Wang Hongsong, Secretary-General of Beijing Arbitration Commission
The 2004 Arbitration Rules will be the sixth version of the Arbitration Rules of Beijing Arbitration Commission (the “BAC”). Compared with the previous five amendments (namely those in 1996, 1997, 1998, 1999 and 2001), the new amendment adopt a new perspective on the basis of the local environment and practice to meet the objective of being in line with the international practice to the largest extent while respecting the mandatory provisions in the Arbitration Law. Therefore it contains major adjustments in both contents and forms. This amendment further emphasizes on the value orientation of learning from advanced concepts of arbitration, respecting the autonomy of will of the parties, urging arbitrators to be impartial and diligent and enhancing the credibility of arbitration in the society, which is always the focus of BAC. The new Arbitration Rules will be formally implemented on March 1, 2004. The major modifications are as follows:
I. Adjustments in Structure
The previous amendments were all based on the model text of arbitration rules issued by the State Council. But this amendment has rearranged the structure of chapters and renamed some chapters according to the adjustments in contents, as with the constant growing of provisions through multiple revisions, the original structure will result in excessive complicity of some contents and the lack of sufficient logical links between different articles. Compared with the 2001 version, the 2004 Arbitration Rules have the following specific adjustments in structure: The original Chapter V “Hearing and Awards” is split into two chapters, “Arbitral Proceedings” and “Arbitral Award”; the original Chapter IX “Term and Delivery” is merged with Chapter X “Supplementary Provisions” into one chapter “Supplementary Provisions”; the original Chapter III “Application and Acceptance” is renamed as “Application for Arbitration, Defence and Counterclaim”; the original Chapter VII “Special Provisions for Foreign-Related Arbitral Procedures” is renamed as “Special Provisions for International Commercial Arbitration”; and the original Chapter VIII “Suspension and Termination of Arbitral Procedures” is deleted.
Meanwhile, with reference to the arbitration rules of some internationally famous arbitration institutions, the 2004 Arbitration Rules sets a subtitle for each article. This helps to ensure the consistency and integrity of the texts on one hand, and on the other hand provides a convenient reference for the users. The amended Rules contain 65 articles in 9 chapters.
II. Adjustments in Contents
The 2004 Arbitration Rules generally show changes in three aspects, namely a) more freedom to the parties to reflect the autonomy of will of the parties in a high degree; b) a greater emphasis on the obligation of the arbitrators to perform their duties impartially and diligently; and c) improvements in the procedural provisions to ensure the efficiency and flexibility of the arbitral proceedings.
1. Respect for the autonomy of will of the parties
(1) The 2004 Rules provide in the General Provisions that the parties may agree to the application of a different arbitral procedure or a different set of arbitration rules (Article 2)。
One of the greatest characteristics and advantages of the arbitration system is the high degree of autonomy of the parties’ will. Accordingly, it ought to allow the parties to choose the applicable arbitral procedures and rules at their discretion. Based on this understanding, the right of the parties to adjust the arbitration rules with an agreement between them has been affirmed in the 2001 Arbitration Rules. Building on this, the 2004 Arbitration Rules further express the specific meaning of such right in the General Provisions: It includes not only to adjust the specific procedural provisions in the Arbitration Rules of BAC, but also to choose a different set of arbitration rules with an agreement between the parties. This defines a clearer scope of the right and shows greater respect for the freedom of the parties to make agreements. But taking into account the security of procedures, the parties’ agreement is subject to the consent of BAC.
(2) Thy way to nominate the presiding arbitrator is added in the 2004 Arbitration Rules to provide the parties with more options in determining the hearers of the case (Paragraph 2 of Article 18).
The parties’ right to choose arbitrators at their discretion is an obvious advantage of arbitration in comparison with litigation, and is also an important manifestation of the respect for the autonomy of will of the parties. Although the previous versions of the Arbitration Rules endow the parties with the right to jointly select the presiding arbitrator, in practice there are few cases where the parties may reach an agreement in this respect. To make it more possible for the parties to jointly select the presiding arbitrator and realize the autonomy of will of the parties in the selection of arbitrators to the greatest extent, the following modifications are made in the 2004 Arbitration Rules: Without extending the time limit on selection, opt-in clauses are added for the parties’ selection of the presiding arbitrator, that is: the parties may each nominate 3 arbitrators as the candidates for the presiding arbitrator. Where there is only one common candidate on both parties’ lists, such candidate shall be nominated as presiding arbitrator; and if there are two or more such candidates, the Chairman shall, taking into consideration the specific circumstances of the case, confirm one of them as the presiding arbitrator. The BAC may also provide a list of 5 to 7 candidates for the presiding arbitrator from which the parties shall each select 1 to 3 as candidates, and the presiding arbitrator is to be determined in the same way as above. This enables the maximal respect for the will of the parties to choose their “dispute umpires” on their own without prolonging the process of selection.
