A court is a judicial body, whereas the commission is established by the government to deal with labour disputes. In other words, the commission is an integral part of an administrative body, and the commission’s power to adjudicate disputes originates from special authorization under laws. Since labour arbitration and litigation involve distinctively different proceedings, it is necessary to provide for, as part of the pertinent legal framework, the connection between arbitration and litigation. According to current regulations, arbitration is a pre-trial procedure that must be undergone; a party to a dispute may initiate a lawsuit only if he or she disagrees with the arbitral award. Given the variations of cases, these provisions are oversimplified. This article analyzes some typical circumstances.

One or more awarded items are not challenged by either party concerned. Pursuant to the judicial interpretation of the Supreme People’s Court (SPC), the arbitral award for a labour dispute case issued by the labour arbitration commission will not take effect if a party to the dispute files a lawsuit with the court in respect of any contents of the award. That is to say, once a party challenges the award in court, it will become null and void generally, and the court should hear the dispute all over again. However, does the court have the discretion to affirm any awarded item simply because one or both parties concerned show no objection to it? Or can the main body of the court’s judgment affirm any awarded item to which neither parties disagree but which does not form part of the plaintiff’s cause of action?

Xia Liqun is a senior partner at Wintell & Co. He can be contacted on +86 21 6854 4599 or by email at xialiqun@wintell.cn

Chen Qixin is an associate at Wintell & Co. He can be contacted on +86 21 6854 4599 or by email at chenqixin@wintell.cn

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Video: Labour disputes: Connecting arbitration and litigation (in Mandarin Chinese)