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Arbitration

Arbitration - The International Arbitration Centre for the Asia Pacific


Why Hong Kong?


New Legislative Framework

  • In June 2011, a new Arbitration Ordinance came into effect which reforms the arbitration law of Hong Kong by unifying the legislative regimes for domestic and international arbitrations on the basis of the Model Law on International Commercial Arbitration of the United Nations Commission on International Trade Law ("Model Law"). With the reform, more international arbitration will be attracted to Hong Kong.
  • There is no restriction on foreign law firms engaging in and advising on arbitration in Hong Kong. Parties in arbitration may retain advisers without restrictions as to their nationalities and professional qualifications.

World Class Arbitration Institutions

  • Hong Kong has its own home-grown arbitration body: the Hong Kong International Arbitration Centre ("HKIAC"), which has been designated the appointing body under the Arbitration Ordinance (Cap 609) to appoint arbitrators and to determine the number of arbitrators where the parties to a dispute are unable to agree.
  • HKIAC is totally independent and free from governmental interference.
  • In 2011, 65% (representing 178 cases) of all HKIAC's arbitration cases are of an international nature.
  • The International Court of Arbitration of the International Chamber of Commerce ("ICC"), which is based in Paris, has opened a branch of its Secretariat in Hong Kong in November 2008 to serve ICC arbitration in the Asia-Pacific Region.
  • In September 2012, the China International Economic and Trade Arbitration Commission (CIETAC), which handles a large number of international arbitration cases, has established in Hong Kong its first office outside the Mainland, namely the CIETAC Hong Kong Arbitration Centre. The presence of the Centre will help to further enhance Hong Kong’s competitiveness as a venue for international arbitration.
  • In January 2015, the Permanent Court of Arbitration ("PCA") signed a host country agreement with the Central People’s Government and a related memorandum of administrative arrangements with the Government of the Hong Kong Special Administrative Region to facilitate the conduct of PCA-administered arbitration in Hong Kong, including state-investor arbitration. The PCA was established by the Convention for the Pacific Settlement of International Disputes (1899). It has an excellent reputation in handling international investment arbitration, and is a leading international institution with its headquarters in The Hague.

Worldwide Recognition and Enforcement of Arbitral Awards


Background to the new Arbitration Ordinance, Cap. 609

Under the now repealed Arbitration Ordinance (Cap. 341) ("the Repealed Ordinance"), there were separate regimes for the conduct of domestic and international arbitrations in Hong Kong. The regime for domestic arbitration was largely based on the United Kingdom ("UK") arbitration legislation, while the regime for international arbitration was based on the Model Law.

In 1998, the Hong Kong Institute of Arbitrators in co-operation with the HKIAC established a Committee on Hong Kong Arbitration Law on the reform of the arbitration law. The Committee issued a report in 2003 recommending that the then Arbitration Ordinance be redrafted and a unitary regime with the Model Law governing both domestic and international arbitrations be created. The Department of Justice ("DoJ") set up in September 2005 the Departmental Working Group to implement the Report of the Committee on Hong Kong Arbitration Law, chaired by the Solicitor General and comprising representatives of the legal profession, arbitration experts and relevant government officials, to formulate legislative proposals to implement the recommendations in the report of the Committee.

DoJ published a Consultation Paper on Reform of the Law of Arbitration in Hong Kong and draft Arbitration Bill ("Consultation Paper") on 31 December 2007 for a 6-month consultation on the reform of the law of arbitration in Hong Kong. With the draft Bill adopting the structure of the Model Law as its framework, the purposes of the reform are -

  • to make the law of arbitration more user-friendly to arbitration users both in and outside Hong Kong;
  • to enable the Hong Kong business community and arbitration practitioners to operate an arbitration regime which accords with widely accepted international arbitration practices and development as the Model Law is familiar to practitioners from both civil law and common law jurisdictions;
  • to attract more business parties to choose Hong Kong as the place to conduct arbitral proceedings, as Hong Kong will be seen as a Model Law jurisdiction; and
  • to promote Hong Kong as a regional centre for dispute resolution.

