The emergence in China of local arbitration commissions (“LACs”), and in particular their growing role as a forum of choice for dispute resolution, is a phenomenon that has received inadequate scholarly attention. Outside of China, research focusing on LACs is almost nonexistent, and articles dealing with LACs are characterized both by an absence of direct sources of knowledge as well as skepticism regarding the potential independence, competence and fairness of LACs. This article intends to present an analysis of LACs based on a case study of the Beijing Arbitration Commission (“BAC”), for which the author worked as a part-time case-handling secretary from April 2005 to April 2007. The case study describes how the BAC maneuvers within the legal and policy framework to obtain independence, raise standards, strengthen competence, and build effective mechanisms to maintain integrity. The findings of this case study suggest that the BAC’s employment system and its full financial independence are two fundamental factors bolstering the quality and efficiency of its arbitration. However, the achievement of these two factors requires a strong executive, which explains the challenges both for the BAC itself in its early years, and later for other LACs that wish to model themselves on the BAC.
Since the Arbitration Law of the People’s Republic of China came into force in 1995, 183 new arbitration institutions have been founded, in addition to the China International Economic and Trade Arbitration Commission (“CIETAC”), established in 1954, and the China Maritime Arbitration Commission (“CMAC”), established in 1959.1 These new arbitration institutions are called local arbitration commissions (“LACs”), generally named after the administrative area in which they are registered. However, their jurisdiction is not confined to their respective administrative areas; any Chinese arbitration institution can arbitrate domestic and international cases regardless of the location of the dispute or parties.2 Although LACs are a relatively recent phenomenon in China, they are growing in importance and influence. As shown in the table below, LACs have developed at a very quick pace and their caseload has risen steeply in recent years, reaching 47,314 cases in 2005.
LACs’ Caseload Growth: 1999-2005
(Arranged by Year and Total Caseload).
(Source: Department of Coordination on Government Legal Affairs, Legislative Affairs Office of the State Council, Zhong cai gong zuo qing kuang [Briefing Work of Arbitration] (Issue Nos. 13, 23 and 56); Administrative Department, Legislative Affairs Office of the State Council, Zheng fu fa zhi gong zuo jian bao [Briefing Work of Government Legal Affairs] (Issue Nos. 146, 171 and 210))
Recently, some of the top LACs, such as the Beijing Arbitration Commission (“BAC”), Wuhan Arbitration Commission (“WAC”), and Guangzhou Arbitration Commission (“GAC”) have begun to take action to attract international commercial arbitrations.3 More and more foreign companies negotiating with Chinese counterparts are being encouraged to incorporate arbitration clauses in their contracts to settle their disputes before LACs. Yet little research, if any, has focused on LACs. One recent publication on forum selection for international dispute resolution in China displayed complete ignorance of the existence of LACs by claiming that if a foreign party wants to avoid the Chinese courts by selecting arbitration, CIETAC is effectively the only choice for foreign-invested entities.4 Some experts are aware of the rising role of LACs, but are skeptical about their independence, competence, and fairness. Professor Donald C. Clarke argues that LACs are closely tied to government, especially in their reliance on local government for funding and personnel.5 Nadia Darwazeh and Michael Moser have questioned whether all LACs are in fact competent and experienced enough to handle foreign-related arbitrations.6 Professor Jerome A. Cohen has admitted that geographic convenience is usually the best argument to attract foreign companies to an LAC. But, unless elaborate measures are devised and implemented to prevent local government, the Communist Party, or business and personal influences from interfering with the decision-making of the arbitration panel, foreign businesses are unlikely to embrace this option.7 Thus, whether LACs can be independent, competent, and fair forums is a significant and critical question worthy of careful study. Based on a case study of the BAC, this article will explore what kind of specific constraints LACs face during the process of striving for independence, competence, and fairness against the background of China’s economic transition and social transformation resulting from the reforms and open policy adopted in 1978, and to what extent they can overcome these constraints through their own efforts.
