论文部分内容阅读
Introduction
Because of the unique position that Hong Kong occupies in the Mainland, it is a well-established policy of the Hong Kong Special Administrative Region (“HKSAR”) Government to develop and enhance Hong Kong’s status as a leading dispute resolution centre in Asia Pacific.
In October 2010, the findings of the 2010 International Arbitration Survey: Choices in International Arbitration was published. The survey was conducted by the School of International Arbitration at Queen Mary, University of London. Over 130 general counsel and heads of legal departments around the world participated in the survey. 62% of the respondents said that formal legal infrastructure was the most decisive factor in choosing a place of arbitration. The survey reveals that neutrality and impartiality, the track record of enforcing agreements to arbitrate and arbitral awards (also known as "arbitration-friendliness") of a place of arbitration and whether the country concerned is a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) are the aspects of formal legal infrastructure that most influence the choice of place of arbitration.
The survey results underscore the efforts the HKSAR Government has been making to further enhance Hong Kong’s comparative advantage in arbitration services, and in many ways confirm that Hong Kong is moving on the right track.
An enhanced arbitral environment will help further develop the arbitration services of Hong Kong. Hong Kong already has a mature legal system, an independent Judiciary, as well as a deep pool of experienced professionals (including lawyers, accountants, engineers, architects and surveyors). Arbitration awards made in Hong Kong are enforceable through the courts of most of the world’s trading economies by virtue of the New York Convention as well as our arrangement with the Mainland on reciprocal enforcement of arbitral awards since 1999.
Back ground to the new Arbitration Ordinance, Cap. 609
The now repealed Arbitration Ordinance (Cap. 341)("the Repealed Ordinance") provided separate regimes for the conduct of domestic and international arbitrations in Hong Kong. The regime for domestic arbitration was largely based on the United Kingdom ("UK") arbitration legislation, while the regime for international arbitration was based on the United Nations Commission on International Trade Law("UNCITRAL") Model Law on International Commercial Arbitration ("Model Law") as adopted by UNCITRAL on 21 June 1985 (which was amended by that Commission on 7 July 2006).
In 1998, the Hong Kong Institute of Arbitrators in cooperation with the Hong Kong International Arbitration Centre ("HKIAC") established a Committee on Hong Kong Arbitration Law on the reform of the arbitration law. The Committee issued a report in 2003 recommending that the Repealed Ordinance be redrawn and a unitary regime with the Model Law governing both domestic and international arbitrations be created. The Department of Justice ("DoJ") set up in September 2005 the Departmental Working Group to implement the Report of the Committee on Hong Kong Arbitration Law ("Working Group"), chaired by the Solicitor General and comprising representatives of the legal profession, arbitration experts and relevant government officials, to formulate legislative proposals to implement the recommendations in the report of the Committee.
DoJ published a Consultation Paper on Reform of the Law of Arbitration in Hong Kong and draft Arbitration Bill ("Consultation Paper") on 31 December 2007 to seek views on reform of the law of arbitration in Hong Kong. The consultation period ended on 30 June 2008. The draft Bill adopts the structure of the Model Law as its framework. The purposes of the reform are –
(a)to make the law of arbitration more user-friendly to arbitration users both in and outside Hong Kong;
(b)to enable the Hong Kong business community and arbitration practitioners to operate an arbitration regime which accords with widely accepted international arbitration practices and development as the Model Law is familiar to practitioners from both civil law and common law jurisdictions;
(c)to attract more business parties to choose Hong Kong as the place to conduct arbitral proceedings, as Hong Kong will be seen as a Model Law jurisdiction; and
(d)to promote Hong Kong as a regional centre for dispute resolution.
The Arbitration Bill was introduced to the Legislative Council in July 2009. The Bills Committee held 15 meetings with the Administration and received views from eight deputations at one of these meetings. The new Arbitration Ordinance, Cap. 609 was enacted by the Legislative Council on 11 November 2010 (“the Ordinance”) and the new law came into effect on 1 June 2011.
The Arbitration Ordinance, Cap. 609
The Ordinance is divided into 14 Parts.
