Publish time: Fri Aug 12 15:57:52 CST 2016
Compared with internationally renowned arbitration institutions, or even just institutions within China, twenty years of history is not long. Meanwhile, the Beijing Arbitration Commission/ Beijing International Arbitration Center (“BAC”) has experienced many difficulties as it continues to strive for growth and development.
The implementation of the non-governmental reformation of BAC in the 1990s required a huge amount of courage. It was an adventure to become totally self-supported and financially self-sufficient, and behind the scene is the courage to be fearless. “The loose external policy environment has contributed to the development of BAC. When BAC was first established, the Legal Affairs Office of the People's Government of Beijing Municipality clearly stated that the biggest support offered by the government to arbitration is non-interference. The successive leaders of the Legal Affairs Office have since upheld such philosophy,” said Mr. Lin Zhiwei, Secretary General of BAC, as one of the members who was involved in the establishment of BAC. BAC has always emphasized to the outside world that the success of the development of BAC should be attributed to external environment created by the government, and this has, to a certain extent, brought about the government’s own initiative to uphold this philosophy.
Today, when Mr. Lin Zhiwei looks back at all the major decisions which BAC has made, he feel obliged to say that BAC has always managed to do the right thing at the right time.
Arbitration should respond to the need of marketization
Mr. Lin Zhiwei has worked in the Legal Affairs Office of the people's Government of Beijing Municipality for 17 years. Against such background, Mr. Lin has a strong sense of rule and overall consciousness. He is able to put more time and effort into building a solid foundation. This includes improving and developing the internal standard, the echelon construction of talents and the internal hardware and software.
“First is the concept of marketization. The essence of arbitration is to deliver dispute resolution services in a professional manner and it is a type of dispute resolution where both parties agree to exclude the jurisdiction of the courts. In practice, there are some institutions that prefer to treat arbitration as a form of judicial activity, nevertheless, ever since our establishment, BAC has positioned itself as an arbitration institution that serves the market economy. We place heavy emphasis on services instead of regulations. Consequently, we do not have a rigid management model that specifies vacancies, fiscal allocations and the number of staffs. We decide on the institution framework, staff and relevant regimes of BAC according to the demands of the market.” Mr. Lin Zhiwei explained, by using the essence of arbitration, the reasons for the marketization of BAC.
“Second is the system of marketization.” BAC was found in the 1990s and at a very early stage, BAC has begun the reform of its administration style and effected business administration in Shiye Danwei (Institutional Units). Not only does this guarantee that BAC can be self-supported, it also means that BAC is able to pay taxes. We have since become a leader in the reforms of the arbitration industry. BAC has used just over 3 years to become self-supported and it has rapidly established a foothold in the CBD district, the most prosperous place in Beijing. In the existing hundreds of arbitration institutions in China, there aren’t many that can exist truly independently. In addition to that, BAC has made brilliant achievements in arbitration services.
“We also take a market-orientated approach in the appointment of people. Traditional Institutional Units has long and relatively formalized recruitment procedures such as recruitment applications and open recruitment examinations. Employees will not usually leave an organization once they are recruited. However, it is much more flexible at BAC. Our personnel management system is not as structured but we have very strict procedures.” Mr. Lin Zhiwei revealed that BAC has recruited another 10 individuals to join their office at the end of last year. The new employees will commence work in the first half of 2016. In his opinion, determining the employment scale and standard according to the market demand is a very flexible approach that suits the development needs of BAC. “In recent years, there have been around 100 individuals shuttling in and out the role of case manager. There now remain 25 case managers. With the training they received at BAC, many have returned to the legal profession as corporate counsels or lawyers when they leave BAC.” Mr. Lin Zhiwei believes that this approach guarantees the professionalism and efficiency of BAC’s case managers.
