How many arbitrators do you need in mainland China?

By Ma Xiaoxiao, Beijing Arbitration Commission/Beijing International Arbitration Centre

In the practice of commercial arbitration, the number of arbitrators may vary depending on the degree of acceptance of a legal system treating the principle of party autonomy. Article 30 of the Arbitration Law regulates the composition of arbitration tribunals, and the author addresses this in light of her practice at the BAC/BIAC.

Article 30 of the Arbitration Law provides that the arbitration tribunal may consist of either one arbitrator or three arbitrators. In addition, most of the arbitration rules of Chinese arbitration institutions specify that, in the absence of any special agreement between the parties, the number of arbitrators should be one or three, according to the amount in dispute. In practice, if the parties have special agreements on the number of arbitrators or the way the arbitration tribunal is formed, the arbitration institutions will generally respect the contractual stipulations and make corresponding adjustments to the arbitration fees charged at the time of filing the case.

The reason for a special agreement may vary. For a higher-value case, but one that is less complicated, or for cases of the same type of subject matter, having one arbitrator may help save on arbitration costs and, to the maximum extent, realize the needs for efficiency. For a smaller-value case, but one that is fairly complicated, three arbitrators may reduce the possibility of personal bias or a wrong judgment. Arbitrators from different professions or backgrounds will help realize the fairness in a justifiable award through deliberation, co-operation and perspective contribution.

But can parties agree on another number of arbitrators to form an arbitral tribunal? It has been argued that article 30 of the Arbitration Law is a mandatory provision, as the number of arbitrators can only be one or three. It would otherwise be invalid if the parties’ agreement violates article 30. Others argue that article 30 is a discretionary stipulation, and parties’ agreement overrides it.

The author believes article 30 is discretionary, and should not be the restriction of parties’ autonomy. Three reasons for this are: (1) article 30 does not involve the jurisdiction of arbitration, or validity of arbitration agreement, which may leave the power for these at legislative discretion. It is an item that may be agreed by the parties; (2) The wording of article 30 is “may” rather than “shall”; and (3) in practice, the parties may agree on the composition of the arbitral tribunal in various forms. For example, parties may agree that the presiding arbitrator must be jointly selected by two parties’ nominated arbitrators, or a lucky draw of arbitrators, etc.

Such an agreement is inconsistent with the provisions of article 31 of the Arbitration Law on the composition process of the arbitral tribunal, but is generally accepted in practice. The author argues that the provision on the number of arbitrators as specified in article 30 and the provision on the form of arbitral tribunal as specified in article 31 are essentially embodiments of parties’ autonomy, and should not be treated differently. Considering often extreme circumstances in practice, arbitration institutions may well explore more possibilities in these matters. The innovative arbitration rules in this regard will protect the trust that parties place on arbitration and realize the advantages of the arbitration mechanism.

For example, article 45 of the BAC/BIAC Arbitration Rules provides that “in the event that, after the conclusion of the last hearing, an arbitrator on a three-member arbitral tribunal is unable to participate in the deliberation and render an award as a result of his or her death, or for other reasons, the chairman may replace that arbitrator with a substitute arbitrator. Alternatively, provided that the parties consent, and with the approval of the chairman, the two remaining arbitrators may continue the arbitration proceedings and make decisions, or an award.”

Different numbers of arbitrators reflects the flexibility of the arbitration procedure. Either parties’ autonomy or innovation with the rules will prevail as long as it is helpful in realizing efficiency of the procedure and fairness of the outcome. This is the distinguishing feature of arbitration from litigation.

A further question could be, can we have an even number of arbitrators? In the given framework of the Arbitration Law, there is no mechanism for courts to make a determination where a procedure impasse occurs. Certain jurisdictions have laws, like the British Arbitration Act 1996, that stipulate an umpire can handle an even number deadlock. However, this is impossible in China, as is fostering new consensus between disputing parties, and thus unwanted delays are caused.

To sum up, the author suggests that, in the ongoing discussion of the Arbitration Law, the revision of article 30 will feature. It is better to explicitly make it a discretionary rule by allowing parties autonomy in wording and, if necessary, to make it clear that the number must be odd at the time of the first composition of the arbitration tribunal.

Meanwhile, in order to allow necessary innovation, the wording could be read as follows: In the absence of a special agreement between the parties, an arbitration tribunal may comprise three arbitrators or one arbitrator, unless the arbitration rules of the selected arbitration institution say otherwise.

Ma Xiaoxiao is a case manager at Beijing Arbitration Commission/Beijing International Arbitration Centre (BAC/BIAC)