(3) The limit on the number of the parties’ authorized representatives is deleted (Article 16).
The 2001 Arbitration Rules set a limit of “generally not more than three” on the number of the authorized representatives for a party of an arbitration case. Considering that it is the freedom and autonomy of will of the parties to decide whether to entrust authorized representatives and how many representatives to be entrusted, and the Rules should not excessively interfere in it, the 2004 Arbitration Rules cancel this limitation.
(4) The right of the parties to jointly select the place of hearing (Article 25).
The 2001 Arbitration Rules only provided that hearings may be held “at other locations at the consent of the Secretary General of BAC”, while the 2004 version adds the right of parties to determine the place of hearing by providing that hearings may be held at locations other than BAC’s premises if “the parties so agree”.
2. Stress on the obligation of arbitrators to perform their duties impartially and diligently
(1) The arbitrators’ obligation of information disclosure is added (Article 20).
The 2001 Arbitration Rules on one hand required arbitrators to sign a statement of declaration. Although this approach draws upon the foreign system of disclosure by arbitrators to some extent, there are essential differences between them: The disclosure system requires that an arbitrator should voluntarily disclose his/her certain relations with the parties or their authorized representatives for the parties and the arbitration institution to consider if such relations affect the arbitrator's independence and impartiality; while the existing system of statement of declaration is to have an arbitrator sign on a statement with fixed content to promise that he/she does not have certain relations with the parties or their authorized representatives. Strictly speaking, such a statement is more like a guarantee, which has a prominent passive nature and only covers the time upon the acceptance of nomination or appointment.
On the other hand, although the 2001 Arbitration Rules provided that an arbitrator in any circumstance for withdrawal shall, on his/her own initiative, make disclosure to the Commission and request to withdraw, such a provision is to have an arbitrator judge on his/her own whether a certain relation between him/her and the parties or their authorized representatives is a circumstance for withdrawal. This, to a certain extent, does not show respect for the parties’ right to know. In addition, an arbitrator’s own judgment is likely to be biased.
To break these limitations in the 2001 Arbitration Rules, the 2004 Arbitration Rules adopt the internationally accepted the system of information disclosure by arbitrators, making clear that information disclosure is an important obligation of an arbitrator. The Rules require that “if an arbitrator, having decided to accept the parties’ nomination or the Chairman’s appointment, is aware of circumstances relating to the parties or their authorized representatives which might lead any one of the parties to doubt his independence or impartiality, the arbitrator shall disclose those circumstances in writing.” and this obligation of disclosure exists throughout the arbitration process. The disclosure of an arbitrator will be transmitted by the arbitration institution to both, and written comments on it from the parties are allowed. This better protects the impartiality of arbitration by enhancing the binding on arbitrators and providing necessary information for the parties to apply for withdrawal.
(2) The list-style provision in Article 28 related to the circumstance for withdrawal that “the arbitrator has any other relationship with one of the parties involved or its representative”.
Although the detailed list of the situations included in the term “other relations” in the 2001 Arbitration Rules enhanced the operability of the Rules, it is probably not exhaustive. Therefore, the 2004 Arbitration Rules delete the list of the situations concerning “other relations” while maintaining the circumstances where an arbitrator must withdraw. The parties may challenge an arbitrator in writing as long as they believe that the arbitrator is in a circumstance for withdrawal as prescribed in the Arbitration Law. This imposes a more stringent constraint on arbitrators and better protects the impartiality of arbitration.
(3). The 2004 Arbitration Rules for the first time provides for the power of the arbitration institution to replace an arbitrator, enhancing the supervision on the arbitrators’ performance of their duties (Paragraph 2 of Article 22).
