In our February 2024 update, we discussed the proposed amendments to the 2018 Hong Kong International Arbitration Centre (“HKIAC“) Administered Arbitration Rules.
This article follows up on the launch of the 2024 version of the HKIAC Rules (the “2024 Rules“), which will take effect on 1 June 2024 (unless the parties have agreed otherwise) and incorporate most of the previously discussed amendments.
The 2024 HKIAC Rules is available here.
The key amendments are summarised as follows:
- Diversity in arbitral appointments (see Art. 9A): parties and co-arbitrators are encouraged to consider “diversity” when selecting arbitrators, but the HKIAC offers no definition or guiding principles regarding the concept of “diversity“. However, the HKIAC, in its press release, has cited its 2016 signing of the ERA Pledge as an example – the Pledge aims to increase the appointment of women arbitrators to achieve fair representation and gender parity.
- New overarching considerations (see Art. 13.1): tribunals and parties should now consider information security and environmental impact when adopting procedures for the conduct of the arbitration. This reflects the HKIAC’s existing practices, such as its offering of “HKIAC Case Connect” since 2021, which is a secure case management platform with banking-grade encryption and continuous server monitoring, and its work on drafting the “Green Protocols” to promote sustainable arbitration.
- Clarifications of the arbitral tribunal’s powers (see Art. 13.6, 13.9 and 13.10): the amendments clarify that the tribunal has power to determine preliminary issues and enhance the HKIAC’s role in matters that impact the integrity of the arbitral process, such as the appointment of arbitrators and revocation of an arbitrator’s mandate.
- Enhancements to the mechanism for a single arbitration to proceed under multiple contracts (see Art. 29.2): the amendments allow the HKIAC to appoint the arbitral tribunal if it determines that the arbitration is properly commenced under Article 29, with parties deemed to have waived their rights to designate an arbitrator.
- Time limit to declare the closure of proceedings (see Art. 31.1): the revisions now impose a fixed time limit, no later than 45 days from the last directed submissions, for the tribunal to declare the proceedings or the relevant phase of the proceedings closed.
- Considerations for cost apportionment (see Art. 34.4): factors such as the relative success of the parties, scale and complexity of the dispute, parties’ conduct, outcome related fee structure agreements, and adverse environmental impact should be taken into account when determining whether the costs of arbitration are reasonable and how to apportion arbitration costs.
- Enhanced information security provisions (see Art. 45A): data protection and cybersecurity are critical in international arbitration, as demonstrated by the hacking incident of the Permanent Court of Arbitration website during the China-Philippines maritime border dispute in July 2015. In light of this background, the HKIAC has taken steps to address the risk of cyberattacks such as recognising secure online repositories as valid means of communication and is now empowering the arbitral tribunal to make decisions, orders, or awards in respect of any breaches of information security measures agreed upon by the parties or directed by the tribunal.
- Determination of fees payable to arbitrators (see §5.1 of Schedule 2 and §5 of Schedule 3): the amendments grant the HKIAC the authority to review and adjust the fees and expenses of the arbitral tribunal if parties have chosen to pay based on an hourly rate. Similarly, if parties have elected to pay by reference to an ad valorem fee scale, the HKIAC is empowered to determine the amount of fees and expenses to be paid to any arbitrator.
- Clarifications of the powers of the emergency arbitrator (“EA“) (see §10 of Schedule 4): the 2018 Rules include an emergency arbitration mechanism which enables parties to seek urgent interim relief from an emergency arbitrator prior to the establishment of the arbitral tribunal. Typically, the HKIAC appoints an EA within 24 hours of receiving an application, and the EA will make an emergency decision within 14 days. The 2024 Rules clarify that the EA has the power to issue any preliminary or interim order during this 14-day timeframe.
Overall, the 2024 revisions codify the HKIAC’s existing initiatives and clarify the powers of tribunals and the institution itself. These changes are a targeted enhancement which underscores the HKIAC’s commitment to maintaining its preeminent position in international arbitration.