The BAC was established on September 28, 1995 with its office in Beijing, which was one of seven pilot cities designated to reorganize arbitration commissions under the Arbitration Law.8 As shown in the table below, the annual caseload of the BAC has continually increased at a rapid pace. The number of international arbitration cases also shows a rising trend. Meanwhile, the BAC has demonstrated a strong willingness to innovate and explore ways to introduce international practice into China’s society. In 2005, Professor Cohen proffered ten recommendations drawn from his experience for consideration by CIETAC. At the time of his recommendations most of them had already been put into practice by the BAC.9 The BAC also was the first of the LACs to host and publish a professional journal, create an arbitrators’ training program, and organize a monthly arbitrators’ workshop. All of these features have made the BAC increasingly well- known and regarded as one of the most eminent arbitration commissions in China today.10 An article in Business China even claimed, “The Beijing Arbitration Commission (BAC) is considered the only local arbitration commission which meets or surpasses global standards.”11 Dahan Song, Deputy Director of the Legislative Affairs Office of the State Council, also states that the BAC’s development is the epitome of the arbitration industry’s development in China.12 With its leadership position among LACs, the BAC is a useful model for exploring various constraints an LAC faces in contemporary Chinese society, as well as the effectiveness of potential solutions. Although the case study method has limitations compared with other empirical research methods, it is undoubtedly an effective way to probe into the complex and subtle development processes of the LACs. The BAC’s case may not completely represent other LACs, but it surely can be a window into the social conditions commonly faced by LACs. The experiences drawn from the example of the BAC may even have applications for the courts in China as they seek to become an independent, competent and fair forum.
The BAC’s Caseload: 1995-2005
Source: BAC’s Case Management System
(Arranged by Year and, Total Caseload, and Total International Caseload)
1995: 7: 0
1996: 149: 2
1997: 168: 1
1998: 233: 4
1999: 326: 8
2000: 449: 11
2001: 666: 20
2002: 891: 19
2003: 1,029: 33
2004: 1,796: 30
2005: 1,979: 53
This article is composed of five parts. Part I introduces how the data were collected. The data presented came mainly from personal observations, interviews, and archived documents. Part II focuses on how the BAC strives to be an independent institution. This section discusses in detail how LACs rely on local governments for their funding and for personnel, and to what extent this reliance affects the independence of an LAC. It also describes the BAC’s strategy for maneuvering within the legal and policy framework to obtain independent status. Part III explores the question of the competence of the BAC, analyzing the secretariat and the arbitrators separately. The analysis of the BAC’s process of strengthening its competence reveals a theme of raising standards and eliminating incompetence. Part IV explores whether the BAC is fair, based on two main criteria: whether effective mechanisms are in place to prevent the occurrence of unfairness, and whether the stated sanctions are enforced strictly when misconduct occurs. Some discussion draws comparisons with corruption in the judiciary, in light of the concern over the spread of corruption from the judiciary to arbitration. Part V summarizes the main findings from the case study of the BAC and analyzes what kind of role BAC leadership plays in the process of seeking independence, competence, and fairness. It looks ahead to the main challenges faced by the BAC as it continues to develop and by other LACs that attempt to model themselves on the BAC.
Part III is written below. The article in whole is available as an attached pdf.
III. RAISING STANDARDS AND ELIMINATING INCOMPETENCE
When a case is submitted to arbitration, a secretary will be assigned by the secretariat to manage the case and provide services to the disputing parties and the arbitral tribunal. As a result, the question of whether an arbitration commission is competent should be considered by inquiring separately into the competence of the secretaries and the arbitrators.
A. Are the Arbitrators of the BAC Competent?
Under the Arbitration Law, arbitration must be conducted by the arbitrators appointed from the list or panel of arbitrators maintained by an arbitration commission. Being listed in a panel of arbitrators is a precondition for a person to be appointed as an arbitrator in a case. In practice, the listing of arbitrators is a process by which an arbitration commission exercises its discretion pursuant to the uniform but general qualifications set out in Article 13 of Arbitration Law.28 Thus, whether a commission’s arbitrators are competent depends on whether an arbitration institution can successfully select and maintain a competent panel of arbitrators. The BAC recognizes that, as China has implemented a system of institutionalized arbitration, establishing a sound system for selecting and training qualified arbitrators is a responsibility that an arbitration institution must assume. It is also one of the objective requirements necessary for an arbitration institution to maintain its competitiveness and uphold its reputation.29 Therefore, to evaluate the competence of the BAC’s arbitrator panel, it is necessary to examine separately academic qualifications, appointment standards, professional training, and case-specific performances.
1. Academic Qualifications
Many scholars agree that education is an important indicator of the quality of an arbitrator. As shown in the table below, the statistics on academic qualifications of successive terms of arbitrators at the BAC indicates that the percentage of arbitrators with Ph.D. and master’s degrees has increased, while the percentage of arbitrators without bachelor’s degrees has declined from 65.45% in the first session to 8.64% in the fourth session. Thus, the level of education of arbitrators in the BAC has risen dramatically.
