HKIAC rules in revision

By Joe Liu, HKIAC
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The Hong Kong International Arbitration Centre (HKIAC) launched a rules revision process in August 2017 to consider amendments to the 2013 HKIAC Administered Arbitration Rules (2013 rules) having regard to the latest trends in international arbitration, feedback from users and HKIAC’s past case management experience.

The 2013 rules have been widely regarded as one of the market-leading arbitration procedures with several innovative provisions, such as the availability of two options to pay arbitrators’ fees, leading the HKIAC to receive a nomination for a GAR award in 2014. Notwithstanding this, after multiple rounds of public consultation, the HKIAC considers that it is time to update the 2013 rules with certain amendments possibly to benefit users.

刘侨是香港国际仲裁中心的总法律顾问-Joe-Liu-is-a-managing-counsel-at-the-Hong-Kong-International-Arbitration-Centre
Joe Liu

The HKIAC has announced several new provisions to add to the 2018 Administered Arbitration Rules (2018 rules), intended to improve the procedural certainty and cost-efficiency of HKIAC arbitration. The provisions primarily address the following:

Use of technology. It is inevitable that technology will transform the conduct of arbitration and be increasingly used to address the constant demand for cost and time-effectiveness of arbitration. In recognition of this, the HKIAC encourages the use of technology to manage proceedings and to deliver documents.

There will be new provisions to recognize the uploading of documents onto a secured online repository as a valid means of service. Parties may agree to use their own repositories or a dedicated repository provided by the HKIAC. The 2018 rules will also identify the effective use of technology as a factor for an arbitral tribunal to consider when adopting suitable procedures for an arbitration.

Multi-party and multi-contract disputes. The HKIAC is at the forefront of developing effective provisions for disputes involving multiple parties and/or contracts. It is known for its comprehensive and far-reaching provisions on joinder, consolidation and single arbitration under multiple contracts. These set the market standard at the time of their introduction in 2013.

In the 2018 rules, the HKIAC further expands those provisions in, among other things, allowing a party to commence a single arbitration under multiple agreements even though these are between different parties. This is a feature not available in the 2013 rules. Furthermore, the HKIAC will add provisions to allow expressly the same arbitral tribunal to run multiple arbitrations concurrently with, for example, common procedural timetables and pleadings, concurrent or consecutive hearings, and separate awards, provided that a common question of law or fact arises in all the arbitrations. This new mechanism is intended to enhance efficiency and reduce costs in multiple proceedings, where consolidation is not possible or desirable.

Third party funding. With the imminent implementation of the legislative amendments to permit the use of third-party funding in arbitration and associated proceedings in Hong Kong, the HKIAC will include express provisions to address the issues of disclosure, confidentiality and costs of third-party funding.

Under these provisions, a funded party is required to disclose the existence of a funding arrangement and the identity of the funder, as well as any changes to these details that occur after the initial disclosure. The confidentiality provisions will be amended to allow a funded party to disclose arbitration-related information to its existing or potential funder for the purposes of obtaining or maintaining funding. In addition, a provision will be added to confer discretion on an arbitral tribunal to take into account any funding arrangement when fixing or apportioning costs of arbitration.

Early determination of points of law or fact. There appears to be a trend among major arbitral institutions to include summary determination procedures in their rules in response to the common criticism that arbitration has no equivalent to the summary judgment or striking-out procedure in court litigation, thereby allowing a party to advance a meritless claim or defence through a full procedure. This trend also reflects users’ demand, as shown in the 2018 Queen Mary and White & Case International Arbitration Survey (2018 Survey) where over 20% of respondents selected summary determination procedures as an innovation that would make international arbitration more appealing for the banking, energy, construction and technology sectors.

The HKIAC will introduce an Early Determination Procedure expressly to empower an arbitral tribunal to determine a point of law or fact that is manifestly without merit or manifestly without the tribunal’s jurisdiction, or a point of law or fact that, assuming it is correct, would not result in an award being rendered in favour of the party that submitted such point. The tribunal must decide whether to proceed with a request for early determination within 30 days from the date of the request. If the request is allowed to proceed, the tribunal must issue an order or award, which may be in summary form, on the relevant point within 60 days from the date of its decision to proceed. These time limits may be extended by the HKIAC or party agreement. Pending the determination of the request, the tribunal may decide how to proceed with the underlying arbitration.

Procedural certainty. Commercial parties want certainty. 43% of respondents to the 2018 Survey considered “greater certainty” as a factor that would have the most significant impact on the future evolution of international arbitration. To that end, the HKIAC will introduce a series of provisions to achieve greater procedural certainty.

The HKIAC’s Emergency Arbitrator Procedure will be updated to confirm the timing of filing an application for emergency relief, the test for issuing such relief and the maximum fees payable to an emergency arbitrator. The procedure will be expanded to allow a party to file an application before, concurrent with or after the submission of a Notice of Arbitration, but prior to the constitution of an arbitral tribunal. All time limits under the procedure will be shortened and an emergency arbitrator’s fees will be subject to a maximum amount. A new provision will be added to clarify, among other things, that the granting of emergency arbitrator relief will be subject to the same test applied by an arbitral tribunal when deciding whether to issue an interim measure.

In its regular procedure, the HKIAC will introduce for the first time a default three-month time limit for rendering an arbitral award after the closure of the proceedings or the relevant phase of the proceedings (as opposed to the overall six-month time limit for issuing an award in the expedited procedure). There will also be a requirement that, after the proceedings are declared closed, the tribunal must notify the parties and the HKIAC of the anticipated date of delivering an award. All these requirements bring certainty as to when parties can expect to receive a decision on their dispute.

COMING INTO EFFECT

With the provisions above and many others, the 2018 rules will provide a procedural framework under which parties and tribunals can conduct proceedings seamlessly with an unrivaled range of mechanisms to resolve parties’ disputes through a highly efficient, cost-effective and certain process.

The 2018 rules are anticipated to come into effect in November 2018. The full text of these rules is available at the HKIAC’s website: www.hkiac.org.

Joe Liu is a managing counsel at the Hong Kong International Arbitration Centre