Part 1 sets out the object and principles of the Ordinance. The object of the Ordinance is to facilitate the fair and speedy resolution of disputes by arbitration without unnecessary expense. The Ordinance is based on the principles that the parties to a dispute should be free to agree on how the dispute should be resolved and that the court should intervene in the arbitration of a dispute only as expressly provided for in the Bill.
Part 2 sets out the principles for the interpretation of the Model Law, the procedural rules in respect of the delivery of written communications and the application of the limitation provisions. It also specifies that, as a starting point, court proceedings relating to arbitration are to be heard otherwise than in open court (Section 16). This follows the view of the majority of the submissions received in response to the Consultation Paper. Section 16 further provides for the circumstances under which such proceedings may be heard in open court and sections 17 and 18 provide for when information relating to such proceedings may be published.
Part 3 contains provisions relating to an arbitration agreement including the definition and the form of an arbitration agreement, and the circumstances under which a court action, the dispute of which is the subject of an arbitration agreement, should be referred to arbitration.
Part 4 contains provisions relating to the composition of an arbitral tribunal. It provides for the appointment of arbitrators and sets out the grounds and procedures for challenging such appointment.
Part 5 empowers an arbitral tribunal to rule on its own jurisdiction, namely, whether it has jurisdiction to decide a dispute under an arbitration agreement.
Part 6 deals with the power of an arbitral tribunal to grant interim measures and preliminary orders.
Part 7 specifies the procedures for the conduct of arbitral proceedings and sets out the general powers exercisable by an arbitral tribunal when conducting arbitral proceedings.
Part 8 prescribes the procedures for the making of arbitral awards including the award on costs and interest on award of costs of the arbitral proceedings. It further provides for the circumstances under which arbitral proceedings are to be terminated and the mechanism for doing so.
Part 9 provides that recourse to the court against an arbitral award may be made by a party by an application for setting aside the award on specified grounds.
Part 10 retains the statutory scheme under the repealed Arbitration Ordinance for the enforcement of arbitral awards made, whether in or outside Hong Kong, in arbitral proceedings by an arbitral tribunal.
In Part 11, section 100 provides that all the optin provisions under Schedule 2 to the Ordinance will automatically apply to an arbitration agreement entered into before, or at any time within a period of 6 years after, the commencement of the Ordinance and which has provided that arbitration under the agreement is a domestic arbitration.
Part 12 contains miscellaneous provisions relating to the liability of an arbitral tribunal and a mediator appointed under section 32 or referred to in section 33 and other relevant bodies. It also provides for the power to make relevant rules of court and prescribes the procedures for making an application under the Ordinance.
Part 13 contains provisions relating to the repeal of the Arbitration Ordinance (Cap 341) and the relevant savings and transitional arrangements.
Part 14 provides that the consequential and related amendments are set out in Schedule 4.
Confidentiality provisions
A major feature of the new Arbitration Ordinance is the provisions on the protection of confidentiality in arbitration proceedings as well as court hearing related to those proceedings. In the 2010 International Arbitration Survey referred to above, 62% of the respondents said confidentiality is ‘very important’ to them in international arbitration. However, half of the participants in the survey wrongly thought that arbitration is confidential even when there is no confidentiality clause in the arbitration agreement or the chosen rules. 12% did not know whether arbitration is confidential in those circumstances.
The UNCITRAL Model Law does not say anything about confidentiality. Indeed, the drafters of the Model Law rejected even relatively narrow proposals to provide for the confidentiality of arbitral awards and hearings for the following reason:
“It may be doubted whether Model Law should deal with the question whether an award may be published. Although it is controversial since there are good reasons for and against such publication, the decision may be left to the parties or the arbitration rules chosen by them.” See Report of the Secretary-General on Possible Features of a Model Law on International Commercial Arbitration, UN Doc. A/CN.9/207, para 101 (1981)
Likewise, the UNCITRAL Notes for Organizing Arbitral Proceedings caution users of arbitration about the lack of common understanding in respect of confidentiality in arbitral proceedings and make the following points:
“(a)There is no uniform answer in national laws as to the extent to which the participants in an arbitration are under a duty to observe the confidentiality of information relating to the case;
(b)Parties that have agreed on arbitration rules or other provisions that do not expressly address the issue of confidentiality cannot assume that all jurisdictions would recognize an implied commitment to confidentiality;
(c)Participants in an arbitration might not have the same understanding as regards the extent of confidentiality that is expected.” (para 31)
Most jurisdictions which have adopted legislation for international arbitrations based on the Model Law do not provide for confidentiality in their legislation. The Federal Arbitration Act of the Unites States and the English Arbitration Act 1996 make no reference to confidentiality. There is no national legislation on confidentiality in Australia, and the High Court of Australia in Esso Australia [1995] 128 ALR 391 (HCA) at p 401 has declared that there is no general rule of confidentiality except that there is a rule of privacy in arbitration hearings. In Sweden, the Swedish Supreme Court held in Bulgarian Foreign Trade Bank Ltd v. AI Trade Finance Inc. (Case T-1881-99) that there is no implied duty of confidentiality in private arbitrations.