Certainly, the value of using education to measure competence should not be exaggerated. While discussing the competence of the judiciary in China, Professor Hualing Fu has pointed out that legal education may not be a valid test because legal reform and legal education are still relatively new to China. It also takes time for a legal system to evolve and mature. Given the intricate relationships the courts must maintain to survive politically and economically, the competence of the presidents of the courts could be determined by their political skill and connections, not their legal learning.30
The insights of Professor Fu can be confirmed by the distribution of the academic qualification of arbitrators of the first term. Around 1995, even those who were deemed professionals or experts in their field rarely held a bachelor’s degree or higher. At that time up to 65.45% of arbitrators on the panel had not received an undergraduate legal education. However, this does not mean that those appointed without higher education were necessarily competent. Interviews with Secretary-General Wang disclosed that two aspects of the arbitrator panels in the first term were not satisfying.31 First, most of the arbitrator candidates were recommended by the working units to which they belonged. Therefore, some units recommended the candidates according to their seniority rather than according to their actual ability to deal with the case. They treated the position of arbitrator as an honor to be conferred rather than a professional position. Although there were nearly 1,000 candidates in the pool for the first 273 arbitrators, some arbitrators proved unsuitable after the test of dealing with real cases.32 Second, to resolve the problem arising from the merger of newly established arbitration commissions with existing arbitration organs, the PRAI required that, as to the appointment of arbitrators or employment of personnel for the working body, those in existing arbitration organs who satisfied the requirements were to be considered first. As such, 44 arbitrators in the arbitrator panel of the first term were appointed from among the arbitrators of the former technology contract arbitration commission. But the number of technology contract disputes was very small, so most of the arbitrators in this field had little experience, if any. The subsequent progress made in choosing arbitrators is discussed below, after further consideration of the question of appointment standards.
2. Appointment Standards
The problems of arbitrator quality in the first term demonstrated the great need to build an arbitrator team with strong professional and ethical standards. Awareness of the importance of the arbitrators compelled the BAC to deliberate and explore constantly the issues of “what kind of person is suitable to be an arbitrator” and “how to select and train arbitrators.”33 Let us explore how the BAC answers these two questions in practice.
What kind of person is suitable to be an arbitrator? The BAC’s view was that, since the objective of arbitration is to resolve disputes fairly, reasonably and promptly, having high academic qualifications or job title and rank are merely an outward manifestation of professional qualification, neither of which necessarily represents nor truly reflects the actual standards and abilities of an arbitrator in handling cases.34 This means that legal education only provides the possibility for a professional to be a qualified arbitrator but is not the only requirement needed by an arbitrator. What are the further requirements of an arbitrator? Wang told me she once tried to find a description of what an ideal arbitrator should be, but she failed. Although it is not difficult to find a description of what an ideal judge should be, it is rare to come across a similar description of an arbitrator. After ten years of exploring, Wang formulated her own ideal image of an arbitrator:
An arbitrator should be an expert, a special talent with all-round capabilities, who is not only proficient in his specialty but is also familiar with arbitration theories, arbitration rules, and arbitration procedures and practices. He must not only know the theories, and have the requisite knowledge but must also have wisdom, experience and ability. An arbitrator must have an aspiration for arbitration work. Not only must he have an in-depth understanding of the values and significance of arbitration and a strong sense of identity with arbitration, he must also have a strong interest and passion for arbitration work (and not merely be interested in the status and honor accorded to an arbitrator), and have long-term plans and thoughts for his career development in arbitration. 35
Secretary-General Wang admitted that these attributes represent an ideal, but they are the fundamental ideas that are driving the BAC to spare no effort in the establishment of a modern arbitrator system.36 To attract outstanding talent, the BAC crystallized the provisions of the Arbitration Law on the qualifications of arbitrators, and promoted greater transparency and standardization by formulating its own standards and measures for appointing arbitrators. “The Standards for the Selection and Appointment of Arbitrators” (“Selection and Appointment Standards”) was deliberated and approved by the 1st Meeting of the 2nd Session of the BAC in September 1998. The criteria for the selection and appointment of arbitrators are based on the Arbitration Law and the needs of the BAC’s own development, and are considered in totality with the quality of the work force in Beijing. Specific requirements (such as an arbitrator’s educational background, professional experience and industrial evaluation) for professionals to act as arbitrators have been categorized under different headings, i.e., “lawyers,” “professionals from the economic and trade sector,” “personnel engaged in legal education or legal research work,” “personnel from administrative organs or industrial administrative departments,” “personnel who were originally engaged in arbitration work,” or “judicial officers who have left service or retired.” In accordance with this provision, up to 44.7% of the arbitrators on the panel of the first term were not re-appointed in 1998. Therefore, raising the qualification threshold by adopting the Selection and Appointment Standards helped not only with the appointment of qualified new arbitrators, but also by reducing the number of original arbitrators with unsatisfactory qualifications.
