Does Hong Kong pass the CIArb test?

hongkongKey jurisdictions fight for the prestige (and money) that comes with being a global arbitration centre. Hong Kong sees how it measures up to CIArb’s 10 Principles for an efficient and effective seat of arbitration. Amy Lo, Timothy Hill and Charmaine Kwong of Hogan Lovells in Hong Kong administer the exam and grade Hong Kong’s successes.

 

1.            Law

Test: A clear, effective and modern arbitration law that recognises and respects the parties’ choice to arbitrate by providing a framework for facilitating fair and just resolution of disputes through the arbitration process

Response: A former British colony, Hong Kong has a long-established common law system drawing on the experiences of other jurisdictions including the United Kingdom, Australia, and Singapore. A dedicated Arbitration Ordinance (Cap 609) modelled upon the UNCITRAL Rules is in place governing arbitration in Hong Kong. The Ordinance has also recently been amended to remove legal uncertainties and to update the list of parties to the New York Convention.

The Hong Kong International Arbitration Centre (HKIAC) has consolidated best practices into the 2013 HKIAC Administered Arbitration Rules (HKIAC Rules) to much acclaim,.  creating a sophisticated system which offers parties innovative tools (including standard terms of appointment of arbitrators, provisions governing multi-party and multi-contract, as well as choice of method to remunerate the arbitral tribunal) to enhance cost-effectiveness and efficiency of arbitration.  HKIAC was the first major international arbitral institution to introduce into its model arbitration clause an express governing law provision.

Both the Arbitration Ordinance and the HKIAC Rules have provisions that respect parties' autonomy, allowing flexibility for parties to tailor their arbitral process, while at the same time providing sufficient safeguards.

Result: Pass

2.            Judiciary

Test: An independent judiciary experienced in international commercial arbitration and respectful of party autonomy

Response: The independent judiciary of Hong Kong is amongst the things that make Hong Kong proud. The Hong Kong courts have extensive experience dealing with commercial cases as well as multi-jurisdictional disputes involving cross-border transactions and/or international parties. The Court of Final Appeal, the highest level court in Hong Kong, maintains an impressive list of esteemed foreign judges, each of whom sit alongside two permanent Hong Kong judges to form a truly impartial bench.  It is well-known for its boldness and robust approach to upholding the rule of law in Hong Kong. The judiciary has promoted its pro-arbitration stance through case decisions, sustaining Hong Kong's position as the preferred seat of arbitration in the Asia-Pacific Region. Any perception that Hong Kong is not ‘independent’ as it is part of China is simply misplaced.

Result: Pass

3.            Legal expertise

Test: A legal profession experienced in international commercial arbitration and international dispute resolution, offering choice to those seeking representation in arbitration and before the national courts

Response: Currently, 53 overseas law firms, including many of the world's leading ones, have established a presence in Hong Kong. A number of law firms from Mainland China have also established business presence in Hong Kong, linking international clients with the Chinese market. Hong Kong is the unique place which supports multilingualism, connecting local legal experience to that of the world. Many experienced lawyers and arbitrators have practical experiences in Hong Kong (and very often elsewhere too) and therefore will provide a wide range of choice in terms of expertise and practitioners when conducting arbitration in Hong Kong.

Result: Pass

4.            Education

Test: A commitment to education of all key players and to the development of learning in the field

Response: The majority of universities in Hong Kong provide postgraduate programmes focusing on arbitration and dispute resolution, aimed at both fresh graduates and practicing members of the legal profession for their continued development. Also, the Hong Kong Mediation and Arbitration Centre incentivise learning through scholarships, encouraging law students to build a solid foundation of knowledge in ADR through hands-on experience early on in their studies.

Result: Pass

5.            Right of representation

Test: A clear right for parties to be represented in arbitration by party representatives of their choice whether from inside or outside the seat

Response: Just like any other civil proceedings in Hong Kong, a party can represent oneself in arbitration if they do not wish to be legally represented. Representation is particularly recommended in cases with complex points of law or where the party does not fully understand the case. Moreover, parties are free to appoint locally-qualified legal counsel, foreign legal advisors, or even non-legal representatives to represent them in arbitration.