A major feature of the Ordinance is the provisions on the protection of confidentiality in arbitration proceedings as well as court hearing related to those proceedings. The Ordinance provides that as a starting point, court proceedings relating to arbitration are not to be heard in open court. Such proceedings will be heard in open court only if any party so applying can satisfy the court that for good reasons the proceedings ought to be heard in open court (see Sections 16 & 17 of the Ordinance). The Ordinance also provides that unless otherwise agreed by the parties or under any exceptions as provided for in the Ordinance, no party may publish, disclose or communicate any information relating to arbitral proceedings and awards(see Section 18 of the Ordinance). The Ordinance adheres to the international practice that arbitral awards should only be made public with the consent of the parties concerned, having regard to the private and confidential nature of arbitration. This provision seeks to strike a proper balance between safeguarding the confidentiality in arbitration and the need for parties in the arbitral proceedings to protect or pursue their legal rights or for them to enforce or challenge an arbitral award.
Restrictions on Reporting of Court Proceedings under Section 17 of the Ordinance
Sections 2D of the Repealed Ordinance allowed a party to apply for court proceedings concerning arbitration to be heard otherwise than in open court. Section 2E of the Repealed Ordinance restricted the reporting of proceedings otherwise than in open court. These provisions were introduced to the Repealed Ordinance by the Arbitration(Amendment) (No. 2) Ordinance 1989 (64 of 1989). The legislative amendment was based on the recommendations put forward by the Law Reform Commission of Hong Kong (“the LRC”) in its 1987 Report on the Adoption of the UNCITRAL Model Law of Arbitration (“the 1987 Report”). The LRC has explained the reasons why reports in law reports and professional journals of court proceedings should be permitted, notwithstanding the general confidentiality requirements, as follows:
“As far as the decisions of the courts are concerned we would not like to see the extended confidentiality we have recommended interfere with the access of outside parties to judgments on the law. In most cases confidential information, including the identity of parties can be hidden by judicious editing. In the rare case where the facts so obviously identify the parties that confidentiality is not possible shortly after the event, the passage of time will remedy the problem. We therefore recommend that notwithstanding the general confidentiality requirements, reports in law reports and professional journals be permitted on the following conditions:
a)that such steps be taken as are reasonably practicable to hide any matter, including the identity of the parties, that any party reasonably wishes to remain confidential,
b)that if the court is satisfied that such matter cannot be hidden, the publication may be embargoed for such period not exceeding ten years as the court thinks appropriate.”(Emphasis added) pp 23-24, para 4.31.
Section 17(1)-(5) of the Ordinance adopts section 2E of the Repealed Ordinance to take into account the starting position of “closed court hearing” in Section 16 of the Ordinance. Section 17 provides as follows:
“(1)This section applies to proceedings under this Ordinance in the court heard otherwise than in open court(“closed court proceedings”).
(2)A court in which closed court proceedings are being heard must, on the application of any party, make a direction as to what information, if any, relating to the proceedings may be published.
(3)A court must not make a direction permitting information to be published unless—
(a)all parties agree that the information may be published; or
(b)the court is satisfied that the information, if published, would not reveal any matter (including the identity of any party) that any party reasonably wishes to remain confidential.