In December 1999, the 4th Meeting of the 2nd Session of the BAC approved the revisions to the “Standards for the Selection and Appointment of Arbitrators” and renamed it “Standards for the Selection, Appointment and Re-Appointment of Arbitrators,” stipulating that arbitrators must be “of noble character, fair and upright, conscientious and diligent, modest and prudent.” This revision augmented the moral content of the document and added the requirement that arbitrators “must be clear-minded and quick-witted, able to judge judiciously and with insight, able to communicate effectively in writing and orally, capable of hearing cases, mediation work and rendering awards and competent in handling cases.” Subsequently, the BAC revised the “Selection Standards” in April 2001 and September 2003 and renamed them “Administrative Measures for the Appointment of Arbitrators” (“Administrative Measures”). Procedural provisions for managing the selection and appointment of arbitrators were added, the parties’ expectations of arbitrators were adopted as the fundamental selection criterion, and the creation of a team of high-caliber arbitrators was set as the goal. The Administrative Measures also placed great emphasis on professional background, case-handling capabilities and experience of an arbitrator. For arbitrators in different categories, the Administrative Measures set forth specific requirements.37 The formulation and revision of the selection and appointment criteria and measures reflect the BAC’s focus and effort to build a qualified, consistent, and reliable arbitrator panel.
Since the criteria for the selection and appointment of arbitrators were issued, the BAC has made their strict implementation a high priority. On the one hand, the BAC actively takes in outstanding talents, providing them with opportunities and spurring them to become accomplished arbitrators as soon as possible; on the other hand, the BAC removes those arbitrators who fail to meet the moral standards and professional requirements of the panel of arbitrators. Through this removal of unqualified arbitrators and the addition of new arbitrators, the good reputation and professionalism of arbitrators are maintained. By 2005, the BAC had undergone three terms of changes and a total of 286 arbitrators had not been reappointed.38
3. Professional Training
While the BAC is stringent in selecting and engaging high caliber talent, it has always attached great importance to the training and examination of current arbitrators. Actually, since its establishment the BAC has organized arbitration training and emphasized that arbitrators should attend training sessions to improve their skills and stay current with relevant information. For example, from October to the middle of November 1995, all arbitrators were divided into two groups to receive training on the “Arbitration Law of P. R. China,” the Rules of Arbitration, and Ethical Standards for Arbitrators.39
In February 2002, the training of arbitrators was given even greater importance. At the 2nd Meeting of the 3rd Session of the BAC, a decision was made to implement a new training system for arbitrators. Newly-appointed arbitrators or arbitrators from previous terms who had not undergone training were to attend training courses on Ethical Standards for Arbitrators, Administrative Measures for Appointment of Arbitrators, and the rules for handling cases and rendering arbitral awards organized by the arbitration commission (BAC, 2002). The 2003 version of Administrative Measures provides that an arbitrator shall undergo the relevant training courses and requisite examinations on the arbitration rules, ethical standards, and arbitration practices. Those who do not attend the training will not be appointed by the Chairman of the BAC to hear arbitration cases. If a previously appointed arbitrator fails to attend the BAC’s courses for arbitrators, lacks arbitration experience or has not handled arbitration cases for a long period of time, the BAC will not re-appoint him (Articles 8, 12). This requirement links an arbitrator’s attendance at training courses with his appointment as an arbitrator by the chairman of the arbitration commission and his re-appointment by the arbitration commission.
On August 25, 2004, the 1st Meeting of the 4th Session of the BAC deliberated and approved “The Decision on Intensifying the Training and Examination of Arbitrators” (“Decision”). Other than reiterating the principle that the Chairman of the BAC shall give priority to appointing arbitrators to hear cases who have passed the training and examination conducted by the institution, the Decision stipulates that it will give priority in appointments to arbitrators who meet the requirements of the Administrative Measures for the Appointment of Arbitrators and who have also attended the institution’s training and sat for its examinations. The training and examinations for arbitrators shall be organized and conducted by “training institutions” commissioned by the arbitration commission,40 and an arbitrator’s training shall be included as part of his professional background and shall be listed in the BAC arbitrators computer enquiry system.41
4. Case-Specific Performance
The BAC has gradually and successfully enhanced the competitive qualifications of its arbitrator panel. With such amplified qualifications, did the BAC’s arbitrators perform in specific cases? Were they competent to handle real cases? Two approaches are helpful to explore this question. The first is whether the awards made by arbitrators stood the test of judicial supervision. By the end of 2005, the BAC had accepted 7,699 cases and concluded 6,840 cases, with a conclusion rate of 89%. According to the information available to the BAC, among the concluded cases, 26 cases were judicially set aside or partially set aside, eight cases were ordered to be re-arbitrated and 18 cases were disallowed.42 The percentage set aside or ordered to be re-arbitrated or disallowed was less than 1%, suggesting a generally high quality performance in the handling of cases. Furthermore, none of the cases set aside, ordered re-arbitrated, or disallowed was an international arbitration case.
