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ARBITRATION

Guide to Arbitration in Hong Kong

Arbitration is a flexible method of dispute resolution which can give a quick, inexpensive, confidential, fair and final solution to a dispute. It involves the determination of the dispute by one or more independent third parties rather than by a court. The third parties, called arbitrators, are appointed by or on behalf of the parties in dispute. The arbitration is conducted in accordance with the terms of the parties' arbitration agreement which is usually found in the provisions of a commercial contract between the parties.

Arbitration in Hong Kong is governed by the Arbitration Ordinance Chapter 341 of the Laws of Hong Kong (the Arbitration Ordinance). This statute is internationally recognised as one of the best pieces of arbitration legislation in the world, combining the maximum of independence from the court system with a strong regime of court support in areas where this is required.

The Arbitration Ordinance is divided into two distinct regimes, the international regime and the domestic or non-international regime. The international regime incorporates the UNCITRAL Model Law, a piece of model legislation developed by the United Nations and commended for international use.

Hong Kong provides complete flexibility to the parties as to the sort of arbitration in which they wish to participate. The parties are free to choose administered or institutional arbitration under the auspices of the Hong Kong International Arbitration Centre (HKIAC).  Alternatively, parties may opt for ad hoc proceedings under which the arbitration is conducted by the arbitrators without the involvement of HKIAC.

In ad hoc proceedings, as a result of an amendment to the Arbitration Ordinance which came into effect on 27 June 1997, HKIAC is authorized to carry out two important functions in relation to an arbitration:

a. HKIAC may appoint arbitrators or umpires where the parties have failed to agree or have not designated an appointing authority or the designated appointing authority fails to carry out its function.
b. HKIAC may determine whether a tribunal of one or three arbitrators should consider a dispute under the international (UNCITRAL Model Law) regime. (Where an arbitration falls within the domestic regime, unless the parties have agreed otherwise there shall be only one arbitrator).

When carrying out the above two functions, HKIAC will follow the Arbitration (Appointment of Arbitrators and Umpires) Rules.

In 2005, HKIAC adopted the HKIAC Procedures for the Administration of International Arbitration (the “Procedures”), for use by parties who seek the formality and convenience of an administered arbitration while maintaining the flexibility afforded by the UNCITRAL Arbitration Rules.  In 2008, HKIAC introduced the HKIAC Administered Arbitration Rules that supersede the Procedures. The new rules took effect from 1 September 2008 and may be adopted for use in both domestic and international arbitration.

The HKIAC Administered Arbitration Rules is intended to be a “light touch” set of procedures to facilitate the parties in the course of their arbitration. Under the HKIAC Administered Arbitration Rules, arbitral proceedings will commence on the date on which the Notice of Arbitration is received by the HKIAC Secretariat.  The HKIAC Secretariat will manage the proceedings until a tribunal is formed.  Where necessary, the HKIAC Council will decide the number of arbitrators and appoint arbitrator(s).  The HKIAC Council will also confirm the party-appointed or co-arbitrators-appointed arbitrator(s), and decide upon any challenge of arbitrators.  Where the Schedule of Fees and Costs of Arbitration attached to the HKIAC Administered Arbitration Rules applies, the HKIAC Council will fix the arbitrators’ fees.

HKIAC provides a free information service and you are welcome to contact us for assistance. Parties should nevertheless obtain separate legal advice when necessary.