1 Legal framework
1.1 What is the relevant legislation on arbitration in your jurisdiction? Are there any significant limitations on the scope of the statutory regime – for example, does it govern oral arbitration agreements?
The Arbitration Ordinance (AO) (Cap 609) applies to arbitration under an arbitration agreement, regardless of whether the agreement is entered into in Hong Kong or the place of arbitration is in Hong Kong. In order for an arbitration to be valid, the AO adopts Option I of Article 7 of the UNCITRAL Model Law, which requires an arbitration agreement to be "in writing" (see question 10).
Pursuant to Section 6 of the AO, the AO applies to the government and the offices set up by the Central People's Government in the Hong Kong Special Administrative Region. However, this is subject to the common law defence of crown immunity or sovereign immunity.
1.2 Does this legislation differentiate between domestic arbitration and international arbitration? If so, how is each defined?
Before the AO came into effect, Hong Kong used to have rules for two distinct regimes – one for international arbitration and one for domestic arbitration. Since the current AO came into effect, parties may choose between application of provisions in the main body of the AO or application of Schedule 2 provisions. The provisions in the main body of the AO do not distinguish between international and domestic arbitration, whereas Schedule 2 of the AO allows parties to opt in certain provisions from the former domestic arbitration regime.
1.3 Is the arbitration legislation in your jurisdiction based on the UNCITRAL Model Law on International Commercial Arbitration?
The AO largely replicates the UNCITRAL Model Law on International Commercial Arbitration and reflects Hong Kong's position as a Model Law jurisdiction.
The AO makes numerous references to the UNITRAL Model Law. For instance, Section 4 of the AO stipulates that: "[t]he provisions of the UNCITRAL Model Law that are expressly stated in this Ordinance as having effect have the force of law in Hong Kong subject to the modifications and supplements as expressly provided for in this Ordinance." In a number of sections that follow, the AO typically reproduces the exact wording of the Model Law article in the first subsection of each relevant AO section. The subsections that follow the quotation of the Model Law provision supplement, modify or otherwise qualify the application of that Model Law provision.
The drafting structure of the AO is designed to be self-contained and user friendly such that users of arbitration would not have to cross-refer to the Model Law if such needs arose. Therefore, Schedule 1 of the AO reproduces the full text of the UNITRAL Model Law, sets out cross-references to the relevant provisions in the AO and distinguishes the provisions that have not been adopted in the AO.
1.4 Are all provisions of the legislation in your jurisdiction mandatory?
The AO contains relatively few provisions that cannot be excluded by the parties.
Certain mandatory rules apply, including the following:
- The parties must be treated equally, and the tribunal must be independent and act fairly and impartially towards the parties (Section 46).
- The arbitration agreement must be in writing (Section 19).
- The tribunal has the power to make orders for security for costs, discovery, the collection of evidence and the preservation of property (Section 56).
- The court has the power to order recovery of the tribunal's fees (Section 62).
- The tribunal has the power to withhold an award for non-payment of the arbitrators' fees and expenses (Section 78).
- The court has the power to set aside an award (Section 81).
1.5 Are there any current plans to amend the arbitration legislation in your jurisdiction?
For issues on third-party funding, see question 37.
1.6 Is your jurisdiction a signatory to the New York Convention? If so, have any reservations been made?
Hong Kong is a party to the New York Convention as a result of China extending the territorial application of this convention to Hong Kong.
Upon acceding to the New York Convention, China included two reservations: the reciprocity principle and the ‘commercial' reservation.
The reciprocity principle means that China, and as a result Hong Kong, applies the convention only to the recognition and enforcement of awards made in the territory of states considered as contracting states under the New York Convention.
The commercial reservation means that only enforcement of arbitral awards arising out of commercial disputes, whether contractual or not, is permitted in China, and thus Hong Kong, under the New York Convention. Disputes between foreign investors and host states are expressly excluded.
