Jurisdiction - Hong Kong
Reports and Analysis
Hong Kong – HKIAC: Implementation And Purpose Of The 2013 Rules.
19 August, 2013

Legal News & Analysis – Asia Pacific – Hong Kong – Dispute Resolution


The Hong Kong International Arbitration Centre ("HKIAC") published its revisions to the HKIAC Administered Arbitration Rules on 12 June 2013. (To access: (i) the 2013 Rules, click here, and (ii) the HKIAC's model arbitration clauses, click here) The amended Rules ("2013 Rules") both codify and enhance existing HKIAC practice, and reflect Hong Kong's position as a leading seat for international arbitration. We summarise the key amendments below.




The 2013 Rules will come into force on 1 November 2013 and will apply to arbitrations commenced on or after that date. The current HKIAC Administered Arbitration Rules (1 September 2008) are generally considered to work well. (See, HKIAC Administered Arbitration Rules – Consultation Paper, at page 2, available at, 
http://www.hkiac.org/images/stories/rules/HKIAC_AAR_CONSULTATION_PAPER.pdf .) 

The 2013 Rules do not therefore represent a fundamental review, but aim to address practical issues arising under the 2008 Rules, whilst introducing a number of new provisions to ensure that HKIAC arbitration remains at the forefront of modern arbitral practice. 


Summary of key amendments


Emergency arbitrators and urgent interim relief (Schedule 4) In line with other major institutions, the HKIAC has introduced an emergency arbitrator procedure, where a party requires urgent interim or conservatory relief prior to the constitution of the tribunal.


Schedule 4 of the 2013 Rules provides that, either concurrent with, or following, the filing of a Notice of Arbitration, a party may apply to the HKIAC for appointment of an emergency arbitrator. (2013 Rules, Schedule 4, clause 1) Urgent interim or conservatory measures from a competent judicial authority remain available, in addition to any relief sought from an emergency arbitrator.(ibid, Schedule 4, clause 22)


An emergency arbitrator's decision will have the same effect as an interim measure and will be binding on all of the parties when rendered: parties should comply "without delay". (ibid, Schedule 4, clause 16. If a party needs to enforce relief granted by an emergency arbitrator, however, it can now do so in Hong Kong thanks to one of a number of recent amendments to Hong Kong's Arbitration Ordinance. This provision was enacted in response to the 2013 Rules and applies to relief granted both in Hong Kong and elsewhere. This is particularly helpful given the number of arbitral institutions that have recently introduced emergency arbitrator provisions.) The emergency arbitrator's decision will cease to be binding: upon any subsequent decision of the tribunal (once constituted); upon the termination of the arbitration (whether by award or withdrawal); or if the tribunal is not constituted, within ninety days of the emergency arbitrator's decision (this period may be extended by the HKIAC or by agreement between the parties). (ibid, Schedule 4, clause 19.) 


The 2013 Rules implement a tight timetable for the emergency arbitration procedure. In common with other institutions that operate emergency procedures, the HKIAC aims to have an emergency arbitrator in place very quickly: it will seek to appoint an emergency arbitrator within two days of accepting an application and receiving the required deposit of HKD180,000. (ibid, Schedule 4, clause 5). Unless an extension is agreed, an HKIAC emergency arbitrator's decision should be made within 15 days of the file being transmitted to the arbitrator by the HKIAC. (ibid, Schedule 4, clause 12). 


The emergency arbitrator may not act as arbitrator in an arbitration relating to the dispute that gave rise to the emergency appointment (unless otherwise agreed by the parties). (ibid, Schedule 4, clause 21.)


Joinder of additional parties (Article 27)


The tribunal has expanded powers under the 2013 Rules, after consultation with all  parties, to join an additional party to an arbitration. Joinder may be ordered only on the request of an existing party, and only where, prima facie, there is a valid arbitration agreement under the 2013 Rules binding all the relevant parties and giving rise to that arbitration. The 2008 Rules required only the consent of the party to be joined and the applicant.


In addition, a third party can now request to join an arbitration. (ibid, Article 27.6). By contrast, the 2008 HKIAC Rules allowed only an application by an existing party to join a third party.


If the HKIAC receives a Request for Joinder prior to the confirmation of the tribunal, it will decide whether, prima facie, the third party is bound by an arbitration agreement under the 2013 Rules that gives rise to the arbitration and whether to join the additional party. (ibid, Article 27.8). If any party objects to the HKIAC's decision, it may raise its objections with the arbitral tribunal once confirmed.


If an additional party is joined before the tribunal is confirmed, all parties will be deemed to have waived their right to designate an arbitrator and the HKIAC may revoke any existing appointment and appoint the tribunal itself. (ibid, Article 27.11.). However, the termination of any previous arbitrator's appointment will be without prejudice to any prior act or order of that arbitrator, and to his or her right to be paid. (ibid, Article 27.12.).


Consolidation of arbitrations (Article 28)


The 2008 Rules do not contain express provisions on consolidation, i.e. merging two or more arbitrations into one. The 2013 Rules empower the HKIAC, at the request of a party and in consultation with all parties and arbitrators, to consolidate two or more arbitrations into the proceedings that started first.


Whilst the HKIAC will consider all circumstances of the case, (ibid, Article 28.3) consolidation will be allowed only where:


(a) the parties agree; or

(b) all of the claims are made under the same arbitration agreement; or

(c) if the claims encompass 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. (ibid, Article 28.1 (a) – (c)).


The practical consequences of consolidation are similar to those for joinder. The parties waive their right to designate an arbitrator, and the HKIAC may revoke the appointment of any arbitrators already confirmed and proceed to appoint the entire tribunal. This provision is designed to ensure equal treatment of the parties. The parties also waive any objection, on the basis of the HKIAC's decision to consolidate,to the validity and enforcement of any award made in the consolidated arbitral proceedings. (ibid, Article 28.6).


Single arbitration under multiple contracts (Article 29)


For arbitration agreements concluded after 1 November 2013, the HKIAC may allow claims arising out of, or in relation to, multiple contracts to be raised in a single proceeding. (ibid, Article 29). Like Articles 27 and 28, this provision reflects the increasingly complex contractual structures that give rise to arbitration, and aims to reduce the cost and uncertainty that might otherwise be incurred if parties had to commence multiple arbitrations.


Calculation and capping of the tribunal's fees (Article 10, Schedules 2 and 3)


The 2013 Rules preserve the option for parties to calculate arbitrators' fees based on hourly rates or on an ad valorem basis that is determined by the amount in dispute. This option is a key feature of HKIAC arbitration. It has proven popular since its introduction in the 2008 Rules because it allows parties to select the method they feel will be most cost-effective.


Schedule 2 sets out the regime for hourly rates, including – for the first time – a cap (currently HK$6,500 (approximately US$830)). (ibid, Schedule 2, clause 9.3.). This can be amended where all the parties to the arbitration agree; but because such agreement may be difficult to achieve, the cap should operate as an effective control on tribunal cost. (ibid, Schedule 2, clauses 9.4 and 9.5). Schedule 3 contains the ad valorem schedule.


The HKIAC has also introduced standard terms and conditions for arbitrators, thereby reducing the need for extensive negotiations at the start of a case. Again, these terms may be amended where all parties agree.


For further information, please contact:

Peter Godwin, Managing Partner, Herbert Smith Freehills
Paula Hodges, Partner, Herbert Smith Freehills

Charles Kaplan, Partner, Herbert Smith Freehills

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