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Arbitration agreements

Validity
What are the validity requirements for an arbitration agreement?

Section 19 of the Arbitration Ordinance (Cap 609) provides that an arbitration agreement must be in writing. However, the term ‘in writing’ has a broad definition, and includes an arbitration agreement whose content is recorded in any form – even if the arbitration agreement itself has been concluded orally, by conduct or by other means.

The definition expressly includes:

  • electronic communications;
  • an agreement in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other; and
  • a reference in a contract to any document containing an arbitration clause, provided that the reference is such as to make that clause part of the contract.

Enforcement of agreements
How are arbitration agreements enforced in your jurisdiction? What is the attitude of the national courts towards arbitration agreements?

Under Section 20 of the Arbitration Ordinance (Cap 609), where a claim is brought before the court in a matter which is the subject of an arbitration agreement, a party to the claim can request that the parties be referred to arbitration. The court will grant that request and stay the court proceedings unless the arbitration agreement is null and void, inoperative or incapable of being performed.

The Hong Kong courts are generally supportive of arbitration. Arbitral awards, whether made in or outside Hong Kong, are enforceable in the same way as court judgments, provided that leave is first obtained under Section 84 of the ordinance. Leave will only be refused in exceptional cases.

Consolidation
Can an arbitral tribunal with its seat in your jurisdiction consolidate separate arbitral proceedings under one or more contracts, and, if so, in what circumstances?

An arbitral tribunal has no power to consolidate arbitration proceedings. However, the Hong Kong International Arbitration Centre (HKIAC), which administers arbitrations in Hong Kong under its own sets of rules, has the power to do so under certain circumstances. Under Article 28 of the HKIAC Administered Arbitration Rules 2013, the HKIAC has the power, at the request of a party and after consulting with the parties and any confirmed arbitrators, to consolidate two or more arbitrations pending under the rules where:

  • the parties agree to consolidate;
  • all of the claims in the arbitrations are made under the same arbitration agreement; or
  • the claims are made under more than one arbitration agreement, a common question of law or fact arises in both or all of the arbitrations, the rights to relief claimed are in respect of, or arise out of, the same transaction or series of transactions and HKIAC finds the arbitration agreements to be compatible.

In addition, Schedule 2, Section 2 of the Arbitration Ordinance (Cap 609) provides that the Hong Kong courts have the power to consolidate two or more domestic arbitrations where the court finds that:

  • a common question of law or fact arises in both or all of them;
  • the rights to relief claimed in those arbitral proceedings are in respect of or arise out of the same transaction or series of transactions; or
  • it is desirable to do so for any other reason.

Choice of law
How is the substantive law of the dispute determined? Where the substantive law is unclear, how will a tribunal determine what it should be?

Most agreements contain a clause expressly stating the law governing the substantive contract. Where no such clause exists, the tribunal will apply conflict of laws rules in order to determine the substantive law of the dispute. These rules are quite complex, but the basic principle is to give effect to the parties' likely intentions as to where a dispute arising from the contract should be resolved. It is possible that different issues in a dispute will need to be resolved by reference to different systems of law.

Even where the parties have expressly chosen the law governing the substantive contract, and perhaps also the procedural rules for arbitration, it is not uncommon for them to have failed to stipulate which other relevant systems of law apply, such as the law governing the arbitration proceedings and the law governing the agreement to arbitrate – thereby leaving them open to dispute. This can lead to a great many complications, and can require recourse to the courts (which will again apply conflict of laws rules to resolve the issue). In an effort to prevent such difficulties from arising, the Hong Kong International Arbitration Centre has included in its model arbitration agreement an express choice of law clause covering these points.

Separability
Are there any provisions on the separability of arbitration agreements?

Yes. Under Section 34 of the Arbitration Ordinance (Cap 609) (which incorporates Article 16 of the UNCITRAL Model Law), the arbitral tribunal:

"may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause."

Multiparty agreements
Are multiparty agreements recognised?

Yes. The Arbitration Ordinance (Cap 609) does not restrict the number of parties to an agreement to arbitrate. In addition, multiparty arbitrations by way of joinder or consolidation are expressly provided for in Articles 27 and 28 of the Hong Kong International Arbitration Centre Administered Arbitration Rules 2013.

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