BAC/BIAC’s new arbitration rules a clear improvement

Recently, Beijing Arbitration Commission/Beijing International Arbitration Centre (BAC/BIAC) announced the latest amendment of its arbitration rules. The new rules mark the dawning of a new age for arbitration in China, bringing about striking improvements in the industry’s credibility and sparking high hopes for its global ambitions. Some scholars have even commended the Chinese arbitration community for realizing such groundbreaking change. Their compliments are echoed here.

The new rules, which will come into effect on 1 September 2019, mainly focus on the reform of the arbitration fees schedule. Case acceptance fees and handling fees are no longer two categories of arbitration fees. Instead, arbitration fees comprise two separate parts, namely, arbitrator remunerations and institutional fees.

The BAC/BIAC states in its explanatory notes on the new rules that “such division is conducive to clarifying arbitration fees for the parties. It will elevate the arbitrators’ performance by allowing equivalent remunerations of the arbitrators’ professional contribution to a specific arbitration case.”

Prior to the new rules, the allocation of remuneration had already been made transparent internally for BAC/BIAC’s arbitrators. Nearly half of the arbitration fees are the tribunal’s remunerations and the allocation of fees among the three arbitrators are well controlled by BAC/BIAC’s internal norms. The new rules take further initiative of formalizing such internal norms and publicizing them. This reform, with its far-reaching impact, may be a giant step forward for the Chinese arbitration community.

New rules institutionalize the Chinese arbitration practice and emphasize its non-profit quality. Gone are the times when most arbitration institutions, apart from few, such as BAC/BIAC, would keep their profit margins under wraps while simultaneously boasting about the number of cases they were handling. The new rules eliminate the arbitration community’s opacity when it comes to reporting income, rendering the arbitration practice in China more institutionalized and transparent.

Further, alongside active discussions amongst the Chinese arbitration community about the rising credibility of arbitration, authorities have also come to define Chinese arbitration institutions as non-profit legal persons. The new rules augment the non-profit nature of arbitration by increasing the minimum amount of arbitrators’ remunerations as well as the proportion of such remunerations in the total arbitration fees, without increasing the cost borne by the parties involved.