Even in the small number of cases set aside, ordered to be re-arbitrated, or disallowed, the basis was not the incompetence of the arbitrators, but mainly because of the rigid judicial interpretation of the Arbitration Law. For example, the Chinese Arbitration Law provides that evidence shall be presented for examination during the hearing (Article 45). Most arbitrators held that: (1) the purpose of this provision is to guarantee the right of the parties to examine the evidence, and (2) the hearing is not mandatory, because the Arbitration Law also states that if the parties agree not to hold a hearing, the arbitral tribunal may render an award in accordance with the pleadings and other supporting documents (Article 39). As such, where evidence is produced by any party during or after the hearing, the arbitral tribunal may decide to admit the evidence without holding further hearings and require the parties to submit in writing any challenge to the authenticity, admissibility and relevance of such evidence within a specified period of time. But some judges have insisted that this practice violates the requirement of holding a hearing provided by the Arbitration Law and have set aside the related awards.43
Another way to evaluate whether BAC arbitrators are competent in specific cases is to interview the secretaries who work at the BAC office. The secretaries at the BAC have the opportunity to work with different arbitral tribunals and observe their performance in handling cases, so they are able to gauge the competence of arbitrators. According to my own experience and the interviews with other secretaries, the competence of arbitrators really is case-specific. In terms of deciding on substantive points of law, if the case to be handled falls into an arbitrator’s specialty, the arbitrator usually will be very competent to deal with the case. If not, the arbitrator is presented with a great challenge. As far as presiding over hearings and dealing with other procedural items, those arbitrators who have received training usually do a better job than those who have not. Generally, the most difficult cases are those involved with construction contracts. Only a small percentage of arbitrators on the panel are competent to be a presiding arbitrator in a major case concerning construction contract disputes.
Some experts believe that whether all local arbitration commissions are in fact competent and experienced enough to handle foreign-related arbitrations remains an open question because in practice most local commissions deal predominantly with domestic disputes, which do not involve foreign parties.44 Actually, many arbitrators on the BAC’s panel are also on the panels of other international arbitration institutions such as CIETAC and the Hong Kong International Arbitration Centre (“HKIAC”). Thus, the pivotal question is whether the parties nominate suitable experts to the arbitral tribunal when an international case is accepted by the BAC. Additionally, the BAC’s newly revised rules permit parties in international commercial arbitration to choose arbitrators outside the Panel of Arbitrators maintained by the BAC.45 If the parties want to select arbitrators outside the Panel of Arbitrators, the parties must submit the resume and detailed contacts of the candidate to the BAC. The candidate could act as an arbitrator if confirmed by the BAC and his/her term would expire at the close of the case, unless the BAC decides to list him/her on the Panel of Arbitrators (Article 55). These procedures should dispel any doubts about the competence of arbitrators in international arbitrations.
B. Are the Secretaries of the BAC Competent?
According to the BAC Rules, the Secretariat of the BAC (the “Secretariat”) handles the day-to-day affairs. A member of its staff will be appointed as the secretary to an arbitral tribunal to assist with case management, including administration of procedural matters (Article 1). In examining whether the secretaries are competent, three related questions should be explored: What are the functions of the secretaries? To fulfill the required functions, what kinds of qualifications are needed? Do the secretaries in the BAC meet those requirements?
1. Secretarial Functions
At the beginning of every case, the disputing parties contact the Secretariat before the arbitral tribunal is formed. When a case is initiated by the claimant and accepted by the case-filing office, it will be assigned to a case-handling secretary who is responsible for the management of that particular case. After receiving a case, the case-handling secretary sends the Respondent a Request for Submission of Defense, as well as a copy of the Application for Arbitration, its attachments, if any, a set of the BAC Rules, and its Panel of Arbitrators (Article 9). The defending party may raise a jurisdictional objection or an objection to the validity of the arbitration agreement after receiving the foregoing documents. In that case, the secretary has the authority, under Article 20 of the Arbitration Law, to make a finding regarding the objection on behalf of the arbitration commission. The defendant also may submit a counterclaim which then is reviewed and accepted by the secretary. The secretary also facilitates the composition of the arbitral tribunal, and following that, consults with the arbitrators to arrange for a hearing date. The secretary is also responsible for making the official record of the hearings and deliberations. If any party requests an expert opinion and the arbitral tribunal consents, the secretary arranges the procedure for obtaining it. After the arbitrators finish the draft of their arbitral award, the secretary reviews the award to be sure that there are no typographical errors or miscalculations. After the arbitral award has been served on the parties, the secretary collates all the files related to the case and submits them to the file archives.
