HKIAC releases updated Administered Arbitration Rules (effective 1 June 2024)

On 3 May 2024, the Hong Kong International Arbitration Centre (“HKIAC”) published the 2024 Administered Arbitration Rules (“2024 Rules”), which will come into force on 1 June 2024. This follows on from a public consultation launched by the HKIAC earlier this year to seek comments from HKIAC arbitration users on its proposed amendments to the 2018 Administered Arbitration Rules. 

The refinements made in the 2024 Rules reflect evolving social norms and technological advancements in the global arbitration community, and also aim to enhance the efficiency of HKIAC arbitrations with respect to time and costs, in order to ensure that Hong Kong and the HKIAC respectively remain the jurisdiction and arbitral institution of choice for international parties.

Key Amendments

1. Considerations on Diversity in Appointing Arbitrators, Environmental Impact and Information Security

Staying attuned to shifting social norms, newly drafted Article 9A encourages parties in arbitral proceedings and co-arbitrators to “take into account considerations of diversity” when choosing an arbitrator. By the same token, the HKIAC must also take diversity into consideration when exercising its authority of appointment.

In line with the uptake on ESG initiatives globally, the arbitral tribunal is explicitly required to take environmental impact into account when adopting suitable procedures (Article 13.1). It may also consider “any adverse environmental impact arising out of the parties’ conduct” when determining the reasonableness of costs of the arbitration and whether and how to apportion costs (Article 34.4).

Meanwhile, information security takes the centre stage with requirements that the arbitral tribunal and parties consider information security (Article 13.1 and 45A). Parties can agree on “any reasonable measures to protect information shared, stored, or processed in relation to the arbitration”. The arbitral tribunal may, after considering the parties’ views, give directions to parties on such protection of information security, and make decisions in respect of any breach of such direction. The arbitral tribunal is also required to consider information security when adopting suitable procedures for the conduct of arbitration. These provisions follow on from the HKIAC’s offering of its online case management platform HKIAC Case Connect from 2021 and echo the increasing prevalence of the use of electronic bundles and other technology in arbitration proceedings.

2. Enhancing efficiency and preserving integrity

The 2024 Rules also enhance the efficiency and integrity of the arbitration, granting the HKIAC the power, in exceptional circumstances, to revoke the appointment of an arbitrator who has “failed to fulfil his or her functions” under the arbitration rules or within prescribed time limits, after consulting with the parties and the arbitral tribunal (Article 13.10).

Article 13.6 also grants further case management powers to the arbitral tribunal, enabling it to “adopt procedures to decide the case efficiently”, including the express power to determine preliminary issues that it considers could dispose of all or part of the case, to bifurcate the proceedings, conduct the arbitration in sequential stages, and decide the stage at which any issue(s) shall be determined. 

Under the 2024 Rules, parties are required to communicate even “proposed” changes to its legal representatives to the other parties, the arbitral tribunal and the HKIAC after the arbitral tribunal has been constituted (Article 13.8). The arbitral tribunal also has the power to “take any measure necessary to avoid a conflict of interest arising from a change in party representation”, including “by excluding the proposed new party representatives” from participation in proceedings, after consulting with the parties (Article 13.9). Such measures thus equip the arbitral tribunal with additional tools to prevent parties from disrupting proceedings via strategic changes in representation intended to orchestrate conflicts of interest.

With respect to the closure of proceedings, the arbitral tribunal is now required to declare the closure of proceedings or the relevant phase of the proceedings “no later than 45 days from the last directed substantive oral or written submissions”, once it is satisfied that the parties have had a reasonable opportunity to present their case (Article 31.1). As specific proceedings are closed sooner with the 2024 Rules, this should lead the swifter rendering of awards (i.e. 3 months from the closure of proceedings, pursuant to existing deadline under Article 31.2).

3. Other Refinements

On the mode of communication, Article 3.1 enables parties and arbitrators to communicate through any form of electronic communication that has previously been agreed upon, allowing for greater agility in the conduct of arbitral proceedings.

Regarding the mechanism allowing claims arising out of more than one contract to proceed under a single arbitration, the addition of a sub-article clarifies that where the HKIAC decides a single arbitration under multiple contracts is properly commenced, parties shall be deemed to have waived their rights to choose an arbitrator and the arbitral tribunal will be appointed by the HKIAC with or without regard to the preference of the parties (Article 29.2). This aligns such arrangement with that of a successful consolidation of two or more arbitrations under Article 28.8.

Key Takeaways

No precise definition or guiding principles are offered by the HKIAC with regards to diversity, such as what factors should be considered when complying with Article 9A. Diversity and inclusion has remained a central topic within the arbitration community in recent years. Recent data published by the HKIAC shows that the proportion of women appointed by the HKIAC as arbitrators increased from 22% in 2021 and 27% in 2022 to 35% in 2023. Concurrently, however, the London Court of International Arbitration (“LCIA”) and the Singapore International Arbitration Centre have been making greater strides towards achieving gender equality in arbitrator appointments, with each appointing close to 50% of female arbitrators in 2022. As a signatory to the ERA Pledge for Equal Representation in Arbitration since 2016, the precise impact of the HKIAC’s newly drafted Article on diversity remains to be seen and may be difficult to monitor in practice. Nevertheless, its inclusion reinforces the HKIAC’s position amongst the expanding ranks of arbitral institutions which feature diversity-related language within their arbitration rules. 

On the other hand, the HKIAC’s information security measures mirror similar provisions in the LCIA Arbitration Rules, which grant the arbitral tribunal the power to adopt specific measures to protect data shared for the arbitration and to issue cybersecurity directions. The HKIAC’s environmental impact provisions also reflect the LCIA and the International Chamber of Commerce’s (“ICC”) focus on environmental sustainability. For instance, the LCIA Arbitration Rules provide for requests and responses for arbitration to be submitted electronically by default, as well as for any written communication in relation to the arbitration to be delivered electronically. The ICC Arbitration Rules not only provide for electronic filing, but also enables arbitral tribunals to decide that hearings be conducted remotely by videoconference — after consulting the parties, and based on relevant circumstances of the case — underscoring the potential minimisation of travel as a crucial step towards conducting ‘greener proceedings’. 

Conclusion and Next Steps

Since the enactment of the HKIAC Administered Arbitration Rules, the number of arbitrations conducted in the HKIAC has seen remarkable growth, lauded by practitioners for its effectiveness and cost-efficiency. In the 2024 Rules, apart from changes made to improve the time and cost efficiency of HKIAC arbitrations, by placing diversity, environmental impact, and information security at the forefront, the HKIAC signals its intention to align with the prevailing social norms in parallel with other leading arbitration centres around the globe. 

The 2024 Rules are a fine-tuning of the HKIAC’s arbitration rules which are already widely acknowledged as industry-leading. How the 2024 Rules will operate in practice remains to be seen, but will no doubt be closely observed by the wider arbitration community in its impact in strengthening Hong Kong’s position as a global dispute resolution hub.

If you require any further assistance, please contact Danny Leung at danny.leung@twobirds.com.