Wang Hongsong, Secretary-General of Beijing Arbitration Commission
The Beijing Arbitration Commission Arbitration Rules (the “Rules”) applied by Beijing Arbitration Commission (“BAC”) have been amended for four times since the founding of BAC, but each amendment contains only a few revisions. Although the Rules implemented on April 1, 1999 have played a positive role in enforcing the Arbitration Law, standardizing arbitral proceedings and protect the rights of the parties, they urgently need improvement and supplement as some problems have been exposed during the implementation. In view of this, BAC made more substantial adjustments, revisions and supplements in accordance with the Arbitration Law and on the basis of fully respecting the principle of autonomy of will of the parties, and adopted the new amended version of the Rules on April 25, 2001, which were implemented on August 1, 2001.
BAC as an arbitration institution established in accordance with the Arbitration Law has seen an annual increase in both the amount in dispute and the number of cases handled by it since its inception. It has also been taking independence, impartiality, efficiency and diligence as the target of its work, and has been striving to create for the parties a more suitable environment for arbitration. On one hand, BAC has established a comprehensive management system for arbitrators and staff, which has been constantly improved; on the other hand, it has also been amending and enriching its arbitration rules for more systematic and scientific arbitral proceedings. It is against this background that the new Rules came into being.
Opinions have been extensively solicited from arbitrators and relevant department before the new Rules were reported to BAC for consideration. After several full arguments, some texts of the original Rules were amended, and the number of articles was increased from the original 94to 107, strengthening relevance and operability of the Rules. Balancing the continuity of the spirit of the original Rules and the development trend of arbitration, this amendment contains many contents that are not explicitly provided in the original Rules, and revises many provisions that are likely to cause delay in practice to reduce barriers and uncertainties in arbitral proceedings. In addition, the new Rules stress on the functions and duties of the arbitral tribunal. This amendment makes substantial changes in a wide range. The main contents involved are as follows:
I. On the Adjustment of the Rules by the Agreement of the Parties (See Article 5 of the new Rules)
An important principle of the arbitration system is that of the autonomy of will of the parties. As the Rules are designed to ensure the properness of procedures and impartiality of decision in arbitration, in theory the parties should be allowed to adjust the Rules with an agreement between them. In the arbitration rules of other arbitration institutions around the world, it is rather common to allow the parties to adjust the rules with an agreement between them. However, too much emphasis on the agreement of the parties may also lead to violations against the provisions of the Arbitration Law or bring troubles or uncontrollable situations to the arbitral proceedings. Therefore, with reference to the relevant provisions in the arbitration rules of other arbitration institutions, BAC added in the Rules “unless otherwise agreed to by the parties and consented to by the BAC” to allow the parties to adjust the Rules to a certain extent with an agreement between them while requiring that such an agreement should be subject to the consent of BAC.
II. On Objections against Jurisdiction (See Articles 9 and 10 of the new Rules)
Different from objections against the validity of arbitration agreement, the objections against the jurisdiction of arbitration have a much more extensive and complex coverage. In some cases, the parties would raise an objection not against the validity of arbitration agreement but against the jurisdiction of the arbitral tribunal. For example, they may challenge whether the dispute concerned exists or whether the matter of dispute is within the scope of the arbitration agreement. Although the Arbitration Law makes provisions on the objections against the validity of arbitration agreement, it has no provision on the objections against the jurisdiction of arbitration. According to the Arbitration Law, the arbitration commission shall make a decision on an objection against the validity of arbitration agreement. But in practice, decisions on some objections concerning the jurisdiction of arbitration must be made after substantive hearings. Therefore, it is more proper to have such right of decision exercised by the arbitral tribunal instead of the arbitration commission. In addition, the decision by the arbitral tribunal is also a common practice in the international community. Therefore, Article 9 of the new Rules allows the parties to raise objections against the jurisdiction of the arbitral tribunal. Paragraph 2 of Article 10 provides that “if the parties challenge the tribunal’s jurisdiction over the case for arbitration, the BAC may render a decision or authorize the Arbitral Tribunal to render a decision.” This both complies with the law and has certain flexibility. It is also an authorization of BAC to the arbitral tribunal in the form of “Rules”.
