Beijing Arbitration Commission

Beijing Arbitration Commission 2002 Annual Review

(Discussed and passed at the Fourth Meeting of the Third Session of the Beijing Arbitration Commission on January 24, 2003)

Wang Hong-song

.Completion of work in 2002

1. The BAC accepted a total of 891 cases in 2002, an increase of 225 cases or 33.8 percent more than that in 2001. The disputed amount arrived at 4.1 billion RMB, twice as much as that in 2001. Among the cases accepted in 2002 were 18 foreign-related cases, 8 more than in the previous year. The proportions of the various kinds of cases are as follows: sales contractual disputes, 33.45% (6.25% less than the 39.7% in 2001); construction and engineering contractual disputes, 26.49% (4.74% less than the 31.23% in 2001); loan, mortgage and security contractual disputes, 4.5% (6.25% more than the 4.75% in 2001); lease contractual disputes, 6.37%; joint venture and joint operation contractual disputes, 4.37%; processing work contractual disputes, 2.36%; advertisement contractual disputes, 2.24%; technology and labor contractual disputes, 1.35%, and other types of contractual disputes, 7.3%. The normal trend of sales, construction and engineering contractual disputes forming a large proportion of all cases has continued to diminish.

In 2002, the number of concluded cases went up to 853, a rise of 210 cases or 32.65 percent more than that in 2001. The ratio of the concluded cases to total cases was 95.73 percent (a decline of 0.82 percent compared to the 96.55% in 2001). The average duration for each case from the forming of an arbitral tribunal to the conclusion was 77 days (one day more than that in 2001). This was indicative of the increase in the number of large or difficult cases. Therefore, in this aspect, we can still improve. Of all the cases concluded in 2003, only one arbitral award was partly set aside by the Peoples Court, three were non-enforced and one was ruled to be re-arbitrated.

By the end of 2002, the BAC had handled a total of 2,889 cases. The rate of increase for case numbers stayed above 33 percent for a fifth continuous year and is expected to gradually decrease as the base number of cases rises. In addition, the number of cases concluded by the BAC reached 2,657, accounting for 92 percent of all cases. According to incomplete statistics, of the concluded cases, the Peoples Court set aside 6 arbitral awards partly or in whole, ordered 3 cases to be re-arbitrated and held that 12 awards were not to be enforced; the proportion of these was less than 1 percent of the total.

2. Other works in 2002 mainly dealt with the following aspects:

(1) In an effort to further raise the efficiency of case handling and safeguard the rights and interests of the parties, the BAC enacted the Several Provisions on Strengthening the Management of Exceeding Time Limit of the Arbitral Case Handling of the Beijing Arbitration Commission (hereinafter referred to as the Several Provisions) definitely stipulating for arbitrators (1) the calculative criterion in delay and the exceeding of time limits, (2) obligation distribution and (3) detailed disposal measures. According to the Several Provisions, the BAC also perfected the arbitrational case management system software in aspects related to the evaluation of arbitrators case handling thus guaranteeing the objectiveness of the evaluation system. At the same time, payment for the arbitrators case handling was also raised to great extent. All these measures boosted responsibility and efficiency consciousness.

(2) With the approval of Beijing Municipal Price Bureau, the BAC amended the Arbitration Fee Schedule by raising the standard cost of the lowest handling fee and decreasing the fee rate for cases with larger disputed amounts. We also published the Arbitration Fee Schedule as well as our Refund Standards, and set up a quick calculation program for arbitration fees to allow parties to know the cost of arbitration immediately from our website. This measure brought some changes to our case structure. In 2002, with the approval of the Beijing Municipal Foreign Exchange Bureau, the BAC applied for an independent banking account for foreign exchange.

(3) We strengthened our work on the professional discussion and training of arbitrators. On May 9-10, the BAC, together with the Executive Division of the Supreme Peoples Court, the Beijing Municipal High Peoples Court and the China University of Political Science and Law, sponsored a theoretical symposium of forcible execution in civil proceedings with 80 participants including chief judges and presidents in charge of various levels of the Beijing Municipal High Peoples Court and judges from the Executive Division of the Supreme Peoples Court. On April 10, the BAC held a work meeting where more than ten construction cost consultation and appraisal units took part in and discussed how to raise the quality and efficiency of appraisal. On August 28, according to the determinations passed at the Third Meeting of the Third Session of the Beijing Arbitration Commission, we implemented the new arbitrator training system. There were 49 arbitrators, 52 percent of those that were supposed to participate in training in Ethical Standards of Arbitrators, arbitral procedures, the case handling criterion, arbitral award rendering, etc. Through training, arbitrators better understood the ethical requirements, work requirements and arbitral procedures prescribed by the BAC. Since September, arbitrators have spontaneously sponsored and organized six symposiums related to finance, real estate, contraction and engineering with more than 110 participating arbitrators. These symposiums were warmly welcomed and the arbitrators showed strong interest in professional learning and research.

