Summary of Key Changes in 2013 HKIAC Administered Arbitration Rules (effective from 1 November 2013)

This article summarises key changes which arbitration practitioners and clients should be aware of in the revised administered arbitration rules recently unveiled by the Hong Kong International Arbitration Centre (“HKIAC”). The revised rules (the “2013 HKIAC Rules”), finalised after a revision process and consultation period lasting over a year, are effective from 1 November 2013.

The 2013 HKIAC Rules incorporate several new features of modern arbitral practice which will help to ensure that the HKIAC remains an attractive choice for international and regional arbitration.

The key changes in the 2013 HKIAC Rules include:

Emergency arbitrator provisions (Article 23.1 and Schedule 4)

In line with international trends, new procedures have been introdued for the appointment of an emergency arbitrator for urgent interim or conservatory relief before the constitution of the arbitral tribunal. If the HKIAC determines it should accept an application, the HKIAC shall seek to appoint an Emergency Arbitrator within 2 days. A decision on the application for urgent interim relief shall normally be made within 15 days from the date on which the case file is transmitted to the Emergency Arbitrator. The Emergency Arbitrator shall have no further power to act once the arbitral tribunal is constituted. Unless otherwise agreed by the parties, the Emergency Arbitrator may not act as arbitrator in any arbitration relating to the dispute giving rise to the application for urgent interim relief.

Joinder of additional parties (Article 27)

Under the previous rules, the joinder provisions were limited and the arbitral tribunal could only join parties with the consent of the existing parties to the arbitration. Under the 2013 HKIAC Rules, the arbitral tribunal has the power to allow an additional party to be joined to the arbitration provided that, prima facie, the additional party is bound by an arbitration agreement under the 2013 HKIAC Rules. If a request for joinder is submitted before the arbitral tribunal is constituted, the HKIAC has prima facie power to join such party. Any question as to the jurisdiction of the arbitral tribunal arising from the HKIAC’s decision will be decided by the arbitral tribunal. If an additional party is joined before the arbitral tribunal is constituted, all parties will be deemed to have waived their rights to designate an arbitrator and the HKIAC may revoke any existing appointment. In these circumstances, the HKIAC will appoint the tribunal. The parties waive any objection, on the basis of any decision to join an additional party to the arbitration, to the validity and/or enforcement of any award made by the arbitral tribunal in the arbitration, in so far as such waiver can validly be made.

Consolidation of arbitrations (Article 28)

The previous rules made no provision for consolidation of arbitrations. Under the 2013 HKIAC Rules, the HKIAC has the power to consolidate two or more HKIAC arbitrations into the arbitration that commenced first. In such case, the parties to all the arbitrations will be deemed to have their right to designate an arbitrator and the HKIAC may revoke any existing appointment. In these circumstances, the HKIAC will appoint the tribunal. The parties waive any objection to the validity and/or enforcement of any award made by the arbitral tribunal in the consolidated proceedings based on the HKIAC’s decision to consolidate arbitrations.

Single arbitration under multiple contracts (Article 29)

The previous rules did not provide for the situation where claims arise under multiple contracts. Under the 2013 HKIAC Rules, claims arising out of or in relation to multiple contracts can be raised in a single arbitration provided that (i) all parties to the arbitration are bound by each arbitration agreement giving rise to the arbitration; (ii) a common question of law or fact arises multiple contracts; (iii) the rights to relief claimed are in respect of, or arise out of, the same transaction or series of transactions; and (iv) the arbitration agreements under which those claims are made are compatible.

Expedited procedure (Article 41)

Under the previous rules, arbitrations in which the amount in dispute in aggregate did not exceed US$250,000 were subject to expedited procedures unless the parties agreed otherwise or the HKIAC determined otherwise. Under the 2013 HKIAC Rules, the expedited procedures operate on an elective, rather than automatic, basis. Parties may apply to the HKIAC for the arbitration to be conducted on an expedited basis where (i) the amount in dispute is less than HK$25 million; (ii) the parties agree; or (iii) in cases of exceptional urgency.

Security for costs (Article 24)

Arbitral tribunals will now have express power to order security for costs, in line with the Arbitration Ordinance (Cap. 609). The previous rules did not expressly provide for this.

Fees of the tribunal (Article 10 and Schedules 2 and 3)

The parties have the option of having an arbitral tribunal’s fees calculated in accordance with either (i) the HKIACs schedule of fees based on agreed hourly rates in accordance with and Schedule 2; or (ii) a percentage of the sum in dispute per Schedule 3. If the parties cannot agree, the default position will be the former.

Parties responsible for service of Notice of Arbitration, Answer to Notice of Arbitration and certain applications

Previously, the HKIAC would effect service of the Claimant’s Notice of Arbitration and the Respondent’s Answer to Notice of Arbitration. The 2013 HKIAC Rules provide that the Notice of Arbitration and Answer to Notice of Arbitration must include a confirmation that copies (including any exhibits) have been or are being served simultaneously on all other parties. Additionally, a Claimant must notify and lodge documentary verification with the HKIAC of the date of receipt by the Respondent of the Notice of Arbitration. Similar provisions apply to any Request for Joinder, an Answer to Request for Joinder, a party’s comments on a third party’s Request for Joinder, a Request for Consolidation and an application for the appointment of an Emergency Arbitrator.

Conclusion

The 2013 HKIAC Rules are a welcome development, reflecting the latest best practice in international arbitration and promoting effective institutional oversight without undermining party autonomy.

If you wish to know more about the 2013 HKIAC Rules or have queries about arbitration in general, please contact us.

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