Ariel Ye                                                Stephen Johnson
Partner, King & Wood Mallesons    Senior Foreign Legal Consultant, King & Wood Mallesons
D +86 10 5878 5083                            D +86 10 5878 5265
ariel.ye@cn.kwm.com                     stephen.johnson@cn.kwm.com

The Beijing Arbitration Commission (BAC) has recently adopted the new version of its arbitration rules (New Rules), which will become effective on 1 April 2015. The New Rules make it more convenient for parties to join additional parties and consolidate arbitral proceedings. As a result, the New Rules are a very positive development in bringing the BAC arbitration procedures in line with best international arbitration practice.

Joinder of parties to arbitral proceedings

Many commercial contracts are entered into between multiple parties. When a dispute arises between two parties, in the context of arbitration, it is often difficult for one of the parties to join an additional party (which was also part of the agreement under dispute). No such problem exists in domestic courts, because courts have the power to join additional parties to proceedings.

The current BAC Arbitration Rules did not contain any provisions that allowed a party to an arbitration proceeding to join an additional party. However, article 13 of the New Rules addresses this issue. Article 13 provides that, prior to the constitution of the arbitral tribunal, the parties may apply to the BAC to join an additional party under the same arbitration agreement. If the arbitration tribunal is already constituted, an application for joinder will only be accepted if the claimant, respondent and the party to be joined agree. The process for joining a third party is set out in articles 7 to 10 of the New Rules.

The joinder provisions in the New Rules compare favourably with current international arbitration practice. Article 13 of the New Rules most closely resembles the joinder provisions in the ICC Arbitration Rules. Article 7 of the ICC Arbitration Rules similarly allows a party to apply to the Secretariat to join a third party before the constitution of the arbitral tribunal. In addition, the ICC Arbitration Rules do not permit third parties to be joined after the constitution of the tribunal “unless all parties, including the additional party, otherwise agree”.

Accordingly, the joinder provisions in the New Rules are a welcomed addition. They ensure that arbitration proceedings at the BAC are handled more efficiently and effectively. In allowing additional parties to be joined, the BAC’s procedures are in line with current international arbitration practice. In doing so, the drafters of the New Rules have achieved their goals.

Consolidation

It is important for an arbitral institution to have the power to consolidate arbitral proceedings. For example, often large IT companies enter into proforma contracts with various parties. Frequently the same issue arises under the contracts and the IT company is required to initiate multiple arbitration proceedings involving the same contract and with the same issues in dispute. If an arbitral institution has the power to consolidate multiple proceedings, it can save a significant amount of costs and can avoid different arbitral tribunals delivering inconsistent awards.

The current BAC Arbitration Rules do not contain any provisions for the consolidation of multiple proceedings. However, article 29 of the New Rules addresses this issue. It provides that, where the parties consent and the BAC considers it necessary, the BAC may consolidate two or more arbitrations into a single arbitration. In deciding whether to permit the consolidation the BAC may take into account all circumstances, such as the arbitration agreements.

The consolidations provisions in the New Rules most closely resemble the provisions in the ICC Rules. Like the New Rules, the ICC Arbitration Rules similarly provide that the ICC Court (rather than an arbitral tribunal) may, at the request of a party, consolidate two or more arbitrations into a single arbitration. Article 10 then sets out three circumstances in which the ICC Court will permit consolidation of arbitral proceedings. We note that, under the New Rules, the BAC has a wider scope to consolidate arbitral proceedings than the ICC Arbitration Rules.

Lastly, we note that the UNCITRAL Arbitration Rules do not contain any provisions for consolidation of proceedings. As a result, in the context of consolidating proceedings, the New Rules are preferable to the UNCITRAL Arbitration Rules, because they provide more flexibility for the BAC to consolidate proceedings.

Conclusion

The New Rules’ provisions regarding joinder of additional parties and consolidating proceedings are a very positive development for the BAC. These provisions will provide the parties with more flexibility in arbitral proceedings and will help parties to avoid additional costs and time in having to initiate multiple proceedings. By adopting the New Rules, the BAC has brought its procedure in line with best international practice. This will ensure that the BAC is a more attractive forum for parties to initiate arbitration proceedings.