Introduction to the Arbitration Rules of the Hong Kong International Arbitration Centre

Due to Hong Kong's unique status as an international trade, commercial, financial and shipping center, coupled with the support and promotion of the SAR government, Hong Kong has now become one of the important international arbitration centers. As a permanent arbitration institution, the Hong Kong International Arbitration Center (HKIAC) The number of adjudicated cases has shown a rapid growth trend in recent years.[①]. With the implementation of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) and the influx of international investment from countries and regions including Hong Kong into the Mainland, various commercial disputes and international disputes have gradually increased, involving the two places. Arbitration cases are also increasing. In 2008, for example, HKIAC adjudicated 602 cases, including 308 cases involving mainland China. Therefore, mainland lawyers should strengthen their understanding and familiarity with the relevant rules of Hong Kong international arbitration in order to provide more professional legal services for the parties to resolve disputes through arbitration, so that commercial disputes and international disputes can be resolved in a timely and effective manner. This article focuses on the arbitration rules of HKIAC institutions, focusing on the relevant contents of Hong Kong international commercial arbitration, hoping to be beneficial to mainland lawyers engaged in arbitration business in Hong Kong.

Overview of 1. Hong Kong Arbitration

(I) ad hoc arbitration and institutional arbitration

In Hong Kong, arbitration is divided into ad hoc arbitration ("ad hoc" arbitration) and institutional arbitration (institutional arbitration).

Ad hoc arbitration is a commercial arbitration in which the parties submit their disputes to a commercial arbitrator of their choice, which is not governed by any established commercial arbitration institution, but in which the parties submit their disputes to a commercial arbitrator of their choice, who will hear and make an award in accordance with the arbitration rules of their own design or choice. Such arbitrations are entirely "managed" by the arbitrators and the parties, either by choosing off-the-shelf arbitration rules, such as the United Nations Commission on International Trade Law Arbitration Rules (UNCITRAL Arbitration Rules), or by designing the rules by the parties themselves, the latter being uncommon. Because there is no need to pay fees to the arbitration institution, it can improve work efficiency and reduce the cost of arbitration under certain conditions, and it is more flexible in procedure. The parties to the dispute can agree on any matters related to arbitration, including arbitration fees. Prior to the promulgation of the Arbitration Ordinance in 1963, the arbitration system in force in Hong Kong was essentially a kind of ad hoc arbitration. After the establishment of HKIAC in 1985, ad hoc arbitration also occupied a considerable proportion, and many maritime cases were arbitrated through ad hoc arbitral tribunals.

The so-called institutional arbitration refers to the commercial arbitration in which the parties choose a permanent arbitration institution to resolve their disputes by consensus, that is, a permanent commercial arbitration institution manages the commercial arbitration proceedings in accordance with fixed arbitration rules. Such arbitrations are administered by arbitration institutions, such as the International Chamber of Commerce, HKIAC or the London Court of International Arbitration. Usually, arbitrations administered by an arbitral institution are held under its own arbitration rules. The advantage of institutional arbitration lies in the orderly and standardized management of the arbitration procedure, and the arbitration institution can also control the arbitrator and the quality of its arbitration to a certain extent.

Since ad hoc arbitration is entirely agreed upon by the parties or the place of arbitration, arbitrators and arbitration rules are selected, there is no established arbitration system and the mainland lacks corresponding theory and practice. Therefore, the introduction of this paper mainly revolves around institutional arbitration.

Hong Kong International Arbitration Centre (HKIAC), (II)

HKIAC was established in 1985 and is composed of Hong Kong businessmen and professionals. Its purpose is to assist parties in disputes to resolve disputes through arbitration or other means. It is generously funded by the Hong Kong business community and the Hong Kong government but is completely independent and financially self-sufficient. In legal nature, HKIAC is a non-profit-making limited guarantee company, working under the leadership of a committee composed of business and professionals of different nationalities and with a wide range of experience and skills. The Secretary General of the center is its chief administrative officer and head of registration. The administrative work of the center is carried out by the management committee through the Secretary General.