1.7 Is your jurisdiction a signatory to any other treaties relevant to arbitration?
The Hong Kong Department of Justice website lists all of the treaties that are in force and are applicable to Hong Kong (www.doj.gov.hk/eng/laws/interlaw.html).
In addition to the New York Convention, Hong Kong is a party to a number of other treaties and conventions relevant to arbitration, including:
- the Hague Convention for the Pacific Settlement of International Disputes 1899;
- the Hague Convention for the Pacific Settlement of International Disputes 1907;
- the Statute of the Hague Conference on Private International Law 1951 (as amended 2007);
- the Vienna Convention on the Law of Treaties 1969;
- the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States 1965;
- the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters 1970; and
- 16 bilateral investment treaties.
2 Arbitrability and restrictions on arbitration
2.1 How is it determined whether a dispute is arbitrable in your jurisdiction?
The following types of dispute are not arbitrable:
- actions in rem against ships;
- criminal cases;
- competition and antitrust disputes;
- divorce proceedings;
- guardianship applications; and
- matters reserved for resolution by state agencies and tribunals (eg, taxation, immigration and national welfare entitlements).
2.2 Are there any restrictions on the choice of seat of arbitration for certain disputes?
There is no default seat requirement under the Arbitration Ordinance (AO). The parties are free to agree on the place of arbitration (Section 48 of the AO, adopting Article 20 of the Model Law). Failing such agreement, the place of arbitration will be determined by the tribunal having regard to the circumstances of the case, including the convenience of the parties.
3 Arbitration agreement
3.1 What are the validity requirements for an arbitration agreement in your jurisdiction?
Section 19 of the Arbitration Ordinance (AO) (adopting Option I of Article 7 of the Model Law) requires that an arbitration agreement be in writing.
The term ‘in writing' is broadly defined and includes an arbitration agreement whose content is recorded in any form – even if the arbitration agreement itself has been concluded orally, by conduct or by other means.
The definition expressly includes:
- electronic communications;
- an agreement in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other; and
- a reference in a contract to any document containing an arbitration clause, provided that the reference is such as to make that clause part of the contract.
3.2 Are there any provisions of legislation or any other legal sources in your jurisdiction concerning the separability of arbitration agreements?
Yes. Section 34(1) of the AO (adopting Article 16(1) of the Model Law) provides that the arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.
3.3 Are there provisions on the seat and/or language of the arbitration if there is no agreement between the parties?
There is no default seat under the AO. The parties are free to agree on the place of arbitration (Section 48 of the AO, adopting Article 20 of the Model Law). Failing such agreement, the place of arbitration will be determined by the tribunal having regard to the circumstances of the case, including the convenience of the parties.
There is no default language of the arbitration under the AO. The parties are free to agree on the language or languages to be used in the arbitral proceedings (Section 50 of the AO, adopting Article 22 of the Model Law). Failing such agreement, the tribunal will determine the language or languages to be used in the proceedings.
4 Objections to jurisdiction
4.1 When must a party raise an objection to the jurisdiction of the tribunal and how can this objection be raised?
A plea that the tribunal does not have jurisdiction must be raised no later than submission of the statement of defence. A party is not precluded from raising such a plea by the fact that it has appointed or participated in the appointment of an arbitrator. A plea that the tribunal is exceeding the scope of its authority must be raised as soon as the matter alleged to be beyond the scope of its authority arises during the arbitration proceedings. In either case, the tribunal may admit a later plea if it considers the delay justified (Section 34(1) of the AO, adopting Article 16(2) of the Model Law).
Where the tribunal rules that it has jurisdiction, any party may request, within 30 days of receiving notice of the ruling, that the court decide on the matter (which decision cannot be appealed) (Section 34(1), adopting Article 16(3) of the Model Law).
However, where the tribunal rules that it has no jurisdiction to decide a dispute, such decision is not subject to appeal (Section 34(4) of the AO).
4.2 Can a tribunal rule on its own jurisdiction?
An arbitral tribunal may rule on its own jurisdiction, including any objections with respect to its constitution, matters submitted to arbitration and the existence or validity of the arbitration agreement (Section 34(1) of the AO, adopting Article 16(1) of the Model Law).
