The Hong Kong International Arbitration Centre (HKIAC) has released updated administered arbitration rules that come into effect 1 June 2024. The updated 2024 Administered Arbitration Rules (the “2024 Rules”) are a much anticipated update to the HKIAC Administered Arbitration Rules 2018 (the “2018 Rules”) and have a keen emphasis on enhancing time and cost efficiency within the arbitration process.
Since the last time that HKIAC updated its administered arbitration rules in 2018, it has experienced a significant surge in the number of arbitrations and the diversity of parties involved in its arbitrations. For an overview of HKIAC’s 2023 statistics, please see our client alert issued in March 2024. Amid this surge in user demand, a key objective of the 2024 Rules is to preserve and bolster the efficiency and integrity of the HKIAC arbitration process. Noteworthy among the key updates are:
- Preserving the Efficiency and Integrity of the Arbitration (Art. 13.10 and Art. 41.4(a)): Under the 2018 Rules, only the tribunal could suspend arbitral proceedings for a failure to pay deposits, and only after constitution of the arbitral tribunal. The 2024 Rules now give HKIAC the power to take any necessary measures to preserve the efficiency and integrity of the arbitration, including the power to suspend or cease arbitration proceedings before the constitution of the arbitral tribunal if parties fail to fully pay deposits for costs.
- Avoiding Conflicts of Interest (Art. 13.8 and Art. 13.9): Under the 2018 Rules, parties are required to notify the HKIAC, the other parties, and the arbitral tribunal of any changes to legal representation after a change has been made. Under the 2024 Rules, parties must promptly notify HKIAC, the arbitral tribunal, and other parties of any proposed changes to legal representation. The 2024 Rules also give the tribunal express power to exclude the proposed new legal representatives from participating in the arbitral proceedings to avoid conflicts of interest. This change will empower tribunals to curtail attempts by parties to delay proceedings through engineering a conflict of interest via late-stage changes in their legal representatives.
- Consolidating a Single Arbitration under Multiple Contracts (Art. 29.2): Under new Article 29.2, when HKIAC determines that a single arbitration involving multiple contracts has been commenced properly, the parties are deemed to have waived their rights to designate an arbitrator. HKIAC will appoint the arbitral tribunal with or without regard to any party’s designation. This amendment aligns with other existing provisions, such as Article 28.8, which already provide for such a waiver in a consolidation of arbitrations.
- Declaring Closure of Proceedings and Time Limit for Issuing Award (Art. 31.1 and Art. 31.2): The 2018 Rules did not provide any express deadline for the arbitral tribunal to declare the proceedings closed. The 2024 Rules now require the arbitral tribunal to declare proceedings closed when it is satisfied that the parties have had a reasonable opportunity to present their case, and no later than 45 days from the last directed substantive oral or written submissions. However, the time for the arbitral tribunal to render an award following closure of proceedings remains unchanged: unless the parties or HKIAC agree to an extension, an award must be rendered within three months after the closure of proceedings. This modification should help expedite awards by helping to ensure that the tribunal declares proceedings closed without delay.
- Revoking Arbitrator Appointment (Art. 13.10): Under new Article 13.10, HKIAC is now empowered to revoke the appointment of an arbitrator who is unable to fulfil their duties, following consultation with both parties and the arbitral tribunal. This new power operates independently from the parties’ ability to challenge arbitrators (Article 11) and serves as an additional safeguard to preserve the efficiency and integrity of the arbitration.
- Clarifying Case Management Powers of Tribunals (Art. 13.6): The 2024 Rules clarify that the arbitral tribunal has the authority to determine preliminary issues, bifurcate the proceedings, conduct the arbitration in sequential stages, and decide the stage at which any issue or issues shall be determined, or otherwise to adopt procedures to decide the case efficiently. The codification of this tribunal power is a helpful development, as it formalizes the tribunal’s authority to adopt procedural tools to expedite proceedings.
- Adding Costs of Arbitration (Art. 34.1 and Art. 34.4): Costs of Emergency Relief proceedings are now included as “costs of arbitration” to be determined and apportioned by the arbitral tribunal. The arbitral tribunal now must also consider a non-exhaustive list of factors when exercising its discretion to apportion costs, including the relative success of the parties, the scale and complexity of the dispute, the conduct of the parties, any third-party funding arrangement or outcome-related fee structure agreement, and/or any adverse environmental impact arising out of the parties’ conduct.
- Considering Diversity in Arbitral Appointments (Art. 9A): In recent years, arbitral institutions around the world have been actively promoting or considering diversity in arbitral appointments and tracking related statistics. HKIAC is going one step further by expressly recording a duty to promote and consider diverse candidates in the arbitral appointment process. Parties and co-arbitrators are also encouraged to do the same when designating arbitrators.
- Protecting Information Security (Art. 13.1, Art. 45A.2, and Art. 45A.3): Under the new provisions, arbitral tribunals are required to address information security concerns and may give directions to protect the security of information shared, stored, or processed during the arbitration. The arbitral tribunal may also make a decision, order, or award in respect of any breach of the information security measures agreed upon by the parties or directed by the tribunal, after consulting with the parties.
These new provisions underscore HKIAC’s dedication to optimizing efficiency, adapting to evolving norms, and leveraging technological advancements in the administration of arbitration proceedings.
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