European Disputes
Blog

On 3 May 2024, the Hong Kong International Arbitration Centre (“HKIAC”) published its 2024 ‘Administered Arbitration Rules’ (the “2024 Rules”). The 2024 Rules, which supplant the HKIAC’s 2018 ‘Administered Arbitration Rules’, primarily seek to refine and improve the efficiency of the HKIAC’s existing arbitral procedure whilst placing a heightened emphasis on diversity, environmental and information security considerations. Overall, the HKIAC has adopted an approach of “evolution rather than revolution” with its new rules, albeit it is striking that such a major arbitral institution is taking steps to institutionalise a better approach to diversity and the environment.

With approximately $12.5 billion in dispute across all HKIAC-administered arbitrations in 2023, and with an average value of approximately $60 million per arbitration, the 2024 Rules will affect a significant volume of high-value disputes going forward¹.

Accordingly, future potential litigants should be aware of the following key changes before electing to arbitrate disputes under the HKIAC rules:

Efficiency

• Article 13.6 now grants the arbitral tribunal discretion to adopt procedures to decide cases efficiently (after consultation with the parties). This includes, amongst other things, the ability to conduct arbitration in sequential stages and determine preliminary issues that could dispose of all or part of a case.
• Article 13.10 also permits the HKIAC to take any measure necessary to preserve the efficiency and integrity of the arbitration (after consultation with the parties and the arbitral tribunal). This includes, in exceptional circumstances, revoking the appointment of a new arbitrator who has failed to fulfil their functions.
• Article 31.1 imposes a new deadline of no later than 45 days from the last directed relevant substantive oral or written submissions for the arbitral tribunal to declare the proceedings (or the relevant phase of proceedings) closed.

Diversity

• Article 9A.1 encourages, but does not require, the parties and co-arbitrators to take into account considerations of diversity when designating and appointing arbitrators.
• Article 9A.2, in contrast, requires the HKIAC to take into account considerations of diversity (together with other relevant considerations) when exercising its authority to appoint arbitrators.

Environment

• Article 13.1 now requires the arbitral tribunal to consider environmental impact when adopting suitable procedures for the conduct of arbitration in order to avoid unnecessary delay or expense.
• Article 34.4 also permits the arbitral tribunal to consider any adverse environmental impact arising out of the parties’ conduct in the arbitration when determining the reasonableness of, and how to apportion, arbitration costs.

Information Security

• Article 13.1 now requires the arbitral tribunal to consider information security (in addition to the environment) when adopting suitable procedures for the conduct of arbitration, which sits alongside the existing requirement to have regard to the effective use of technology.
• Article 45A.1 also permits parties to agree reasonable measures to protect information shared, stored or processed in relation to the arbitration.
• Article 45A.2 grants the arbitral tribunal discretion to give directions to the parties to protect the security of information shared, stored or processed in relation to the arbitration (after consultation with the parties).
• Article 45A.3 permits the arbitral tribunal to make a decision, order or award in respect of any breach of the information security measures agreed by the parties or directed by the tribunal (after consultation with the parties).

Miscellaneous

• Article 41.4(a) now permits the HKIAC to suspend or stop administering an arbitration if deposits are not paid in full within 30 days after receipt of a request for payment.

The 2024 ‘Administered Arbitration Rules’ took effect on 1 June 2024.

1. “HKIAC Releases Statistics for 2023” (6 March 2024), HKIAC, (https://www.hkiac.org/news/hkiac-releases-statistics-2023) ↩︎