I. GENERAL RULES
Article 1 – Scope of Application
1.1 The HKIAC Security of Payment Adjudication Rules (“Rules”) shall apply to adjudications where the parties have agreed that:
- the Security of Payment (SOP) Provisions for Public Works Contracts (“Public Works Contracts”) shall apply to their contractual relationship and HKIAC shall act as the adjudicator nominating body (“ANB”) or words to similar effect; or
- the Mandatory Subcontract Conditions for Security of Payment – Security of Payment (SOP) Provisions for Relevant Subcontracts (“Subcontracts”) shall apply to their contractual relationship and HKIAC shall act as the ANB or words to similar effect.
1.2 The Rules shall come into force on 23 Feburary 2022 and, unless the parties have agreed otherwise, shall apply to all adjudications falling within Article 1.1 of the Rules commenced on or after that date.
Article 2 – Interpretation of the Rules
2.1 References in these Rules to Security of Payment Provisions (“SOP Provisions”) refers to Annex C of the Public Works Contracts or Annex D of the Subcontracts, unless otherwise specified.
2.2 The Rules supplement the SOP Provisions. Where the Rules conflict with a provision of the SOP Provisions or a mandatory provision of any applicable law, the relevant provision of the SOP Provisions or the law shall prevail.
2.3 The Rules include any Schedules referred to herein as amended from time to time by HKIAC, in force on the date of commencement of the adjudication.
2.4 HKIAC shall have the power to interpret all provisions of the Rules including any Schedule referred to herein.
2.5 If the circumstances of the case so justify, HKIAC may amend the time limits provided for in the Rules, as well as any time limits that it has set. HKIAC shall not amend any time limits set by the Adjudicator unless the Adjudicator directs otherwise, or any time limits in the SOP Provisions unless the parties agree that HKIAC may amend such time limits.
2.6 HKIAC has no obligation to give reasons for any decision it makes in respect of any adjudication commenced under the Rules and the SOP Provisions. Unless otherwise determined by HKIAC, all decisions made by HKIAC under the Rules and the SOP Provisions are final and, to the extent permitted by any applicable law, not subject to appeal.
2.7 References in the Rules to “HKIAC” are to the Council of HKIAC or any committee, sub-committee or other body or person specifically designated by it to perform the functions referred to herein, or, where applicable, to the Secretary-General of HKIAC for the time being and other staff members of the Secretariat of HKIAC.
2.8 References in these Rules to the singular include the plural and vice versa.
2.9 HKIAC may from time-to-time issue practice notes or publish information on its website to supplement, regulate, and implement these Rules for the purpose of facilitating the administration of adjudications governed by them and the SOP Provisions.
2.10 English is the original language of these Rules. In the event of any discrepancy or inconsistency between the English version and a version in any other language, the English version shall prevail.
Article 3 – Adjudicator Nominating Body
3.1 HKIAC shall perform the functions of the ANB as set out in the SOP Provisions.
3.2 HKIAC shall be entitled to charge an Application Fee for its services as set out in the Fee Schedule that is published on HKIAC’s website on the date of commencement of the adjudication. Where in the opinion of HKIAC there are exceptional circumstances, HKIAC may charge a fee in addition to the Application Fee.
3.3 HKIAC shall publicise the Application Fee on its website. HKIAC may adjust the Application Fee from time-to-time.
3.4 Where a question arises as to the existence, validity, or scope of the parties’ agreement to adjudicate a payment dispute, including HKIAC’s competence to act as the ANB, the adjudication shall proceed to the extent that HKIAC is satisfied, prima facie, that an agreement to adjudicate under the SOP Provisions and/or these Rules may exist. Any question as to the jurisdiction of the Adjudicator shall be decided by the Adjudicator, once appointed, pursuant to Clause 17(2) of the SOP Provisions.
3.5 To the extent that the ANB requires information from any of the parties to fulfil its functions under the SOP Provision and/or these Rules, it may request that information from any party.
Article 4 – Commencement of the Adjudication and Service of Written Communications
4.1 In addition to the information that shall be included in the Notice of Adjudication under Clause 11(2) of the SOP Provisions, the Notice of Adjudication shall include:
(a) the physical addresses, any email addresses, and/or any facsimile numbers of the parties and any of their representatives; and
(b) a copy of the agreement to adjudicate under the SOP Provisions and/or these Rules; and
(c) a copy of the contract or other legal instrument out of or in relation to which the dispute arises, or reference thereto; and
(d) confirmation that copies of the Notice of Adjudication have been or are being served on the other party (“Respondent”) by one or more means of service to be identified in such confirmation, and the date of such service; and
(e) any documentary verification to indicate such service has been or is being made.