4.3 Can a party apply to the courts of the seat for a ruling on the jurisdiction of the tribunal? In what circumstances?
Yes. Where the tribunal has given a ruling on a preliminary question as to jurisdiction, but without making an award, application is made to the judge, sitting in chambers, by summons (Order 73, Rules 3 and 4 of the Rules of the High Court). Such application must be made to the court within 30 days of receiving notice of the tribunal's ruling (Section 34(1) of the AO, adopting Article 16(3) of the Model Law).
5 The parties
5.1 Are there any restrictions on who can be a party to an arbitration agreement?
The Arbitration Ordinance (AO) has no restrictions on who can be a party to an arbitration agreement.
Certain arbitration rules allow multi-party arbitrations by way of joinder of parties or consolidation of separate arbitrations. For further details, please see question 18.
5.2 Are the parties under any duties in relation to the arbitration?
Section 59(1) provides that unless otherwise expressed in an arbitration agreement, a party which has a claim under the agreement must, after commencement of the arbitral proceedings, pursue that claim without unreasonable delay. If the tribunal is satisfied that the defaulting party has unreasonably delayed in pursuing the claim in the arbitral proceedings, the tribunal may make an award dismissing the defaulting party's claim and prohibiting that party from commencing further arbitral proceedings in respect of the claim.
For the duty of confidentiality, please see question 44.
5.3 Are there any provisions of law which deal with multi-party disputes?
Arbitration rules have different provisions for dealing with multi-party disputes. These provisions typically deal with the following key aspects:
Joinder of parties in an existing arbitration:
- Who can be added to an arbitration after it has already been commenced? Must the additional party be a signatory to the arbitration agreement?
- Who can file a request for joinder?
- Who can decide on or consent to a request for joinder?
- If certain decisions have already been made by the arbitral tribunal before joinder of parties is allowed, will these decisions bind the latecomers?
- Appointment of the same arbitrator(s) to hear related disputes in concurrent arbitral proceedings.
Consolidation of separate arbitrations:
- Circumstances in which an arbitral tribunal may combine arbitrations, such as arbitrations involving a common question of law or fact, claims arising out of the same transaction or series of transactions, and compatible arbitration agreements.
6 Applicable law issues
6.1 How is the law of the arbitration agreement determined in your jurisdiction?
The parties are free to elect the law governing the arbitration agreement.
In practice, parties often fail to do so and a dispute may arise as to the which law governs an arbitration agreement. There is no hard and fast rule, but guidance can be found in the Court of First Instance decision in Klöckner Pentaplast Gmbh & Co Kg v Advance Technology (HK) Company Limited  4 HKLRD 262. It is held that:
…there is no rule that the lex arbitri must be the law of the seat of the arbitration. That is especially so where the law is chosen by the parties. (Klöckner, paragraph 24)
…the starting point must be the terms of the particular clause and the contract in question. First, the contract including the arbitration clause must be examined to see if there is any agreement, express or implied, by the parties as to both the proper law of contract, or the lex arbitri. It is only if agreement cannot be found that the implication arises from the choice of seat, that the law of that place will be the lex arbitri. (Klöckner, paragraph 26)
… it is not permissible to look at the arbitration agreement in isolation, but that regard should be had to the surrounding circumstances including the law governing the substantive contract." (Klöckner, paragraph 27).
6.2 Will the tribunal uphold a party agreement as to the substantive law of the dispute? Where the substantive law is unclear, how will the tribunal determine what it should be?
The general principle is to give effect to the parties' intentions as to where a dispute arising from the contract should be resolved. For instance, most agreements contain a clause expressly stating the substantive law of the dispute.
Where no such clause exists, the tribunal will apply conflict of laws rules in order to determine the substantive law of the dispute (pursuant to Section 64 of the Arbitration Ordinance, adopting Article 28 of the Model Law), which can be very complex.
