After two years of drafting and consultation, Beijing Arbitration Commission (“BAC”) published revised Arbitration Rules on 4 December 2014. The revised Arbitration Rules, which replace the 2008 Rules, will come into force on 1 April 2015 (the “2015 Rules”). The 2015 Rules are available here.
According to the Secretary General of BAC, the 2015 Rules not only cater to the needs and preferences of parties to BAC arbitration but they also seek to keep up with international best practice while taking into account existing arbitration practice in China.
The 2015 Rules feature the following key amendments:
- Introducing a concurrent name “Beijing International Arbitration Center” (Article 1(2)) alongside the original name of Beijing Arbitration Commission. Reference to “Beijing International Arbitration Center” in any arbitration agreement will now result in the arbitration being administered by BAC.
- Whilst the parties are entitled to amend the Claim or Counterclaim, the 2015 Rules make clear that if the amendment is late and may affect the normal progress of the arbitration proceedings, BAC (or the arbitral tribunal, if constituted) have the power to refuse to allow the amendment. (Article 12)
- Adding rules to govern situations where a Counterclaim is filed outside the relevant time limit (Article 11(2)). In such circumstances, BAC or the tribunal will take into account factors including the necessity for hearing the Counterclaim and the Claim in a single proceeding, the time limit exceeded, whether unnecessary delay to the arbitral proceedings will be caused and other related factors.
- Giving parties the opportunity to appoint stenographers to record the hearing (Article 40(5)). Parties can now appoint stenographers by filing a joint request, or by filing a request by one party and the request is approved by BAC. The resulting additional costs should be borne by the parties or the requesting party. Previously, parties to BAC arbitrations did not have access to a full transcript of the hearing.
- Placing emphasis on the principles of good faith, collaboration and adopt appropriate methods to resolve disputes, and alerting parties to cost consequences if they cause delay to the arbitral proceedings (Article 2(4); Article 51(3)). The principles of good faith, collaboration and appropriateness in dispute resolution apply not only to the parties and their representatives, but also to BAC and the tribunal.
- Provision for joinder of additional parties (Article 13). Parties may now apply to join an additional party to the arbitration, provided the additional party is bound by the same arbitration agreement, and subject to approval by BAC. Unless the parties agree otherwise, joinder will be allowed only before the tribunal is constituted.
- Provisions where there are multiple parties to the same arbitration agreement (Article 14). Where there are two or more Claimants or Respondents in an arbitration, or any additional party is joined to the arbitration, any party may bring claims against any other party to the same arbitration agreement, subject to acceptance by the tribunal or, if the tribunal has not been constituted, by BAC.
- Provision for consolidation of arbitrations (Article 29). Consolidation may be allowed where all the parties consent, or where a party applies and BAC considers it necessary to consolidate two or more arbitrations pending under the 2015 Rules into a single arbitration. BAC will take into consideration factors including the arbitration agreements on which the relevant arbitrations are based, the nexus among the relevant arbitrations, the stage of proceedings of the relevant arbitrations, and whether any arbitrators have been nominated or appointed in the relevant arbitrations.
- Power for the tribunal to hear more than one case in the same hearing (Article 28). Three conditions have to be fulfilled: (a) the arbitrations concerned involve the same or related subject matter(s); (b) a party applies for consolidation of hearings, with the consent of all other parties concerned; and (c) the compositions of the tribunals in the arbitrations concerned are all the same.
- Increased scope and flexibility of procedural measures (Article 35). The tribunal may take such measures as preparing the hearing timetable, issuing lists of questions, holding pre-hearing conferences, and producing terms of reference. With the tribunal's authority, the presiding arbitrator may take these measures alone.
- Increased tribunal discretion for assessing evidence (Article 37). The tribunal may refer to relevant laws and regulations, judicial interpretations of the Supreme People’s Court, industry practices and trade usage, and consider the case in its entirety.
- Increased flexibility to designate the seat of arbitration (previously referred to as the “place of arbitration”) (Article 26). The default seat of arbitration is the location of BAC (Beijing, People’s Republic of China). BAC may also determine another seat of arbitration according to the specific circumstances of the case.
- Significant developments regarding the language of arbitration (Article 72). Where parties have not reached agreement upon the language of the arbitration, the language used in the arbitral proceedings will not always be Chinese. The tribunal may determine the language of the arbitration according to the specific circumstances of the case. The tribunal also has the option of conducting arbitral proceedings in multiple languages.
- New provisions on interim measures (Article 62). At the request of the parties, the tribunal may order any interim measures it deems proper in accordance with the applicable law, subject to appropriate security to be provided by the requesting parties (if necessary). The requirement that a request needs to be "in accordance with the applicable law" suggests that arbitrations seated in mainland China are still restricted by Chinese civil procedure law which only allows courts to grant interim relief in aid of arbitration. The 2015 Rules also provide that the parties may apply for interim measures to the competent court directly.
- Introduction of an emergency arbitrator procedure (Article 63). After the commencement of a case and before the constitution of the tribunal, a party which requires interim relief may submit a written application for appointment of an emergency arbitrator to BAC in accordance with the applicable law. BAC will appoint an emergency arbitrator from its panel within two days of receiving payment of the relevant fees, and the emergency arbitrator shall issue a decision within 15 days of appointment. Again, the same limitation to the "applicable law" applies as regards emergency arbitrators.
- In the absence of an agreed choice of law, the tribunal has the power to determine the law governing the dispute according to the circumstances of the case. If the parties agree, the tribunal can also render its award amiable compositeur or ex aequo et bono (Article 69).
- Allowing parties to international arbitration to pay the arbitrators either by hourly rates or according to BAC's ad valorem fee schedule (Article 61). Under the 2015 Rules, the case administration fee is calculated on an ad valorem Arbitrators' fees, however, may be calculated either by applying an hourly rate or on an ad valorem basis. The 2015 Rules therefore give parties the opportunity to choose between the two calculation methods, according to the circumstances of the case. If no agreement is reached within the time limit, the arbitrators' fees will be calculated on an ad valorem basis.
In keeping with many arbitral institutions, including, most recently, CIETAC, BAC has taken a number of steps to bring its rules into line with international best practice and improve the process for its end users. While it remains to be seen how and how many of the new provisions will work in practice, most of these developments are likely to be welcomed by practitioners, arbitrators and parties alike.
Should you wish to discuss any of the issues outlined above, or if you have questions, please contact: Justin D’Agostino, Jessica Fei, Brenda Horrigan, May Tai or Simon Chapman.