The 2001 Arbitration Rules only provided that the parties have the right to challenge an arbitrator and the arbitrator has the obligation to withdraw when he/she is in a circumstance for withdrawal. But in practice, though not in any circumstance for withdrawal, some arbitrators failed to perform their duties impartially and diligently or were incompetent in other ways, causing dissatisfaction of some parties with the arbitral tribunal and thus affecting the reputation of the arbitration institution. The arbitration institution was unable to adopt any effective measure to deal with this due to the lack of relevant provisions. Learning from the experience of some international arbitration institutions, the 2004 Arbitration Rules make up for this deficiency by providing that “an arbitrator may also be replaced on the BACs initiative if it decides that he/she is prevented de jure or de facto from fulfilling his/her functions as an arbitrator, or that he/she is not fulfilling his/her functions in accordance with the Rules”. This emphasizes the obligation of arbitrators to carefully perform their duties from the perspective of consequences and strengthens the sense of responsibility of arbitrators, so as to help ensure that arbitrators will fulfill their duties in case hearings.
At the same time, taking into account the possible negative impact of the initiative replacement of arbitrator on the parties’ right to select arbitrators, the 2004 Arbitration Rules provide for strict procedures for the replacement to ensure prudent exercise of the power of replacement in practice.
(4). The requirement on due process of the arbitral tribunal (Paragraph 3 of Article 23) is added.
Arbitrators as “distribute umpires” play a vital role in achieving due process, which is the value orientation running through the arbitration system. Although BAC has paid great attention to emphasize due process in arbitral practice and made specific guiding recommendations in this regard in the regulatory documents related to the arbitrators’ case handling, it did not set standards on the conducts of the arbitral tribunal in its Arbitration Rules from this perspective. Taking into account the significance of due process in the entire course of arbitration, the 2004 Arbitration Rules for the first time explicitly affirm the principle of “due process”, providing that “regardless of the mode of hearing adopted, the arbitral tribunal shall treat the parties fairly and impartially and give each party a reasonable opportunity to present and argue its case”.
(5). The text “an arbitrator who disagrees with the award may choose not to sign the award, provided, however, that he/she shall provide his/her decision and reasons therefor to the tribunal in writing.” in the 2001 Arbitration Rules is amended to “the dissenting arbitrator may choose not to sign the award. An arbitrator who chooses not to sign the award shall issue a dissenting opinion, which shall be sent to the parties together with the award but does not form part of the award. If the arbitrator who chooses not to sign the award does not issue a statement of personal opinion, he shall be deemed to have refused to sign the award without any justifiable reason.” (Paragraph 3 of Article 41).
It is common in practice that the members of an arbitral tribunal cannot reach a unanimous agreement, and in this case most of the arbitrators holding minority views are reluctant to sign on the arbitral award. Although the Arbitration Law provides that a dissenting arbitrator is entitled not to sign on the award, this right should be exercised in good faith. Some arbitrators refused to sign without explaining any reason, which is an improper behavior. The 2001 Arbitration Rules required that a dissenting arbitrator should present his/her opinions and reasons in writing, these opinions and reasons were just to be presented to the arbitral tribunal instead of the parties that empower the arbitrator. Therefore, the 2004 Arbitration Rules provide that the dissenting opinions of the arbitrators refusing to sign on the award shall be sent to the parties together with the award. This is to increase the transparency of arbitration award, protect the right of the parties to know the dissenting opinions of the arbitrators refusing to sign and remind arbitrators to exercise this right cautiously.
3. Improvement in the procedural provisions
Based on the procedural problems exposed in practice and with reference to the good practice in improving the procedural provisions in the practice of arbitration on international commercial cases, the 2004 Arbitration Rules make many improvements and supplements to the original procedural provisions:
(1) On the raise of and decision on jurisdictional objections: In the 2004 Arbitration Rules, the time for submitting a jurisdictional objection in a documents-only arbitration is amended from “before the first submission of the statement of defence” to “prior to the expiry of the time limit for the submission of the first defence” (Paragraph 1 of Article 6) to make the expression more precise and enhance the operability of the provision. A provision on the form of ruling of the arbitral tribunal on the jurisdictional objection is also added, i.e. the arbitral tribunal “can deliver its decision in the form of either an interim award or a final award” (Paragraph 4 of Article 6).
