HKIAC Introduces New Rules

The 2018 Rules introduce amendments relevant to the use of technology, third party funding, multi-party and multi-contract arbitrations, the early determination of disputes, alternative means of dispute resolution, emergency arbitrator proceedings, and time limits for the delivery of awards.

The 2018 Rules are the result of a revision process started in August 2017 which also included extensive public consultation in Hong Kong and internationally.

SUMMARY OF THE AMENDMENTS

• Online Delivery of Documents (Art. 3.1e, 3.3 and 3.4): Parties may agree to deliver documents through the use of a secured online repository – a new method of delivery recognised by the 2018 Rules. Where a document is uploaded onto an online repository, the date of receipt shall be determined according to the time at the place of receiving a notice of the upload. Parties may agree to use their own repositories or a dedicated repository provided by HKIAC.

• Use of Technology for Determination of Procedures (Art. 13.1): The effective use of technology has been identified as a factor to be considered by an arbitral tribunal when determining suitable procedures for the conduct of an arbitration.

• Disclosure, Costs and Confidentiality of Third Party Funding (Art. 34.4, 44 and 45.3e): A funded party is required to disclose promptly the existence of a funding agreement, the identity of the funder and any subsequent changes to such information. A funded party is permitted to disclose arbitration-related information to its existing and potential funder. These provisions are broadly in line with the relevant amendments to the Hong Kong Arbitration Ordinance (“Ordinance”). The 2018 Rules also expressly allow an arbitral tribunal to take into account any third-party funding arrangement in fixing and apportioning the costs of arbitration.

• Expanded provisions for Single Arbitration under Multiple Contracts (Art. 29): The scope of the provisions on single arbitration under multiple contracts has been broadened by allowing a party to commence a single arbitration under several arbitration agreements even if the parties to the arbitration are not bound by each of the arbitration agreements. Any question as to whether a single arbitration has been properly commenced under Article 29 shall be decided by the arbitral tribunal once constituted under Article 19.4 or, where the tribunal is not yet constituted, by HKIAC when deciding whether to proceed under Article 19.5.

• Concurrent Proceedings (Art. 30): The 2018 Rules provide an express basis for an arbitral tribunal to conduct multiple arbitrations at the same time, one immediately after another, or suspend any of the arbitrations until the determination of any other of them. The tribunal may do so if the same tribunal is constituted in each arbitration and a common question of law or fact arises in all the arbitrations, after consulting the parties. The test for concurrent proceedings is broader than that for consolidation. As a result, concurrent proceedings may be conducted in situations where consolidation is not possible or desirable.

• Early Determination Procedure (Art. 43): The Early Determination Procedure 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. The tribunal must 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 tribunal must issue an order or award, which may be in summary form, on the relevant point within 60 days from the date of its decision to proceed. These time limits may be extended by HKIAC or party agreement. Pending the determination of the request, the tribunal may decide how to proceed with the underlying arbitration.

• Use of Alternative Means of Dispute Settlement (Art. 13.8): After the commencement of an arbitration, where the parties agree to pursue alternative means of settling their dispute (e.g. mediation, conciliation or negotiation) a party may request HKIAC, the arbitral tribunal or emergency arbitrator to suspend the arbitration or emergency arbitrator procedure, as applicable. A party may request that the arbitration or emergency arbitrator procedure resume at any time during or after the alternative process. Upon such request, the arbitration or emergency arbitrator procedure shall proceed.

• Emergency Arbitrator Procedures (Art. 23.1 and Schedule 4): A party may file an application for the appointment of an emergency arbitrator before the commencement of an arbitration, provided that a Notice of Arbitration is submitted to HKIAC within seven days unless the emergency arbitrator extends this time limit. An emergency arbitrator, once appointed, will apply the same test for interim measures under Article 23 when considering an application for emergency relief. All time limits under the Emergency Arbitrator Procedure have been shortened. The total fees of an emergency arbitrator are subject to a maximum amount which will be notified on HKIAC's website.

• Time of Delivering Awards (Art. 31.2): After the arbitral proceedings are declared closed, the arbitral tribunal is required to notify the parties and HKIAC of the anticipated date of delivering an arbitral award. The date of delivering the award shall be within three months from the closure of the proceedings or relevant phase of the proceedings. This time limit may be extended by HKIAC or party agreement.

The implementation of the Amendment Ordinance will surely reinforce Hong Kong as a key arbitration hub. The new law has been widely welcomed by the arbitration community and most certainly institutional funders will begin funding arbitrations now that the Amendment Ordinance comes fully into force. It is essential for the parties to carefully consider the terms of any funding agreement which they are considering entering into and we strongly suggest that they consider professional advice before entering into such agreements.