The text of the Consultation Paper is available at:

http://www.doj.gov.hk/eng/public/pdf/2007/arbitration.pdf pdf file format

The consultation period ended on 30 June 2008, and DoJ reported to the Legislative Council Panel on Administration of Justice and Legal Services on 23 February 2009 on the outcome. A copy of the discussion paper is available at:
http://www.legco.gov.hk/yr08-09/english/panels/ajls/papers/aj0223cb2-899-6-e.pdf pdf file format

For more detailed discussion, please see the paper on "Summary of Submissions and Comments on the Consultation Paper on Reform of the Law of Arbitration in Hong Kong and Draft Arbitration Bill" prepared by the Administration for the Bills Committee on Arbitration Bill:
http://www.legco.gov.hk/yr08-09/english/bc/bc59/papers/bc590916cb2-2469-3-e.pdf pdf file format

The Arbitration Bill was introduced into the Legislative Council in June 2009. A Bills Committee was formed by the Council to study the Bill. The Bills Committee held 15 meetings with the Administration and received views from eight deputations at one of the meetings. The Report of the Bills Committee, which sets out the deliberations of the Bills Committee, is available at:
http://www.legco.gov.hk/yr10-11/english/hc/papers/hc1022cb2-83-e.pdf pdf file format

The new Arbitration Ordinance, Cap. 609 was enacted by the Legislative Council on 10 November 2010 ("the Ordinance") and the new law came into effect on 1 June 2011. Please click here to read the text of the Arbitration Ordinance (Cap. 609).


Attractive Features of the New Law on Arbitration

The Ordinance has the following attractive features:

Clear, certain and accessible arbitration law based on the Model Law

  • With the enactment of the Ordinance, our arbitration law becomes clearer, more certain, and more easily accessible to arbitration users and practitioners from around the world. The Ordinance is self-contained so that it is easier for users to find all relevant provisions in one place.
  • The Ordinance unifies the legislative regimes for domestic and international arbitration on the basis of the Model Law.
  • The Ordinance gives legal effect to those provisions of the Model Law that are applicable to Hong Kong. Those provisions, with such modifications or supplements where necessary, are arranged in the same order as the Model Law.

Please see more detailed discussion in the paper on the "Rationale and Justifications for the Drafting Approach of the Arbitration Bill" prepared by the Administration for the Bills Committee on Arbitration Bill. The paper is available at:
http://legco.gov.hk/yr08-09/english/bc/bc59/papers/bc590916cb2-2469-1-e.pdf pdf file format

Incorporation of recent Model Law initiatives

  • The opportunity has been taken to include in the Ordinance a number of recent initiatives proposed by the Model Law. For example, the Hong Kong court is empowered to recognise and enforce interim measures ordered by an arbitration tribunal sitting outside Hong Kong. The requirement that an arbitration agreement be in writing is extended to include electronic communications.

Protection of confidentiality in arbitration proceedings and related court hearing

  • A major feature of the Ordinance is the provisions on the protection of confidentiality in arbitration proceedings as well as court hearing related to those proceedings. To enhance confidentiality for international arbitration, the Ordinance provides that as a starting point, court proceedings relating to arbitration are not to be heard in open court. Such proceedings will be heard in open court only if any party so applying can satisfy the court that for good reasons the proceedings ought to be heard in open court.
  • The Ordinance also provides that unless otherwise agreed by the parties or under any exceptions as provided for in the Ordinance, no party may publish, disclose or communicate any information relating to arbitral proceedings and awards. The Ordinance adheres to the international practice that arbitral awards should only be made public with the consent of the parties concerned, having regard to the private and confidential nature of arbitration. This provision seeks to strike a proper balance between safeguarding the confidentiality in arbitration and the need for parties in the arbitral proceedings to protect or pursue their legal rights or for them to enforce or challenge an arbitral award.

Please see more detailed discussion in the paper on the confidentiality provisions and related issues of the Arbitration Bill prepared by the Administration for the Bills Committee on Arbitration Bill. The paper is available at:
http://legco.gov.hk/yr08-09/english/bc/bc59/papers/bc590430cb2-1404-1-e.pdf pdf file format

Provisions for a fair and speedy method of resolution of dispute by arbitration with minimal court intervention

  • Achieving fair and speedy resolution of disputes and avoiding unnecessary costs are the objectives of the Ordinance.
  • Under the Ordinance, the court may intervene only in circumstances as expressly provided for in the Ordinance. In general, minor procedural proceedings in the court should not be subject to appeal. These include, for example, and in line with the Model Law provisions, the appointment of arbitrators, the procedure to challenge an arbitrator, and the decision terminating the mandate of an arbitrator. Only proceedings which determine substantive rights or might do so may be subject to appeal.

