Outline of opinions on private lending cases in BAC/BIAC

Private lending disputes have become hot potatoes in recent years, and the caseload of lending matters has also surged in Chinese arbitration institutions. When making decision on these disputes, the tribunal normally needs to strictly apply the General Provisions of the Civil Law, the Contract Law and other laws and regulations, and consider the Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law in the Trial of Private Lending Cases (the provisions of private lending cases) and other judicial interpretations. In issues regarding tribunals’ discretion, the values of fairness and appropriation are required to be considered in protecting the legal interests and restricting loans unethically and immorally intended to enrich the lender.

The authors have studied cases from Beijing Arbitration Commission/Beijing International Arbitration Centre (BAC/BIAC) and summarized some major disputes and tribunal considerations in private lending cases. In general, the tribunals would consider the total sum of interest due and delayed, default interest and other fees, and balance between the parties in every individual case.

Calculations of interest within the interest period. In BAC/BIAC private lending cases, the calculation method of interest accrued within the interest period often draws attention. In some credit agreements, parties adopted an irregular method to calculate the interest, resulting in an inconsistency between the explicit written interest rate and the hidden interest rate calculated from the repayment table.

Sun Yu, Shen Yunqiu and Chen Xiao are case managers of Beijing Arbitration Commission/Beijing International Arbitration Centre