Articles

27 June 2024

The Hong Kong International Arbitration Centre (HKIAC) has released its new Administered Arbitration Rules, which will come into effect on June 1, 2024. The 2024 HKIAC Rules introduce several important changes aimed at enhancing the efficiency and integrity of HKIAC arbitrations. While preserving the overall structure and approach of the well-received 2018 Rules, the 2024 update brings some significant developments.

The key changes in the 2024 HKIAC Rules include:

1. Expanded powers for tribunals and HKIAC to address guerrilla tactics

The new rules provide robust tools to combat tactics that obstruct the swift and cost-effective resolution of disputes.

During the initial stages of the arbitration, HKIAC is now empowered to take any measure necessary to preserve the efficiency or integrity of the proceedings (Article 13.10). HKIAC also has an important continuing role under this provision because in exceptional circumstances it can revoke the appointment of an arbitrator who is unable to fulfil their duties even when there has not been a challenge to the tribunal by the parties.

Once the Tribunal is in place, new provisions allow it to exclude a party's proposed new legal representatives, and take any other necessary measure, so as to avoid a conflict of interest (Article 13.9). This will help address situations where a party seeks to derail or delay proceedings through conduct designed to undermine the effectiveness of the proceedings.

Enhanced powers are also given to the tribunal to determine preliminary issues or otherwise adopt procedures to decide the case efficiently, which is intended to codify the existing power to decide preliminary issues, bifurcate, conduct the arbitration in stages and decide the stage at which an issue will be resolved by the tribunal (Art. 13.6).

2. Streamlined multi-contract arbitration

Claims under multiple contracts can be decided in a single arbitration but this will only be allowed to proceed if the HKIAC is satisfied the single arbitration has been properly commenced (Article 29.1, referencing Article 19.5). When such an arbitration is commenced, the parties will be deemed to have waived their rights to designate an arbitrator, and the HKIAC will appoint the arbitral tribunal with or without regard to any party’s designation (Article 29.2). These changes seem to be designed to give better recognition to the commercial reality that related claims often span multiple contracts and transactions.

3. Diversity in arbitrator appointments

Furthering HKIAC's existing diversity efforts, the new rules (Article 9A) expressly encourage the appointment of diverse arbitrators by the parties and co-arbitrators. Similarly, when designating or appointing arbitrators, HKIAC will now consider gender, age, ethnicity, and cultural background. This amendment aligns with growing calls for increased diversity in appointments across international arbitration. It is hoped that parties (and their representatives) will likewise consider diversity when selecting the arbitral tribunal.

4. Environmental impact considerations

For the first time, the HKIAC Rules embed environmental impact considerations directly into the arbitral process. Tribunals are empowered to adopt environmentally friendly practices (Article 13.1), such as electronic filings and virtual hearings, after consulting the parties and when allocating costs (Article 34.4). This reflects the increasing importance placed on sustainability in international arbitration practice and procedure. The Campaign for Greener Arbitrations provides assistance with its Green Protocols and HKIAC is a signatory to the Campaign and itself adopts a green approach. It is hoped that the HKIAC will provide further guidance to arbitral tribunals (perhaps in a practice note) to ensure arbitrations are more environmentally friendly.

5. Information security and data protection

Cybersecurity and data privacy have become critical issues in the digital age. Recognizing this, the 2024 Rules impose a duty on tribunals, parties and HKIAC to consider reasonable information security measures to protect the arbitration in the newly inserted Article 45A. This change will be especially important to help safeguard sensitive commercial and personal data used in proceedings beyond the existing confidentiality provisions in Article 45. Given the widespread use of technology, including electronic bundles, cloud-based storage and services and virtual hearing platforms and, in our view, it is important that arbitral tribunal are assisted by parties and their representatives in ensuring suitable safeguards are adopted.

6. Refined emergency measures provisions

Changes to Schedule 4 which govern the appointment of an emergency arbitrator now grant them the power to make “any preliminary or interim order” deemed necessary before making their emergency decision (paragraph 10 of Schedule 4).  This allows emergency arbitrators to grant urgent interim relief pending their “substantive” emergency decision.

The New Rules also clarify that an emergency arbitrator may proceed with the emergency arbitration proceedings and render their decision within the prescribed time period (14 days from the date on which HKIAC transmitted the case file), even if the case file has subsequently been transmitted to the main arbitral tribunal (paragraphs 12 and 13 of Schedule 4).  

The 2024 HKIAC Rules were developed following extensive public consultations with users and leading arbitration practitioners. While not a complete overhaul, the changes represent a substantial modernization that will further strengthen HKIAC's position as a leading arbitral institution. The amendments address key user priorities like efficiency, diversity, sustainability and cybersecurity, while expanding the tools available to tribunals and HKIAC to manage proceedings effectively. The 2024 Rules will enhance HKIAC's ability to meet the evolving needs of the arbitration community in Hong Kong and globally.

Contributed by:

Mohammed Talib - Partner, Pinsent Masons
Nicholas Turner - Partner, Pinsent Masons