7 Consolidation and third parties
7.1 Does the law in your jurisdiction permit consolidation of separate arbitrations into a single arbitration proceeding? Are there any conditions which apply to consolidation?
The main body of the Arbitration Ordinance (AO) has no provisions dealing with consolidation of separate arbitrations.
Before the AO came into effect, Hong Kong used to have rules for two distinct regimes – one for international arbitration and one for domestic arbitration. Since the current AO came into effect, parties may choose between application of provisions in the main body of the AO or application of Schedule 2 provisions. The provisions in the main body of the AO do not distinguish between international and domestic arbitration, whereas Schedule 2 of the AO allows parties to opt in certain provisions from the former domestic arbitration regime, such as provisions on consolidation of arbitrations.
Under Schedule 2, the court may order arbitral proceedings to be consolidated where it appears to the court that:
- a common question of law or fact arises in both or all of them;
- the rights to relief claimed in those arbitral proceedings are in respect of or arise out of the same transaction or series of transactions; or
- for any other reason, it is desirable to make an order under this section.
7.2 Does the law in your jurisdiction permit the joinder of additional parties to an arbitration which has already commenced?
The AO does not have provisions dealing with or prohibiting joinder of additional parties to an arbitration. On the other hand, care should be taken in ascertaining whether joinder of parties is allowed under the applicable arbitration rules. For instance, joinder of parties is allowed under Article 27 of the Hong Kong International Arbitration Centre Administered Arbitration Rules 2013.
7.3 Does an arbitration agreement bind assignees or other third parties?
The starting point is that a party which has not signed an arbitration agreement or otherwise agreed to become a party to the arbitration proceedings cannot be bound by an arbitration agreement or award.
However, a third party to an arbitration agreement may enjoy a right to enforce a contract term through arbitration under Section 12 of the Contracts (Rights of Third Parties) Ordinance (Cap 623) if:
- the contract term is enforceable by the third party;
- the term provides that one or more descriptions of dispute between the third party and the promisor is to be submitted to arbitration; and
- the term constitutes an arbitration agreement.
8 The tribunal
8.1 How is the tribunal appointed?
The starting point is that the parties are free to agree on the procedure for appointing the arbitrator(s) (Section 24(1) of the Arbitration Ordinance (AO), adopting Article 11(2) of the Model Law).
The procedures for commencing arbitration and appointing arbitrators are often embodied in the arbitration agreement. Subject to the arbitration agreement and the procedural rules adopted by the parties, for arbitral proceedings to commence and the tribunal to be appointed, the normal procedure requires a notice or request for arbitration to be served, in which the claimant must propose its choice of arbitrator to the respondent(s). The respondent may then counter-propose its own arbitrator. If the parties fail to agree on the appointment(s) of arbitrator(s), the claimant may request the appointment authority to appoint an arbitrator for the parties.
8.2 Are there any requirements as to the number or qualification of arbitrators in your jurisdiction?
The starting point is that the parties are free to agree on a procedure of appointing the arbitrator(s) (Section 24(1) of the AO, adopting Article 11(2) of the Model Law). No person shall be precluded by reason of nationally from acting as an arbitrator, unless otherwise agreed by the parties (Section 24(1) of the AO, adopting Article 11(1) of the Model Law).
The parties may agree that an arbitrator must possess certain characteristics or qualifications by way of stipulating these in the arbitration agreement.
If the parties fail to agree on the number of arbitrators, the following default procedures require either one or three arbitrators to be appointed:
- In an arbitration with three arbitrators, each party will appoint one arbitrator and those two arbitrators will appoint the third arbitrator (Section 24(1) of the AO, adopting Article 11(3)(a) of the Model Law).
- In an arbitration with a sole arbitrator, if the parties are unable to agree on the arbitrator, one will be appointed, at the parties' request, by the court or the Hong Kong International Arbitration Centre (HKIAC) (Section 24(1) of the AO, largely adopting Article 11(3)(b) of the Model Law).