(4)Despite subsection (3), if—
(a)a court gives a judgment in respect of closed court proceedings; and
(b)the court considers that judgment to be of major legal interest, the court must direct that reports of the judgment may be published in law reports and professional publications.
(5)If a court directs under subsection (4) that reports of a judgment may be published, but any party reasonably wishes to conceal any matter in those reports (including the fact that the party was such a party), the court must, on the application of the party—
(a)make a direction as to the action to be taken to conceal that matter in those reports; and
(b)if the court considers that a report published in accordance with the direction made under paragraph (a) would still be likely to reveal that matter, direct that the report may not be published until after the end of a period, not exceeding 10 years, that the court may direct.
(6)A direction of the court under this section is not subject to appeal.”
Disclosure of Information Relating to Arbitral Proceedings and Awards Made in Those Proceedings
The 2010 UNCITRAL Arbitration Rules do not provide for confidentiality except in relation to an award, which may be made public only with the consent of all parties or where and to the extent disclosure is required of a party by legal duty, to protect or pursue a legal right or in relation to legal proceedings before a court or other competent authority(Art. 34(5)). Legislation of jurisdictions which is based on the Model Law usually contains provisions on confidentiality protection. However, those provisions are limited to discrete aspects of the arbitral process, while not addressing more general obligations. For example, Malta adopted the Model Law in its Arbitration Act. Section 44(5) of the Arbitration Act states: “The award may be made public only with consent of the parties.”
Whilst judicial opinion in other parts of the world remains divided as mentioned above, an authoritative statement has now emerged from the English Court of Appeal in Emmott v. Michael Wilson & Partners. ([2008] EWCA (Civ) 184 (CA); [2008] Bus LR 1361), which seems to have settled the juridical basis for the duty. It was held that the obligation of confidentiality in arbitration is implied by law arisen out of the nature of arbitration and is a substantive rule of law masquerading as an implied term. The content of the obligation may depend on the context in which it arises and on the nature of the information or documents in question. The limits of the obligation are still in the process of development on a case-by-case basis. The principal cases in which disclosure will be permissible include where it is reasonably necessary for the protection of the legitimate interests of an arbitrating party.
In the absence of legislation, a number of arbitral institutions publish redacted versions of arbitral awards and orders, for the purpose of providing guidance to parties, counsel and arbitrators. The International Chamber of Commerce (“ICC”) has for many years published“sanitized” extracts of arbitral awards in various publications(specifically, the ICC Court’s Bulletin, the ICCA Yearbook, specialized collections of ICC awards and Journal Du Droit International (Clunet)). When an award is published, it is redacted to remove the names of parties and other identifying facts. Although the parties are not consulted concerning publication, the ICC’s practice is not to publish even redacted versions of awards if one party volunteers an objection. (See the discussion of such practice by Gary B Born in International Commercial Arbitration, Kluwer, 2009, at p 2269). Other arbitral institutions also publish arbitral awards, typically in redacted form and only with the parties’consent. (Swiss International Arbitration Rules, Art. 43(3) and International Center for Dispute Resolution Rules, Art. 27(4) [permitting redacted publication of selected American Arbitration Association awards, only with the consent of all parties]).
The LRC in the 1987 Report has recommended against legislation to enforce confidentiality or to require that arbitral awards be reported for the following reasons:
“The situation in respect of arbitral proceedings themselves is, however, different. As arbitration is a matter of contract between the parties the courts should not be able to intervene either to enforce confidentiality or to require that arbitral awards be reported. We would like to see some arrangement whereby the Hong Kong International Arbitration Centre sought permission from arbitral parties and subsequently systematically published awards. It is not, however, an appropriate subject for legislation.” (p 23, para 4.30)
The HKIAC provides for such arrangement regarding the publication of awards as follows:
“An award may be published, whether in its entirety or in the form of excerpts or a summary, only under the following conditions:
(a)a request for publication is addressed to the HKIAC Secretariat;
(b)all references to the parties’ names are deleted; and
(c)no party objects to such publication within the time limit fixed for that purpose by the HKIAC Secretariat. In the case of an objection, the award shall not be published.”