III. On the Signing of Arbitrators on a Statement of Declaration (See Article 26 of the new Rules)
Arbitrators are required to sign a statement of declaration to certify to BAC and the parties when accepting the nomination by the parties or appointment by the Chairman that they are not in any circumstances requiring their withdrawal from the tribunal and to promise to handle cases independently, impartially, efficiently and diligently. To some extent, this draws on the practice of arbitrators’ disclosure in foreign countries. BAC has adopted this practice since its inception, which has played a positive role in improving the arbitrator’s ability of self-discipline and ensuring the impartiality of arbitration. Now the practice is established in the Rules to make it institutionalized and standardized.
IV. On the Re-nomination/Re-appointment of Arbitrators (See Article 27 of the new Rules)
The provisions on the re-nomination/re-appointment of arbitrators in the original Rules did not make it clear whether the parties would be given additional time when it is necessary to re-appoint an arbitrator by the Chairman. We believe that the procedures for re-nomination of arbitrators provided in Article 22 of the original Rules do not include the re-appointment of arbitrators. Because the premise of the appointment of an arbitrator by the Chairman is that the parties have entrusted the Chairman to do so or the parties have not nominated an arbitrator within the prescribed time limit or fail to reach an agreement on the presiding or sole arbitrator. This suggests that the parties have agreed the appointment of an arbitrator by the Chairman or it has been impossible for them to jointly nominate the presiding arbitrator. Therefore, when the appointed arbitrator becomes unable to perform his/her duties, it is meaningless and will cause a delay to give the parties more time to make a choice. Therefore, Article 27 of the new Rules explicitly provides that if the arbitrator was appointed by the Chairman, the Chairman shall appoint another arbitrator.
V. On the Withdrawal of Arbitrators (See Articles 28 and 31 of the New Rules)
In terms of the withdrawal of arbitrators, the new Rules increase the circumstances requiring withdrawal of arbitrators (see Items 4 and 5, Paragraph 2 of Article 28 of the Amended Draft), which make the system of withdrawal more operable and ensure the impartiality of the arbitral proceedings. The new Rules also provide in Article 31 that “if, subsequent to being notified of the composition of the tribunal, a party engages a representative whose participation results in an arbitrator meeting the conditions for withdrawal set forth in Article 28 hereof,” the party shall be deemed to have waived its right to challenge the arbitrator on the grounds thereof, and shall bear the corresponding costs incurred due to the postponement of case hearing caused by the withdrawal. This is to prevent the parties from taking advantage of the withdrawal system to intentionally delay the hearing, improve the efficiency of arbitration and protect the legitimate rights and interests of both parties.
VI. On the Hearing in Consolidation (See Article 38 of the New Rules)
Cases for arbitration are subject to the agreement between the parties and are strictly relative. Internationally, unless the parties otherwise agree, most countries do not allow arbitration in consolidation, and only a few countries allow a court or arbitral tribunal to order consolidation of arbitration. The Arbitration Law and arbitration rules of arbitration institutions in China have no provisions on the arbitration in consolidation, which is controversial and needs careful considerations. However, if different arbitration cases with common or related subject matters are heard separately, the costs will be high and there are likely to be conflicts between the awards made by different arbitral tribunals. Allowing arbitration in consolidation on the basis of respecting the will of the parties will not only help to resolve the dispute in a timely manner, but also improve the quality of the case hearing. In practice, some cases were heard by arbitral tribunal in consolidation with the consent of the parties, and they had good results and positive feedbacks from the parties. Therefore, proceeding from the reality, the new Rules make provisions on arbitration in consolidation. Such arbitration shall meet at least two conditions:
(1) It must gain express consent from all parties; and
(2) The members of arbitral tribunal shall be identical. With these conditions met, the arbitral tribunal shall decide whether to hear the cases in consolidation.
VII. On the Pre-hearing Procedures (See Article 48 of the New Rules)
Pre-hearing procedure refer to the procedures where the presiding arbitrator summons the parties to exchange evidence prior to a hearing under the necessary guidance of the arbitral tribunal, so as to confirm jointly the issues in dispute and the scope of hearing. The provisions in the new Rules on such procedures are to simplify procedures instead of complicating them. This is an attempt of BAC in improving the arbitral procedures. The pre-hearing procedures are just hosted by the presiding arbitrator and do not require the presence of all the three arbitrators. This is more time saving and convenient than the ordinary hearing procedures. At the same time, the procedures allow the parties to exchange evidence before hearing and have a sufficient understanding on the issues in dispute and the evidence and reasons of the other party, and help the arbitral tribunal to further clarify the focus and scope of the hearing, and thus give full play to the function of the hearing, save time and improve the effectiveness of procedures. As for in which cases can the pre-hearing procedures be applied, it shall be determined by the arbitral tribunal according to the specific circumstances of the case.