HKIAC is located in the central area of the office building on Hong Kong Island. The specific location is 38th floor, Tower 2, Exchange Square, Central, Hong Kong. It can provide two types of conveniences for parties who choose it as an arbitration institution: actual equipment and services. The actual equipment includes: 10 comfortable rooms, the largest of which can accommodate up to 180 people; a safe storage area for documents and other physical evidence; a stenographer's room to organize records; closed-circuit television facilities to review drawings and other documents; and a full range of communication and other services. Services that can be provided or arranged in connection with the session include: recording, translation, videoconferencing, food, ordering lunch and delivery to the center, booking hotels and air tickets, arranging transportation to and from the center and hotels, arranging courier delivery of documents overseas, and wireless Internet access. Of course, in order to use the above equipment or services, the parties have to pay a certain fee, the fees are clearly marked.

If requested by the parties, HKIAC may administer the arbitration case and, in administering the case, HKIAC assists in communication between the arbitrator and the parties and provides other appropriate administrative services. Even arbitrations administered by other arbitration institutions, or arbitrations administered by non-institutions, can be conducted in HKIAC.[②]

2. HKIAC Arbitration Rules

In an HKIAC hearing or arbitration administered by HKIAC, the parties are free to choose the rules of procedure. HKIAC has developed several sets of rules for local arbitration, summary form arbitration, small claims arbitration, paper arbitration and electronic transaction arbitration, which are freely selectable by the parties. In 2008, HKIAC introduced the "HKIAC Institutional Arbitration Rules", effective from September 1, 2008, which mainly refer to the Swiss rules and adopt a model of "minor" management by institutions. The following focuses on the contents of the HKIAC Institutional Arbitration Rules:

(I) scope of application

If the arbitration agreement (whether concluded before or after the dispute has arisen) provides for the use of the rule, the rule applies; if the arbitration is agreed to be "administered by the arbitration center", or if there is an equivalent expression, the rule applies provided that it does not violate the true will of the parties. This rule does not preclude the selection of only HKIAC as a designated authority, or the request of HKIAC to provide certain management services, but does not preclude the application of the rule.

The HKIAC Institutional Arbitration Rules supersede the HKIAC Administrative Procedure for International Arbitration in force as of March 31, HKIAC2005, unless the parties have agreed to elect to apply such administrative procedure prior to September 1, 2008. After the entry into force of the HKIAC Arbitration Rules, if the arbitration agreement provides for the application of the UNCITRAL Arbitration Rules (UNCITRAL Arbitration Rules) and the administration of the HKIAC, the HKIAC shall be the appointing authority and the HKIAC Secretariat will recommend to the parties the application of the HKIAC Arbitration Rules.

(II) arbitration agreement

Arbitration is an agreement-based dispute resolution method, unless the parties have an arbitration agreement and the agreed conditions are sufficient, the arbitrator shall not have the right to decide the dispute. In the absence of an arbitration agreement, the arbitral tribunal will not accept the application for arbitration.

Hong Kong's provisions on the form of arbitration agreement are basically in line with the provisions of article 7 (2) of the United Nations Model Law on International Commercial Arbitration that "the arbitration agreement shall be in writing. An agreement is in writing if it is contained in a document signed by the parties, or in an exchange of letters, telexes, telegrams or other means of telecommunications providing a record of the agreement, or in an exchange of statements of claim and defense. The reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement if the contract is in writing and the reference is sufficient for the arbitration clause to form part of the contract." It can be seen that the written form of arbitration agreement is not limited to the form of contract, the validity of the bill of lading and EDI form of arbitration agreement is also affirmed, which is more in line with the increasingly networked trend of the world today, not limited to the traditional paper contract form.

Arbitration agreements usually cover disputes "arising out of or in connection with" a particular contract, a definition that is broad enough to cover tort disputes related to the transaction (e. g. misrepresentation), which gives the arbitral tribunal the power to resolve both contract and tort disputes.

(III) arbitration language

In principle, the parties are free to choose the language of the arbitration. At HKIAC, there are currently some cases in which Chinese (Putonghua) is entirely used as the language of arbitration. With the increase in the number of cases in the Mainland, more and more parties will choose Chinese (Putonghua) as the language of arbitration. In practice, the parties should consider their own language, the language used in the contract, the language in which they may testify, and the limitations of the arbitration language on the choice of arbitrators. In order to save the costs of arbitration, the parties should generally avoid agreeing to arbitration in two languages, as in this case, all documents submitted must be in two versions, oral statements and evidence must be translated at the hearing, and the parties must determine whether the translation is accurate, which will increase the costs of arbitration.