(See Rule 39.3 of the HKIAC Administered Arbitration Rules)
The Hong Kong Institute of Arbitrators has recommended in its 2003 Report of Committee on Hong Kong Arbitration Law (“the 2003 Report”) that a provision to further safeguard the confidentiality in arbitration should be adopted. The 2003 Report recommended that a provision along the lines of section 14 of the New Zealand Arbitration Act 1996 should be adopted in the new Ordinance. Section 14 was as follows:
“(1)Subject to subsection (2), an arbitration agreement, unless otherwise agreed by the parties, is deemed to provide that the parties shall not publish, disclose, or communicate any information relating to arbitral proceedings under the agreement or to an award made in those proceedings.
(2)Nothing in subsection (1) prevents the publication, disclosure, or communication of information referred to in that subsection –
(a)If the publication, disclosure, or communication is contemplated by this Act; or
(b)To a professional or other adviser of any of the parties.”
The 2003 Report recommended that a further exception should be added to cover publication, disclosure or communication that a party is obliged to make by virtue of other provisions of the law. Section 18 of the Ordinance now gives effect to the above proposal.
Section 18 (1) of the Ordinance provides as follows:
“Unless otherwise agreed by the parties, no party may publish, disclose or communicate any information relating to—
(a)the arbitral proceedings under the arbitration agreement; or
(b)an award made in those arbitral proceedings.”
Section 18(2) provides as follows:
“Nothing in subsection (1) prevents the publication, disclosure or communication of information referred to in that subsection by a party—
(a)if the publication, disclosure or communication is made—
(i)to protect or pursue a legal right or interest of the party; or
(ii)to enforce or challenge the award referred to in that subsection,
in legal proceedings before a court or other judicial authority in or outside Hong Kong;
(b)if the publication, disclosure or communication is made to any government body, regulatory body, court or tribunal and the party is obliged by law to make the publication, disclosure or communication; or
(c)if the publication, disclosure or communication is made to a professional or any other adviser of any of the parties.”
Research has been conducted on the confidentiality protections under the arbitration institutional rules as well as the exceptions for disclosure. It is found that both the London Court of International Arbitration and the HKIAC make similar reference to the permissible disclosure if such disclosure is needed to protect or pursue a legal right or to enforce or challenge an award in legal proceedings.
Paragraph 30.1 of the Arbitration Rules of the London Court of International Arbitration (effective 1 January 1998) provides as follows:
“Unless the parties expressly agree in writing to the contrary, the parties undertake as a general principle to keep confidential all awards in their arbitration, together with all materials in the proceedings created for the purpose of the arbitration and all other documents produced by another party in the proceedings not otherwise in the public domain - save and to the extent that disclosure may be required of a party by legal duty, to protect or pursue a legal right or to enforce or challenge an award in bona fide legal proceedings before a state court or other judicial authority.” (Emphasis added)
HKIAC Administered Arbitration Rules, rule 39.1 reads as follows:
“Unless the parties expressly agree in writing to the contrary, the parties undertake to keep confidential all matters and documents relating to the arbitral proceedings, including the existence of the proceedings as well as all correspondence, written statements, evidence, awards and order not otherwise in the public domain, save and to the extent that a disclosure may be required of a party by a legal or regulatory duty, to protect or pursue a legal right or to enforce or challenge an award in legal proceedings before a judicial authority. This undertaking also applies to the arbitrators, the tribunal-appointed experts, the secretary of the arbitral tribunal and the HKIAC Secretariat and Council.” (Emphasis added)
Such an exception is also consistent with the latest statement of the English law on confidentiality and its exception in the case of Emmott ( “where it is reasonably necessary for the protection of the legitimate interests of an arbitrating party” at para. 107 of the Judgment).
