HKIAC Rules 2013

In June 2013, the Hong Kong International Arbitration Centre (the “HKIAC”) published revised Administered Arbitration Rules, which will come into force on 1 November 2013 (the “2013 Rules”).

The original Administered Arbitration Rules took effect from 1 September 2008 (the “2008 Rules”) and, after 3 years of use, it was considered that the 2008 Rules generally worked well and no major overhaul was required. The 2013 Rules simply clarify the 2008 Rules and introduce certain provisions codifying current best practices. The 2013 Rules continue to provide for a light touch approach.

The 2013 Rules govern an arbitration where an arbitration agreement provides for the same to apply or provides for arbitration “administered by HKIAC” or words to similar effect and the Notice of Arbitration is submitted on or after 1 November 2013. However, this is subject to Articles 23.1, 28, 29 and Schedule 4 not applying where the arbitration agreement was concluded before 1 November 2013. Key changes include:

Consolidation and joinder (Articles 27 to 29)

Tribunal has been given power to join a party (upon the request of an existing party provided the additional party is bound by an arbitration agreement, or upon the request of a third party). The 2008 Rules only provided for limited power to join a party with the written consent of an existing party applicant and the additional party. HKIAC may also consolidate 2 or more arbitrations (into the arbitration that commenced first) upon a party’s request if a common question of law or fact arises and the rights to relief arise out of the same transaction or series of transactions, or allow claims arising out of multiple contracts to be made in a single arbitration. The 2008 Rules contained no express provision for consolidation.

Emergency relief (Article 23.1 and Schedule 4)

A party may now apply for emergency relief concurrent with or after the Notice of Arbitration, but before constitution of the tribunal. If the HKIAC accepts the emergency application, short deadlines are provided for, namely, appointment of the emergency arbitrator within 2 days and within 15 days of transmission of the file, the emergency decision must be made. Such decision is to bind the parties until the rendering of the final award or until the emergency arbitrator or tribunal so decides.

Expedited procedure (Article 41)

Circumstances in which parties may apply for their dispute to be determined on an expedited basis have been expanded. The monetary threshold has been raised to HK$25 million (equivalent to over US$3 million), albeit based on such threshold, the expedited procedure only applies if the HKIAC so decides upon the application of a party, rather than automatically under the previous threshold of US$250,000 as per the 2008 Rules. Otherwise, the HKIAC may decide that the expedited procedure applies if the parties so agree or in cases of exceptional urgency. The expedited procedure means the presumption of a sole arbitrator and documentary evidence only, as well as the award being required to be rendered within 6 months.

Capped hourly rate and standard terms of appointment (Article 10.1 and Schedules 2 and 3)

Under the 2008 Rules, parties may agree for the tribunal’s fees to be calculated based on a prescribed percentage of the sum in dispute or hourly rates. Such choice remains under the 2013 Rules, but if hourly rates are opted for, a cap set by the HKIAC from time to time applies, initially at HK$6,500 per hour (equivalent of approximately US$830). Standard terms of appointment have also been introduced, which can be amended by agreement or the HKIAC. The purpose is to reduce the need for the parties to negotiate these issues.

Arbitration Amendment Bill 2013 (the “Bill”)

The Bill was gazetted on 28 March 2013 and a second reading of the same in the Legislative Council (Hong Kong’s parliament) took place on 24 April. It is hoped that the amended Arbitration Ordinance will come into force in August.

One main amendment is to implement the reciprocal arrangement for enforcement of awards concluded with Macau in January. This would mean awards made in Macau are enforceable in Hong Kong with leave of the court (limited grounds for refusal of enforcement are prescribed virtually identical to those for New York Convention awards). This fills a gap since Hong Kong and Macau are not separate states, but rather special administrative regions of China, and previously a Macau award was not considered a foreign award in Hong Kong and reliance could not be placed on the New York Convention.

The Bill also provides that emergency relief granted by an emergency arbitrator (whether in or outside Hong Kong) is enforceable in the same manner as an order or direction of the court with leave of the court (applicant must show emergency relief sought to be enforced, inter alia, preserves assets, evidence and/or status quo and/or prevents prejudice to arbitral process). This supports the introduction of emergency relief provisions to the 2013 Rules, as well as the growing worldwide trend to provide for emergency relief, for example, in the ICC and the SIAC rules.