Hong Kong

• Courts' willingness to intervene in the arbitration process
• Consolidation
• Injunctions
• Emergency relief
• Mandatory provisions
• Arbitration (Appointment of Arbitrators and Mediators and Decision on Number of Arbitrators) Rules
• Arrangement with the Mainland
• Arrangement with Macao

Introduction

The regulatory framework for arbitration in Hong Kong comprises the Arbitration Ordinance (Cap.609) (the “Ordinance”) and the Arbitration (Appointment of Arbitrators and Mediators and Decision on Number of Arbitrators) Rules (“Arbitrator Appointment Rules”) (Cap.609C).

References to "sections" are to sections of the Ordinance.

Under the Ordinance, domestic arbitration and international arbitration are subject to regulation by the same provisions, such provisions being largely based on the UNCITRAL Model Law on International Commercial Arbitration.

The provisions of the Ordinance apply to arbitrations where the place of arbitration is Hong Kong, whether or not the arbitration agreement is entered into in Hong Kong. However, for arbitrations outside Hong Kong, a limited number of provisions apply, including:

• the court’s power to stay court proceedings and refer the parties to arbitration (section 20);
• the court’s power to grant interim relief (sections 21 and 45);
• the court’s power to grant leave to enforce any emergency relief granted by an emergency arbitrator (sections 22A and 22B);
• the court’s powers to make an order directing the inspection, photographing, preservation, custody, detention or sale of any relevant property by the arbitral tribunal, a party to the arbitral proceedings, or an expert, or directing sample to be taken from, observations to be made of or experiments to be conducted on any relevant party (section 60);
• the court’s power to order the enforcement of an order or direction made by an arbitral tribunal (section 61); and
• the court’s power to enforce Convention awards (sections 82 to 98D).

Courts' willingness to intervene in the arbitration process

The Ordinance recognises party autonomy and emphasises parties' freedom to agree on how a dispute should be resolved, subject to the observance of such safeguards as are necessary in the public interest. It is expressly stated in the Ordinance that the court should interfere in the arbitration only as expressly provided by the Ordinance (sections 3(2)(b) and 12):

• assisting the process: the court will assist when necessary, for example, by appointing an arbitrator (section 24), extending the time frame for the commencement of arbitration proceedings (section 58) or giving assistance in taking evidence (section 55). Also see "injunctions" below.
• removal of arbitrators or revocation of their authority: the court may remove an arbitrator or revoke his authority if he fails to act without undue delay (section 27), if he is not (or may not be) impartial or does not possess the qualifications agreed to by the parties (section 25).
• jurisdiction: an arbitral tribunal may rule on its own jurisdiction. If it rules as a preliminary question that it has jurisdiction, any party to the arbitration may request the court to review its ruling (section 34).
• referral to arbitration: the court has no discretion but must, if a party so requests, refer the parties to arbitration and grant a stay unless the arbitration agreement is null and void, inoperative or incapable of being performed. The court does, however, retain some discretion in relation to consumer contracts or matters within the jurisdiction of the Labour Tribunal (section 20).

An arbitral award may be set aside by the court only if the applicant succeeds in establishing those specified grounds set out in the Ordinance e.g. he has not been given proper notice of the appointment of the arbitrator, he was unable to present his case, or the award is in conflict with the public policy of Hong Kong. This remedy of setting aside does not touch on the substantive merits of the award (section 81).

Consolidation

Under schedule 2, section 2 of the Ordinance, the court has the power, on an application by a party, to order consolidation of arbitrations. In such cases, the court may appoint an arbitrator for the consolidated proceedings. These powers under the Ordinance will apply either where the parties expressly say so in their arbitration agreement or in domestic arbitrations commenced under an arbitration agreement that was entered into: (i) before the commencement of the Ordinance; or (ii) within a period of 6 years after the commencement of the Ordinance (sections 99 & 100 and schedule 2, section 2).