4.2 The Notice of Adjudication shall be accompanied by payment to HKIAC of the Application Fee. The Application Fee may be paid in accordance with the payment instructions on HKIAC’s website.
4.3 Notwithstanding the time limits contained in the SOP Provisions, HKIAC reserves the right to commence its functions as ANB under these Rules only upon receipt of the Application Fee and the information referred to in paragraph 4.1.
4.4 All written communications between a party and the Adjudicator shall be:
(a) transmitted, wherever possible, in a manner that provides for instantaneous or same-day receipt by the intended recipients such as email, facsimile, same-day physical delivery, and not solely by means that takes more than one working day for delivery;
(b) copied simultaneously to HKIAC by the same instantaneous or same-day means.
4.5 All written communications to HKIAC shall be served on HKIAC at its physical address, facsimile number, and/or relevant email address as stated on HKIAC’s website for the purposes of adjudications under the SOP Provisions.
4.6 Time limits under the Rules will begin to run on the first working day following the service of any written communication on the intended recipient. Time limits will be calculated on the basis of working days in Hong Kong, excluding official holidays and weekends.
4.7 The parties shall immediately notify HKIAC and the Adjudicator of any representatives they have appointed in the Adjudication under Clause 20(1) of the SOP Provisions, and shall immediately notify any change in representative made during the Adjudication.
II. APPOINTMENT OF THE ADJUDICATOR
Article 5 – Appointment by HKIAC of Adjudicator
5.1 Subject to Articles 4.2, 4.3, and 4.5 of these Rules, HKIAC shall appoint an Adjudicator in accordance with Clause 13 of the SOP Provisions or Clause 13A of the Subcontract SOP Provisions, whichever is applicable. In accordance with Clause 33(1) of the SOP Provisions, HKIAC shall appoint the Adjudicator from HKIAC’s Panel of Adjudicators for Adjudications under the SOP Provisions as publicised on HKIAC’s website.
5.2 At the time of accepting the appointment, the Adjudicator shall sign a declaration form in accordance with Clause 14 of the SOP Provisions.
5.3 HKIAC shall provide the parties with the Adjudicator’s curriculum vitae, contact details, and signed declaration form in accordance with Clause 14 of the SOP Provisions.
5.4 The appointment of an Adjudicator by HKIAC shall not be hindered by any controversy with respect to whether the adjudication of a payment dispute was initiated in a timely manner pursuant to Clause 10 of the SOP Provisions or whether the Notice of Adjudication complies with the requirements of Clause 11(2) of the SOP Provisions.
Article 6 - The Adjudicator’s Fees and Expenses
6.1 The Adjudicator’s Fees shall be calculated in accordance with the Fee Schedule published on HKIAC’s website at the time the adjudication is commenced. The Adjudicator’s Fee shall be determined in accordance with the claimed amount.
6.2 For the purposes of calculating the claimed amount, claims and counterclaims are added, as are any set-off or cross-claims, unless HKIAC, after consulting with the Adjudicator and the parties, concludes that it is not appropriate to include any set-off or cross-claims in the claimed amount. Where there are alternative claims, only the principal claim will be taken into account for the calculation of the claimed amount, except where HKIAC considers it appropriate to take into account the amount of any alternative claim. Any interest claim shall not be taken into account for the calculation of the claimed amount except where HKIAC determines that doing so would be appropriate.
6.3 The Adjudicator’s Fees shall cover the activities of the Adjudicator from the time of his or her appointment until the rendering of the Adjudication Decision pursuant to Clause 26 of the SOP Provisions and any corrections to the Adjudication Decision issued pursuant to Clause 28 of the SOP Provisions.
6.4 The Adjudicator is entitled to reimbursement of expenses in accordance with the Terms of Appointment of Adjudicators under the SOP Provisions published on HKIAC’s website on the date on which the Adjudicator accepted to act as Adjudicator.
Article 7 – Deposits for the Adjudicator’s Fees and Expenses
7.1 As soon as practicable after receipt of the Notice of Adjudication, HKIAC shall, in principle, request the Claimant and the Respondent each to deposit with HKIAC an equal amount as an advance for the Adjudicator’s fees and expenses.
7.2 HKIAC may request the parties to make supplementary deposits with HKIAC after consulting with the Adjudicator and in accordance with the Fee Schedule.
7.3 If the required deposits are not paid in full to HKIAC within the time period set by HKIAC, HKIAC shall so inform the parties in order that one or another of them may make the required payment.
