发布时间： 2019-12-3 供稿人：王瑞华
Reducing the risk of sham arbitrations
Credibility is crucial for the existence and development of commercial arbitration institutions.It is also the guarantee for a healthy environment within arbitration practice.
The existence of fraud litigation is a serious concern and has led to the amendment and judicial interpretation of the Civil Procedure Law and Criminal Law. In terms of arbitration, although debated, the concept of sham arbitration has incurred equal attention in both laws.
In practice, the author has rarely experienced a sham arbitration, but the concern of its adverse effect definitely hurts the credibility of arbitration. Therefore, a comprehensive consideration seems necessary.
Arbitral institutions and tribunals would welcome a mechanism to prevent arbitral proceedings from being manipulated to harm the legitimate rights and interests of users of the system. Such a mechanism would need to identify shams scientifically and effectively, so preventing risk. This article explores how to prevent the risk of sham arbitration within each stage of the arbitration proceeding.
At the case acceptance stage: Reminders and risk alerts. In mainland China arbitration practice, the case-filing or case acceptance department of an arbitration institution conducts formal reviews of matters such as double-checking the capacity of the parties, arbitration clauses and claims, etc.
When doing so, institutional personnel should keep an eye on whether the claims are specific and clear, what the background is to the dispute，and in general be sensitive to any abnormal reaction or attitude from the parties concerned. Reminders and risk alerts could be given to make sure the parties are acting on the good faith principal. A letter of commitment, if necessary, could be required.Meanwhile, the case-filing department may mark risky material, or make a note for colleagues who will later manage the arbitration proceedings.
Before the hearing: Making full preparations. For arbitration cases in which sham arbitration risks may exist, continual attention is necessary before the hearing. Case managers could communicate with the arbitration tribunal in a timely manner and give more details when concerned that a sham arbitration may occur, such as in cases of “hand-in-hand" arbitrations. When making preparations for the hearings of such cases, the tribunal is recommended to pay more attention to the risk points when preparing case notes or hearing outlines.
During the hearing: Comprehensive and prudent identification. The arbitration hearing may be a process of confrontation. Sufficient information exchange between the parties and observations of the parties’ behaviour can help the arbitral tribunal identify whether there is a risk of sham arbitration. Specifically, they should focus on three items.
First, strengthen the overall control of the hearing, and observe the responses and performances of the parties.Before the hearing, the tribunal can address the parties, emphasizing the disciplines and reiterating the principle of good faith in arbitration, and the legal consequences of sham arbitration.
The tribunal may further identify the risk of a sham arbitration by observing the performances of the parties during the hearing. If the party’s opinions are self contradictory, or the party intentionally avoids illustrating issues, or disregards their core interests, or if they appear too tense to express their opinions correctly, the tribunal should pay more attention to identify whether there is risk behind the behaviour.
Second, focus on evidence checking and review. When there are any contradictions of facts and evidence, the original evidence presented by the party concerned shall be carefully verified, and the statements and admissions of the party shall be trusted with caution if there is no original evidence. When the parties concerned refuse to provide original evidence, or fail to reasonably explain the evidence, the evidence is better not to be adopted.
Third, the investigation should be carried out prudently. Regarding explanations or illustrations from the parties thatare obviously inconsistent with industry practice and commercial rationality, the tribunal is recommended to learn the factual background and performance of the contract through proper inquiries.
In the meantime, the tribunal could make professional judgment and timely response based on experience. Thus, it would not be easy for the parties to fabricate the background and other information.
From hearing to the closing stage: Rendering awards prudently. For cases in which the risk of sham arbitration might still exist after the hearing, the arbitral tribunal shall be more prudent in making arbitration awards, and ensure that the claims of the applicant can be supported only when the evidence chain is clear and complete.
If the evidence is insufficient for the arbitral tribunal to substantiate and admit the claim, the arbitral tribunal may reject the claim on the ground of lack of evidence. In addition, if both parties have reached consent in advance, and have a strong will towards a conciliation statement, the arbitral tribunal should carefully examine the legality of the conciliation agreement. Through prudent demonstration, if this leads to a sham arbitration, the tribunal should reject the parties’ application.
Wang Ruihua leads the case filing division of Beijing Arbitration Commission/Beijing International Arbitration Centre (BAC/BIAC).
BAC/BIAC case managers Yang Yufei and Liu Nianqiong also contributed to the article.