VIII. On Evidence
In practice, many aspects of arbitral proceedings are related to evidence, and evidence also takes a large share in the reasons for the parties to apply for canceling or not enforcing an arbitration award. In order to further regulate the evidence-related issues, the new Rules make provisions in the following four aspects:
1. The new Rules strengthen the burden of evidence on the parties by providing that the parties shall categorize, label and bind the evidence, briefly indicate the sources, object of proof and contents of the evidence, sign and stamp a seal on the evidence and state in writing the date of submission. (See Article 42 of the new Rules); and explicitly provide that if a party fails to provide evidence or the evidence provided cannot support its claims, the party shall assume liabilities arising from such failure to provide evidence (see Article 41 of the new Rules).
2. The new Rules add the provisions on the investigation of the facts and collection of evidence of the arbitral tribunal on its own initiative (see Article 44 of the new Rules). According to this provision, if the tribunal deems it necessary to require the presence of the parties during investigation and collection of evidence, it shall notify the parties accordingly and in a timely manner; if, after being notified, the party/parties fail(s) to appear, the tribunal may proceed with the investigation of facts and collection of evidence notwithstanding such failure; and the tribunal shall deliver to the parties the evidence collected on its own initiative for examination.
3. The new Rules add requirements on the time limit for the parties to submit evidence (see Articles 47, 49 and 51 of the new Rules).
Although the Arbitration Law provides that the parties shall provide evidence on their claims, it does not make any requirement on the time of evidence submission by the parties. The provisions in the original Rules that the evidence materials shall be submitted within the time limit specified by the arbitral tribunal are mainly targeted to the evidence provision by the parties after the first hearing instead of prior to the hearing. In practice, some parties do not submit evidence according to the requirements of the Rules and the arbitral tribunal but present it as a secret weapon during the hearing, so that the other party is placed in a disadvantaged position due to lack of preparation , making the first hearing meaningless; some parties make multiple submissions of evidence materials after hearing, leading to delay of the arbitral procedures. In view of this, the new Rules empower the arbitral tribunal to impose a time limit on the pre-hearing evidence submission by the parties; and they also specify the adverse consequence to be borne by the party that fail to submit evidence according to the requirement of the tribunal, such as bearing the corresponding costs (see Articles 49 and 51 of the new Rules). This allows the arbitral tribunal to take the initiative in speeding up the arbitration hearing, and enables the parties to keep abreast of each other's evidence, make timely preparation and fully exercise their procedural rights.
4. On the combination of evidence presented during the hearing and written examination.
The provisions in original Rules that “evidence shall be presented during the hearing” are likely to cause a misunderstanding that the evidence, no matter produced by the parties at any time, shall be presented during the hearing. Therefore some parties submit evidence for many times during arbitration and the arbitral tribunal has to organize multiple hearings. This both reduces the efficiency of arbitration and increases the burden on the parties. In fact, the advantage of arbitration lies in its simple, fast, and flexible procedures. It is internationally recognized that the requirement on the procedural properness of arbitration is met as long as the arbitral tribunal gives both parties equal opportunities and rights to examine the evidence and present their opinions. As for whether such opportunities and rights are realized through examination during hearing or written examination, it shall be solely determined by the arbitral tribunal. Therefore, to ensure the impartiality and efficiency of arbitration and reduce the burden on the parties, the new Rules adopt an approach of combining evidence presentation during hearing and written examination, that is, for the trial of the case, the evidence that has been exchanged between the parties before the hearing shall also be presented at the time of the hearing (see Paragraph 1, Article 49 of the new Rules); as for the evidence submitted after the required time, at the time of the hearing or after the hearing with consent of the arbitral tribunal, if the tribunal decides to organize another hearing, the evidence shall be presented and examined during the hearing; and where the tribunal decides not to continue the hearing, it shall allow exchange of the evidence between the parties, and allow the parties a reasonable time period for written examination (see Paragraph 2, Article 49 and Paragraph 2, Article 51 of the new Rules) , so as to ensure the that the parties may fully exercise their rights to examine the evidence.
