In August 2017, the “Hong Kong International Arbitration Centre” (“HKIAC”) drafted new rules which modified in depth its version of 2013 and took into account the latest developments of international arbitration.
After several public consultations with arbitration practitioners in Hong Kong and worldwide confirmed the relevance of a revision, the HKIAC announced the introduction of new arbitration rules, intended to better meet the arbitration practice requirements and the realities of the modern arbitration world. The new rules entered into force on 1st November 2018.
The new rules address three very remarkable innovations: the introduction of new provisions concerning the use of new technologies by parties and arbitral tribunals (1) transparency of third party funding (2) and the implementation of an Early Determination Procedure (3).
The new rules also make other significant changes, in particular with respect to procedures involving several parties and/or multiple contracts and (4) the Emergency Arbitrator Procedure (or Emergency Relief) (5).
1. Technology at the center of the arbitration process
Following the undeniable development of new technologies in the legal and business fields, the drafting team edited new provisions in order to enhance time and cost efficiency within the arbitration process.
These new rules allow parties to upload their documents onto a secured online repository as a valid means of service. Parties may thus agree to use their own repositories or a dedicated repository provided by HKIAC (Articles 3.1(e), 3.3 and 3.4 2018 Rules).
The new article 13.1 also recognizes the effective use of technology as an element to be considered by an arbitral tribunal when adopting suitable arbitration procedures.
2. Transparency of third party funding
Third Party Funding (“TPF”) has been authorized both in Singapore and Hong Kong. Those countries amended their laws respectively on 14 June 2017 for Hong Kong (a new article 10A was added by the Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Ordinance 2017) and 10 January 2017 for Singapore (see. Civil Law (AMENDMENT) ACT 2017).
The HKIAC followed this general trend and introduced new detailed rules with respect to TPF.
Therefore, pursuant to article 44 of the 2018 Rules, a funded party is required to disclose the existence of a funding agreement, the identity of the funder and any subsequent changes to such information. That information has to be communicated as soon as possible without any time bar imposed by the text (See. article of 18th October 2018 published on the HKIAC website).
Provisions for transparency were also amended for the purpose of allowing a funded party to disclose arbitration-related information to its existing or potential funder in order to obtain or to assure that the existing funding will be maintained (art. 45.3 of the 2018 Rules)
Furthermore, a new rule was introduced which confers to the arbitral tribunal a discretionary power to take into account the existence of a TPF when it decides the allocation of costs (art. 34.4 of the 2018 Rules)
Comparable provisions exist in the Note on arbitrator conduct in cases involving external funding published by the Singapore International Arbitration Centre (“SIAC”) (Singapore International Arbitration Centre Practice Note, PN—01/17 (March. 31, 2017), Administered Cases under the arbitration rules of the Singapore International Arbitration Center, On Arbitrator Conduct in Cases Involving External Funding, March. 31, 2017) but they are provided by a separate and supplementary document to the arbitration rules.
3.Recognition of an Early Determination Procedure
The HKIAC also followed the tendency initiated by numerous arbitration institutions to include summary procedures in their rules.
For this purpose, the HKIAC adopted an Early Determination Procedure which “empowers an arbitral tribunal to determine a point of law or fact that is manifestly without merit or manifestly outside of 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” ( HKIAC “News Alter”, “New HKIAC Administered Arbitration Rules to come into force on 1 November 2018”).
This procedure has been already established by other arbitration centers such as the ICC in its Note to parties and Arbitral tribunals on the conduct of the Arbitration under the ICC rules of arbitration (paragraphs 59 to 64) but also the Stockholm Chamber of Commerce (SCC) which provides for a similar mechanism (article 39 of the SCC Rules).
Pursuant to article 43 of the 2018 HKIAC Rules, the tribunal shall 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 arbitral tribunal must issue an order or award, which may be in summary form, within 60 days from the date of its decision to proceed. Those time limits may be extended by the HKIAC or by agreement of the parties (art. 43.6 of the 2018 Rules). Pending the determination of the request, the arbitral tribunal may decide how to proceed with the underlying arbitration (art. 43.7 of the 2018 Rules).
4. Revision of the rules regarding multi-party disputes or arbitration under multiple contracts
Rules concerning joinder, consolidation, and single arbitration under multiple contracts have been implemented by several arbitration institutions. For example, one can find such provisions in articles 8 to 10 of the ICC rules. Such rules also exist under the SIAC arbitration rules (articles 6 to 8 of the 2016 Rules).
If in 2013, the HKIAC had introduced provisions concerning disputes involving several parties and/or multiple contract, in its new rules, it extended the scope of these provisions by authorizing a party to commence a single arbitration under multiple agreements even though they are concluded by different parties (art. 29 of the 2018 Rules).
Furthermore, the HKIAC added provisions according to which the same arbitral tribunal is allowed to conduct multiple arbitrations at the same time, or one immediately after another, or suspend any of those arbitration after the determination of any other of them provided that (i) the same arbitral tribunal is constituted in each arbitration and (ii) a common question of law or fact arises in all the arbitrations (art. 30 of the 2018 Rules). For this purpose, the arbitral tribunal shall establish common procedural timetables and pleadings for these concurrent proceedings (Joe Liu, ‘HKIAC introduces New Rules’, article publié le 22 octobre 2018 sur le Kluwer arbitration blog).
This new mechanism aims at reducing costs and improving efficiency in multiple procedures where conditions to consolidate are not met.
5. Modification of the provisions concerning Emergency Relief
The new arbitration rules also clarified a number of gaps within the 2013 version of the Rules, and most particularly with respect to the Emergency Relief mechanism.
In the new version, the procedure has been extended to allow a party to file an application before, during or after the submission of a Notice of Arbitration. However, the appointment of the emergency arbitrator must be done prior to the constitution of the arbitral tribunal (Schedule 4.1 of the 2018 Rules).
In addition, the rules fixed a cap that arbitrators must not exceed when fixing the arbitration fees (see. article published on the HKIAC’s website, « HKIAC Average Costs and Duration »).
Finally, a new provision specifies that an emergency arbitrator, once appointed, will apply the same test of admissibility for interim measures, as provided by article 23.4 of the 2018 Rules, when considering an application for Emergency Relief (Schedule 4.2 of the 2018 Rules). An emergency measure will be granted provided that the claimant suffered an irreparable harm and that there is a reasonable possibility that the requesting party will succeed on the merits of the claim (article 23.4 of the 2018 Rules).
The Emergency Arbitrator Procedure is all the more useful for an arbitration seated in Hong Kong insofar as Section 22B Arbitration Ordinance Cap. 609 provides that every emergency relief granted by an Emergency Arbitrator under the relevant rules is enforceable as an order or direction of the Hong Kong court. It is also the case in Singapore through Section 27 (1) du Singapore International Arbitration Law Cap. 143 (included in the notion of “foreign award”).
Caroline Duclercq and Stanislas Kauffmann