(2) On the application for arbitration, defence and counterclaim: The 2004 Arbitration Rules add the “proof of the claimant’s identity” (Item 4, Paragraph 1 of Article 7) in the documents to be submitted to apply for arbitration, and for the first time provide that the respondent shall submit other necessary proof documents in addition to the statement of defence upon receipt of the request for submission of defence. Provisions are also made on the contents of the statement of defence and the proof documents (Paragraph 1 of Article 10). In addition, the 2004 Arbitration Rules specify the time of commencement of arbitral proceedings, i.e. “on the date of acceptance of the application for arbitration by the BAC.” In terms of the submission of a counterclaim or an amendment to claim or counterclaim beyond the stipulated period of time, the 2004 Arbitration Rules provide that the arbitral tribunal, or if the arbitral tribunal has not been constituted, the BAC, shall decide whether to accept such submissions (Paragraph 1 of Article 11 and Article 12). Compared with the previous provisions that attributed all the power of decision to the arbitral tribunal, the amended provisions are more conducive to practical operation.
(3) The 2004 Arbitration Rules add the obligation (Article 19) of the secretary of the arbitral tribunal to transmit the case file to the tribunal promptly after its constitution, making clear the respective responsibilities of the tribunal and the secretary, i.e. the tribunal is responsible for the substantive hearing of cases and the secretary is responsible for the procedural management and services concerning the cases. This is conducive to the close cooperation between the arbitration institution and the arbitral tribunal based on their precise positioning.
(4) On the specific procedures for the challenge against an arbitrator: The previous Arbitration Rules had no provision on the specific procedures for handling the challenge of the parties against an arbitrator after its receipt by the secretary. To unify the inconsistent approaches in arbitral practice, the 2004 Arbitration Rules add the provision that “the secretary of the arbitral tribunal shall promptly transmit the notice of challenge to the other party and each member of the arbitral tribunal” requirement (Paragraph 4 of Article 21). At the same time, detailed provisions are made on several situations that may occur after the parties submit a challenge: “When a party challenges an arbitrator and the other party agrees to the challenge, or the challenged arbitrator withdraws voluntarily upon being informed of the challenge, such arbitrator shall no longer participate in the arbitration. In neither case does it imply acceptance of the validity of the grounds for the challenge”(Paragraph 5 of Article 21). “The Chairman shall decide on the challenge” except in the abovementioned situation，and “the decision of the Chairman shall be final.” (Paragraph 6 of Article 21) With these supplements, the provisions on the specific procedures for withdrawal of arbitrators are relatively complete and more operable. In addition, as the Chairman of BAC does not serve as an arbitrator, the 2004 Arbitration Rules delete the contents on the decision-making power concerning withdrawal when the Chairman serves as an arbitrator.
(5) On the request for a postponement of hearing: In the 2004 Arbitral Rules, the deadline for the parties to request for a postponement of hearing is extended from “at least seven days before the hearing” to “at least five days before the hearing” (Paragraph 1 of Article 27), leaving a greater flexibility to the parties.
(6) On the burden of proof and evidence submission: The provisions on the parties’ burden of proof in the 2001 Arbitration Rules read: “If a party fails to provide evidence within a stipulated time limit or the evidence provided cannot support its claims, the party shall assume liabilities arising from such failure to provide evidence.” (original Paragraph 2 of Article 41). In the 2004 Arbitration Rules, the text “shall assume liabilities arising from such failure to provide evidence” is amended to “shall bear the consequences of such failure”(Paragraph 3 of Article 29) with reference to the provisions on the consequences relating to the burden of proof in Some Provisions of the Supreme People's Court on Evidence in Civil Procedures. This more concretely embodies the principle of “burden of proof borne by the claimant”.
In terms of the forms of evidence, the previous Arbitral Rules required that “documentary evidence shall be submitted in the form of original copies; and physical evidence shall be submitted in the form of original things.” Considering that the rigorous requirement for original documents or things may bring difficulties to the parties’ production of evidence and is sometimes unnecessary, the 2004 Arbitration Rules no longer require submission of original documents or things, and provides that a document or thing in any form shall be deemed to be identical to the original document or thing unless the other party challenges its authenticity. （Paragraph 5 of Article 29）.