Automatic opt-in mechanism to cater for the special circumstances of the construction industry
In the legislative process, deputations from the construction industry pointed out that the under the Repealed Ordinance, a domestic subcontract in the construction industry did not need to expressly refer to domestic regime as it would automatically apply. Without an express opt-in, all subcontracts would have been governed by the international unitary regime under the Ordinance. The status quo of local construction subcontractors would immediately change when the Ordinance came into force. In response, the Administration introduced the automatic optin mechanism for the construction industry. In Part 11 of the Ordinance, section 100 provides that all the opt-in provisions under Schedule 2 to the Ordinance will automatically apply to an arbitration agreement entered into before, or at any time within a period of 6 years after, the commencement of the Ordinance and which has provided that arbitration under the agreement is a domestic arbitration. Schedule 2 of the Ordinance includes provisions for:
? Arbitration by a sole arbitrator in the absence of agreement;
? Appeal against an arbitral award on a question of law;
? Consolidation of arbitrations by the court;
? Determination of a preliminary question by the court; and
? Challenging an arbitral award on the grounds of serious irregularity
Section 101 provides that where: (a) all the provisions in Schedule 2 automatically apply to an arbitration agreement in a construction contract under section 100; and (b) the whole or any part of the construction operations to be carried out under the construction contract is subcontracted to any person under another construction contract which also includes an arbitration agreement, then all the provisions in Schedule 2 would also apply to the arbitration agreement in the subcontract.(subject to any contrary agreement of the parties in accordance with Section 102). In addition, section 100 is not applicable to “non-local subcontractors” to avoid opt-in provisions in Schedule 2 being imposed on unwary non-local subcontractors, thereby undermining Hong Kong’s reputation as an international arbitration centre.
Compatibility with the Model Law
With the Ordinance coming into operation in June 2011, Hong Kong has a unified arbitration regime based on the Model Law. It is believed that the structure of the Ordinance has achieved the important objective that Hong Kong is to be seen as conforming to the Model Law. A. Redfern and M. Hunter, Law and Practice of International Commercial Arbitration, (4th ed., Sweet & Maxwell, London, 2004), p.633 stated that the following unofficial definition of what could constitute “Model Law conformity” has been used:
“1. When reading the national statute, the impression must be given that the legislator took the Model Law as basis and made certain amendments and additions, but did not simply take the Model Law as one amongst various models or follow only its ‘principles’;
2. The bulk of the Model Law provisions must be included (70 to 80 per cent); and
3. The law must contain no provision incompatible with modern international commercial arbitration (e.g. foreigners may not be arbitrators, no-excludable appeal on errors of law).”
The Model Law comprises 47 articles. Of these, 36 articles (about 77%) are incorporated in the Ordinance verbatim and in their entirety. When reading the Ordinance, it appears that the legislator took the Model Law as basis and made certain amendments and additions, but did not simply take the Model Law as one amongst various models or follow only its ‘principles’. As a result of the enactment of the Ordinance, Hong Kong’s arbitration law becomes in tune with the latest and best international practice. However the Ordinance has also introduced some changes to the Model Law. Details of the provisions of the Ordinance which involve changes to the Model Law can be found, for example, in Peter Caldwell, ‘The New Hong Kong Arbitration Ordinance’, Asian Dispute Review 14 (January 2011). The most significant ones of those changes are as follows:
Scope of application of the Ordinance
Section 5 of the Ordinance provides that the Ordinance applies to an arbitration under an arbitration agreement, whether or not the agreement is entered into in Hong Kong, if the place of arbitration is in Hong Kong. Section 7 of the Ordinance provides that section 5 has effect in substitution for Article 1 of the Model Law. The Ordinance applies irrespective of whether or not the arbitration agreement is entered into in Hong Kong. If the place of arbitration is outside Hong Kong, a few provisions of the Ordinance will still apply. These provisions include:
? application for court proceedings in Hong Kong to be stayed and for the dispute to be referred to arbitration (section 20);
? application to the courts in Hong Kong for the grant of interim measure of protection (sections 21 and 45);
? application to the Court of First Instance in Hong Kong for directions on the preservation, detention or sale of relevant property relating to arbitral proceedings (section 60);
? application to the Court of First Instance in Hong Kong for the enforcement of the orders or directions of an arbitral tribunal (section 61); and
?Recognition and enforcement of arbitral awards under Part 10 of Cap. 609.
Number of arbitrators
Article 10 of the Model Law recognises the freedom of parties to determine the number of arbitrators. Article 10(2) provides that: “failing such determination, the number of arbitrators shall be three.” Section 23(3) applies to the exclusion of Article 10(2) of the Model Law and provides that the number of arbitrators is to be either 1 or 3 as decided by the HKIAC.
