Emergency arbitrator proceedings and the GKML case

By Terence Xu, BAC/BIAC
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紧急仲裁员仲裁程序及临时措施在内地的实践

In late 2017, the Beijing Arbitration Commission/Beijing International Arbitration Centre (BAC/BIAC) accepted its first case applying the emergency arbitrator proceedings (EA proceedings) in Mainland China, known as the GKML case. In terms of the emergency arbitrator’s award rendered in arbitral proceedings administered by the BAC/BIAC, the applicant in the GKML case obtained an enforcement order rendered by the High Court of the Hong Kong Special Administrative Region Court of First instance.

With the arbitral tribunal’s efficient arrangement and attorneys’ professional contribution, the GKML case was finally settled amicably. The emergency arbitrator in the GKML case, Sun Wei, posted an article recently in his Kluwer Arbitration Blog to introduce this case. It has attracted a lot of attention and generated subsequent discussions among the Chinese arbitration community on the EA proceedings and interim measures.

This article offers a different perspective to that of the arbitral institution on the EA proceeding and interim measures of the GKML case.

Since the arbitral tribunal is not authorized to order an interim measure under the Arbitration Law and the Civil Procedure Law, and preservation has exclusively remained at the court’s discretion, the parties in international arbitration cases have difficulty realizing their preservation interests under this legal framework. The Beijing Arbitration Commission Arbitration Rules, effective from 1 April 2015, added and revised the interim measures (article 62) and the emergency arbitrator (article 63). The revision is deemed as a progressive innovation and is designed to satisfy the need in international practice.

In the GKML case, since the property was to be preserved in Hong Kong, and the Arbitration Ordinance in Hong Kong has the provision of Enforcement of Emergency Relief Granted by Emergency Arbitration (section 22B), the applicants registered the case at the BAC/BIAC and initiated the EA proceeding at the same time. The detailed process in the GKML case is illustrated in the process chart below.

Emergency-arbitrator-proceedings-and-the-GKML-case-2

In the GKML case, the smooth commencement of the EA proceedings and the professional arrangement of the emergency arbitrator are two keys to the effective progressing of the EA proceedings. Sun Wei gave a detailed introduction of the arrangement from the EA perspective, while this article concentrates on how to smoothly initiate an EA proceeding.

According to the BAC rules, the successful commencement of the EA proceedings depends on the following three factors:

  • Whether the claimant and the arbitration institution, based on their own practical experience, comprehend the legal environment of the place where the attachment property is located.
  • Whether enough information and approaches are available for the arbitration institution to conduct effective and efficient service, thus ensuring that the parties are able to present the case.
  • Whether the arbitration institution is able to make a fit appointment of the emergency arbitrator within a certain period of time and guide the disclosure proceedings.

In the GKML case, at first, the claimant communicated its willingness of using the EA proceedings with the BAC/BIAC’s case acceptance division, a few days in advance of the formal commencement of the arbitration procedure. After this, the BAC/BIAC reached out in different jurisdictions and got positive affirmation of the recognition of EA proceedings in target jurisdictions, along with normal factors that local courts in target jurisdictions will inspect in deciding similar measures of preserving properties or injunctions.

Having done this, the BAC/BIAC allowed the claimant’s application of EA proceedings, while the case filing material was enough to present the case on prima facia bases. Sun Wei’s article listed three substantive factors that affect his discretion – the likelihood of success, urgency of the case, and reasonableness of interim measures. It should be clarified that these three factors are not necessarily taken into consideration when the arbitration institution decides whether to allow the application of EA proceedings. But taking them into consideration is likely to help the parties better prepare for a more effective and efficient EA proceedings.

In the communication mentioned above, the BAC/BIAC acquired the main contacts of the respondents, including cellphones and email addresses, allowing the BAC/BIAC to effectively communicate with the respondents and educate them on the EA proceedings from the first day. Such communication also helped build trust between the respondents and the arbitration institution, which encouraged the respondents to produce documents in time, and to better present their cases.

It should be noted that, in accordance with article 63(4), that “the rights to state shall be ensured” does not necessarily mean the emergency arbitrator cannot decide the interim measures by ex parte presentation. When deliberate delay exists, the test will be whether the arbitration institution or the emergency arbitrator has arranged the opportunity for presenting the case.

Finally, before making the appointment of the emergency arbitrator, the BAC/BIAC measured the possible substantive issues of the case, and then made contact with Sun Wei, an expert in the sector, in order to co-ordinate with his schedule and avoid potential conflict of interest. This is how we made sure the emergency arbitrators were able to deal with issues within the prescribed time, according to the BAC rules.

Since the GKML case was the first one that made the interim measures in the EA proceedings among cases in Mainland China, its success not only sets a precedent for Chinese arbitration institutions’ innovative practice, but also demonstrates the internationalization of Chinese arbitration institutions.

Terence Xu is a senior manager at the BAC/BIAC. BAC/BIAC’s case manager, Shen Yunqiu, also contributed to the article