HKIAC arbitration refers to the settlement of disputes administered by the Hong Kong International Arbitration Centre (the “HKIAC”) under one of its arbitration rules. According to the Queen Mary, University of London and White and Case’s 2015 International Arbitration Survey, HKIAC was the third most preferred and used arbitral institution worldwide and the most favored arbitral institution outside of Europe. According to the Queen Mary 2021 International Arbitration Survey, HKIAC has slipped to fourth place, being displaced by the SIAC, but it remains one of the most preferred international arbitral institutions in the world.
HKIAC provides alternative dispute resolution services in various forms, from administered and ad hoc international arbitration to mediation, adjudication and domain name dispute resolution.
History of the HKIAC
HKIAC was established in Hong Kong in 1985 by a group of businesspeople and professionals to promote the use of arbitration and other forms of alternative dispute resolution in Asia. It is one of the longest-standing arbitral institutions in the Asia-Pacific region. Formed as a non-profit company limited by guarantee under Hong Kong law, today HKIAC is independent of both the business community and the Government and operates with its own budget and funds. HKIAC has its headquarters in Hong Kong, which is considered as one of the premier venues for international arbitration in the world, and the first Asian jurisdiction to adopt the latest version of the UNCITRAL Model Law on International Commercial Arbitration.
Organizational Structure of the HKIAC
HKIAC is governed by the HKIAC Council, comprised of leading businesspeople and professionals from around the world. In addition, HKIAC also has an International Advisory Board, which provides guidance and advices to HKIAC on a policy level. The Executive Committee is the principal body directing the activities of HKIAC, with three standing committees, which deal with matters concerning the business operations of HKIAC and the functions entrusted to HKIAC under the arbitration rules:
The HKIAC Secretariat, led by the Secretary-General, conducts daily administration of dispute resolution services. The Secretariat provides administrative support in dispute resolution proceedings including arbitration, mediation, adjudication and domain name disputes. HKIAC’s legal staff are highly qualified individuals admitted in both civil and common law jurisdictions with experience in international commercial, investment, and inter-State arbitration. The HKIAC Secretariat is comprised of legal and administrative staff of diverse nationalities.
Development of the HKIAC Arbitration Rules
There have been three different versions of the HKIAC Administered Arbitration Rules (including their revisions and amendments) (the “HIAC Rules“):
- HKIAC Administered Arbitration Rules 2008 (English)
- HKIAC Administered Arbitration Rules 2013 (English)
- HKIAC Administered Arbitration Rules 2018 (English)
The 2018 HKIAC Rules, currently in force, entered into effect on 1 November 2018, as we have previously commented. The 2018 HKIAC Rules are divided into several different chapters, as follows:
- Section I. General Rules (Articles 1-3)
- Section II. Commencement of the Arbitration (Articles 4-5)
- Section III. The Arbitral Tribunal (Articles 6-12)
- Section IV. Conduct of Arbitration (Article 13-32)
- Section V. Award, Decisions and Orders of the Arbitral Tribunal (Articles 33-41)
- Section VI. Other Provisions (Articles 42-46)
- Schedule 1: Registration and Administrative Fees
- Schedule 2: Arbitral Tribunal’s Fees, Expenses, Terms and Conditions – Based on Hourly Rates
- Schedule 3: Arbitral Tribunal’s Fees, Expenses, Terms and Conditions – Based on Sum in Dispute
- Schedule 4: Emergency Arbitrator Procedures
In addition, the HKIAC also provides for a separate set of Procedures for the Administration of Arbitration under the UNCITRAL Arbitration Rules, first issued in 1986, and updated in 2005 and 2015, respectively.
The Procedures for the Administration of Arbitration under the UNCITRAL Arbitration Rules represent a separate set of rules designed for use by parties who seek the advantages of administered arbitration, while maintaining the flexibility afforded by the 1976 or 2010 version of the UNCITRAL Arbitration Rules.
For domestic arbitrations, the HKIAC also provides for the HKIAC Domestic Arbitration Rules, introduced for the first time in 1993, and subsequently updated in 2012 and 2014, respectively. Other sets of HKIAC Rules the parties may also chose from for specific types of disputes include:
- HKIAC Short Form Arbitration Rules – used by the Parties who wish to resolve their disputed through a shortened procedure (in effect as of 1 August 1992);
- HKIAC Securities Arbitration Rules (in effect as of 1 July 1993);
- HKIAC Electronic Transaction Arbitration Rules – designed for disputes arising out of electronic transactions (in effect as of 1 January 2002);
- HKIAC Small Claims and “Documents Only” Procedures – intended to provide a cost-effective way of resolving disputes over relatively small sums.
HKIAC Model Arbitration Clauses
The HKIAC provides several model clauses, which parties may readily include in their respective contracts. For instance, for all future disputes the parties wish to submit to standard, HKIAC Administered Arbitration, HKIAC recommends the following model clause:
Any dispute, controversy, difference or claim arising out of or relating to this contract, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non- contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered by the Hong Kong International Arbitration Centre (HKIAC) under the HKIAC Administered Arbitration Rules in force when the Notice of Arbitration is submitted.
The law of this arbitration clause shall be … (Hong Kong law).
The seat of arbitration shall be … (Hong Kong).