If the parties have not agreed on the language of the arbitration, the arbitral tribunal, when constituted, will first decide on the language or languages to be used in the arbitral proceedings, and this decision will apply to the statement of claim, the statement of defense and any further statements, and, if a hearing is required, to the language to be used in the hearing. In addition, if any documents attached to the statement of claim or defense and any additional documents or evidence submitted in the arbitration proceedings are in the original language, the arbitral tribunal shall have the power to direct the parties to submit at the same time a text in the language or languages agreed upon by the parties or decided by the arbitral tribunal.

Confirmation of (IV) arbitrator

In accordance with the HKIAC Arbitration Rules, all arbitrators shall be impartial and independent of the parties at all times. If the parties are of different nationalities, the sole arbitrator or presiding arbitrator may not be a person of the same nationality as any one of the parties, unless the parties agree otherwise in writing. This is the most basic requirement for arbitrators and the only requirement in the rules, so although HKIAC has a roster of arbitrators, the parties can find anyone to be an arbitrator, not limited to the roster of arbitrators, which is only used by the arbitration center when appointing arbitrators. In the course of adjudicating a case, an arbitrator shall perform the following obligations: to facilitate a fair and expeditious resolution of the dispute and to avoid unnecessary costs; to treat the parties fairly and impartially; to give the parties a reasonable opportunity to present their case; and to adopt appropriate procedures in the light of the specific circumstances of the dispute in order to avoid unnecessary delay and costs.

After the appointment of an arbitrator, there is a confirmation process. According to the Rules, all appointed sole arbitrators or members of a three-member arbitral tribunal, either appointed by the parties or appointed by the arbitrators, are subject to confirmation by the HKIAC Council and the appointment takes effect only after confirmation. If an arbitrator is not confirmed, the HKIAC Council is not obliged to give reasons. This facilitates HKIAC's management and control of the quality of arbitration.

In terms of the number of arbitrators, if the parties have not agreed on the number of arbitrators, at the request of one party, the HKIAC Council will decide whether the case should be submitted to a sole arbitrator or a three-member arbitration tribunal. In making the decision, the Council will consider factors such as the amount in dispute, the complexity of the request, the nationality of the parties, the relevant practices of the industry, business or profession involved in the dispute, the choice, the number of suitable arbitrators, and whether the case is urgent. Before deciding on the number of arbitrators, the Council allows the other parties to the arbitration to submit to the Secretariat brief written comments, giving such number and reasons as they deem appropriate. If no comments are received within 14 days after the Secretariat's notice for comments, the Council will take a decision. Where summary proceedings apply, the case shall be referred to a sole arbitrator, unless the arbitration agreement provides for a three-member tribunal. If the arbitration agreement provides for a three-member arbitral tribunal, the Secretariat will recommend that the parties refer the case to a sole arbitrator. If the parties do not agree to refer the case to a sole arbitrator, the fees of the three arbitrators shall be determined in accordance with the Arbitration Fees and Fees Schedule attached to the Arbitration Rules of the HKIAC Institution, which makes it more expensive for the three-person tribunal to hear cases where summary proceedings are applied than for the sole arbitrator.

Composition of (V) arbitral tribunal

If the dispute is referred to a three-member arbitral tribunal, the arbitral tribunal shall, unless otherwise agreed by the parties, be constituted as follows: Each party appoints one arbitrator. If a party fails to appoint an arbitrator within 30 days from the date of receipt of the other party's notice of the appointment of an arbitrator or within a period of time agreed by the parties, the Council shall appoint a second arbitrator. The two arbitrators appointed as aforesaid shall appoint the third arbitrator to act as the presiding arbitrator of the arbitral tribunal. If the appointment is not made within 30 days after the confirmation of the second arbitrator or within the period agreed upon by the parties, the presiding arbitrator shall be appointed by the Council of the Centre. In all cases, the appointed arbitrator must meet the requirements of independence, impartiality and nationality.

(VI) arbitration proceedings

The following is a brief introduction to several typical systems and practices of institutional arbitration proceedings in Hong Kong.