Equal treatment of parties
Article 18 of the Model Law provides that: “The parties shall be treated with equality and each party shall be given a full opportunity of presenting his case.” Section 46(1) provides for the substitution of Article 18 of the Model Law by subsection (2) and (3). Section 46(2) provides that the parties shall be treated with equality. It is identical to the first part of Article 18 of the Model Law. The requirement that an arbitral tribunal is to be independent when conducting arbitral proceedings or when exercising its powers is added under section 46(3)(a) to give effect to the recommendation in the 2003 Report. Section 46(3)(b) requires that the parties should be given a “reasonable” opportunity to present their cases. However the term “full” opportunity is used in Article 18 of the Model Law. This change followed the recommendation in the 2003 report that the word“reasonable” should be used in place of “full”. According to the 2003 Report:
“We accept that Article 18 of the Model Law [make] it difficult for an arbitrator to prevent a party from calling unnecessary factual witnesses, an excessive number of expert witnesses or making repetitive submissions as such arbitrator may be accused of partiality and/or his award may be set aside under Article 36(1)(a)(ii). It is important, as confirmed by the submission from HKIAC and the experience of Committee members who sit as arbitrators, that the arbitrator should have the power to control unreasonable conduct by a party. We therefore recommend that Article 18 of the Model Law be amended by substituting “reasonable”for “full”.” (para. 26.4 of the 2003 Report)
Recognition and enforcement of arbitral awards
Part 10 of the Bill corresponds to Chapter VIII of the Model Law and relates to the recognition and enforcement of arbitral awards. Sections 82 and 83 of the New Ordinance state that Articles 35 and 36 of the Model Law which provide for the recognition and enforcement of arbitral awards and grounds for refusing their recognition or enforcement do not have effect. Before the enactment of the Ordinance, an award made in the Mainland by a recognized Mainland arbitral authority ("the Mainland award"), and an award made in a State or territory (other than China or any part of China) which is a party to the New York Convention ("Convention award"), can be enforced in Hong Kong. The procedures for the enforcement of Mainland awards and Convention awards under the Ordinance remain the same. The grounds for refusal of enforcement of Mainland awards are identical to the New York Convention. An arbitral award which is neither a Mainland award nor a Convention award is also enforceable at the discretion of the Court under Section 84 of the Ordinance. Section 86 of the Ordinance provides that the enforcement of such an award may be refused on any of the grounds specified in that provision. Those grounds for refusal are identical to the New York Convention, except that section 86(2)(c) gives the court a discretion to refuse the enforcement of such arbitral award if ‘for any other reason the court considers it just to do so’.
Conclusion
The Ordinance represents a milestone in the reform of arbitration law in Hong Kong. It is a major initiative of the HKSAR Government to make Hong Kong a friendlier place for arbitration. With the enactment of the Ordinance, the arbitration law of Hong Kong has become clearer, more certain, and more easily accessible to arbitration users and practitioners from across the world.
Because of the unique position that Hong Kong occupies in the Mainland, it is a well-established policy of the Hong Kong Special Administrative Region (“HKSAR”) Government to develop and enhance Hong Kong’s status as a leading dispute resolution centre in Asia Pacific.
In October 2010, the findings of the 2010 International Arbitration Survey: Choices in International Arbitration was published. The survey was conducted by the School of International Arbitration at Queen Mary, University of London. Over 130 general counsel and heads of legal departments around the world participated in the survey. 62% of the respondents said that formal legal infrastructure was the most decisive factor in choosing a place of arbitration. The survey reveals that neutrality and impartiality, the track record of enforcing agreements to arbitrate and arbitral awards (also known as "arbitration-friendliness") of a place of arbitration and whether the country concerned is a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) are the aspects of formal legal infrastructure that most influence the choice of place of arbitration.
The survey results underscore the efforts the HKSAR Government has been making to further enhance Hong Kong’s comparative advantage in arbitration services, and in many ways confirm that Hong Kong is moving on the right track.