(7) On evidence examination and authentication: The 2004 Arbitration Rules follow the mode of the presentation of evidence for examination during the hearing and submission in writing of any challenge to the evidence. In terms of authentication, the 2004 Arbitration Rules proceed from the needs in practice and absorb the general provisions in Some Provisions of the Supreme People's Court on Evidence in Civil Procedures on the authentication of facts and evidence to facilitate the hearing of the arbitration tribunal. These include: “If a party has neither admitted nor denied facts alleged by the other party, and refuses to express any opinion on those facts despite explanation and inquiry by the arbitral tribunal, it shall be deemed to have admitted those facts; if a party has admitted to adverse facts or evidence, whether in the application for arbitration, statement of defence, its statements or other written opinions, those facts or evidence shall be confirmed by the arbitral tribunal, unless the party subsequently withdraws the admissions and produces evidence to rebut those facts or evidence; and if a party can prove that the other party possesses evidence that it refuses to disclose without any justifiable reason, and that such evidence would have had an adverse impact on the case of the party possessing the evidence, adverse inferences may be drawn from such refusal to disclose.”(Paragraphs 4, 5 and 6 of Article 33) these provisions are also conducive to urge the parties to follow the principle of good faith in arbitration proceedings.
(8) On appraisal: First, the 2004 Arbitration Rules add that appraisal procedures may be launched “if any party requests an appraisal and the arbitral tribunal consents”; and second, the right to nominate the appraisal organization or appraisal expert is given to the parties and only when the parties fail to reach an agreement on the nomination within the specified time limit can such organization or expert be appointed by the arbitral tribunal (Paragraph 1 of Article 31). Compared with the provision in the 2001 Arbitration Rules, which directly gives the right to appoint the appraisal organization or expert to the arbitral tribunal, this provision obviously shows more respect for the rights of the parties. In addition, the appraisal conclusions from an organization or expert chosen by the parties themselves but be easier to be accepted by the parties, and this approach also helps to avoid the possible “black-box operations" in the appointment of appraisal organizations or experts by the arbitral tribunal. Taking into account the barriers against the procedures in practice caused by the disputes between the parties and appraisers on whether to provide materials for appraisal, the 2004 Arbitration Rules add that “the arbitral tribunal shall decide on any disagreement between any party and the appraiser as to whether the document, material, property or article required for the appraisal is relevant to the case” (Paragraph 3 of Article 31).
(9) On hearing related measures: Built on the original provisions on pre-hearing procedures, to improve the efficiency of hearings, the 2004 Arbitration Rules draw on the approach in the LCIA Arbitration Rules and provide that “prior to the hearing or at any stage during the hearing, the arbitral tribunal also may, if necessary, require the parties to produce evidence and to respond to questions” (Paragraph 2 of Article 32).
(10) Decision on procedural matters: 2004 Arbitration Rules for the first time explicitly provide for the decision on the procedural matters: “With the consent of the parties or the authorization of the other arbitrators of the arbitral tribunal, the presiding arbitrator may also decide on procedural matters” (Paragraph 2, Article 39). This ensures that the arbitration proceedings will not be disturbed due to the cause of any individual arbitrator, and it is conducive to improving the efficiency of hearings by endowing the presiding arbitrator with the power of decision on procedural matters in certain conditions.
(11) On summary procedure: Based on the constant development of the cases for arbitration and improvement in the competence of arbitrators, the 2004 Arbitration Rules raise the upper limit of the subject amount of summary procedure cases from RMB 500,000 Yuan to RMB 1,000,000 Yuan (Paragraph 1 of Article 44); and at the same time provide that “the parties may agree to apply the summary procedure even if the amount in dispute exceeds RMB 1,000,000 Yuan, in which case the costs of the arbitration shall be reduced accordingly” (Paragraph 2 of Article 44). The 2004 Arbitration Rules set the date of constitution of the arbitral tribunal as the starting point of the time limit on the rendering of award in summary procedure, and amend the provision in the previous versions of Arbitration Rules that “for foreign-related arbitration cases, if hearings are held, the award shall be made within 30 days of the hearing” to “for an international commercial case, the award shall be rendered within 90 days of the date of the constitution of arbitral tribunal"(Article 49).