It should be noted that, in this area, where the parties have agreed to arbitration pursuant to the rules of the HKIAC (see here) Article 28 of the 2018 HKIAC Rules empowers the HKIAC to consolidate two or more arbitrations pending under those Rules in situations where:

(i) the parties agree to consolidate the arbitrations;

(ii) all of the claims in the arbitrations are made under the same arbitration agreement; or

(iii) in claims made under more than one arbitration agreement, a common question of fact or law arises in both or all of the arbitrations, the rights to relief claimed are in respect of, or arise out of, the same transaction or series of transactions, and the HKIAC finds the arbitration agreements to be compatible.

In deciding whether to consolidate the arbitrations, the HKIAC will consider the circumstances of the case, including whether arbitrators have been designated or confirmed in more than one of the arbitrations and, if so, whether the same or different arbitrators have been confirmed. The consolidation provisions were first introduced in the 2013 HKIAC Rules which came into force on 1 November 2013 in respect of arbitrations where a Notice has been submitted on or after that date - although their provisions on consolidation, emergency arbitrators (see below) and single arbitration under multiple contracts do not apply to arbitration agreements concluded before that date unless otherwise agreed.

Injunctions

The court has the power to grant interim injunctions, direct any other interim measures to be taken, such as granting orders to preserve assets or evidence, irrespective of whether or not similar powers may be exercised by the arbitral tribunal (section 45).

Emergency relief

Amendments to the Ordinance made in July 2013 have greatly facilitated the enforcement of emergency relief granted by an emergency arbitrator. Pursuant to section 22B, any such relief granted, whether in or outside Hong Kong, will be enforceable by a Hong Kong court, provided that leave is obtained from the court. For emergency relief granted outside Hong Kong, the court must be satisfied, before granting leave, that the relief falls within one (or more) of the six prescribed categories of measures under the Ordinance, which include the preservation of evidence and security for costs.

Emergency arbitrator provisions in the 2018 HKIAC Rules (article 23 & schedule 4) allow either party to an arbitration to apply for the appointment of an emergency arbitrator, who would decide whether to grant emergency interim or conservatory relief before the tribunal is constituted. The appointed emergency arbitrator has the power to order any measures that may be “necessary or appropriate”, including an order to preserve assets or evidence, or an order to prohibit a party from acting in a way that might prejudice the arbitral process. The emergency arbitrator is required to make his/her decision within 15 days after the HKIAC has transmitted the file to him/her.

Interim Relief Arrangement between Mainland Chinese Court and Hong Kong for Arbitral Proceedings

The Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong Special Administrative Region which came into force on 1 October 2019 allows parties to arbitral proceedings seated in Hong Kong to apply, at any time before an arbitral award is made, to Mainland courts for interim measures including property preservation, evidence preservation and conduct preservation. Interim relief will be available from Mainland courts in support of arbitrations administered by designated arbitral institutions in Hong Kong, including the Hong Kong International Arbitration Center, the International Court of Arbitration of the International Chamber of Commerce – Asia Office and the China International Economic and Trade Arbitration Commission Hong Kong Arbitration Center. Access to interim relief from the Mainland courts will be available in support of arbitral proceedings administered by the designated arbitral institutions, whether commenced before or after that effective date.

Mandatory provisions

A number of provisions of the Ordinance may be excluded by agreement of the parties. The main exceptions are:

• where a court gives a judgment in respect of proceedings under the Ordinance, the court’s power to direct the publication of the judgment in law reports and professional publications subject to concealment of matters reasonably requested by the parties, if the judgment is of major legal interest (section 17)
• the definition and form of the arbitration agreement (section 19);
• the court’s obligation to enforce a valid arbitration agreement (section 20)
• the obligation of the arbitrator to disclose circumstances likely to cast doubts on his independence and impartiality and the grounds for challenging the arbitrator (section 25);
• the competence of the arbitral tribunal to determine its own jurisdiction (section 34);
• the court’s power to grant interim injunctions or direct any other interim measures to be taken (section 45);
• the tribunal’s duty to act fairly, impartially and to avoid unnecessary delay (section 46);
• the tribunal’s power (or the court’s power in circumstances where the tribunal is not yet in place) to extend a time limit for starting an arbitration (section 58);
• the parties’ liability for the fees of the arbitral tribunal (section 78);
• the court’s power to set aside an arbitral award on specified grounds (Article 81); and
• the arbitral tribunal’s immunity from suit, save for dishonest actions or omissions (section 104).