Before the amendment of the Labour Law, BAC signed yearly contract with their employees. “Having an ‘iron rice bowl’ (meaning a stable, lifelong job) is totally different to maintaining a competitive mentality. We demand good service from our arbitrators and thus it must be the case that we must first provide proper service to our arbitrators. We need young and diligent individuals for the position of case managers and therefore at BAC, we have an ‘eight year limited period’ when we recruit. It means that if a staff has not entered a management position after eight years of work, he/ she will need to search for a new job. In practice, many of BAC’s case managers are very outstanding, having received the excellent training at BAC, some go on to become partners at law firms, heads of corporate legal departments or work for the government. Additionally, when they leave BAC, they can also become arbitrators. This creates a virtuous circle of the development of both institutions and its people.” Mr. Lin Zhiwei strongly believes that BAC is not bureaucratic.
It is Mr. Lin Zhiwei’s view that the quality of the case managers reflects the quality of service of the arbitration institution. The parties, their legal representative and arbitrators understand the culture, standard of service and development capacity of BAC mainly through BAC’s case managers who they have the most direct and frequent dealings with. BAC’s staffing model has received recognition from the society and job applicants. As BAC continue to raise the bar for the recruitment of case managers, the intensity of competition for a post at BAC has also increased accordingly. In 2005, there were over 1600 LL.M. graduates fighting for 4 positions at BAC.
Respecting the independence of the arbitral tribunal
“The high quality handlings of over 27,000 arbitration cases form a good foundation for BAC’s development, and high standard arbitrators and respect for the independence of the arbitral tribunal from institutions form the prerequisites for good handling of arbitration cases,” said Mr. Lin Zhiwei.
Regarding the arbitrators, BAC has formulated a scientific set of management and training system. For the management of the arbitrators, BAC’s Arbitrator Employment Management Measures and Arbitration Rules check on strictly the professional ethics, moral standard, independence and impartiality of BAC’s arbitrators. Furthermore, BAC has established a long-standing supervisory and complaints mechanism. Arbitrators, the parties and staff at the administrative department will all give evaluations and feedback. If an arbitrator is suspected to be in violation of the principle of justice or impartiality, he will be temporarily removed from the panel of arbitrators and this will not be restored unless there is reasonable justification. If the situation is serious, the arbitrator will be removed permanently. BAC will never condone any conduct that affects impartiality and professionalism. This is also an important weapon to BAC’s team of arbitrators in maintaining integrity and honesty.
As for the selection of arbitrators, the minimum requirements are quite typical. Mr. Lin Zhiwei places more focus on the arbitrator’s authority and influence in the arbitration industry because these factors enhance conviction. The journey continues even after an arbitrator has successfully joined BAC’s panel of arbitrators. Salons, seminars, trainings and evaluations, BAC has clear vision for the specialization of its team of arbitrators. According to the introduction given by Mr. Lin Zhiwei, beside the monthly large-scale professional salon aimed at all arbitrators, BAC also frequently organizes mini open seminars on hot topics. For example, the legality of VIE structures became a hot topic in the industry two years ago. The BAC promptly organized a professional seminar on this topic and invited eminent personalities in the field and arbitrators in related fields to conduct an in-depth analysis and discussion on the validity of VIE agreements, the legal relationships between VIE agreements and existing laws and any potential legal risks. A high quality professional seminar with broad perspectives from participants have provided many arbitrators with extremely valuable opinions and recommendations on how to deal with related disputes prudently under the current legal environment. This not only shows the professionalism of BAC, but also provided guidelines for the actual handling of related disputes.
In relation to respecting the independence of the arbitral tribunal in hearing cases, Mr. Lin Zhiwei revealed that BAC has a set of rules and regime and the main thrust is to allow arbitrators to adjudicate freely and independently. Of course, arbitrators should assume the corresponding responsibilities and obligations when they exercise their adjudication power. For instance, BAC was the first in China to introduce a disclosure system for arbitrators. BAC has also implemented other practices such as Med-Arb and Construction Dispute Review. In the process of handling cases, BAC places heavy emphasis on “reasoning”. “Firstly, parties are given the opportunity to fully express their opinions during the hearings. Parties and their legal representatives are expecting this pattern because they are more respected and they do not get interrupted easily. Secondly, the arbitral award must give reasons for the judgment. Many arbitral awards discuss the evidence in-depth but only talk briefly about the decision. In contrast, BAC’s arbitral award will respond to all submissions made, it will also explain, and even give reason to justify, the admission of evidence. Mr. Lin Zhiwei explained that when parties receive arbitral awards like these, they are genuinely convinced and it is rare for them to be in conflict for the second time.
