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Allen & Overy hosts London stop of HKIAC Road Show

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09 July 2014

On 30 May 2014, Allen & Overy hosted the London leg of the Hong Kong International Arbitration Centre’s (HKIAC) Road Show, showcasing its new 2013 Administered Arbitration Rules (the 2013 Rules).

The event was in two parts: first, a session on the changes introduced in the 2013 Rules and recent trends in Asian arbitration, and, secondly, a mock application to the HKIAC Secretariat for consolidation of two arbitrations under the new powers of consolidation contained in the 2013 Rules. The event was well attended by arbitration practitioners, based predominantly in London, reflecting the keen interest in developments in arbitration in Asia.

Hong Kong is rising to the challenge as a modern centre for international arbitration
The event was opened by Joseph Wan of the HKIAC Council (former CEO of Harvey Nichols), who commented on Hong Kong's position on the world stage. He noted that it is recognised as being one of the most transparent jurisdictions in the world (coming ahead of Japan, the UK and the US), is ranked fourth in the world for judicial independence and is a Model Law jurisdiction, as well as a party to the New York Convention. He also pointed to Hong Kong’s state of the art facilities and leading practitioners. Joseph went on to highlight the West-to-East shift of focus in arbitration that has taken place and how the HKIAC has responded by introducing its 2013 Rules, which cater for the growing complexity of commercial disputes, while retaining a light-touch and full-service approach to administering arbitrations.

The committee that drafted the 2013 Rules was chaired by the Global Co-Head of Allen & Overy’s International Arbitration Group, Matthew Gearing QC, who is based in Hong Kong.

Allen & Overy Counsel Angeline Welsh, who has practised in both London and Hong Kong, spoke about the dynamism of the arbitration market in Asia, where international arbitration is fast becoming the preferred dispute resolution procedure, including for some sectors that have been slow to embrace international arbitration in the West, such as financial institutions. Angeline explained that the rising popularity of international arbitration in Asia has seen arbitration centres emerge that are now as well respected as those in the West. Hong Kong, and the HKIAC, has played an important role in this, although Singapore is also vying for the title of leading arbitration centre in the region, with Malaysia close behind. Angeline noted two developments in particular:

• First, the Hong Kong Arbitration Ordinance (amended at the end of 2013) is regarded as one of the most modern and up-to-date pieces of arbitration legislation in the world. This now includes provisions to ensure that awards and orders of emergency arbitrators are enforceable in Hong Kong, irrespective of whether they are made by an arbitral tribunal seated in Hong Kong.

• Secondly, the 2013 Rules include provisions that reflect most of the current key issues in arbitral procedure, including the joinder of third parties, consolidation of arbitration claims and the use of emergency arbitrators.

Arbitral Trends – The HKIAC Perspective

Ruth Stackpool-Moore and Adiyta Kurian, respectively Managing Counsel and Counsel at the HKIAC, spoke about the key arbitral trends seen by the HKIAC over the past five years.

These included:
1. an increase in the use of the HKIAC’s administered rules, with a corresponding move away from ad hoc arbitration;
2. more parties making their own arbitrator appointments, rather than relying on the institution to appoint;
3. an increasing number of disputes relating to complex transactions, often involving multiple parties and contracts; and
4. a growing uptake in the use of its expedited arbitration procedure.

Friven Yeoh, partner at O’Melveny & Myers in Hong Kong, observed that although it was unsurprising, given its location and the fact that the use of arbitration is strongly encouraged in Asia, that the HKIAC sees a large number of Asian parties to arbitrations it administers, the increasing use of the HKIAC by non-Asian parties was striking. It suggests that there has been a shift in the balance of power between Asian and non-Asian parties, so that the Asian parties were in a stronger position to negotiate an Asian seat of arbitration. Friven also took the opportunity to address the concern sometime voiced that, as a Chinese city, the choice of Hong Kong as an arbitral seat may give rise to neutrality concerns for non-Chinese parties. Friven argued that a tribunal seated in Hong Kong could be as international as the parties want it to be and noted that Hong Kong has a well-respected and independent judiciary, with a pro-arbitration reputation.

A mock arbitration

The second part of the afternoon’s events saw James Freeman, senior associate at Allen & Overy, Ben Holland, partner at Covington & Burling, and Friven Yeoh go head-to-head in a mock application for the consolidation of two arbitration proceedings under Article 28 of the 2013 Rules. Maxi Scherer, Special Counsel at Wilmer Hale, took the role of a party-appointed arbitrator in one of the arbitrations, and Ruth Stackpool-Moore acted as the HKIAC Secretariat.

The application for consolidation turned on Article 28.1(c) of the 2013 Rules, which gives the HKIAC the power to consolidate two or more arbitrations where:

“the claims are made under more than one arbitration agreement, a common question of law of fact arises in both or all of the arbitrations, the rights to relief claimed are in respect of, or arise out of, the same transaction or series of transactions, and HKIAC finds the arbitration agreements to be compatible”.

Although consolidation provisions have been included in a number of recent amendments to arbitration rules (such as the 2012 ICC Rules and, it appears, the forthcoming new LCIA Rules), Article 28.1(c) is arguably the most expansive consolidation provision in any of the major of arbitration rules.

The mock application allowed a number of potential issues under Article 28.1(c) to be tested, including how much commonality between claims is required to give rise to “a common question of law or fact”, and how similar the arbitration agreements had to be for them to be “compatible”. Does it matter, for example, if the seat is stated to be Hong Kong in one arbitration agreement, while the other is silent as to the seat? And of what relevance – if any - is it if one arbitration agreement provides for proceedings in Chinese and English, while the other provides for the arbitration to be conducted solely in English?

The mock application provided a practical and entertaining way to see one aspect of the HKIAC’s 2013 Rules in action and prompted a number of questions from the floor as to the exact scope and flexibility of the Rules on the issue of consolidation. It left the audience with food for thought during the drinks and nibbles that followed.

After London, the HKIAC Road Show continued to New York and forthcoming stops include Singapore and Mumbai.