First Emergency Arbitration Procedure In China

The Beijing Arbitration Commission (BAC) recently administered the first emergency arbitration proceeding in mainland China. Wei Sun was the emergency arbitrator who heard the application and he has since published a discussion of the matter online. Although the decision has not been made public, the case was also discussed online by the applicants' counsel who referred to it as the “GKML case”.

Background

The two applicants, who were the Claimants in the main arbitration, were companies registered in Hong Kong. The first respondent was a company registered in the Cayman Islands and the second respondent was a Chinese national with assets in Hong Kong. The second respondent was the controlling shareholder of the first respondent and the dispute related to a share repurchase agreement. The applicants applied under Article 63 of the current Beijing Arbitration Commission Arbitration Rules, which came into force on 1 April 2015 (“2015 BAC Rules“), for an emergency arbitrator to grant the following interim relief measures:

Disclosure by the respondents of information about their assets; An order preventing the respondents from dissipating their assets; An order preventing the respondents from commencing a lawsuit or similar procedure to deter enforcement; and An order preventing the respondents from encouraging others to act contrary to 1 - 3 above. Applicable rules

Article 63 of the 2015 BAC Rules provides that, after the BAC has accepted a case, any party seeking interim measures may by written application to the BAC apply for the appointment of an emergency arbitrator in accordance with the applicable law. The BAC will then appoint an emergency arbitrator within two days of receiving payment of application fees from the applicant. In this case, Wei was appointed on the same day that the applicants submitted the request for emergency arbitration.

Article 63(4) grants the arbitrator broad discretion to determine the interim application procedure by providing that “an emergency arbitrator shall consider the application for interim measures in such manner as he or she deems appropriate, and shall ensure that the parties have a reasonable opportunity to present their cases“.

Under Article 63(5) the emergency arbitrator shall issue a decision within 15 days of appointment. In this case, the decision was rendered within 11 days.

Decision

Wei noted the broad discretion under Article 63(4) and, taking into account the arbitration rules of other...