IX . On the Time for the Claimant to Amend its Claim or the Respondent to Amend its Counterclaim
The original Rules provide that the claimant or respondent shall submit any written application seeking amending of the arbitration claim or counterclaim within 30 days after the first hearing (15 days for summary procedure). This was intended to urge the parties to exercise their rights to amend claims or counterclaims within 30 days to improve the efficiency of arbitration. But in practice it was misleading. People may think the 30 days are the time period for the parties to exercise their rights to apply for amending claims or counterclaims, and such rights will be violated if the arbitral tribunal makes a ruling before the expiry of the period. Therefore it extends the period of hearing. To solve this problem, the new Rules do not specify the time limit on the parties’ applications for amending claims or counterclaims, and the arbitral tribunal shall decide whether to accept the applications according to the progress of the case.
X. The New Rules Add Requirements on Conscientious Performance of Duties by Arbitrators to Enhance Their Sense of Responsibility and Ensure the Impartiality and Efficiency of Arbitration (See Articles 26 and 62 of the new Rules).
XI. Proceeding from the Principles of Being Fair and Reasonable, the New Rules Provide That If the Hearing of the Case Is Postponed Due To the Cause of Any Party, the Party Concerned Shall Bear the Corresponding Costs (See Paragraph 2, Article 31, Paragraph 3, Article 49 and Paragraph 3, Article 68 of the New Rules).
XII. On Summary Procedure
1. The upper limit of the amount involved in a case eligible for summary procedure is increased from the original RMB 300,000 Yuan to RMB 500,000 Yuan (see Article 71 of the new Rules).
2. Article 21 of the original Rules is relocated to the provisions concerning summary procedure (see Article 72 of the new Rules).
This article was meant to make provisions on how to nominate arbitrators when ordinary procedure is changed into summary procedure, therefore it is more appropriate to put it in the provisions concerning summary procedure.
3. The new Rules add the provisions that subsequent to the first session of hearing, any notices of the hearing date are not subject to the three-day advance notification time limit (or 10-day time limit for the cases involving foreign matters). (see Paragraph 2, Article 76 of the new Rules).
4. On the change from summary procedure to ordinary procedure
Article 68 of the original Rules provided that “Requests for the amending of claims or requests raising counterclaims shall not affect the summary procedure and the rendering of an award by the tribunal. However, situations in which the tribunal deems that the requests affect the summary procedure and the award-rendering shall be an exception”. But that Rules did not make explicit provisions on the composition of the arbitral tribunal and the status of the original sole arbitrator in the tribunal when summary procedure is changed into ordinary procedure, leading to inoperability in practice. The new Rules make provisions to this regard. (see Article 78).
XIII. Amendments to the Special Provisions on Arbitration Procedures for Cases Involving Foreign Matters
1. Article 7 of the original Rules is relocated to the provisions concerning the procedures for cases involving foreign matters (see Article 82 of the new Rules).
2. The time limit for raising a counterclaim is amended from within 60 days from the receipt of the request for submission of defence to within 45 days, so as to make it consistent to the time limit for defence. The new Rules also add that “if such counterclaims are submitted beyond the aforementioned time period, the tribunal shall decide whether or not to accept them” (see Article 84 of the new Rules).
3. The new Rules add the provisions on the applications made by the claimant for amendments to claims or by the respondent for amendments to counterclaims and the corresponding time limit for defence (see Article 85 of the new Rules).
4. The new Rules add the provisions on the application of a party for preservation of the other party’s property (see Article 86 of the new Rules).
XIV. Other Amendments
1. The new Rules add the provisions on the basic composition of BAC (see Article 3 of the new Rules)
2. The new Rules add the provision that BAC may set up a list of arbitrators for specialized fields as it deems necessary (see Paragraph 1, Article 4 of the new Rules).
3. The new Rules add the provision that the tribunal may decide in the award that the losing party compensates the winning party for reasonable costs and expenses in dealing with the case. (see Paragraph 2, Article 68 of the new Rules).
4. Other amendments concerning expression and order of the texts.
In short, the new Rules provide for some new mechanisms, which play a positive role in promoting the smooth arbitral proceedings, reducing delays in arbitration, decreasing un certainties in the Original rules and making clear some matters emerging in practice but not covered by the original Rules. They will make available more impartial and convenient arbitration to the parties. The arbitration system in China still needs further development, and BAC is ready to make its due contributions to the sound development of the system by continuous practice and explorations.