The Hong Kong International Arbitration Centre (HKIAC) has recently updated its Administered Arbitration Rules (the "2024 Rules"), which came into effect on 1 June 2024. The 2024 Rules introduce several key changes aimed to enhance the efficiency of the arbitration process, keep up with social norms and make appropriate provisions to cater for the use of electronic communications in HKIAC arbitrations.
The 2024 Rules are a refined version of the already widely received 2018 version of the Rules. With the introduction of significant amendments in 2018 such as early determination, third-party funding, emergency arbitration and improvements on multiple contracts and arbitrations, the 2018 version has proven to be practical and effective, and there has been a steady increase in the number, amount, and diversity in HKIAC arbitrations over the years. With the further refinement, the 2024 Rules will continue to be market-leading and serve as a sound foundation for the effective and efficient conduct of arbitrations.
Key features and implications of 2024 Rules that practitioners should pay attention to include:-
New and Expanded Powers for the Tribunal and the HKIAC
The 2024 Rules grant the tribunal and the HKIAC new and expanded powers to deal with various situations that may arise in the course of arbitration, including codifying some existing practices. For example:
- The tribunal can exclude new legal representatives from participating in the arbitration if their involvement would create a conflict of interest with the arbitrators (Article 13.9).
- The HKIAC can revoke the appointment of an arbitrator who fails to perform their functions or comply with the Rules, after giving the arbitrator and the parties an opportunity to comment (Article 13.10).
- The tribunal can determine preliminary issues or bifurcate the proceedings, either on its own initiative or upon a party’s request, after consulting with the parties (Article 13.6).
- The HKIAC can suspend or terminate the arbitration if the parties fail to pay the required deposits for the costs of the arbitration before the constitution of the tribunal (Article 41.4).
- The HKIAC can review and adjust the fees and expenses of the tribunal, based on either the hourly rates or the sum in dispute, and can also determine the method of remuneration if the parties have not agreed on one (Schedules 2 and 3, paragraph 5).
These powers are intended to preserve the efficiency and integrity of the arbitration process and to avoid unnecessary delays or complications.
Diversity, Environmental, and Information Security Considerations
The 2024 Rules also reflect the HKIAC’s commitment to promoting diversity, environmental, and information security considerations in arbitrations. For example:
- The parties and the co-arbitrators are encouraged to consider diversity, including gender, age, nationality, culture, and ethnicity, when appointing arbitrators (Article 9A).
- The tribunal is required to take into account the environmental impact of the arbitration when determining the procedures and allocating the costs of the arbitration (Articles 13.1 and 34.4(f)).
- The parties are encouraged to agree on, and the tribunal is empowered to order, measures to protect the security of information in the arbitration, such as encryption, anonymization, or redaction (Articles 13.1 and 45A).
These considerations are in line with the HKIAC’s statistics, which show a continuous growth and diversity of parties and disputes in HKIAC arbitrations, as well as a growing awareness of data security.
Procedural Efficiency and Emergency Arbitrator Powers
The 2024 Rules also aim to enhance the procedural efficiency and the emergency arbitrator powers in HKIAC arbitrations. For example:
- The tribunal is required to declare the proceedings closed within 45 days from the date of the last submissions, unless otherwise agreed by the parties or decided by the tribunal (Article 31.1).
- The practical implication of Article 31.1 is that the tribunal is required to render the final award within three months from the date of the closure of the proceedings, unless otherwise agreed by the parties, extended by the HKIAC, or justified by exceptional circumstances (Article 31.2).
- The emergency arbitrator can issue interim or preliminary orders before issuing the emergency decision, and can also proceed with the emergency decision even after the transmission of the case file to the tribunal (Schedule 4, paragraphs 10, 12, and 13).
These provisions are designed to expedite the resolution of disputes and to provide effective interim relief to parties in urgent situations.
Multi-party and Multi-contract Provisions
The 2024 Rules also clarify and update the provisions on multi-party and multi-contract arbitrations, which are increasingly common in complex commercial disputes. In particular, the new Article 29.2 provides for the designation and appointment of arbitrators in a single arbitration under multiple contracts by deeming the parties’ waiver of the right to designate an arbitrator, bringing it in line with the position of a successful consolidation under Article 28.8.
Costs of Arbitration
The 2024 Rules helpfully set out factors that the tribunal should take into account in determining whether the costs of the arbitration in question are reasonable and whether and how such costs should be apportioned, such as the relative success of the parties, scale and complexity of the dispute and the conduct of the parties (Article 34.4). From the authors’ experience, most, if not all, of the factors are the common factors that the tribunal would take into account, but this new Article provides the backing under the Rules.
Scope of Application and Model Arbitration Clause
Generally speaking, the 2024 Rules will apply to all HKIAC arbitrations commenced on or after 1 June 2024, unless agreed otherwise by the parties (Article 1.1). The HKIAC has also updated its model arbitration clause to reflect the 2024 Rules, which parties may wish to adopt or adapt for their future contracts (Article 10.1).
Conclusion
The 2024 Rules are a welcome development that demonstrates the HKIAC’s responsiveness to the evolving needs and expectations of the arbitration community. The 2024 Rules introduce several improvements aimed at upholding the efficiency and integrity of HKIAC arbitrations, while maintaining the flexibility and party autonomy that are the hallmarks of arbitration. Parties and practitioners should familiarize themselves with the 2024 Rules and their implications for their practices.