Arbitration in Hong Kong is governed by the Arbitration Ordinance. The ordinance is mainly based on the UNCITRAL Model Law on International Commercial Arbitration.
Mandatory laws
The Arbitration Ordinance contains only few provisions that cannot be excluded by the parties and is based on the following principles:
“(a) subject to the observance of the safeguards that are necessary in the public interest, the parties to a dispute should be free to agree on how the dispute should be resolved;
(b) the court should interfere in the arbitration of a dispute only as expressly provided for in this Ordinance.“
New York Convention
Hong Kong is a signatory by virtue of China’s accession to the convention on January 22 1987. Reciprocal enforcement of arbitration awards with mainland China is now governed by the Arrangement Concerning Mutual Enforcements of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region.
Like many other signatories to the convention, Hong Kong has adopted both the reciprocity reservation and the commercial reservation. The reciprocity reservation provides that Hong Kong will recognise and enforce only those arbitral awards made in other states which are also signatories to the convention.
Treaties and conventions
All the treaties that are in force and are applicable to Hong Kong are listed here: www.doj.gov.hk/eng/laws/interlaw.html.
The Arbitration Ordinance almost entirely incorporates the provisions of the UNCITRAL Model Law, including the amendments to the UNCITRAL Model Arbitration Law.
Hong Kong Law allows third-party funding for arbitrations that take place in Hong Kong.
Arbitration agreements
Validity
An arbitration agreement must be recorded in any form and must include: electronic communications; an agreement in an exchange of statements of claim and defense in which the existence of an agreement is alleged by one party and not denied by the other; and a reference in a contract to any document containing an arbitration clause, provided that the reference is such as to make that clause part of the contract.
Enforcement of agreements
A party to the claim can request that the parties be referred to arbitration. The court will grant that request and stay the court proceedings unless the arbitration agreement is null and void, inoperative or incapable of being performed.
Consolidation
An arbitral tribunal has no power to consolidate arbitration proceedings. However, the Hong Kong International Arbitration Centre, which administers arbitrations in Hong Kong under its own sets of rules, has the power to do so under certain circumstances.
Arbitral tribunal
Criteria for arbitrators
The parties are allowed to determine the number of arbitrators or authorise a third party to make that determination, to agree on a procedure for appointing the arbitrator, and can essentially adopt whatever criteria they wish in selecting an arbitrator or arbitrators.
Contractual stipulations
The parties are free to determine the number of arbitrators or authorise a third party, including an institution, to make that determination. The parties may stipulate that an arbitrator must possess certain characteristics.
An arbitrator may not be prohibited from being appointed by reason of his or her nationality, unless the parties agree otherwise.
Default requirements
If the parties do not succeed in agreeing on the number of arbitrators, the number of arbitrators must be either one or three, as decided by the HKIAC of the Arbitration Ordinance.
The parties have the right to agree on the procedure for appointing the arbitrator.
The tribunal must be independent, act fairly and impartially as between the parties, giving them a reasonable opportunity to present their case and deal with their opponent’s case, use procedures that are appropriate to the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for resolving the dispute to which the arbitral proceedings relate. These requirements are mandatory and may not be varied by the parties.
Powers and obligations
Arbitrators have the powers conferred on them by the arbitration agreement and the applicable arbitration rules, as agreed by the parties.
Liability of arbitrators
An arbitrator is liable in law for an act done or omitted to be done by him or her in relation to the exercise or performance of his or her functions only if it is proved that the act was done or omitted to be done dishonestly.
Communicating with the tribunal
It is standard practice for the parties to communicate with the tribunal in writing. It is generally less formal than court proceedings, and email is commonly used.
All statements, documents or other information supplied to the tribunal by one party must be communicated to the other party.
Reaching decisions
Unless otherwise agreed by the parties, in arbitration proceedings with more than one arbitrator, any decision of the tribunal must be made by a majority of the tribunal’s members. Where there is a dissenting opinion, the signature of the dissenting arbitrator need not be included on the final award. This will not affect the award’s validity, provided that the reason for the omitted signature is stated.
Arbitrability
The following categories of dispute may not be referred to arbitration: family law matters, including those relating to divorce and child custody; criminal law matters; actions in rem against vessels; and matters reserved for determination by the state, including taxation and immigration.
The tribunal cannot make orders as to specific performance of any contract relating to land or any interest in land.
Arbitral proceedings
Unless otherwise agreed by the parties, the arbitration proceedings commence on the date that the respondent receives a request to refer the dispute to arbitration.
The duration of the relevant limitation period varies depending on the cause of action. For claims in contact or tort, the limitation period is generally six years from the date on which the cause of action accrued.
The parties are free to agree on the procedural rules to be applied. If and to the extent that the parties fail to agree, the tribunal may conduct the arbitration in the manner that it considers appropriate.
The Arbitration Ordinance (Cap 609) does not prohibit dissenting opinions. Arbitrators are not obliged to give a dissenting opinion, however, the reason for the arbitrator’s failure to sign an arbitral award must be stated.
There is no default language or location under the Arbitration Ordinance. The parties are free to agree on the language or languages to be used in the arbitral proceedings
The parties are free to agree on the place of arbitration. Failing to do so, the place of arbitration will be determined by the tribunal having regard to the circumstances of the case, including the convenience of the parties.
Unless otherwise agreed by the parties, no party may publish, disclose or communicate any information related to the arbitral proceedings.
Ethical codes
The Hong Kong International Arbitration Centre (HKIAC) has published a Code of Ethical Conduct for Arbitrators (www.hkiac.org/en/arbitration/arbitrators/code-of-ethical-conduct). Other professional bodies involved in arbitration have their own ethical codes – for example, the Hong Kong Institute of Arbitrators, whose Code of Professional and Ethical Conduct is virtually identical to the HKIAC code (www.hkiarb.org.hk/en/ethicalconduct.php).
Solicitors in Hong Kong must comply with the rules and principles set out in the Hong Kong Law Society’s Guide to Professional Conduct. Similarly, Hong Kong barristers must comply with the Hong Kong Bar Association’s Code of Conduct.
Costs
The tribunal may include in an award directions concerning the costs of the arbitral procedures. The tribunal may specify by whom, to whom and in what manner the costs of these procedures are to be paid. In practice, the tribunal will adopt the normal common law approach to the recovery of costs.
The tribunal is not obliged to follow the scales and practices adopted by the court on taxation when assessing the amount of costs. The tribunal must allow only costs that are reasonable and may allow costs incurred in the preparation of the proceedings before the start of the arbitration.
The parties can, if they wish, agree that the costs of the arbitration proceedings are to be taxed by the court. Unless otherwise agreed by the parties, the tribunal may direct that the recoverable costs of arbitral procedures be limited to a specified amount.
Third-party funding
Hong Kong has laws regarding champerty and maintenance which generally prohibit third-party funding in litigation. However, there is currently some uncertainty in the law over whether arbitration is also subject to the same prohibition. This uncertainty is set to be addressed by upcoming reforms.
Class-action or group arbitration
Concept
Hong Kong law does not currently allow any form of class action in litigation or arbitration.
Multiparty litigation and arbitration are permitted. In court proceedings, individuals can make a claim on the same issue as joint plaintiffs. As for arbitration, the Arbitration Ordinance (Cap 609) does not restrict the number of parties to an agreement to arbitrate and multiparty arbitrations by way of joinder or consolidation.
