The HKIAC’s updated ‘light touch’ Rules include key provisions on joinder, consolidation, multiple contracts and single arbitrations, costs, emergency relief and expedition.
In November 2013, the HKIAC introduced new Administered Arbitration Rules after a year-long consultation. It presented these as maintaining its signature ‘light-touch’ approach, reinforcing the importance of party autonomy, while keeping in step with modern best practice in international commercial arbitration.
Although the 2013 Rules were introduced and effective from 1 November 2013, the new provisions relating to consolidation of arbitration, multi-contract arbitrations and emergency relief will not apply to arbitration agreements concluded before the effective date unless the parties agree otherwise.
The arbitral tribunal has power to join additional parties to an arbitration if that party is bound by a valid arbitration agreement under the Rules giving rise to the arbitration. This will not prejudice the tribunal’s power to subsequently decide on questions of jurisdiction arising from the joinder decision.
Parties to an arbitration may submit a joinder request to the tribunal requesting further parties be joined to the arbitration. Third parties may also, of their own volition, request to be joined to an arbitration.
Where a tribunal has not been constituted, the HKIAC will decide whether the requirements for joinder areprima facie [on the face of it] met. The tribunal, once constituted, will then hear any jurisdictional objections from the parties arising from the HKIAC’s prior decisions on joinder.
Where joinder occurs before the tribunal is confirmed, all parties to the arbitration shall be deemed to have waived their rights to designate an arbitrator, the HKIAC may revoke the appointment of any designated or confirmed arbitrator, and the HKIAC will appoint the arbitral tribunal itself.
The HKIAC may consolidate two or more arbitrations at the request of a party and in consultation with other parties and any confirmed arbitrators, where the parties agree to consolidate and all claims in the arbitrations are made under the same arbitration agreement.
Consolidation may also take place where the claims are made under more than one ‘compatible’ agreement with a common question of law or fact in both or all of the arbitrations and with rights arising out of the same transaction or series of transactions.
In deciding whether to consolidate, the HKIAC takes into account all the circumstances of the case.
If the following conditions are met, claims arising out of, or in connection with, more than one contract may be made in a single arbitration.
- All parties to the arbitration are bound by each arbitration agreement giving rise to the arbitration.
- A common question of law or fact arises under each arbitration agreement giving rise to the arbitration.
- The rights arise out of the same transaction or series of transactions.
- The arbitration agreements under which those claims are made are compatible.
The parties are deemed to have waived their rights to object to the validity/enforcement of an arbitral award based on the arbitral tribunal’s decision made under articles 27 to 29.
Tribunal fees and expenses
Articles 9, 10, schedules 2 and 3; and the HKIAC’s practice notes
Fees and expenses may be determined by applying an hourly rate or by a schedule of fees based on the sum in dispute, i.e. on an ad valorem [‘in proportion to the value’] basis. While parties are free to choose between them, the hourly rate method will prevail if parties cannot agree.
These schedules also contain the standard terms on which a tribunal is appointed.
The HKIAC also issued separate practice notes on cost implications, setting out more detail.
Where an hourly rate is used to determine the arbitrators’ fees, the agreed hourly rate must not exceed a rate set by the HKIAC (currently HK$6,500 – the US dollar equivalent is US$835). If fees are determined on an ad valorem basis, the revised schedule of fees has been simplified, making it easier for parties to estimate and control costs (schedule 3, article 6).
Article 23 and schedule 4
Emergency relief is an urgent interim or conservatory measure available to a party to an arbitration before the constitution of an arbitral tribunal.
A party requiring emergency relief may, at the same time as or following the filing of a notice of arbitration – but prior to the constitution of the tribunal – submit an application to appoint an emergency arbitrator following the procedures set out in schedule 4.
The emergency arbitrator cannot subsequently act as an arbitrator without the parties’ agreement, and the emergency arbitrator’s power ends once the tribunal is constituted.
Where the request for emergency relief is granted, an emergency arbitrator is normally appointed within two days and a decision rendered within 15 days from the date on which the case file was passed to the emergency arbitrator.
Decisions, orders or awards from an emergency arbitrator have the same effect as an interim measure. They are binding on parties, and can be modified, suspended or terminated by the emergency arbitrator or the arbitral tribunal. Meanwhile, parties are not prevented from seeking urgent interim or conservatory measures from a competent judicial authority.
Before the tribunal is constituted, a party can apply to the HKIAC for the arbitration to be conducted in accordance with an expedited procedure if there is exceptional urgency; or if the amount in dispute does not exceed HK$25 million (US$3,200,000) and the parties are agreed.
Where the expedited procedure applies, the proceedings are heard by a sole arbitrator (unless the arbitration agreement provides otherwise and the parties do not agree to alter the effect of that agreement). The claim is determined based on the documents alone, unless the arbitrator decides that it is appropriate to hold one or more hearings. The award is normally made within six months, with reasons stated in a summary form.
Jurisdiction of tribunal
The arbitral tribunal’s power to rule on its jurisdiction is made explicit under the 2013 Rules. This includes ruling on any objection concerning the existence, validity or scope of an arbitration agreement.
The HKIAC may decide on jurisdictional questions before the tribunal is concluded. The arbitration may proceed if the HKIAC is prima facie satisfied that an arbitration agreement under the 2013 Rules may exist.
A regional trend
Following the introduction of the 2013 HKIAC Rules, the Japanese Commercial Arbitration Association introduced changes to its rules on 1 February 2014, echoing some of the changes made by the HKIAC, including the introduction of emergency arbitrator procedures and interim relief. These are now common features of the arbitration rules of a number of leading international arbitration institutions.