1. Powers of the arbitral tribunal. After the arbitral tribunal is composed, the first thing is to convene a procedural meeting with the parties, issue instructions, determine the timetable for the arbitration proceedings, and provide the timetable to the parties and the secretariat of the center. Until the hearing, the arbitral tribunal has a number of powers to administer the arbitral proceedings, including requiring the claimant to provide a guarantee of the costs of the arbitration, requiring the respondent to provide a guarantee of the amount in dispute, directing the disclosure of documents, deciding on intermediate measures and deciding on the manner in which evidence is to be provided.

2. Jurisdiction objection system. If the respondent objects to the jurisdiction of the arbitral tribunal, it may raise a jurisdictional plea claiming that the arbitration agreement is invalid or does not cover the matters claimed in the arbitration, and such a plea shall be raised no later than the arbitration defense. The arbitral tribunal will decide whether it has jurisdiction, which will normally be settled as a preliminary point of dispute. If the arbitral tribunal finds that it has jurisdiction, either party may appeal to the Court of First Instance within 30 days of the arbitral tribunal's finding, and the decision of the Court of First Instance cannot be appealed, and the arbitration continues during the appeal.

3. Arbitration fee guarantee system. If the arbitral tribunal decides that the claimant has lost the case and is responsible for the costs of the arbitration of the respondent, the respondent will not be compensated for the costs of the arbitration if the claimant fails to perform. In order to avoid this situation, the arbitration rules set up the arbitration fee guarantee system. If the respondent can prove that the applicant's financial situation is poor and may not be able to afford the respondent's arbitration costs, it may require the applicant to provide a guarantee of arbitration costs. Unlike litigation, arbitration cannot require a guarantee of arbitration costs simply because the applicant is a resident outside Hong Kong. Instruction of the applicant to provide cost guarantees is less common in arbitration than litigation.

4. System of clarification of pleadings. The applicant sets out his claim in the application, and the respondent submits a statement of defense to the application, or at the same time counterclaims to the applicant. The applicant may file a reply to the respondent's defense or a reply to the respondent's counterclaim. In order to clarify what exactly is in dispute, a party may request further clarification from the other party or require the other party to provide details of the matters raised in the pleadings.

5. Failure to participate in the arbitration does not necessarily result in a loss. This is a difference between arbitration and litigation, if the respondent does not participate in the arbitration, the arbitral tribunal shall still hear the dispute (either in court or in writing) to see if the applicant can prove its case, unlike litigation, the arbitral tribunal shall not have the right to rule against a party's failure to respond.

6. Document disclosure system. The procedure by which a party discloses and allows the other party to inspect its documents relating to the dispute is called document disclosure. Document disclosure is a typical step in Hong Kong arbitration proceedings, which is similar to the pre-trial evidence exchange system in litigation. Unlike court proceedings, in arbitration, parties do not have the right to demand broad disclosure of documents. The arbitral tribunal will usually order the disclosure of documents, although it is not required. The scope of the disclosure of the document, the latter to be agreed upon by the parties, or decided by the arbitral tribunal. The arbitral tribunal has the power to order the parties to disclose all relevant documents, whether to their advantage or disadvantage.

7. Principle of privilege of confidentiality. This is a system corresponding to document disclosure, which means that documents related to "confidentiality privilege" may not be disclosed in the document disclosure procedure. The first is the privilege of legal advice, which protects communications between clients and lawyers for the purpose of giving and receiving legal advice, which may not be disclosed and which may only be waived by the client. The second is the privilege of litigation, which protects documents prepared for the preparation of litigation, or in anticipation of litigation, which may not be disclosed, and which applies equally to documents prepared for the preparation of arbitration. Litigation privilege is not limited to the communication between lawyer and client, so the scope of protection is broader than legal privilege. This privilege may be waived only by the party for whom the document is being prepared. The third is the "non-destructive rights" privilege, which protects communications between parties (or their lawyers) for the purpose of negotiating and resolving disputes, and such communications may not be disclosed. This privilege applies whether or not the parties formally declare the relevant documents or discuss the protection of the "non-destructive rights" privilege, which may be waived only with the consent of the parties.

Except for the rule of privilege of confidentiality, the arbitral tribunal is not bound by the strict rules of evidence applicable in court proceedings and has the power to determine what evidence is admissible and what the evidence bears in the determination of the facts.

