In its official press release, HKIAC states that while the 2024 Rules introduce a number of new provisions to reflect advancing social norms and technological developments, they are largely a refinement of the 2018 Rules which are widely recognised and have been well-received by users.
In particular, in 2023, there was a total of 500 matters submitted to HKIAC, 281 of which were under the arbitration rules. 75.1% of all arbitrations were international, i.e., one of the parties was a non-Hong Kong party.
Key changes
The 2024 Rules include the following key innovations:Diversity
The 2024 Rules contain a new article 9A “Diversity” encouraging parties and co-arbitrators to take into account considerations of diversity when designating arbitrators, and requiring HKIAC to do the same when exercising its authority in appointing arbitrators.
However, the 2024 Rules do not specify the diversity criteria (for instance, gender, nationality, etc.). In practice, HKIAC pays particular attention to gender diversity and the engagement of arbitrators not previously appointed by HKIAC. According to HKIAC 2023 statistics, of all appointments made by HKIAC, 34.9% were of female arbitrators, and 34.3% were of arbitrators not previously appointed by HKIAC over the last three years.
Information Security
Another newly introduced provision is article 45A “Information Security”, whereby the parties may agree on any reasonable measures to protect information in relation to the arbitration. The arbitral tribunal may, after consulting with the parties, give directions to the parties to protect the security of any information, and make a decision, order or award in respect of any breach of the information security measures.
Furthermore, information security is one of the factors to be considered when adopting procedures for the conduct of the arbitration (article 13.1). This may include, in particular, adopting a protocol for exchanging and storing electronic documents and evidence, or a procedure for holding online hearings to ensure the protection of confidential information and to limit unauthorised access to such information.
Environmental impact
The 2024 Rules also attach greater attention to the environmental impact of the arbitration. In particular, it is now one of the factors to be considered in adopting the procedure for conducting the arbitration (article 13.1) and in apportioning the costs of the arbitration (article 34.4(f)).
Arbitration hearings are known to have a very noticeable carbon footprint due to a large number of participants having to fly in from different parts of the world to attend them. The need to consider the environmental impact of arbitration may encourage further adoption of online or hybrid hearings.
Additionally, arbitrators may seek to reduce the use of paper, in particular, printed hearing materials.
Powers of HKIAC and the arbitral tribunal to preserve efficiency and integrity of the arbitration
As provided in article 13.10, HKIAC may, after consulting with the parties and the arbitral tribunal, take any measure necessary to preserve the efficiency or integrity of the arbitration. This includes, in exceptional circumstances, the power to revoke the appointment of any arbitrator where the HKIAC considers that the arbitrator is prevented from or has failed to fulfil his or her functions in accordance with the 2024 Rules or within the prescribed time limits.
The arbitral tribunal has express power to determine preliminary issues that could dispose of all or part of the case, bifurcate the proceedings, conduct the arbitration in sequential stages, and decide the stage of the arbitration at which any issue or issues shall be determined (article 13.6). Therefore, arbitrators are expected to take a more proactive approach in order to increase the efficiency of the procedure. This is of course something to look forward to.
Furthermore, the arbitral tribunal may take any measure necessary to avoid a conflict of interest arising from a change in party representation. In particular, the arbitral tribunal may exclude the proposed new party representatives from participating in the arbitral proceedings (article 13.9).
The 2024 Rules set a fixed time limit during which the arbitral tribunal shall declare the proceedings or the relevant phase of the proceedings closed, ie, 45 days from the last substantive oral or written submissions (article 31.1). In practice, this time limit will be counted from the date of the conclusion of the oral hearing, the submission of written post-hearing briefs or the parties’ oral closing statements.
Amendments to the recommended arbitration clause
The model arbitration clause now contains an additional recommended option relating to the calculation of the arbitral tribunal’s fees and expenses. In the arbitration clause, the parties may agree on the calculation of the fees on the basis of either the sum in dispute (ad valorem) or the arbitrators’ hourly rates.
Other changes
Other less noteworthy changes address the implications of failing to deposit an advance for the costs, HKIAC’s powers to determine, verify and adjust the tribunal’s fees and expenses, the powers of emergency arbitrators, etc.
Significance
HKIAC continues to be one of the most popular foreign arbitration institutions among Russian entities. In 2023, Russia ranked seventh in terms of the number of parties to arbitrations in HKIAC with Russian law ranking twelfth. However, regrettably, no arbitrator from Russia was appointed in 2023 under the HKIAC Rules. We expect the number of disputes involving Russian parties under the HKIAC Rules to increase in the next few years.
The amendments are mostly aimed at refining the provisions of the 2018 Rules, taking into account the current developments in the international arbitration.
Please note that the 2024 Rules are now only available in English and two dialects of Chinese.