(4) The BAC enhanced arbitration publicity and outward communication and improved the editing, printing and distribution of the Beijing Arbitration Newsletter (now titled Beijing Arbitration). We also improved the design of the web page and the English translation and enriched the site with related content to make our website more modern and international. In 2002 the BAC delivered more than 50 articles in newspapers, magazines and websites to publicize the Arbitration Law and the BAC, The BAC organized or jointly organized on over 30 occasions several kinds of symposiums, publicizing, training, and exchanging activities. In addition, the BAC introduced both itself and the arbitration systems on Chinas mainland at

the Lawyers Meeting in the Asia-Pacific Regions of the GE Electric Company;

the Spring Meeting of Dispute Handling Organization of the U.S. CPR;

other meetings held by the Commerce Chamber of Germany in Beijing, the Commerce Chamber of Taiwan and some legal colleges.

In the first half of 2002, we visited the China Securities Regulatory Commission, the Beijing Municipal Olympic Organizing Commission and the Beijing Municipal Planning Commission to better understand societys requirements for arbitration. In October, a delegation of the BAC visited

the International Court of Arbitration of the International Chamber of Commerce in Paris;

the London Court of International Arbitration;

the Milan International Arbitration Center;

Arbitration institutes affiliated with the Munich Commerce Chamber and the Bavaria Commerce Chamber;

the Chinese-Taiwan Arbitration Commission

These visits were for studying and understanding the advanced experiences of these foreign arbitration commissions and discussing possible cooperation for the future. All efforts enlarged the influence of the BAC in society and the international arbitration field.

(5) We reinforced logistical services. The BAC purchased 25 new parking stalls in 2002. Along with the original stalls, we now have a total of 51 parking stalls with 10 above ground and 41 underground. The parking stalls provide free parking for use by parties and their representatives, arbitrators and relevant persons arriving at the BAC. In 2002 we also renovated the existing eight arbitration rooms and enlarged areas in the fourth and fifth arbitration rooms. We replaced carpets and tables with brand new ones, which made the arbitration rooms more harmonious and the atmosphere warmer. In addition, we leased dedicated cables access to the Internet via permanent IP addresses and each arbitration room was equipped with digital video and audio recoding systems (some of these rooms are also equipped with broadcasting systems). This was done to establish a material basis for case handling in the future through the Internet. Work systems and different kinds of management programs were further perfected to create an orderly work atmosphere. Pursuant to provisions on system reform of government-sponsored institutions that are regulated by the Ministry of Organization and the Ministry of Personnel, and relevant documents of the Beijing Municipal Finance Bureau, the office began in 2002 to adapt to the change in the enterprise management system of government-sponsored institutions and to pay taxes in accord with regulations. All these measures make the service of the office stride ever forward.

Unfinished work in 2002

First, the planned symposium on arbitration theory and practice in which all arbitrators were to have participated in was not held. Second, the periodic investigations into the proceedings and questionnaires that were to be sent to parties and their representatives were not carried out. Last, after implementing the Several Provisions, the relevant files and tables were not perfect and the procedures of case urging were not carried out in a strict manner. These three problems will be dealt with and the situation improved in 2003.

Existing problems

1. Building up the arbitrator system

Most of arbitrators perform earnestly and diligently and possess the necessary professional qualifications and abilities for arbitration work as a whole. Especially in recent years, along with the amending and perfection of the Ethical Standards for Arbitrators of the Beijing Arbitration Commission and the Administrative Measures for the Engagement of Arbitrators, and the establishment and implementation of the Several Provisions on Strengthening the Management of Exceeding Time Limit of the Arbitral Case Handling of the BAC, arbitrators have further reinforced their consciousness of punctuality and have consistently raised case-handling efficiency. Therefore, the BAC made great achievements in 2002 due to the common effort of arbitrators. But some problems are still worthy of paying attention to as follows:

(1) A few arbitrators blindly accepted their appointment, whether or not they were acquainted with the professional domain related to the cases and whether or not they had the competence required to determine the issues at dispute. As such they could not exert their capabilities properly for lack of relevant knowledge, which caused discontent among the parties and their representatives. Also some arbitrators (mainly involved in regular arbitrations) lacked a sense of responsibility in exercising good faith. These arbitrators were uninterested in and indifferent to case handling, failed to read up on relevant case files, and did not conscientiously scrutinize arbitral awards. They failed to assume the requisite duties even while occupying the post, as if they were occupying a post without doing any useful work as criticized in some articles (referenced in Primary Discussion about the Arbitration System Reform in China published in the Beijing Arbitration Volume 43).