8. Expert witness system. In order to assist it in the examination of evidence, the arbitral tribunal may, after consultation with the parties, appoint one or more experts. The arbitral tribunal may meet in private with any appropriately designated expert. The expert shall submit a written report to the arbitral tribunal on a particular issue to be decided by the arbitral tribunal. The arbitral tribunal shall communicate the letters of assignment prepared by it to the parties. The parties shall provide the expert with any relevant information requested by him or any relevant documents or items requested by him for his examination. A dispute between the parties and the expert as to whether the requested information or documents or articles are relevant shall be referred to the arbitral tribunal for decision. Upon receipt of the expert's report, the arbitral tribunal shall send a copy to the parties and give the parties an opportunity to submit written comments on the report. The parties have the right to examine any document on which the expert relied in his report. After the submission of the report, the expert shall, at the request of either party, appear in court and be questioned on the spot by the party. Either party may appoint expert witnesses to testify on matters in dispute.

Applicable law for (VII) adjudication of disputes

If the contract provides for arbitration in Hong Kong, it does not necessarily result in the contract also having to be governed by the law of Hong Kong, I .e. the law applicable to the contract need not be determined by the place of arbitration.

In a contract dispute, the arbitral tribunal will apply the law applicable to the contract to determine the substantive issues, and the procedural issues are determined by the Arbitration Regulations and the applicable arbitration rules. If the applicable law of the contract is foreign law and the arbitral tribunal is not familiar with it, the arbitral tribunal may request expert advice from the parties to determine the applicable foreign law. If the contract does not specify the applicable law, the arbitral tribunal shall decide what law applies, which is usually settled as a preliminary point of dispute. The applicable law chosen is usually the law of the State with which the contract is most closely connected. The contractual provision for arbitration in Hong Kong will generally be an important factor in the arbitral tribunal's consideration of the application of Hong Kong law.

The law applicable to a tort dispute, on the other hand, is determined by the arbitral tribunal through the Hong Kong conflict of laws rules, so the law applicable to a tort dispute may be different from the law applicable to a contract.

(VIII) arbitral award

In the case of a three-member arbitral tribunal, any award or other decision of the arbitral tribunal shall be based on the opinion of the majority of the arbitrators. If there is no majority opinion, the opinion of the presiding arbitrator shall be made. With the prior authorization of the arbitral tribunal, the presiding arbitrator may decide on procedural issues on his own. In addition to the final award, the arbitral tribunal shall have the power to make interim, interlocutory or partial awards. If appropriate, the arbitral tribunal may award costs in a non-final award.

The award is written, final and binding on the parties, who are under an obligation to perform it forthwith. The award contains the reasons on which it is based, is signed by the arbitrators and states the date and place of the award. In the case of a three-member arbitral tribunal and one or two of the arbitrators have not signed, the reasons for such failure will be set out in the award. Except in cases where the arbitral tribunal has the right to lien the award, the arbitral tribunal shall send the original award signed by the arbitrator and sealed by the arbitration center to the parties and the secretariat of the arbitration center.

If the parties settle the dispute before the award is made, the arbitral tribunal will issue an order to terminate the arbitration proceedings or, at the request of the parties and with the approval of the arbitral tribunal, make a settlement award on the basis of the settlement. The arbitral tribunal is not required to give reasons for such an award. If, before the award is made, for any reason other than the above, it is no longer necessary or possible to continue the arbitration, the arbitral tribunal will issue an order to terminate the arbitration proceedings. The arbitral tribunal then sends an order to terminate the arbitral proceedings or a settlement award signed by the arbitrators to the parties and the secretariat of the arbitration center. The settlement award is also written, final and binding on the parties, and the parties are obliged to perform it immediately.

(IX) arbitration fees

At the option of the parties, it shall be determined in accordance with article 3 of the Schedule of Arbitration Fees and Fees or in accordance with a fee agreed upon by the appointing party and the arbitrator appointed (in the case of the third arbitrator in a three-member tribunal, by the parties and the third arbitrator). The method of fixing the fees of the arbitral tribunal shall be notified to the secretariat of the arbitration center within 30 days from the date of the notice of arbitration. If the parties fail to agree within this period on the method of fixing the arbitral tribunal's fees, the fees shall be charged as agreed upon by the appointing party and the arbitrator appointed.

