New BAC Rules to enter into force on 1 September 2019

The Beijing Arbitration Commission (BAC) has updated its arbitration rules and fee schedule. The new versions will replace the current (2015) version, with effect from 1 September 2019.

Among a number of notable amendments, BAC’s revised fee structure marks a significant step towards aligning Chinese arbitral practice with international standards. The new fee schedule:

  • distinguishes between the institution’s administrative charges and the arbitrator’s fees, with a clear imposition of higher charges for the latter. Under the current fee schedule, arbitration fees are payable entirely to the institution, without transparency as to the proportion that is paid to the arbitrators;
  • applies equally to both domestic and international arbitrations, removing any differentiation between the fees applicable. In addition, parties to domestic arbitrations can now agree to have the arbitrator’s fees charged on an hourly basis whereas under the current rules, this option is only available for international arbitrations;
  • increases the minimum administrative charges as well as arbitrator’s fees. For arbitrations involving amounts in dispute below RMB 250,000, the administrative charges and arbitrator’s fees shall be RMB 5,000 and RMB 12,000 respectively, totalling RMB 17,000. Under the current rules, the minimum arbitration fees payable for a dispute up to and including RMB 1,000 is only RMB 5,100, a sum that barely covers one hour of a sole arbitrator’s hourly rate;
  • imposes a maximum on the administrative charges and arbitrator’s fees, thereby preventing disproportionately high costs for high-value cases. For arbitrations involving amounts in dispute of RMB 5 billion and above, the administration fees will be capped at RMB 8.761 million. If the disputed amount is RMB 8.682 billion and above, the arbitrators’ fees will further be capped at RMB 18 million. Where hourly rates apply, an arbitrator’s hourly fee shall be capped at a maximum of RMB 5,000.

Other highlights of the new BAC Rules include:

  • the threshold for ordinary procedures before a full panel of three arbitrators has been increased from RMB 1 million to RMB 5 million. Where the amount in dispute falls below RMB 5 million, summary procedures handled by a sole arbitrator shall apply (Article 54);
  • a claimant may file a single notice of arbitration where a dispute arises out of multiple contracts provided that (i) the contracts contain identical or compatible arbitration clauses and (ii) the contracts are collateral or the contracting parties are identical and the subject matter of the arbitration is of a similar or related nature (Article 8);
  • amendments to the emergency arbitration procedure. Drawing on its experience of administering the first emergency arbitration in China in 2017, which resulted in an award that was successfully enforced in Hong Kong, BAC has clarified the emergency arbitration regime in its new rules. This includes clearer stipulations of the procedures and fees involved in the appointment of emergency arbitrators (Article 63);
  • the period for BAC to accept a case after a claimant’s payment of the requisite fees is extended from five to 10 days (Article 9);
  • an option for certain administrative deadlines to be extended by approval of the Secretary-General of the BAC, depending on the circumstances of each case, is now expressly codified (Article 70).

The new BAC Rules and fee schedule will no doubt be warmly welcomed by users and practitioners, enhancing BAC’s reputation as one of China’s most progressive arbitral institutions.

 

Helen Tang
Helen Tang
Partner, Mainland China
+86 21 2322 2160
Michelle Li
Michelle Li
Partner, Mainland China
+86 21 2322 2162
Hew Kian Heong
Hew Kian Heong
Partner, Mainland China
+86 21 2322 2150
Stella Hu
Stella Hu
Senior Consultant, Hong Kong
+852 2101 4248

STATE COUNCIL OF CHINA ANNOUNCED GROUND-BREAKING POLICY TO ALLOW FOREIGN ARBITRATION INSTITUTIONS TO SET UP BUSINESSES IN SHANGHAI FREE TRADE ZONE TO ADMINISTER CASES IN MAINLAND CHINA

On 6 August 2019, the State Council of China published the “General Planning of the New Area of ​​the China (Shanghai) Pilot Free Trade Zone Program” (“General Planning“).  Under Article 4 of the General Planning,  reputable overseas arbitration and dispute resolution institutions will be allowed to “set up business organisations in the new area [of the China (Shanghai Pilot Free Trade Zone)] and conduct arbitration businesses in relation to civil and commercial disputes arising in the areas of international commerce, maritime affairs, investment, etc.” and the relevant bodies will “support and assure the application and enforcement of interim measures by Chinese and foreign parties before and during the arbitration proceedings, such as asset preservation, evidence preservation and action preservation.”