Result: Pass

6.            Accessibility and safety

Test: Easy accessibility, adequate safety and protection for parties, their documentation and information

Response: Hong Kong is conveniently located at the heart of Asia, with flights reaching in from all parts of the globe. The tiny city has one of the lowest crime rates in the world. Everyone, regardless of race, gender, religion, political affiliation or opinion, is equal before the law and can be expected to be treated like everybody else. High standards in the legal profession are apt to safeguard parties, their information and documentation.

Response: Pass

7.            Facilities

Test: Functional facilities for the provision of all services required to run an effective and efficient arbitration

Response: Established in 1985, HKIAC is the main arbitration institution in Hong Kong, providing a full range of services from assisting appointment of arbitrators to administering arbitration. Rooms at HKIAC are able to accommodate at least 4 people to a large crowd of 185, configured to suit unique requirements with global videoconferencing facilities, multi-lingual support staff, and an extensive library of resources relevant to alternative dispute resolution. Being one of Asia's legal and financial hub, other institutions such as CIETAC and the ICC International Court of Arbitration have set up offices in the city, alongside with numerous other locations such as hotels and office spaces that are suitable for conducting arbitrations with the necessary amenities at your fingertips.

Queen Mary University of London has just released results of its Survey on International Arbitration, according to which HKIAC is the most preferred arbitration institution outside Europe and the most improved institution over the past five years.

Result: Pass

8.            Ethics

Test: Professional and other norms embracing a diversity of legal and cultural traditions and the developing norms of international ethical principles governing the behaviour of arbitrators and party representatives

Response: Lawyers in Hong Kong are to adhere to all-encompassing ethical rules and high standards set out in the Hong Kong Solicitors' Guide to Professional Conduct and also the Code of Conduct published by the Hong Kong Bar Association. These standards have developed and heightened through the transition from colonial times to new era Hong Kong. Ethics are taken seriously in Hong Kong and misdemeanours may lead to disbarment from the legal profession.

Result: Pass

9.            Enforceability

Test: Adherence to international treaties and agreements on the ready recognition and enforcement of foreign arbitration agreements, orders and awards made at the seat of the arbitration in other countries

Response: Hong Kong has been a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the new York Convention) since 1980 under the English rule, and has continued its application in Hong Kong under Chinese sovereignty after the handover in 1997. Further, the Hong Kong courts have well demonstrated their readiness to support arbitration, highlighting Hong Kong as the prime go-to jurisdiction in the Asia-Pacific region for international commercial arbitration. The Arbitration Ordinance entails the courts with wide enforcement powers but restrictive jurisdiction in interfering with the arbitral process or the finality of awards.

Result: Pass

10.         Immunity

Test: A clear right to arbitrator immunity from civil liability for matters done or omitted to be done in good faith in capacity as arbitrator

Response: Section 104 of the Arbitration Ordinance shields arbitrators from liability by providing immunity to the tribunal unless the act is proven to be done or omitted to be done dishonestly. "Dishonesty" is the term used in the legislation as opposed to "good faith" in its counterpart in the UK.  Similar protection is provided to administrators and appointers under section 105 of the same Ordinance.

 Result: Pass

Hong Kong’s grade?

Hong Kong possesses all the hallmarks of an efficient and effective seat of arbitration, as per the 10 CIArb Principles. Recent incidents such as the "umbrella movement" have not shaken Hong Kong's position as a significant player in the international arbitration arena. In fact, it has provided the golden opportunity for Hong Kong to stand proud of its rule of law, showcasing the independence of its highly-regarded judiciary as well as the delicate yet strong-standing of the "one country, two systems" model in Hong Kong.

Stakeholders of arbitration in Hong Kong – the government, the courts, renowned judges and international arbitral institutions with a key presence in Hong Kong, are all striving hard to further promote Hong Kong as the premier international arbitration venue in Asia.  Looking back, Hong Kong has stood up to its scrutiny, outperforming its duties as the international commercial and financial hub.

Other results from key jurisdictions

London

Singapore

Paris {coming soon}

[1] See Olga Boltenko, "Hong Kong: Lord Hoffman's rule of law musings", 10 Dec 2014, Global Arbitration Review, Vol 10 – Issue 1

Filed Under: Arbitration

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