The costs of legal representation and assistance shall be borne by the arbitral tribunal, taking into account the circumstances of the case, or, if it considers it reasonable, by the parties. Except in that case, the costs of the arbitration shall, in principle, be borne by the losing party, unless the arbitral tribunal decides otherwise. However, if the arbitral tribunal considers it reasonable, it may also award all or part of the contribution to the parties.

Once the arbitral tribunal has been constituted, the secretariat of the Centre will request the parties to pay an equal amount to the Centre as an advance payment for the costs of the arbitration. If the requested advance payment of fees is not made in full within 30 days of receipt of the request, the secretariat of the Centre shall notify the parties so that they can be paid by either party. If no payment has been made, the arbitral tribunal may order the suspension or termination of the arbitral proceedings or the continuation of the arbitration in such manner as it deems appropriate.

HKIAC and the arbitral tribunal have the right to lien the award made by the arbitral tribunal to ensure the payment of the relevant arbitration costs by the parties.

Mutual enforcement of arbitral awards in the Mainland of 3. and Hong Kong

Before 1997, there were no substantive obstacles to the mutual recognition and enforcement of arbitral awards between the Mainland and Hong Kong. The United Kingdom became a contracting party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention) in 1958. In 1977, the Convention was extended to Hong Kong. Awards made by mainland arbitration institutions are regarded as Convention awards within the meaning of the Hong Kong Arbitration Ordinance, and can apply for recognition and enforcement in Hong Kong under the New York Convention. In the enforcement of Mainland awards in Hong Kong, only formal examination is conducted, not substantive examination. According to statistics, from January 1989 to July 1, 1997, Hong Kong alone implemented 150 awards made by the China International Economic and Trade Arbitration Commission and its sub-commissions.[3] 
The Mainland regards arbitration involving Hong Kong as foreign-related arbitration and shall handle it mutatis mutandis the special provisions on foreign-related civil procedure. Therefore, Hong Kong's awards are enforced in the Mainland in accordance with the provisions of the New York Convention. Specifically, according to the Civil Procedure Law, if a foreign arbitral award needs to be recognized and enforced by a people's court, the parties concerned shall directly apply to the intermediate people's court with jurisdiction, and the court shall handle it in accordance with the international treaties concluded or acceded to by the the People's Republic of China.
However, after the return of Hong Kong, the judicial assistance between the Mainland and Hong Kong is the cooperation and mutual assistance in the judicial field between the judicial organs of different jurisdictions or specific regions within the same sovereign country, that is, the judicial organs of a certain region accept another region. The request of the judicial organ performs certain judicial acts on its behalf in the area under its jurisdiction. Since there is no agreement on judicial assistance between the two parties, the enforcement of arbitral awards has been plagued by the two places during the three years from 1997 to 2000.
Arrangement on the Reciprocal Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region, 1998 and 1999. The "Arrangement" stipulates the conditions, procedures and applicable time limits for the mutual enforcement of arbitral awards between the two places. The enforcement conditions stipulated in the Arrangement are more relaxed than the enforcement conditions of "domestic arbitral awards" stipulated in the Civil Procedure Law and the Arbitration Law of the Mainland, and the enforcement conditions of "local arbitral awards" stipulated in the relevant laws of Hong Kong, it provides more convenient conditions for the mutual enforcement of arbitral awards between the two places. As the "Arrangement" refers to the content of the "New York Convention" to a large extent, it ensures the stability of the mutual enforcement mechanism of arbitration between the two places. At present, under the framework of the Arrangement, the mutual cooperation between Hong Kong and the mainland arbitration is more in-depth.

[①]From 281 2005, 394 2006, 448 2007 and 602 2008, see HKIAC website: http://www.hkiac.org/schi/show_content.php?article_id=9 。

[②]Of course, arbitration in Hong Kong does not have to be managed by the HKIAC, and the parties may choose to be managed by another institution or not, nor does it have to be conducted in the HKIAC, which may be heard at any place convenient to the parties and the arbitrators.

[3]Song Lianbin: "On the Mutual Enforcement of Interregional Arbitral Awards in China", htp:// www.