(2) A few arbitrators still accepted appointment even though they had their hands full and as such were unable to devote the adequate time and vigorous energy to participate in the arbitration. As a result, because of time and schedule conflicts, the date for the handling of some cases was changed again and again, which aroused the discontent and antipathy of parties and representatives. Also a few arbitrators did not give a notice before going on unrelated errands during the handling of a case, and did not keep in contact with the chief arbitrator and secretary after his/her return, which resulted in a delay of case handling without excuse.

(3) A few arbitrators did not adhere to the proper image of arbitration and were late for the oral hearings or would answer telephone calls during the hearing.

(4) Several arbitrators violated neutrality and impartiality. They not only held positions strikingly consistent with the parties and representatives who had chosen them but also were not excluded from the possibility of disclosing arbitral secrets about the tribunals panel discussion based on the awareness of parties and their representatives.

(5) A few arbitrators acted as representatives in cases accepted by the BAC so many times that they had to frequently transfer between their status as arbitrator and as representative. This had a negative influence on the impartial image of arbitrators. Because of institutional nature of arbitration in our country, the scope of arbitrators is limited. Consequently, arbitrators can often contact each other in case handling and professional discussion, which provides opportunity to talk about cases in private between the arbitrator acting as a representative and members of the arbitral tribunal. This results in an unfair advantage for one representative over another representatives of the same case. In particular, if this situation continues to become more common, it will be possible for arbitrators who are also always acting as representatives to end up choosing each other to serve on the tribunal and thereby form special interest groups.

The arbitrators referred to in the above circumstances seriously violate the Ethical Standards that parties and representatives expert form the BAC. However, they are just few individuals and constitute only a small percentage of all arbitrators. Nevertheless, if they are not dealt with properly, such problems will have a fatal effect on arbitrators and the BAC. In addition, these problems will also have a negative impact on the future of the BAC, particularly when considering that with our entry into WTO there will be an influx of foreign arbitration institutions and arbitrators into our arbitration market. In either case, arbitrators should further acquaint themselves with the arbitration rules and procedures, thereby enhancing our competence to conduct and organize oral hearings and to render arbitral awards. Thus the BAC should put more effort into the system design, engagement, training, examination and management of arbitrators.

2. The arbitration rules

By visiting the International Courts of Arbitration in London and Paris, and researching and analyzing arbitral rules of some foreign arbitration institutions, the BAC realized that the Arbitration Rules should be studied more deeply and further improved in regards to (1) the choosing of a chief arbitrator, (2) arbitral cost schedules, (3) transparency of payments for arbitrators and (4) the onus probandi of the parties.

3. Pursuant to the Schemes of Re-establishing Arbitral Institution as enacted by the General Office of the State Council and the practices of some international arbitration institutes, the BAC determined that it would not recruit in-house arbitrators, which basically reaffirmed the policy that had been in place since the BACs inception. In order to guarantee independence and impartiality of arbitration that would be carried out in the long-term, this practice should be definitely stipulated in the Constitution of the Beijing Arbitration Commission to make it fixed, systematic and standard.

4. We should further strengthen the research and publicizing of arbitral theory and further raise the consciousness and level of service in the staff at the Office.

. Work plan for 2003

The BAC will focus on ensuring independence, impartiality and high efficiency and providing high quality service for parties and their representatives. The BAC will attach the most importance to enhancing the system establishment and the improving of services. This will be done through the amending and perfecting of the Arbitration Rules, Ethical Standard, Administrative Measures and other work systems in an effort to further raise the quality and level of our service. The main tasks are as follows:

1. The BAC will reinforce the system of establishment of arbitrators and accordingly propose to adopt the following measures:

(1) To raise payment for arbitrators based on our income, to gradually improve the transparency of payment measures, to enhance the arbitrators sense of responsibility and to recruit professionally talented people from the society.

(2) To further amend the Ethical Standard and Administrative Measures in accordance with practical work demands and to raise the professional standards and work requirements for arbitrator engagement. Some regulations involving these requirements but without corresponding obligations should also be further perfected.

(3) To further standardize (a) the notice system in the arbitral process and (b) the time management system in terms of the scrutiny and revision of arbitral awards, and (c) to carry out questionnaire investigations for concluded cases to find out the parties appraisal and demands of the arbitration.