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HERBERT SMITH FREEHILLS PROMOTES FOUR ARBITRATION SPECIALISTS TO OF COUNSEL

Herbert Smith Freehills has promoted four new Of Counsel from within the global arbitration practice with effect from 1st May. With promotions in New York, Singapore, Hong Kong and Beijing, the new Of Counsel are:

Florencia Villaggi, New York: Florencia specialises in international arbitration. She is a native Spanish-speaking practitioner from Latin America, trained in the Civil Law system but with extensive practice in a Common Law jurisdiction. Her experience encompasses commercial and investment arbitration, with focus on the Latin American region and the energy sector.

Dan Waldek, Singapore: Daniel is a highly rated disputes lawyer specialising in construction, energy and infrastructure disputes covering projects across Asia Pacific. He is admitted as a solicitor in England and Wales and the BVI, and is a Recognised Foreign Lawyer with the Singapore International Commercial Court.

Antony Crockett, Hong Kong: Antony has a significant regional and international market profile in business and human rights. He is qualified in Australia (Victoria), England and Wales, and Hong Kong SAR. He acts as an advocate in international arbitration proceedings and in arbitration-related court proceedings.

Stella Hu, Beijing: Stella is a trilingual Mainland Chinese arbitration specialist with experience in complex cross-border disputes. She has strong client relationships with Chinese State-owned companies, private companies and financial institutions.

Paula Hodges QC notes, “We are delighted to welcome four new Of Counsel from within the global arbitration practice, which – together with our recent Partner promotions –  showcases the outstanding lawyers we have in our international arbitration practice. With Of Counsel promotions in New York, Singapore, Hong Kong and Beijing, it is wonderful to see affirmation of the strength and breadth of the talent across the network.”

SPC ISSUES PROVISIONS ON ACTION PRESERVATION IN IP RIGHTS DISPUTES

The Supreme People’s Court of China (SPC) has released a new set of judicial interpretations concerning interim injunction applications for intellectual property rights (IP Rights)-related disputes. The Provisions on Application of Laws in Adjudication of Action Preservation Cases Involving Intellectual Property Disputes (Fa Shi [2018] No. 21) (Provisions) were published on 12 December 2018 and take effect on 1 January 2019. Prior to that, a consultation draft of the Provisions was released for public consultation on 26 February 2015.

The Provisions provide further guidance on interim injunctive relief (i.e. action preservation) applications made under Articles 100 and 101 of the Civil Procedure Law 2017 (2017 CPL) in cases concerning IP Rights and unfair competition, and clarify certain key concepts therein. (For more information on interim relief in the PRC, contact briana.young@hsf.com to request a copy of our guide “Interim Relief in Mainland China”.)

Some important articles in the Provisions, which are covered in this post, are:

  • Article 6, which provides for circumstances classified as “urgent circumstances” under Articles 100 and 101 of the 2017 CPL;
  • Article 7, which lists the factors that the courts shall take into consideration in determining whether an action preservation order should be granted;
  • Article 10, which elaborates on the concept of “irreparable harm” under Article 101 of the 2017 CPL in cases related to IP Rights or unfair competition. Risk of “irreparable harm” is an element that needs to be proved in any application for pre-litigation or pre-arbitration action preservation orders; and
  • Article 16, which specifies circumstances under which applications for action preservation will be considered “wrongful”.

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