7.4 If a party pays the required deposits on behalf of another party, the Adjudicator may, at the request of the paying party, direct the non-paying party to reimburse the paying party the share paid on its behalf. The request for reimbursement by a party shall be made to the Adjudicator before the completion of his or her Adjudication Decision.
7.5 After the adjudication has been withdrawn or terminated, HKIAC shall render an accounting to the parties of the deposits received and shall return any unexpended balance to the parties in the shares in which the deposit was paid by the parties to HKIAC, or as otherwise instructed by the Adjudicator.
7.6 HKIAC shall place the deposits made by the parties in an account at a reputable licensed Hong Kong deposit-taking institution. In selecting the account, HKIAC shall have due regard to the possible need to make the deposited funds available immediately.
III.DECISIONS OF THE ADJUDICATOR
Article 8 – Adjudication Decision of the Adjudicator
8.1 The Adjudicator may communicate his or her decision to HKIAC by email, facsimile, or physical delivery to the email address, facsimile number, and/or physical address stated on HKIAC’s website. The decision shall be signed by the Adjudicator and shall state the date on which it was made. The Adjudicator shall in all cases provide HKIAC with the requisite number of signed physical copies of the Adjudication Decision to enable HKIAC to provide one signed physical copy to each party and retain one signed physical copy for HKIAC’s records.
8.2 Upon receipt of the Adjudication Decision, HKIAC shall affix its seal to the Adjudication Decision and, subject to any lien under Article 8.5 below, communicate it to the parties without delay.
8.3 For the purposes of Clause 26(4) of the SOP Provisions, HKIAC will communicate the Adjudication Decision to the parties by email, facsimile, and/or physical delivery in accordance with the contact details provided in the Adjudication, or as otherwise instructed by the parties or the Adjudicator.
8.4 The delivery by HKIAC of either a signed electronic copy by email, or a signed copy by facsimile, or a signed physical copy by physical delivery of the Adjudication Decision to the parties, whichever is earliest, shall constitute delivery of the Adjudication Decision for the purposes of Clause 26(4) of the SOP Provisions. Where HKIAC delivers a copy of the Adjudication Decision to the parties by email or facsimile in the first instance, it will also deliver an original signed copy of the Adjudication Decision to each party.
8.5 HKIAC and the Adjudicator shall have a lien over any Adjudication Decision of the Adjudicator to secure the payment of any outstanding fees and expenses, and, notwithstanding the time limit in Clause 26(2) of the SOP Provisions, may refuse to communicate the Adjudication Decision to the parties until all such fees and expenses have been paid in full, whether jointly or by one or other of the parties.
8.6 Any request to correct an Adjudication Decision pursuant to Clause 28 of the SOP Provisions shall be communicated to the Adjudicator, the other party, and HKIAC. Any correction shall be in writing, and the provisions of Article 8 of these Rules shall apply.
Article 9 – Removal of the Adjudicator and Termination of the Adjudication
9.1 A party may request HKIAC to determine whether the Adjudicator should be removed from his or her office as Adjudicator because he or she has become ineligible to act pursuant to Clause 33 of the SOP Provisions. HKIAC shall determine any request under this provision.
9.2 If HKIAC determines that an Adjudicator should be removed from his or her office as Adjudicator, HKIAC shall so declare with the effect being that the Adjudication will be deemed terminated in accordance with Clause 25(1)(e) of the Public Works Contracts SOP Provisions or 25(d) of the Subcontracts SOP Provisions, without prejudice to a claimant’s right to commence a new adjudication in respect of the same payment dispute pursuant to Clause 11(5) of the SOP Provisions.
Article 10 – Exclusion of Liability
10.1 None of the Council of HKIAC nor any committee, sub-committee or other body or person specifically designated by it to perform the functions referred to in these Rules, nor the Secretary-General of HKIAC or other staff members of the Secretariat of HKIAC, the Adjudicator, or any expert appointed by the Adjudicator, shall be liable for any act or omission in connection with the Adjudication, save where such act was done or omitted to be done dishonestly.
10.2 After an Adjudication Decision has been made and the possibility of correction of the decision has lapsed or been exhausted, neither HKIAC nor the Adjudicator or any expert appointed by the Adjudicator shall be under any obligation to make statements to any person about any matter concerning the adjudication, nor shall a party seek to make any of these persons a witness in any legal or other proceedings arising out of the adjudication.
Article 11 – Complaints
Any party may submit to HKIAC a complaint about an Adjudicator in accordance with the complaint procedure published on HKIAC’s website at the time the complaint is submitted. HKIAC shall determine any complaint in accordance with the complaint procedure.