Balancing finality and accuracy in investment arbitration cases

By Fu Xiangyu, BAC/BIAC
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Balancing finality and accuracy in investment arbitration cases, 投资仲裁案件终局性与准确性的兼容

In recent years, issues related to investment arbitration reform have attracted widespread discussion. One such issue is the establishment of an appeal mechanism for investment arbitration. There is no doubt that the establishment of an appeal mechanism is a challenge to the finality of investment arbitration. Although the appeal mechanism faces lots of critics, it actually provides a possibility to balance the finality and accuracy of the investment arbitration award.

The Beijing Arbitration Commission/Beijing International Arbitration Centre (BAC/BIAC) promulgated the Rules for International Investment Arbitration on 1 October 2019, the first rules to introduce an appeal mechanism, which also takes these two essential elements into account. In order to ensure the compatibility of the finality and accuracy of the case, a balance was made between the two elements when the rules were drafted.

In the 40th meeting of the UN Commission on International Trade Law (UNCITRAL) Working Group III, the issue of establishing and exercising the appeal mechanism for investment arbitration was discussed, from 8-12 February 2021. The meeting elaborated on five elements for exercising the appeal mechanism for investment arbitration as follows: Confirming the scope and standard of reviews; identifying appealable awards; affirming the effectiveness of appeals; ensuring controllable case load; and setting time limits.

Based on UNCITRAL’s opinion, apart from affirming the effectiveness of appeals, all the other elements are efforts made to guarantee original finality and efficiency of arbitration. The rules involved and responded to all the five elements in one of its appendixes, the Rules of Appeal Proceedings for International Investment Arbitration (the appellate rules): Article 1 of the appellate rules confirms the scope and standard of reviews; article 3 confirms the scope of appealable arbitrations; clause 4 of articles 1, 6 and 7 explicate control over access of case load; and clause 1 of article 8 states the time limits.

Clause 4 of article 42 regulates that the arbitral tribunal shall, before finalising an award, send a draft of it to the parties for comment, and fix a time limit for them to submit their comments. The parties’ comments shall be strictly limited to specific aspects of the draft award. The arbitral tribunal is not bound to accept the comments, but may give appropriate consideration to them where it considers necessary. A party’s failure to submit comments within the time limit shall not preclude the arbitral tribunal from making the award.

This article is one of the best manifestations of the concept of compatibleness between finality and accuracy. Allowing parties to make comments on the drafts of awards can avoid to the greatest extent errors regarding the application of rules and laws and fact finding, thus avoiding the appeal procedure. It may cause problems including parties putting forward new claims, opinions or new controversial points, or continuing to provide evidence.

However, to resolve these problems, the arbitral tribunals may set time limits in advance, according to article 19 of the Rules on Working Procedures and Timetable, and Appendix B on Indicative Timetable for International Investment Arbitration, to avoid delay of procedures. At the same time, based on the BAC’s terms of reference, the arbitral tribunals will also confirm the focus of a dispute as early as possible, to avoid such delays.

The author believes that the many terms of the rules have fully addressed the criticism and concerns about the existing investment arbitration system. Its appeal mechanism, the biggest highlight of the rules, along with its draft for comments mechanism, not only improve the “accuracy” of the investment arbitration system, but also resolve the concern on the “finality” of the system to a certain extent, making a good balance of the seemingly irreconcilable contradiction between the two elements.


Fu Xiangyu is a case manager at Beijing Arbitration Commission/Beijing International Arbitration Centre (BAC/BIAC). BAC/BIAC case manager Li Yejing also contributed to the article