Arbitration (Appointment of Arbitrators and Mediators and Decision on Number of Arbitrators) Rules

The Arbitrator Appointment Rules prescribe a process, pursuant to the Ordinance, for the default appointment of an arbitrator by the HKIAC, where the parties have failed to agree on the arbitrator or have not appointed a designated authority to fulfil the function. Factors which the HKIAC must consider when appointing an arbitrator are provided under the Arbitrator Appointment Rules.

Arrangement with the Mainland

With the full implementation of the Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region, which enhances the Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region in operation since February 2000, reciprocal enforcement of arbitral awards made in Hong Kong and the Mainland are allowed through applications to the relevant courts.

Arrangement with Macao

The Arrangement Concerning Reciprocal Recognition and Enforcement of Arbitral Awards between the Hong Kong Special Administrative Region and the Macao Special Administrative Region prescribes mutual recognition and judicial enforcement of arbitral awards made in Hong Kong (pursuant to the Ordinance) and in Macao.

Procedure

Hong Kong arbitrators are not bound by the rules of evidence and can receive any evidence that they consider relevant and give such weight to the evidence adduced as they consider appropriate.

In arbitrations administered in accordance with the 2018 HKIAC Rules, the HKIAC provides the option of an “expedited procedure” so as to encourage speed and economy. The expedited procedure is available in circumstances where: (i) the amount in dispute does not exceed HK$25,000,000; (ii) the parties so agree; or (iii) in cases of exceptional urgency. Under the expedited procedure, the case shall be referred to a sole arbitrator (unless the arbitration agreement provides otherwise), the HKIAC may shorten the time limits provided for under the standard procedure, and the tribunal shall decide the dispute on the basis of documentary evidence alone, unless the tribunal decides that it is appropriate to hold any hearing (article 41).

Costs of arbitrations

The costs of arbitration in Hong Kong will vary depending on whether the arbitration is administered or ad hoc.

For arbitrations administered in accordance with the 2018 HKIAC Rules, there is a registration fee of HK$8,000 as well as an administration fee which will vary depending on the sum in dispute (subject to a minimum fee of HK$19,800).

The HKIAC then provides parties with a choice of methods by which the arbitral tribunal’s fees will be determined: either on the basis of an hourly rate, or as a proportion of the amount in dispute (article 10, 2018 HKIAC Rules).

If the former, the arbitrators' fees may be agreed between the parties and the arbitrator(s) but will be subject to a fee cap of HK$6,500 per hour. The parties can agree to pay above the capped rate and the HKIAC can fix the hourly rate of an arbitrator in exceptional circumstances, in the event that the parties cannot agree. Alternatively, if the parties’ opt for the latter method of fixing the tribunal’s fees, the HKIAC shall determine the percentage of the sum in dispute to be applied to the arbitral tribunal’s fees for the full arbitral process.

In the event that a party applies for the appointment of an emergency arbitrator under the 2018 HKIAC Rules, it shall pay an application deposit of HK$250,000.

By contrast, for ad hoc arbitrations, the HKIAC may, at the request of either party (or both parties), appoint arbitrators or umpires and determine the number of arbitrators. The fee for appointing one arbitrator is HK$8,000 and the fee for determining the number of arbitrators is HK$8,000.

Availability of arbitrators

There is available in Hong Kong a large pool of experienced arbitrators, particularly in relation to commercial, construction, maritime and joint venture disputes. The HKIAC maintains a list of around 950 arbitrators.