Maintaining the competitive edge
The 6th Arbitration forum in Great China Area was held in HKU on 6 May 2015. Mr. Lin Zhiwei, the Secretary-General of BAC gave his keynote speech on the forum
Faced with the fierce market competition, BAC constantly reflects on its system and way of working in order to meet the needs of the market and to maintain its competitive edge. For instance, pursuant to BAC’s assessment on its development progress, it has set up some professional posts such as senior knowledge manager and senior brand manager. “The perfection of the management system of BAC will not occur overnight, it is an interactive process between an institution and the market. We have set up some senior management posts because we have entered into such a development stage. A decade ago, it was rare to study and analysis these issues since there are a vast amount of cases. However, the competitive pressure is intensifying. Especially since the WTO protection period ended, foreign arbitration institutions are starting to open offices in China. Along with the existing hundreds of arbitration institutions in China, BAC is put under enormous pressure to find a way to set itself apart and to keep its own competitive advantage.” Mr. Lin Zhiwei thinks that this enable professionalism and culture to be passed on and it also help to maintain a certain degree of stability.
Some people might question about the marketization of BAC: Doesn’t the idea of marketization put money above everything else? Mr. Lin Zhiwei smiled, shook his head and further explained: “As a matter of fact, our goal has always been to serve the public. Marketization offers a mode of existence where we can better serve our clients without being government-dependent. We started off with a Chinese mode which was not recognized by the arbitration industry, since after-all administrative manner provided a point of reference for many arbitration institutions. However, BAC has earned more and more recognition in recent years. Particularly in the past few years, BAC has received about one to two dozens industry peers for in-depth exchanges. Faced with the surge in market demands and workload, the past Institutional Unit’s arrangements are no longer suitable for the development situation in China. Thus, BAC also hopes to move forward in the structure of the organization and the marketization of staff management.”
Mr. Lin Zhiwei told the journalist that under Arbitration Law, arbitration commissions may be established in cities divided into districts. However, many local governments treat arbitration commissions merely as additional Institutional Units and another channel for increasing staffing and its arrangements. That is the reason for there being hundreds of arbitration commissions in China. There are no other countries which use districts to decide where to set up arbitration commissions and such institutional framework is not healthy as it leads to waste of resources and disordered competitions. In order to reflect the required standard for a marketized arbitration industry, arbitration commissions must be allowed to compete freely, the number of arbitration commissions should correspond to the size of the arbitration market and arbitrations commissions should be set up in areas where there is demand.
From the perspective of Mr. Lin Zhiwei, the development of BAC has the advantage of “being in the right place, at the right time, with the right people”. “Right people” because BAC has the best human resources in China. “Right place” because BAC is situated in Beijing, where many large law firms have their headquarters and are therefore willing to adopt a BAC arbitration clause in their contracts. Today, BAC has managed to board on the ship of reform and the Beijing municipal government is very supportive of of BAC’s reform. “We often joke that the biggest support we receive from the government is non-interference,” said Mr. Lin Zhiwei.
“People at BAC realize social efficiency by managing the arbitration profession using the theory of enterprise management and we seek to strike a balance between economic efficiency and social efficiency. At least for now, I am confident to say that if one day I do leave the BAC, BAC’s good development trend will remain. It is certain that there will not be frequent changes as some of the large institutional frameworks are already set in stones.” Mr. Lin Zhiwei’s eyes revealed a sense of accomplishment.