Arbitration in Hong Kong Latest Trends and Developments British Chamber of Commerce 6 September 2011 Hong Kong International Arbitration Centre Chiann Bao, Secretary-General 1
HKIAC: OVERVIEW Independent & Non-Profit Organisation Established in 1985 25 Council Members Board of Directors 14 Full-Time staff Over 300 arbitrators Over 500 mediators 2
HKIAC: Services ADR Services - Arbitration (Ad Hoc/ Administered) - Mediation Hong Kong Mediation Council - Adjudication - Domain Name Support Services - Room hire - Handling deposits - Translation/Transcription services 3
HKIAC STATISTICS (2010) Total: 624 cases 4
HKIAC STATISTICS (2010) Of the 291 Arbitration Matters: 5
NUMBER OF APPOINTMENTS(2010) HKIAC 158 MAG 131 Total: 289 6
HKIAC STATISTICS(2010) Of the 291 Arbitration Matters: 7
HKIAC: ADMINISTERED ARBITRATION RULES Light touch approach Language Confirmation of Arbitrators Expedited Procedures Costs : Schedule of Fees and Costs of Arbitration 8
COST OF ARBITRATION Arbitration costs in US$500,000 cases US$500,000 Centre One Arbitrator (average) Fee + Administrative Costs Centre Three Arbitrator (average) Fee + Administrative Costs Cairo US$ 12,500 Cairo US$ 26,500 Moscow US$ 18,664 Moscow US$ 37,490 Dubai US$ 23,748 Dubai US$ 63,684 Hong Kong US$ 24,875 Hong Kong US$ 64,125 Stockholm US$ 35,868 Stockholm US$ 64,416 Singapore US$ 38,518 Paris US$ 94,936 Paris US$ 41,089 Singapore US$ 99,578 Swiss US$ 45,341 Swiss US$ 107,216 Source: Global Arbitration Review 9
COST OF ARBITRATION Arbitration costs in US$5 million cases Centre One Arbitrator (average) Fee + Administrative Costs Centre Three Arbitrator (average) Fee + Administrative Costs Moscow US$ 43,680 Moscow US$ 87,360 Cairo US$ 45,000 Cairo US$ 95,000 Hong Kong US$ 63,975 Hong Kong US$ 166,225 Dubai US$ 66,447 Stockholm US$ 171,532 Stockholm US$ 92,110 Dubai US$ 187,461 Swiss US$ 113,546 Swiss US$ 260,683 Singapore US$ 113,600 Singapore US$ 298,200 Paris US$ 132,349 Paris US$ 307,016 Source: Global Arbitration Review 10
COST OF ARBITRATION Arbitration costs in US$500 million cases Centre One Arbitrator (average) Fee + Administrative Cost Centre Three Arbitrator (average) Fee + Administrative Cost Cairo US$ 56,000 Cairo US$ 116,000 Hong Kong US$ 318,800 Hong Kong US$ 900,700 Paris US$ 465,799 Moscow US$ 1,099,360 Swiss US$ 502,910 Paris US$ 1,170,966 Singapore US$ 526,465 Swiss US$ 1,178,183 Moscow US$ 530,080 Singapore US$ 1,483,545 Dubai US$ 1,089,855 Dubai US$ 3,188,565 Stockholm N/A Stockholm N/A Source: Global Arbitration Review 11
COST OF ARBITRATION Arbitration costs in US$1 billion cases Centre One Arbitrator (average) Fee + Administrative Costs Centre Three Arbitrator (average) Fee + Administrative Costs Cairo US$ 56,000 Cairo US$ 116,000 Hong Kong US$ 493,800 Hong Kong US$ 1,425,700 Paris US$ 590,799 Paris US$ 1,545,966 Swiss US$ 677,910 Swiss US$ 1,615,683 Singapore US$ 824,665 Moscow US$ 2,099,360 Moscow US$ 1,010,080 Singapore US$ 2,378,145 Dubai US$ 2,080,755 Dubai US$ 6,161,265 Stockholm N/A Stockholm N/A Source: Global Arbitration Review 12
HKIAC: RECENT TRENDS Chinese party on one side Amount in Disputes range from approximately USD 150,000 to USD 3 billion Corporate disputes - arising out of shareholders agreements, joint venture contracts, share transfer agreements - underlying projects have ranged from power plants, development of manufacturing/construction equipment, solar energy, technology developments 13 13
HONG KONG ARBITRATION ORDINANCE Background on reforms Overriding Objectives and Principles Structure Key Provisions and Other Notable Provisions 14
HONG KONG ARBITRATION ORDINANCE Objectives and Principles Facilitate fair and speedy resolution of disputes by arbitration without unnecessary expenses; Enhance parties autonomy; Emphasize minimal court intervention. 15
