Low rates of pay to arbitrators in China are forcing top lawyers to reject work or spend a limited amount of time on cases, according to practitioners in the market.

International and Chinese arbitrators working in the country typically receive substantially less pay than in other jurisdictions, raising concerns over the quality of awards handed down as top arbitrators shy away from appointments.

The country's largest arbitration institution, the China International Economic and Trade Arbitration Commission (CIETAC), calculates rates based on the claim amount, but does not publically specify the percentage that arbitrators receive.

According to local sources, CIETAC takes a significant cut of the parties' fees for administration of the hearing, leaving arbitrators with as little as $2,000 (£1,300) for a simple case and $10,000 (£6,300) for a complex case, compared with tens or even hundreds of thousands of dollars they could receive in Hong Kong or Singapore.

"Many busy people try to avoid getting appointed, so in some cases it can take quite some time to form a tribunal quickly," said a senior dispute resolution partner at one of Beijing's top law firms, who spoke on condition of anonymity.

"They are listed in the panel so usually they should be available for the appointment, but since they are not very well remunerated in these cases good arbitrators try to push work away rather than accept it willingly.

"Where they do accept work, they are not incentivised to spend enough time on cases and generate good awards."

Around the world, arbitration institutions generally calculate arbitrator pay based on pre-determined hourly rates or an 'ad valorem' system – where the pay to the arbitrator is based on the claim amount. Hourly rates are usually capped by the arbitration body, while an ad valorem system normally has a range of fees attached to the amount in question.

At the London Court of International Arbitration (LCIA), arbitrators are paid hourly rates of £250-£450 per hour, soon to be increased to a maximum of £500.

At the Singapore International Arbitration Centre (SIAC) and regional branches of the International Chamber of Commerce (ICC), arbitrator pay is calculated using an ad valorem system, while in Hong Kong the International Arbitration Centre (HKIAC) allows lawyers to choose between ad valorem and hourly rates, which are set to be capped at HK$6,500 (£530) in January.

Some arbitrators in China say they treat arbitration like pro bono work – they do it to help the institution or on a one-off basis to gain valuable experience.

For international arbitrators, there is an option for higher pay subject to the parties shouldering the additional costs, as few lawyers will accept work at the existing rates.

"The remuneration is a real problem," said Christine Kang (pictured), a dispute resolution partner at Jun He Law Offices who is regularly appointed as an arbitrator for Chinese and English procedures for CIETAC.

"Foreign arbitrators are paid a bit more than Chinese arbitrators, but it is still low compared with international standards. Some foreign arbitrators will not accept the appointment. Some of them come once for the CIETAC experience but then never come back.

"CIETAC needs to find a way to improve this, otherwise it will restrict the development of the arbitration institution. The key role in arbitration is the arbitrator. They need to take action to make sure they have high-quality arbitrators, or they will fall behind the other international institutions."

The director of CIETAC's supervision division, Zhao Jian, told Legal Week that pay to arbitrators was proportional to the low fees charged to parties to have their cases heard – fees that are lower than any other arbitration institution in the world. He added that CIETAC was currently in the process of taking active measures to improve arbitrators' remuneration in the country.

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