- In an arbitration with an even number of arbitrators, each party must appoint the same number of arbitrators (Section 24(2) of the AO).
In an arbitration with an uneven number of arbitrators greater than three:
- each party will appoint the same number of arbitrators; and
- the HKIAC will appoint the remaining arbitrator or arbitrators (Section 24(3) of the AO).
Where a party fails to appoint an arbitrator in accordance with an agreed or default procedure, the HKIAC can make the necessary appointment (Sections 24(1) to (4)).
8.3 Can an arbitrator be challenged in your jurisdiction? If so, on what basis? Are there any restrictions on the challenge of an arbitrator?
Section 25 of the AO (adopting Article 12 of the Model Law in its entirety) provides for two exclusive grounds:
- justifiable doubts as to the arbitrator's impartiality or independence; and
- non-possession of qualifications agreed to by the parties.
A party may challenge an arbitrator whom it has appointed, or in whose appointment it has participated, only for reasons of which it becomes aware after the appointment has been made.
Section 26 of the AO (largely adopting Article 13 of the Model Law) provides that the parties are free to agree on a procedure for challenging an arbitrator. If the parties have not agreed on a procedure, the following default provisions will apply:
- A party which intends to challenge an arbitrator must, within 15 days of becoming aware of the constitution of the arbitral tribunal or of any of the grounds set out in Section 25 of the AO, send a written statement of the reasons for the challenge to the arbitral tribunal. Unless the challenged arbitrator withdraws from office or the other party agrees to the challenge, the arbitral tribunal will decide on the challenge (Section 26(1) of the AO).
- If the challenge under the above procedure is unsuccessful, the challenging party can request the court or another authority (eg, the HKIAC) to decide on the challenge. The challenging party must do so within 30 of receiving notice of the decision rejecting the challenge. The court or other authority's decision may not be appealed.
8.4 If a challenge is successful, how is the arbitrator replaced?
If an arbitrator becomes de jure or de facto unable to perform his or her duties, or for other reasons fails to act without under delay, his or her mandate will terminate if he or she withdraws from office or if the parties agree on the termination. If the arbitrator refuses to withdraw from office or the parties cannot agree, any party may request the court or other authority (eg, the HKIAC) to decide on the termination of the arbitrator's mandate, which decision is not subject to appeal (Section 27 of the AO, adopting Article 14 of the Model Law in its entirety).
Where the mandate of an arbitrator terminates under Section 26 or 27 of the AO – whether because of his or her withdrawal from office for any other reason, because of the revocation of his or her mandate by agreement of the parties, or in any other case of termination of his or her mandate – a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced (Section 28, adopting Article 15 of the Model Law in its entirety)
8.5 What duties are imposed on arbitrators? Are these all imposed by legislation?
Section 46 of the AO requires the tribunal:
- to be independent;
- to act fairly and impartially as between the parties, giving them a reasonable opportunity to present their cases and to deal with the cases of their opponents; and
- to use procedures that are appropriate to the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for resolving the dispute to which the arbitral proceedings relate.
These requirements are mandatory and cannot be varied by the parties.
8.6 What powers does an arbitrator have in relation to: (a) procedure, including evidence; (b) interim relief; (c) parties which do not comply with its orders; (d) issuing partial final awards; (e) the remedies it can grant in a final award and (f) interest?
(a) Procedure, including evidence?
Section 56 of the AO provides that unless otherwise agreed by the parties, when conducting arbitral proceedings, an arbitral tribunal may make an order:
- requiring a claimant to provide security for the costs of the arbitration;
- directing the discovery of documents or the delivery of interrogatories;
- directing evidence to be given by affidavit; or
in relation to any relevant property:
- directing the inspection, photographing, preservation, custody, detention or sale of the relevant property by the arbitral tribunal, a party to the arbitral proceedings or an expert; or
- directing that samples be taken from, observations be made of, or experiments be conducted on the relevant property.