(4) To further enhance the training of arbitrators, and to emphasize theoretical research and professional exchanges. In 2003 we will hold the following meetings: first, at the end of April or at the beginning of May we will gather all arbitrators for a symposium about arbitration procedures that will last two to three days. We will invite relevant persons from the Court to explain (a) several provisions on civil lawsuit evidence and (b) important problems in handling cases. Some universal matters in arbitration procedure will also be discussed in the symposium. Second, on April 17 we will organize special courses and invite Mr. Phillip Yang, a famous professor in Hong Kong to introduce the law of evidence in America and Great Britain. Third, at the end of April or at the beginning of May (training time for the latter half of this year will also be decided) we will organize trainings on the Arbitration Rules, Ethical Standards for Arbitrators, criteria for case handling and criteria for the rendering of arbitral awards. Newly-engaged arbitrators must participate and re-engaged arbitrators are also welcome. This practice needs to be regulated and henceforth those arbitrators who fail to participate in such trainings and have no experiences in case handling will not be appointed. If the arbitrators are not aware of even basic knowledge in arbitration procedures which parties and their representatives are increasingly acquainted with, the result will be that such arbitrators will often make a foolish figure and not handle cases correctly. They will then cause damage to the reputation of arbitrators and the BAC. These regulations, along with the new particular knowledge regarding arbitration and the information on the BAC are prescribed by the BAC and arbitrators should learn them and be clear about their content. Fourth, pursuant to demands and feasibility, we will conduct professional exchanges and theoretical discussion activities between arbitrators and foreign arbitration institutes and foreign arbitrators. Last, to meet arbitrators needs, we will (a) organize more arbitrator salons or commissions on arbitration specialties, (b) develop professional studies, case discussions, etc. while at the same time assuming entrustments from legislatures and relevant departments to hold research meetings about related laws and statutes.

(5) To continue to actively and prudently engage arbitrators, especially those with the select talents of good conduct, great learning, rich arbitral experience and devotion to arbitration. Moreover, the scope of arbitrator engagement may extend beyond Beijing or China and we will take into account national and regional variety for foreign arbitrator engagement.

(6) To improve both the arbitrator list and the accompanying computer inquiring system, and also to reinforce the degree transparency in regards to the arbitrators professional information. In 2003 we plan to modify the list of arbitrators (or Panel of Arbitrators) so that it contains basic information such as profession, adept specialty, location, nationality, foreign language capability and so on. The computer inquiring system (also in the English version) enriches the content related to professional competency, academic publications and professional achievements, and adds relevant information on the arbitrator on his or her handling of various cases. Consequently, the notice of the composition of the arbitration tribunal will have attached to it information about the arbitrators professional backgrounds so that the parties and their representatives will be acquainted with the professional knowledge, capability and case handling experiences of their arbitrators. We also plan to use some technological means to make up for the shortages and limitations of the arbitrator list by the way of providing a convenient way for parties and representatives from other locations to find out the professional backgrounds of arbitrators through the Internet.

2. To amend the Constitution of the Beijing Arbitration Commission to set down in writing the practice that the BAC does not recruit in-house arbitrators so as to further guarantee the independence and impartiality through the structure of the system.

3. In accordance with working requirements, the BAC will conduct studies in order to revise the Arbitration Rules so that they are in line with the general practices of international commercial arbitration. Problems mainly involved in this amendment are as follows:
? First, difficulties in raising the degree of openness when designating the chief arbitrator and in fully implementing the rule of autonomy of the parties will.
? Second, difficulties in attempting to prescribe payment for arbitrators, institutional administrative fees and actual expenditures.
? Third, problems in definitely pointing out the authority of the arbitral tribunal.
? Last, problems in perfecting the procedures for the BAC in the selection and appointment of appraisal agencies. Additionally problems relating to other amendments that deal with relevant content, and so on.

Because this amendment would involve many aspects including some subtle problems, we should be bold but prudent in developing relevant research by basing it on a wide variety of suggestions. In terms of the planned timetable, we expect to bring forward an amendment scheme in the first quarter, and collect suggestions and comments in the second quarter. We will then submit a first draft to the Committee of the BAC.

4. To intensify the theoretical research and publicizing work. In 2003 we intend to cooperate with the law schools of several universities to establish the Center of Arbitration Research in an effort to (1) research arbitral rules, systems and cases by relying on the scientific research potential of colleges, (2) probe more deeply into arbitral theory and (3) improve the professional capability of arbitrators and staff of the BAC.

We will also actively continue to organize related courses and meetings about the Arbitration Law and deliver articles in this aspect. We will also continue to carry out academic exchanges and keep communicating with the Peoples Court, relevant governmental departments and industrial associations.

. Strengthen the construction of the Office

First, the office shall recruit more graduates with a legal specialty, professional competency and who possess a good grasp of English to act as secretaries to improve service quality. Second, the office shall further perfect the internal work system, work process and criteria for work documents and service. Third, we shall continue to renovate our website and especially the English website. This includes enhancing the translation quality of content on our English website. Finally, we shall keep on improving the arbitration case management software in order to make it meet the changing needs of our work.


Model Arbitration Clause Arbitration Clause
All disputes arising from or in connection with this contract shall be submitted to Beijing Arbitration Commission / Beijing International Arbitration Center for arbitration in accordance with its rules of arbitration. The arbitral award is final and binding upon both parties.
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