From the description of the duties of the secretary, we can conclude that the secretary is the liaison between the arbitral tribunal and the parties and their representatives. Whether the secretary is skilled in communication and transmits the information accurately will have a direct influence on the trust and cooperation between the arbitral tribunal and the parties. The secretary also plays a key role in achieving a high quality and efficient arbitration. Though the arbitrator is the master of the procedure, the arbitrator usually is part-time and heavily depends on the secretary regarding procedural matters.46
2. Secretarial Qualifications
It is thus clear how the secretary can play an important role in arbitration. To fulfill the tasks required of the secretary, what kinds of qualifications are needed? One author points out that the qualifications of a secretary can be roughly divided into two aspects: professional ethics and professional skills.47 In terms of professional ethics, the secretary should be honest and self-disciplined, diligent and hardworking. In terms of professional skills, the secretary should possess expertise in a particular specialty, including particular knowledge of the arbitration law in that area, and multiple skills that include legal writing, computer competence, foreign languages, management and communication.
The BAC believes that the basic requirements of an ideal secretary comprise six characteristics: first, to hold strong ethical values, to be honest and self- disciplined, and to be scrupulous in separating public from private interests; second, to be discreet and keep confidential information carefully guarded; third, to be precise, meticulous, well-organized, and highly conscientious; fourth, to be cordial and courteous while providing good service and acting with initiative; fifth, to be of high professional competence and efficient; sixth, to be studious and curious, researching assiduously.48 Again, this is an ideal skill set, but it serves as a guide for the BAC as it selects and trains its secretarial team.
During my interviews with her, Secretary-General Wang disclosed that when she was establishing the BAC, some people working in the Beijing Municipal Government tried to transfer to the BAC. Wang did not accept many of these individuals because they had been working in governmental departments for a long time and probably would bring an entrenched, “red-tape ethos” with them. Thus, she came up with the idea that the BAC would adopt a new system of employment rather than use standard civil-service practices. Under the new employment system, the employee would sign an employment contract of a fixed duration with the BAC, and the job would no longer be one with an “iron rice bowl,” as is the norm with civil servant ranks. This decision encouraged those who had planned to transfer to the BAC to reconsider applying to work there, because a transfer would cost them the stable guarantee they possessed as civil servants in other governmental departments.
After successfully resisting the transfer of staff from other governmental departments, Secretary-General Wang had the opportunity to recruit more suitable staff members to the BAC. There were five persons appointed as the first set of secretaries: one graduated from Peking University with a Bachelor’s degree in Law and four graduated from China University of Politics and Law, two with Bachelor’s degrees in law and two with Master’s degrees in law.
In 1995, there was a great demand for law school graduates in China and it was easy for any graduate to find a good job. At that time, most of the law graduates preferred to become civil servants in government, especially in the central government. How was the BAC able to recruit well-qualified staff when it was impossible to know whether the BAC, as a new organization, would be a good employer? One of the five original secretaries still works at the BAC. She explained that she chose the BAC at that time mainly because she believed that working in a governmental department would only waste her youth and legal knowledge. Many believe that working in a governmental department consists of no more than reading newspapers and drinking tea while on duty. Another individual who is now working in the legal department of a regulatory institution after working at the BAC for eight years told me that he met Secretary-General Wang at a job fair and decided to join the BAC after talking with her. Actually, the Beijing Bureau of State Administration of Industry and Commerce had previously given him an offer. But he finally chose to work at the BAC because he identified with the outlook and values that Secretary-General Wang held.
3. Professional Competence
In practice, the secretary functions as the embodiment of the arbitration commission, as its key point of contact with the public.49 Arbitrators, parties and their representatives are generally exposed to an arbitration commission’s ethos, services, and integrity through interaction with its secretaries because they are so frequently in contact. After its initial staffing, the BAC maintained high criteria for recruiting new staff, and applying for the BAC also become increasingly competitive. In 2005, more than 1600 master’s degree graduates from law schools applied for only four vacancies in the BAC. Since the secretaries were selected through a competitive process based solely on the merit demonstrated in their applications, their impressive accomplishments and professional approach have been widely praised by arbitrators, disputing parties and their representatives. In 2006, the average number of annual cases managed and concluded by a secretary was 124.78.50
As for professional skills, there is no doubt that the secretaries of the BAC are widely perceived to be highly competent. Some may question whether the secretaries are competent to manage international cases, since most of the cases accepted by the BAC now are domestic. One of the most obvious differences between international and domestic cases is that a high proficiency in foreign languages is necessary for managing international cases. Actually, this would not be a problem for BAC secretaries, since proficiency in English or other foreign languages has long been a requirement when recruiting new staff. Some secretaries are even proficient enough to provide simultaneous interpretation for conferences. Recently, more and more foreign experts have given speeches in English on arbitration theory and practice in the monthly Arbitrator’s Workshop of the BAC, and some secretaries of the BAC have sufficient English skills to provide simultaneous translations. Some secretaries also have a command of Japanese or Korean. As for the management of arbitral procedure on an international case, BAC secretaries are similarly competent. Actually, many secretaries feel that it is more difficult to manage domestic cases than international cases, because according to the Arbitration Law, there is closer judicial supervision over domestic cases.