In addition, the tribunal has the power to:
- appoint expert(s) to report on specific issues (Section 54 of the AO);
- require the parties to provide the expert(s) with relevant materials for their inspection (Section 54 of the AO);
- require the expert(s) to participate in the hearing (Section 54 of the AO); and
- request the court to assist with taking evidence (Section 55 of the AO).
(b) Interim relief?
Section 35 of the AO (adopting Article 17 of the Model Law) provides that unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, grant interim measures. Such interim measures may include the following:
- maintain or restore the status quo pending determination of the dispute;
- take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral process itself;
- provide a means of preserving assets out of which a subsequent award may be satisfied; or
- preserve evidence that may be relevant and material to the resolution of the dispute.
(c) Parties which do not comply with its orders?
Pursuant to Section 61 of the AO, the court has the power to enforce an order or direction made by an arbitral tribunal (whether inside or outside Hong Kong) in the same manner as an order or direction of the court, but only with the leave of the court. Such order or direction includes an interim measure. For instance, in GE Transportation (Shenyang) Co Ltd v Lu Jinxiang unrep, HCMP 1792/2013,  HKEC 253, the court imposed contempt sanctions on the defendant (three months' imprisonment) for breach of an earlier order of the court enforcing an arbitration tribunal's order of interim measures of protection.
(d) Issuing partial final awards?
Section 71 of the AO provides that unless otherwise agreed by the parties, an arbitral tribunal may make more than one award at different times on different aspects of the matters to be determined.
(e) The remedies it can grant in a final award?
Section 70 of the AO provides that unless otherwise agreed by the parties, the tribunal may award any remedy or relief that could have been ordered by the court if the dispute had been the subject of civil proceedings in court, including the ability to order specific performance of any contract. However, the tribunal cannot order specific performance of a contract relating to land or any interest in land (Section 70(2) of the AO).
Section 79 of the AO provides that unless otherwise agreed by the parties, the tribunal may award simple or compound interest from the dates and at the rates it considers appropriate.
Section 80(1) of the AO provides that interest is payable on money awarded by an arbitral tribunal from the date of the award at the judgment rate, except when the award provides otherwise.
Section 80(2) of the AO specifies that interest is payable on money awarded by the tribunal from the date of the award, unless otherwise provided by the tribunal. Interest is payable on costs from the date of the costs award, unless otherwise provided by the tribunal.
8.7 How may a tribunal seated in your jurisdiction proceed if a party does not participate in the arbitration?
Section 53 of the AO (adopting Article 25 of the Model Law) provides that unless otherwise agreed by the parties, if, without showing sufficient cause:
- the claimant fails to communicate its statement of claim in accordance with Section 51 of the AO, the arbitral tribunal shall terminate the proceedings;
- the respondent fails to communicate its statement of defence in accordance with Section 51 of the AO, the arbitral tribunal shall continue the proceedings without treating such failure in itself as an admission of the claimant's allegations; or
- any party fails to appear at a hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the award on the evidence before it.
To show sufficient cause for non-compliance, the defaulting party must demonstrate that, among other things, its compliance with the requirements set out in Section 46(2) (equality of treatment of the parties), Section 51 (obligation to submit pleadings/statement of case within the time limit agreed by the parties or directed by the tribunal) and Section 52 (requirement to give parties sufficient advance notice of hearings and meetings) of the AO.
8.8 Are arbitrators immune from liability?
No. An arbitrator is liable in law for an act done or omitted to be done by the tribunal or mediator (or an employee or agent of the tribunal or mediator) in relation to the exercise or performance, or the purported exercise or performance, of his or her functions, if it is proved that the act done or omitted to be done was done dishonestly (Section 104 of the AO ).
9 The role of the court during an arbitration
9.1 Will the court in your jurisdiction stay proceedings and refer parties to arbitration if there is an arbitration agreement?
Section 20 of the Arbitration Ordinance (AO) provides that where a claim is brought before the court in a matter which is the subject of an arbitration agreement, a party to the claim can request that the parties be referred to arbitration. If one party to an arbitration agreement commences legal proceedings in any court against the other party, the latter may apply to stay the court proceedings in favour of arbitration.
