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The HKIAC in action to issue updated Administered Rules 2018

31 October 2018

With flawless timing to catch HK Arbitration Week 2018, the updated Administered Arbitration Rules (2018 Rules) will enter into force on 1 November 2018. The 2018 Rules continue the HKIAC’s ‘light touch’ policy, now with amendments to reflect developments in arbitration practice in Hong Kong and globally.

The amendments to the earlier 2013 rules are the product of an extensive public consultation process, in which HFW participated, designed to evaluate those changes needed to keep the HKIAC Administered Rules at the forefront of international best practice.

The 2018 Rules are also accompanied by a practice note on the appointment of arbitrators (the Note), which will also come into force on 1 November 2018 and which sets out the HKIAC’s practice for the appointment of arbitrators. This reflects the need to ensure that the process and procedure applied by the HKIAC for the appointment of arbitrators is transparent to its users. The full text of the new 2018 Rules and the Note can be downloaded here and here and this brief note highlights the key amendments.

Some changes take into account legal technology developments, with a new facility for parties to agree to deliver documents through the use of a secured online repository (Articles 3.1(e), 3.3 and 3.4). And the arbitral tribunal now needs to have regard to the effective use of technology when deciding on appropriate procedure (Article 13.1).

As to be anticipated, the 2018 Rules make express provision for the use of third party funding, and reflect recent amendments to the Hong Kong Arbitration Ordinance (Cap.609), and pre-empt the promulgation of the Code of Practice on third party funding which is currently under development. Under the 2018 Rules, transparency is required, and a funded party must disclose if a funding agreement is in place, the funder in question, and ensure the information is kept updated. When it comes to costs, the use of third party funding is identified as a factor for the arbitral tribunal to consider when awarding costs (Articles 34.4, 44 and 45(e)).

Building on the existing provisions, the 2018 Rules expand the scope of provisions for a single arbitration over multi-contract situations. A party can now commence a single arbitration to determine references arising under several arbitration agreements, notwithstanding that the parties to the arbitration, are not parties to each of the arbitration agreements (Article 29). By way of example, you could think of an arbitration arising under a franchise agreement framed in similar terms and replicated across different jurisdictions each giving rise to a similar claim(s) in arbitration. Instead of multiple arbitrations, all references may now potentially be resolved in a single arbitration. The amendments also develop the provisions relating to the consolidation of arbitrations by setting out the information to include in the Request for Consolidation (Article 28).

Again focused on the efficient resolution of disputes the 2018 Rules introduce an Early Determination Procedure. Under these provisions, at the request of a party, the arbitral tribunal has power to make a decision in summary form, on relevant points of law or fact, within 60 days of its decision to proceed with the request for Early Determinative Procedure. This is on the basis that the points of law or fact in question are manifestly without merit, or manifestly outside the scope of the arbitral tribunal’s jurisdiction (Article 43).

For practitioners, it is important to note that interesting ‘grandfathering’ provisions attach to various Articles, reflecting the time when the provisions were first introduced to the rules. Article 43 (Early Determination Procedure) is not applicable if the arbitration agreement was concluded before 1 November 2018. And in relation to Articles 28 and 29 consolidation and single arbitration under multiple-contracts respectively, the provisions will not apply if the arbitration agreement was concluded before 1 November 2013.

To conclude, the 2018 Rules are a welcome development, and a further demonstration of the HKIAC’s commitment to the continued development of arbitration practice in Hong Kong. We are delighted to have been involved in the consultation process, and we look forward to putting the provisions to good use in practice.

John Court
Global Director of Information Technology