HKIAC rethinking arbitration from users’ point of view

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For years, arbitration conferences have been practitioner-focused. This has to change. In recent times, there have been developing trends toward regulating arbitration practice internationally. This has to be carefully considered and applied. In the future, the emphasis of arbitration should be back on the users, their needs and their preferences. Any form of dispute resolution exists to serve the international business community.

郑若骅 Teresa Cheng
郑若骅 Teresa Cheng

The Hong Kong International Arbitration Centre’s development of its administered arbitration rules, first promulgated in 2008 and revised in 2013, is a prime example of addressing the needs of the market with the users in mind.

Hong Kong has been an arbitration hub for years in the region, providing ad hoc arbitration services to international businesses. The international debate in the past as to the pros and cons of ad hoc arbitrations and administered arbitrations has shown the desires of some users to have a set of arbitration rules they can refer to when drafting a dispute resolution clause, for the case to be administered by an institution when it is commenced, and for the fees to have a certain degree of predictability. With that in mind, the 2008 HKIAC administered arbitration rules were promulgated.

The landscape of businesses has changed in terms of the complexities of the suite of contracts to be entered into for an investment, multiple parties being involved in varying capacities in any one transaction and the overlapping legal and factual issues that can arise in compatible but different contracts. These call for a necessity to revise the rules to address these prevailing features of international businesses. On 1 November 2013, the new HKIAC rules came into effect with a view to better serving the users.

The 2013 rules are the product of experience under the 2008 administered arbitration rules, international experience on application of other arbitration rules, multiple rounds of public consultation and hands-on workshops with users, practitioners and arbitrators. The 2013 rules retain the “light touch” approach. The amendments reflect the latest trends and best practice in international arbitration while catering for the changing landscape of international businesses. For example, one of the key features of the new rules is the introduction of provisions catering for consolidation and multiple contracts, thereby enhancing flexibility to deal with complex disputes. Further, the 2013 rules allow the users to remunerate arbitrators on the basis of either an hourly rate or an ad valorem schedule, implement a cap on the hourly rate to be charged by an arbitrator and set forth standard terms of appointments. These provisions will help users control costs more effectively.

The HKIAC is in the process of revamping its organisational structure and will newly establish an executive committee to serve as the core body that proposes policy to the council and directs the activities of the HKIAC. This executive committee will comprise the chairpersons of three standing committees, one of which will advise the HKIAC secretariat on case-related matters. This revamp is intended to address the needs of users for quality, transparency and predictability in the application of the 2013 rules. The rules will be applied and interpreted consistently with the aims and purpose of international arbitration in mind.

Having set up the infrastructure, HKIAC strives to capitalise on the soft power of Hong Kong – its human resources – not just local talent but the international practitioners that Hong Kong has attracted by its innate open and free-market environment. Counsel in the secretariat include practitioners who have chosen to work with HKIAC to enhance services provided with their multilingual skills, different legal backgrounds and experience in the field of dispute resolution, and importantly their dedication and hard work.

Yet, any arbitration is only as good as the arbitrator, and if one may add, the legal representatives of the parties. It is important, therefore, that the quality of the practitioners be maintained and enhanced for the users. This is achieved through the provision of continuing education. Apart from the training that is conducted by bodies and institutions that have been established for many years in Hong Kong, HKIAC will be taking an active role in providing forums and platforms for discussion, and training practitioners in international commercial and investment arbitration. Hong Kong Arbitration Week will continue to serve its purpose, and other avenues will be explored to further achieve this aim, to provide a conducive learning environment and encourage creative yet solid ideas to be formed.

Sustainable development is essential to building trust and success in any business. While the importance of vastly experienced practitioners sharing their views in conferences is an indispensible element to development, only the participation of the young rising stars will make it sustainable. They will be encouraged to participate more actively, to ensure that the next generation of arbitration practitioners will be equally able and reliable, if not better. HK45 is a body comprising young and talented arbitration practitioners aspiring to develop their interests and career in this area, and HKIAC has been and will be working closely with them to further this important objective, with Hong Kong as a venue for arbitration in mind. HKIAC hopes that by so doing, users that have chosen HKIAC as the administering body will be assured that their arbitration clauses will continue to be handled by sound and knowledgeable practitioners, arbitrators and counsel alike. The pool of talented young practitioners will provide the users with a choice of arbitrators with more competitive rates and availability.

The number of arbitration cases administered by the HKIAC has increased on average by 30% year on year. We are expanding our reach overseas, as evidenced by the fact that a good majority of our cases involve cross-border disputes. These disputes cover a wide range of areas of law including commercial, corporate, maritime, construction, insurance and intellectual property. While these are important achievements for any arbitration institution, HKIAC focuses on the quality of service and innovative initiatives to collaborate with the broader international business and arbitration community, and in particular those in Asia.

HKIAC has one overriding agenda and that is to engage the users, through its Users’ Council and other avenues, and to rethink how arbitration should be from the users’ perspective.

The author, Teresa Cheng SC, is the new chairperson of the Hong Kong International Arbitration Centre, effective 1 January 2014. Cheng is also vice president of the International Council of Commercial Arbitration (ICCA) and a member of the International Centre for Settlement of Investment Disputes (ICSID) panel of arbitrators, designated by the chairman of the ICSID Administrative Council. In 2008, she was the first Asian woman elected through a global election as president of the Chartered Institute of Arbitrators (CIArb). Cheng was awarded the Gold Bauhinia Star by the Chief Executive of Hong Kong in recognition of her public service to Hong Kong in 2011. She is currently the chairperson of the Financial Dispute Resolution Centre, and also sat as a deputy judge in the Court of First Instance of the High Court of Hong Kong.