HONG KONG ARBITRATION ORDINANCE Structure Follows the same order as the UNCITRAL Model Law References made to each article of the Model Law as to its application/disapplication Applicable articles are reproduced with adaptation/modifications and given the force of law 16
HONG KONG ARBITRATION ORDINANCE: EXAMPLE Part 4 Composition of Arbitral Tribunal Division 1 Arbitrators 23. Article 10 of UNCITRAL Model Law (Number of arbitrators) (1)Article 10(1) of the UNCITRAL Model Law, the text of which is set out below, has effect- Article 10. Number of arbitrators (1) The parties are free to determine the number of arbitrators. (2) [Not applicable.]. 17 17
HONG KONG ARBITRATION ORDINANCE: (section 23 continued) EXAMPLE (2) For the purposes of subsection (1), the freedom of the parties to determine the number of arbitrators include the right of the parties to authorise a third party, including an institution, to make that determination. (3) Subject to section 1 of Schedule 2 (if applicable), if the parties fail to agree on the number of arbitrators, the number of arbitrators is to be either 1 or 3 as decided by the HKIAC in the particular case. 18 18
HONG KONG ARBITRATION ORDINANCE: EXAMPLE (UNCITRAL Model Law as Reproduced in Schedule 1) Chapter III. COMPOSITION OF ARBITRAL TRIBUNAL Article 10. Number of arbitrators (1)The parties are free to determine the number of arbitrators. (2)Failing such determination, the number of arbitrators shall be three. [Note: Article 10(2) is not applicable see section 23] 19
HONG KONG ARBITRATION ORDINANCE: UNITARY REGIME One arbitration regime no more distinction between international and domestic arbitration Opt-in system for provisions applicable to domestic arbitration under Cap. 341 (Part 11 and Schedule 2 of the new Ordinance) 20
HONG KONG ARBITRATION ORDINANCE: OPT-IN PROVISIONS (1) Determination of a dispute by a sole arbitrator (2) Consolidation of arbitrations, or for hearings to be heard at the same time or one immediately after another (3) Determination of preliminary question of law by the Court of First Instance (4) Appeal against an arbitral award on question of law (5) Challenging an award on ground of serious irregularity (Section 99 and Schedule 2)
KEY PROVISIONS: CONFIDENTIALITY Model law silent as to confidentiality Arbitral proceedings NEW: codifies the general prohibition against the disclosure of information relating to arbitral proceedings and awards (Section 18) OLD: No provision Court proceedings NEW: presumption that proceedings are held in camera unless the court is satisfied that the proceedings ought to be heard in open court or on the application of any party (Section 16) OLD: presumption that proceedings are held in an open court (Section 2D) 22
KEY PROVISIONS: INTERIM MEASURES Clarity over Arbitral Tribunals powers to grant interim measures by specifying which types of interim measures may be granted; Enforcement of Interim Measures; Preliminary orders may now be granted by Arbitral Tribunals; Court-ordered interim measures in aid of arbitrations in and outside of Hong Kong. NOTE: Available only where the award would be enforceable in Hong Kong and the interim measure is of a description granted by the Court in Hong Kong (Section 45 of the New Arbitration Ordinance). 23
HONG KONG ARBITRATION ORDINANCE: OTHER NOTABLE PROVISIONS Disclosure of Documents: Reasonable Opportunity Costs Mediation-Arbitration HKIAC s Statutory Appointing Authority Functions Determine the number of arbitrators Appoint arbitrators Appoint mediators in substitution for the Courts in certain circumstances. 24 24
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