The Hong Kong court will refuse to stay the proceedings in either of the following situations:
- A party has submitted its first statement on the substance of the dispute; or
- The arbitration agreement is null and void, or is inoperative or incapable of being performed.
9.2 Does the court in your jurisdiction have any powers in relation to an arbitration seated in your jurisdiction and/or seated outside your jurisdiction? What are these powers? Under what conditions are these powers exercised?
Broadly speaking, the court have the powers to:
- enforce an arbitration agreement under Section 20 (see question 32);
support the conduct of arbitral proceedings, which includes, among other things:
- ruling on the termination of an arbitrator's mandate if called on by one of the parties to determine a challenge to an arbitrator's appointment (Section 26 of the AO);
- ruling on whether an arbitrator has become unable to perform his or her functions or has failed to act without undue delay (Section 27 of the AO);
- ruling on a challenge that the arbitral tribunal does not have jurisdiction to decide a dispute (Section 34(5) of the AO);
- granting interim measures (Section 45 of the AO);
- assisting with the taking of evidence on the request of an arbitral tribunal (Section 55 of the AO);
- making an order to direct the inspection, photographing, preservation, custody, detention or sale of a relevant property by the arbitral tribunal, as long as the arbitral proceedings are capable of giving rise to an arbitral award (whether interim or final) that may be enforced in Hong Kong (Section 60 of the AO);
- granting an extension of time to commence arbitral proceedings where no arbitral tribunal has been appointed (Section 58 of the AO); or
- dismissing a party's claim for unreasonable delay (Section 59 of the AO; see question 17); and
- set aside an award based on the ground(s) in Section 81 of the AO (see question 41).
9.3 Can the parties exclude the court's powers by agreement?
10.1 How will the tribunal approach the issue of costs?
Under Section 74 of the Arbitration Ordinance (AO), an arbitral tribunal may include in an award directions concerning the costs of the arbitration proceedings (including the fees and expenses of the tribunal). The tribunal may direct by whom, to whom and in what manner the costs of the arbitration proceedings are to be paid.
The tribunal is expected to adopt the normal common law approach to the recovery of costs. However, the tribunal is not obliged to follow the scales and practices adopted by the court on taxation when assessing the amount of costs (other than the fees and expenses of the tribunal) (Section 74(6) of the AO). The tribunal must allow only costs that are reasonable and (unless otherwise agreed by the parties) may allow costs incurred in the preparation of the proceedings before the start of the arbitration (Section 74(7) of the AO).
Unless otherwise agreed by the parties, the tribunal may direct that the recoverable costs of arbitral proceedings be limited to a specified amount (Section 57 of the AO).
10.2 Are there any restrictions on what the parties can agree in terms of costs in an arbitration seated in your jurisdiction?
A provision of an arbitration agreement to the effect that the parties or any of the parties must pay its own costs in respect of arbitral proceedings arising under the agreement is void (Section 74(8) of the AO); but this is not void if it is part of an agreement to submit to arbitration a dispute that arose before the agreement was made.
The parties may agree that the costs of the arbitration proceedings are to be taxed by the court (Section 75).
11.1 Is third-party funding permitted for arbitrations seated in your jurisdiction?
The AO has recently been amended, such that the common law torts and offences of champerty and maintenance no longer apply to third-party funding of arbitration and mediation.
Under the Arbitration Ordinance, a Code of Practice sets out the standards with which third-party funders are ordinarily expected to comply in connection with arbitration funding. It states:
- the requirements for funding agreements;
- the minimum amount of capital that a third-party funder is required to have;
- the procedure for addressing conflicts of interest; and
- whether third-party funders will be liable to funded parties for adverse costs.