The number of arbitrators shall be … (one or three). The arbitration proceedings shall be conducted in … (insert language).
Parties to an existing dispute in which neither an arbitration clause nor a previous agreement with respect to arbitration exists, may also refer their dispute to arbitration under the HKIAC Administered Rules, using the following submission agreement:
We, the undersigned, agree to refer to arbitration administered by the Hong Kong International Arbitration Centre (HKIAC) under the HKIAC Administered Arbitration Rules any dispute, controversy, difference or claim (including any dispute regarding non-contractual obligations) arising out of or relating to:
(Brief description of contract under which disputes, controversies, differences or claims have arisen or may arise).
The law of this arbitration agreement shall be … (Hong Kong law).
The seat of arbitration shall be … (Hong Kong).
The number of arbitrators shall be … (one or three). The arbitration proceedings shall be conducted in … (insert language).
Signed: _________ (Claimant)
Signed: _________ (Respondent)
Date: _________
HKIAC’s website (Model Clauses) provides for several other model clauses the parties may readily use, should they wish to have their dispute administered by HKIAC under the UNCITRAL Arbitration Rules or, for domestic arbitrations, under the HKIAC Domestic Arbitration Rules.
Commencement of HKIAC Administrated Arbitration
To commence an HKIAC arbitration, the party initiating the arbitration (the “Claimant”) must communicate a Notice of Arbitration to HKIAC and the other party (the “Respondent”). The Notice of Arbitration shall be accompanied by payment of a non-refundable Registration Fee as specified in Schedule 1 to the HKIAC Rules, in the amount stated on the HKIAC website on the date when the Notice of Arbitration is submitted. If the Claimant fails to pay the Registration Fee, the HKIAC will not proceed with the arbitration subject to Article 4.6 of the HKIAC Rules.
Pursuant to Article 4.3 of the HKIAC Rules, the Notice of Arbitration shall include the following:
(a) a request that the dispute be referred to arbitration;
(b) the names and (in so far as known) the addresses, facsimile numbers and/or email addresses of the parties and of their representatives;
(c) a copy of the arbitration agreement invoked;
(d) a copy of the contract (s) or other legal instrument(s) out of or in relation to which the dispute arises, or reference thereto;
(e) a description of the general nature of the claim and an indication of the amount involved, if any;
(f) the relief or remedy sought;
(g) a proposal as to the number of arbitrators (i.e. one or three), if the parties have not previously agreed thereon;
(h) the Claimant’s proposal and any comments regarding the designation of a sole arbitrator under Article 7, or the Claimant’s designation of an arbitrator under Article 8;
(i) the existence of any funding agreement and the identity of any third party funder pursuant to Article 44; and
(j) confirmation that copies of the Notice of Arbitration and any supporting materials included with it have been or are being communicated simultaneously to the Respondent by one or more means of service to be identified in such confirmation.
Costs of HKIAC Administered Arbitration
The costs of HKIAC Administered Arbitration are set out in the Schedule of Fees, available on the HKIAC’s website (see also the 2018 Fee Calculator). Costs of arbitration administered by HKIAC comprise:
- A Registration Fee – a non-refundable fee in the amount of HKD 8,000 (approximately USD 1,000); in cases where there are multiple Claimants; the Registration Fee shall be equally shared between the Claimants, unless they agree otherwise;
- HKIAC Administrative Fees, which depend on the amount in dispute, pursuant to Schedule 1 to the HKIAC Rules;
- Fees of the Arbitral Tribunal and the Tribunal Secretary, which are either determined based on hourly rates (Schedule 2 to the HKIAC Rules;) or based on the amount in dispute (Schedule 3 to the HKIAC Rules).
Unlike before other arbitral institutions, a fee (currently of HKD 50,000), must also be paid by a party submitting a Notice of Challenge to an arbitrator.
HKIAC regularly publishes reports on the average costs and duration of an HKIAC-administered arbitration. The most recent report reflects all cases administered by HKIAC under the HKIAC Rules in which a final award was issued between 1 November 2013 and 31 May 2019. The overall findings demonstrate that the overall median costs of arbitration (not including legal fees, expert fees and other party costs) were USD 56,138, and that the median duration was 12.9 months, which is relatively swift as compared to other arbitral institutions.
HKIAC Caseload Statistics
The popularity of HKIAC is reflected by its large number of cases since its establishment. According to the HKIAC Statistics for 2020, the HKIAC has had a total of 483 new cases, out of which 318 were arbitrations, 16 mediations and 149 domain name disputes. Out of the total number of arbitration cases, 203 cases were administered by HKIAC under the HKIAC Administered Rules. Out of all arbitrations submitted in 2020, a total of 72.3 % were international in nature (meaning that at least one party was not from Hong Kong), 31.8% of all arbitrations involved no Hong Kong parties at all, and 6.6% involved no Asian parties at all.
Regarding the types of disputes at the HKIAC, the majority of disputes were related to international trade / sale of goods (27%), followed by maritime disputes (18.6%), corporate disputes (18.3%), banking and financial services disputes (13.5%), followed by construction disputes (10.7%), professional services disputes (7.2%), insurance disputes (2.2 %), intellectual properly disputes (2.2 %) and, finally, employment disputes (0.3 %).