2 See Guo wu yuan ban gong ting guan yu guan che shi shi “Zhonghua Renmin Gongheguo zhong cai fa” xu yao ming que de Ji ge wen ti [Circular of the General Office of the State Council Regarding Some Problems Which Need to Be Clarified for the Implementation of the Arbitration Law of the People’s Republic of China] (June 8, 1996).
3 The BAC has been aiming to build itself into an international arbitration institution since 1999. See Wang Hongsong, 1999 nian gong zuo zong jie [The Work Summary in 1999] (Dec. 29, 1999) (unpublished memorandum, on file with the author). The WAC established an International Arbitration Court on December 18, 2005, with the main functions of accepting and hearing international commercial arbitration cases and cooperating and interacting with international commercial arbitration institutions. See “International Arbitration Court” (brochure, on file with the author). The GAC also took initial steps to establish an International Arbitration Court in 2005. See Guangzhou zhong cai wei yuan hui 2005 gong zuo zong jie ji 2006 gong zuo yao dian [The Work Summary in 2005 and Working Plan in 2006 of the Guangzhou Arbitration Commission] (Mar. 3, 2006) (unpublished memorandum, on file with the library of GAC).
4 For a specific discussion on the pros and cons of Chinese courts versus CIETAC, see William Heye, Forum Selection for International Dispute Resolution in China: Chinese Courts vs. CIETAC, 27 HASTINGS INT’L & COMP. L. REV. 535 (2004).
5 Donald C. Clark, Empirical Research into the Chinese Judicial System, in BEYOND COMMON KNOWLEDGE: EMPIRICAL APPROACHES TO THE RULE OF LAW 171 (Erik Jensen & Thomas Heller eds., 2003).
6 Nadia Darwazeh & Michael Moser, Arbitration inside China, in MANAGING BUSINESS DISPUTES IN TODAY’S CHINA: DUELING WITH DRAGONS 58 (Michael Moser ed., 2007).
7 Jerome A. Cohen, The Delicate Art of Arbitration, FINANCIAL TIMES, Nov. 30, 2005, at 11.
8 See Guo wu yuan ban gong ting guan yu zuo hao chong xin zu jian zhong cai ji gou he chou jian zhong guo zhong cai xie hui chou bei gong zuo de tong zhi [Circular of the General Office of the State Council on Making Good Arrangements for the Reorganization of Arbitration Institutions and the Establishment of the China Arbitration Association], (Nov. 13, 1994).
9 The ten recommendations proffered by Professor Cohen include: (1) CIETAC should not use its own personnel as arbitrators; (2) A national of a third country should serve as presiding arbitrator; (3) The presiding arbitrator should be a respected legal expert familiar with the relevant business background; (4) CIETAC should limit the number of cases in which someone can serve as an arbitrator at any one time; (5) CIETAC should prevent its arbitrators from serving as advocates in other CIETAC cases; (6) Advocates as well as arbitrators must fully disclose conflicts of interest; (7) CIETAC should enhance the confidentiality of its proceedings; (8) More stringent standards should be applied to prevent arbitrators from engaging in ex parte contacts regarding their cases; (9) CIETAC staff should not draft awards for arbitrators; (10) CIETAC should require a dissenting arbitrator to write an opinion and make it available to the parties and their advocates. When Professor Cohen discussed recommendations 1, 4, 5, 9 and 10, he mentioned that these measures had been implemented by the BAC. See Jerome A. Cohen, Time to Fix China's Arbitration, FAR EASTERN ECONOMIC REVIEW, January/February 2005, at 31.
10 Darwazeh & Moser, supra note 6, at 58.
11 Economist Intelligence Unit, No Dispute about It, BUSINESS CHINA, April 24, 2006.
12 DVD: Zhu zao gong xin li [The Establishment of Credibility] (BAC 2006) (on file
with the author).
27 In this category of disputes, usually there are many disputes with the same facts.
28 Arbitration Law, Art. 13: “The arbitration commission shall appoint fair and honest persons as its arbitrators. Arbitrators must fulfill one of the following conditions: 1. they have been engaged in arbitration work for at least eight years; 2. they have worked as a lawyer for at least eight years; 3. they have been a judge for at least eight years; 4. they are engaged in legal research or legal teaching and in senior positions; or 5. they have knowledge of the law and are engaged in professional work relating to economics and trade, and are in senior positions or the equivalent professional level. The arbitration commission shall establish a list of arbitrators according to different professions.”