12.1 What procedural and substantive requirements must be met by an award?
Section 67(1) of the AO (adopting Article 31 of the Model Law) sets out a number of procedural requirements relating to the formality of an award, as follows:
- The award must be in writing and signed by the arbitrator(s). In arbitral proceedings with more than one arbitrator, the signatures of the majority of all members of the arbitral tribunal shall suffice, provided that the reason for any omitted signature is stated.
- The award must state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or that the award is an award on agreed terms (eg, the terms of a settlement agreement).
- The award must state its date and the place of arbitration, and shall be deemed to have been made at that place; and
- After the award is made, a copy signed by the arbitrators in accordance with paragraph (1) of Article 31 must be delivered to each party.
The common law has laid down certain substantive requirements as to validity of awards, with regard to compliance with the submission, finality, certainty, consistency (or cogency) and capability of performance.
12.2 Must the award be produced within a certain timeframe?
Section 72 of the AO provides that unless otherwise agreed by the parties, an arbitral tribunal has the power to make an award at any time. Any time limit for making an award may from time to time be extended by order of the court on the application of any party, whether that time has expired or not, and the court's decision is not subject to appeal.
13 Enforcement of awards
13.1 Are awards enforced in your jurisdiction? Under what procedure?
The successful party in an arbitration may apply to court for leave to enforce the award and to enter judgment in the same terms as the award under Section 84(2) of the Arbitration Ordinance. Once judgment has been obtained, the successful party may pursue the same enforcement measures as for any court judgment, including execution against goods belonging to the judgment debtor, a garnishee order or a charging order.
When leave is granted, an award cannot be enforced until after 14 days (or such period ordered by the court) from the date of service of the court's order on the debtor. If the debtor applies to set aside within that time, the award cannot be enforced until the setting aside application has been disposed of (see Order 73, Rules 10(6) and (7) of the Rules of High Court (Cap 4A).
14 Grounds for challenging an award
14.1 What are the grounds on which an award can be challenged, appealed or otherwise set aside in your jurisdiction?
Pursuant to Section 81 of the Arbitration Ordinance (AO) (adopting Article 34 of the Model Law), an award may be set aside by the court. However, the court cannot set aside or remit an arbitral award on the grounds of errors of fact or law on the face of the award.
Under Section 81(1), an award may be set aside where the party making the application can prove that:
- a party to the arbitration was under some incapacity;
- the arbitration agreement is invalid under the law to which the parties subjected it or, failing any indication in the agreement as to which law the agreement is subject to, under Hong Kong law;
- the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitration, or was otherwise unable to present its case;
- the award deals with a dispute not contemplated by the terms of the submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration; or
- the composition of the tribunal or the arbitration proceedings was not in accordance with the agreement of the parties, unless such agreement conflicted with a mandatory provision of the AO.
An award may also be set aside where the court finds that:
- the subject matter of the dispute is not capable of settlement by arbitration under Hong Kong law; or
- the award conflicts with Hong Kong's public policy.
Schedule 2 of the AO contains additional opt-in provisions on challenging arbitral awards.
14.2 Are there are any time limits and/or other requirements to bring a challenge?
An application to the courts under Section 81 of the AO must be made within three months of the date on which the party making the application received the award.
14.3 Are parties permitted to exclude any rights of challenge or appeal?
No. Section 81 of the AO (dealing with the setting aside of an award) is a mandatory section and cannot be contracted out of or derogated from by the parties.
15.1 Is arbitration seated in your jurisdiction confidential? Is a duty of confidentiality found in the arbitration legislation?
The default position is provided under Section 18(1) of the Arbitration Ordinance (AO), which states that, unless otherwise agreed by the parties, no party may publish, disclose or communicate any information relating to:
- the arbitral proceedings under the arbitration agreement; or
- an award made in those arbitral proceedings.
15.2 Are there any exceptions to confidentiality?
The default position is provided under Section 18(1) of the Arbitration Ordinance (AO), which states that, unless otherwise agreed by the parties, no party may publish, disclose or communicate any information relating to:
- the arbitral proceedings under the arbitration agreement; or
- an award made in those arbitral proceedings.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.