Please see more detailed discussion in paragraphs 8 to 16 under the heading of "ways in which the provisions of the Arbitration Bill could facilitate the fair and speedy resolution of disputes" of the paper prepared by the Administration for the Bills Committee on Arbitration Bill. The paper is available at:
http://legco.gov.hk/yr08-09/english/bc/bc59/papers/bc591005cb2-2546-3-e.pdf pdf file format

Automatic opt-in mechanism to cater for the special circumstances of the construction industry

In the legislative process, deputations from the construction industry pointed out that under the legislation then, a domestic subcontract in the construction industry did not need to expressly refer to the domestic regime as it would automatically apply. Without an express opt-in under the new Ordinance, all subcontracts would have been governed by the international unitary regime. Thus, the status quo of local construction subcontractors would immediately change when the new Ordinance came into force. In response, the Administration introduced an automatic opt-in mechanism for the construction industry: under section 100 of the Ordinance, all the opt-in provisions (under Schedule 2) will automatically apply to an arbitration agreement entered into before, or at any time within a period of 6 years after, the commencement of the Ordinance and which has provided that arbitration under the agreement is a domestic arbitration. Schedule 2 of the Ordinance includes provisions for:

  • Arbitration by a sole arbitrator in the absence of agreement;
  • Appeal against an arbitral award on a question of law;
  • Consolidation of arbitrations by the court;
  • Determination of a preliminary question by the court; and
  • Challenging an arbitral award on the grounds of serious irregularity.

Moreover, under section 101 of the Ordinance, the opt-in provisions also apply to arbitration agreement (if any) under subcontracts, if the main construction contracts contain arbitration agreement to which the opt-in provisions automatically apply. However, this is not applicable to "non-local subcontractors" to avoid opt-in provisions being imposed on unwary non-local subcontractors, thereby undermining Hong Kong's reputation as an international arbitration centre.

Please see more detailed discussion in the paper of "Arbitration Bill gazetted in June 2009 - Automatic Opt-in for Subcontractors" prepared by the Administration for the Bills Committee on Arbitration Bill. The paper is available at:
http://legco.gov.hk/yr08-09/english/bc/bc59/papers/bc590512cb2-1477-3-e.pdf pdf file format


Arbitration (Amendment) Ordinance 2017

The Arbitration (Amendment) Ordinance 2017 seeks to clarify that disputes over intellectual property rights (IPRs) are capable of resolution by arbitration, and it would not be contrary to public policy to enforce an award solely because the award involves an IPR dispute. The Amendment Bill was passed by the Legislative Council on 14 June 2017 and the Amendment Ordinance was gazetted on 23 June 2017.

The amendments relating to intellectual property arbitration come into operation on 1 January 2018 (except for the new section 103J which will come into operation on the day on which section 123 of the Patents (Amendment) Ordinance 2016 comes into operation). We believe that the enactment of the above legislative amendment will enable Hong Kong’s arbitration regime to stay at the forefront of international development. Moreover, it will further consolidate Hong Kong’s competitiveness as a leading international arbitration centre and reinforce Hong Kong’s edge over other jurisdictions in the region in resolving IPR disputes.

For more detailed discussion, please read:

(1) the brief note setting out the main features (including the commencement arrangements) of the Amendment Ordinance
(2) the leaflet on IP amendments in the Amendment Ordinance
(3) FAQs on IP arbitration in Hong Kong.


Advisory Committee on Promotion of Arbitration

To further promote Hong Kong as a leading centre for international arbitration services in the Asia-Pacific region, the Secretary for Justice has set up an Advisory Committee on Promotion of Arbitration, comprising representatives from the Department of Justice and the legal, arbitration and relevant sectors in Hong Kong. Overseas arbitration experts may also be appointed from time to time to assist in the work of the Advisory Committee either generally or on specific issues. Please click here for the Terms of Reference and Membership of the Advisory Committee.



Report on Enhancing Hong Kong’s position as the leading international arbitration centre in Asia-Pacific

Advisory Body under Part 10A of the Arbitration Ordinance (Cap. 609)

Further information

Further information about arbitration in Hong Kong may be obtained from:

Legal Policy Division
Department of Justice
5th Floor, East Wing, Justice Place,
18 Lower Albert Road,
Central,
Hong Kong
Tel: 852 3918 4099
Fax: 852 3918 4799
E-mail: lpd@doj.gov.hk
Web Site: www.doj.gov.hk

The Secretary-General
Hong Kong International Arbitration Centre
38/F Two Exchange Square
8 Connaught Place
Hong Kong
Tel: 852 2525 2381
Fax: 852 2524 2171
E-mail: adr@hkiac.org
Web Site: www.hkiac.org

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