29 Wang, Decade Review, supra note 24 at 259.
30 Hualing Fu, Putting China’s Judiciary into Perspective: Is It Independent, Competent, and Fair?, in BEYOND COMMON KNOWLEDGE: EMPIRICAL APPROACHES TO THE RULE OF LAW 208 (Erik Jensen & Thomas Heller eds., 2003).
31 Interview with Hongsong Wang, Secretary-General, BAC (Apr. 24, 2006).
32 Hongsong Wang, Quan guo zhong cai gong zuo hui yi shang de fa yan [The Speech at the National Arbitration Work Meeting] (September 13, 1997) (transcript on file with the author).
33 Wang, Decade Review, supra note 24 at 259.
34 Id. at 274. 35 Id. at 259-60. 36 Id. at 260.
37 For example, the revised 2003 Administrative Measures stipulate that the basic requirement for arbitrators in legal education or research work is they must not only be professors or research fellows but must also be “directly engaged in education or research work in civil and commercial law” and “possess the relevant experiences in handling cases”; for arbitrators working in the economic and trade sectors, the basic requirement is they must “hold a senior title in this field or a deputy senior title,” and they must also “have been engaged in economic and trade or professional technical work for eight years and have the relevant legal knowledge and a wealth of experience”; for arbitrators who are retired judges or who have left the judiciary, they must “hold a degree in law or higher academic degree” and must also have been “engaged in hearing civil and economic cases or research works for a long period of time,” “have a good reputation, high work performance standard, be competent in handling cases, a senior judge who was a presiding judge or deputy president of a law court or tribunal”; for arbitrators who are lawyers, they must not only “have a high professional standard and good reputation in the legal profession and no disciplinary or bad record,” they must also “be competent to act as a presiding arbitrator or sole arbitrator”; for arbitrators who are from Hong Kong, Macau and Taiwan and who are foreign nationals, other than meeting the aforesaid requirements, they must “have abundant practical experience in arbitration work.”
38 Wang, Decade Review, supra note 24, at 262.
39 Hongsong Wang, Beijing zhong cai wei yuan hui gong zuo zong jie [Work Summary of the Beijing Arbitration Commission] (December 29, 1996) (unpublished memorandum, on file with the author).
40 The BAC commissioned the Law School of Tsinghua University to organize and provide a four-day professional training course twice a year, consisting of Arbitration Law and its Value Orientation, The Ethics of Arbitrators, The Application of Evidence Rules in Arbitration Process, The Facilitation of Arbitration Process and the Disposal of Related Issues, The Drafting of Arbitral Award, Group Discussion, and Arbitration Moot Court, available at http://www.tsinghua.edu.cn/docsn/fxy/webchn/px/xm/20070709-zc.htm.
41 The BAC maintains an arbitrators database for the use of disputing parties, containing every arbitrator’s background information, such as education, occupation and specialty.
42 Hongsong Wang, Zai 2006 nian chun jie cha hua hui shang de jiang hua [The Speech at the Spring Festival Tea Party of 2006] (January 20, 2006) (transcript on file with the author).
43 Li Wang, Guo nei zhong cai si fa jian du shi zheng Yan jiu: yi Beijing zhong cai wei yuan hui wei li [An Empirical Research on the Judicial Supervision of Domestic Arbitration: Based on the Case of the BAC), BEIJING ZHONGCAI (BEIJING ARBITRATION) June 2004, at 13, 19.
44 Darwazeh & Moser, supra note 6, at 58.
45 The newly revised BAC Rules were adopted at the First Meeting of the Fifth Session of the Beijing Arbitration Commission on September 20, 2007 and took effect April 1, 2008.
46 For an introduction to the functions of the secretary during the process of case- handling, see Hongbo Jiang, Jia qiang zhong cai mi shu zhi ze, gui fan zhong cai ban an cheng xu [Strengthen the Functions of Secretary and Standardize the Procedure of Case- handling], available at http://www.ccarb.org/news_detail.php?VID=1629.
47 Lili Jiang, Zhong cai mi shu zhou yi [Preliminary Discussion on Arbitration Secretary], FAZHI RIBAO [LEGAL DAILY], Dec. 26, 2006.
48 Hongsong Wang, Mi shu de shu zhi [The Qualifications of Secretary] (April 29, 2005) (unpublished memorandum, on file with the author).
50 Hongsong Wang, 2007 nian chun jie cha hua hui fa yan [The Speech at the Spring Festival Tea Party of 2007] (February 13, 2007) (transcript on file with the author).
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