(12) Procedures for international commercial arbitration: According to needs in the development of practice, the 2004 Arbitration Rules amend the “foreign-related arbitral procedures” in the previous versions to “international commercial arbitration procedures” and make adjustments and supplements to the original contents in this regard with reference to the international practice according to the goal of internationalized development. These include: 1) The 2004 Arbitration Rules add the provisions on conciliation. Meanwhile, considering that the mediation system in China is significantly different from the concept and practice in many countries that arbitrators are not allowed to act as conciliators at the same time, in order to eliminate the possible concerns of the parties in international commercial cases in this respect, the Rules also provide that if the conciliation proceedings are unsuccessful, the parties are allowed to request a replacement of an arbitrator with an agreement between them, but the resulting additional costs shall be borne by the parties (Article 56). 2) The time limit on rendering award is shortened from 8 months to 6 months from the date of the constitution of the arbitral tribunal (Article 57). The development of the technology of transportation and communication and the constant improvement in the ability of arbitration institutions to deliver services make this amendment possible. 3) An explicit provision is made on applicable law: The arbitral tribunal shall apply the substantive law agreed upon by the parties, and in the absence of an agreed choice of law, the arbitral tribunal shall apply the law with which the dispute has the closest connection (Article 58). This is the first detailed and clear provision on applicable law in all the amendments of the Arbitration Rules.
(13) Service: The 2004 Arbitration Rules limit the ways of service by public notice or by leaving the documents at the place of service in the presence of a notary to domestic cases (Paragraph 3 of Article 61). This is mainly because some scholars believe these ways of service are contrary to the principle of confidentiality in arbitration, but taking into account the unsatisfactory credit environment in China, it is not realistic to completely abolish them. Therefore the Rules only restrict the scope of application of these ways of service. In addition, the 2004 Arbitration Rules add the provision on the application of “attempt of delivery” (Paragraph 4 of Article 61) in international commercial cases with reference to the arbitration rules of many international arbitration institutions, which provide for “attempt of delivery” based on the particularity of international commercial cases.
4. Other modifications
(1) The 2004 Arbitration Rules add an introduction to BAC (Article 1), delete the provisions on the composition of BAC (as there are corresponding provisions in the Articles of Association) but retain the provision that with the authorization of the Chairman, one of the Vice-Chairmen or Secretary-General of the BAC shall perform the duties and obligations of the Chairman. It is important to note that the above provision on performing duties and obligations on behalf of the Chairman with authorization include the practice in BAC that a Vice-Chairman authorized by the Chairman reauthorize the Secretary-General to perform the duties and obligations. But this is not explicated in the text for the sake of concision.
(2) The provision on the waiver of right to object is put in the General Provisions (Article 3).
(3) The definition of “arbitration agreement” is added and the term “written form” is explained with reference to the corresponding provisions in the Contract Law (Article 4).
(4) The 2004 Arbitration Rule provide that the conciliation proceedings shall not be included in the written records of hearings and that the secretary of the arbitral tribunal may, with the consent of the arbitral tribunal, make an audio or visual record of the hearing (Paragraphs 1 and 2 of Article 36).
(5) It is explicitly provided that the calculation of time limit shall be subject to the business day at the place of the addressee (Paragraph 2 of Article 60).
(6) Some of the provisions in the 2001 Arbitration Rules which already exist in the Arbitration Law, including the texts on the contents to be contained in an arbitration agreement, the duties of arbitrators and the request for withdrawal and enforcement of arbitration awards, are deleted. This is mainly out of the consideration that the Arbitration Law is the law to be observed by all arbitration institutions in China and makes provisions on China’s arbitration system in aspects. Therefore it is unnecessary to repeat all contents of the Law in the Arbitration Rules as a specific procedural rule of BAC. Making procedural innovations in the context of the existing provisions in the Arbitration Law is the basic principle followed by the 2004 amendment to the Arbitration Rules.
The above is an overall explanation on the 2004 amendment to the Arbitration Rules of BAC. It is arguable that after several amendments, the Arbitration Rules have been gradually converted from passively making up for defects to actively serving the realization of advanced arbitration concepts. Although there may still be some unsatisfactory factors in the amended version, BAC is willing to continue its exploration as always. We expect that the arbitration system in China will be constantly improved with the times; and we believe that the system has a bright and broad prospect and will truly become the common choice of the business professionals and the society in the near future. BAC will spare no effort in working together with our likeminded peers and other stakeholders to this end!