An enhanced arbitral environment will help further develop the arbitration services of Hong Kong. Hong Kong already has a mature legal system, an independent Judiciary, as well as a deep pool of experienced professionals (including lawyers, accountants, engineers, architects and surveyors). Arbitration awards made in Hong Kong are enforceable through the courts of most of the world’s trading economies by virtue of the New York Convention as well as our arrangement with the Mainland on reciprocal enforcement of arbitral awards since 1999.
Back ground to the new Arbitration Ordinance, Cap. 609
The now repealed Arbitration Ordinance (Cap. 341)("the Repealed Ordinance") provided separate regimes for the conduct of domestic and international arbitrations in Hong Kong. The regime for domestic arbitration was largely based on the United Kingdom ("UK") arbitration legislation, while the regime for international arbitration was based on the United Nations Commission on International Trade Law("UNCITRAL") Model Law on International Commercial Arbitration ("Model Law") as adopted by UNCITRAL on 21 June 1985 (which was amended by that Commission on 7 July 2006).
In 1998, the Hong Kong Institute of Arbitrators in cooperation with the Hong Kong International Arbitration Centre ("HKIAC") established a Committee on Hong Kong Arbitration Law on the reform of the arbitration law. The Committee issued a report in 2003 recommending that the Repealed Ordinance be redrawn and a unitary regime with the Model Law governing both domestic and international arbitrations be created. The Department of Justice ("DoJ") set up in September 2005 the Departmental Working Group to implement the Report of the Committee on Hong Kong Arbitration Law ("Working Group"), chaired by the Solicitor General and comprising representatives of the legal profession, arbitration experts and relevant government officials, to formulate legislative proposals to implement the recommendations in the report of the Committee.
DoJ published a Consultation Paper on Reform of the Law of Arbitration in Hong Kong and draft Arbitration Bill ("Consultation Paper") on 31 December 2007 to seek views on reform of the law of arbitration in Hong Kong. The consultation period ended on 30 June 2008. The draft Bill adopts the structure of the Model Law as its framework. The purposes of the reform are –
(a)to make the law of arbitration more user-friendly to arbitration users both in and outside Hong Kong;
(b)to enable the Hong Kong business community and arbitration practitioners to operate an arbitration regime which accords with widely accepted international arbitration practices and development as the Model Law is familiar to practitioners from both civil law and common law jurisdictions;
(c)to attract more business parties to choose Hong Kong as the place to conduct arbitral proceedings, as Hong Kong will be seen as a Model Law jurisdiction; and
(d)to promote Hong Kong as a regional centre for dispute resolution.
The Arbitration Bill was introduced to the Legislative Council in July 2009. The Bills Committee held 15 meetings with the Administration and received views from eight deputations at one of these meetings. The new Arbitration Ordinance, Cap. 609 was enacted by the Legislative Council on 11 November 2010 (“the Ordinance”) and the new law came into effect on 1 June 2011.
The Arbitration Ordinance, Cap. 609
The Ordinance is divided into 14 Parts.
Part 1 sets out the object and principles of the Ordinance. The object of the Ordinance is to facilitate the fair and speedy resolution of disputes by arbitration without unnecessary expense. The Ordinance is based on the principles that the parties to a dispute should be free to agree on how the dispute should be resolved and that the court should intervene in the arbitration of a dispute only as expressly provided for in the Bill.
Part 2 sets out the principles for the interpretation of the Model Law, the procedural rules in respect of the delivery of written communications and the application of the limitation provisions. It also specifies that, as a starting point, court proceedings relating to arbitration are to be heard otherwise than in open court (Section 16). This follows the view of the majority of the submissions received in response to the Consultation Paper. Section 16 further provides for the circumstances under which such proceedings may be heard in open court and sections 17 and 18 provide for when information relating to such proceedings may be published.
Part 3 contains provisions relating to an arbitration agreement including the definition and the form of an arbitration agreement, and the circumstances under which a court action, the dispute of which is the subject of an arbitration agreement, should be referred to arbitration.
Part 4 contains provisions relating to the composition of an arbitral tribunal. It provides for the appointment of arbitrators and sets out the grounds and procedures for challenging such appointment.
Part 5 empowers an arbitral tribunal to rule on its own jurisdiction, namely, whether it has jurisdiction to decide a dispute under an arbitration agreement.
Part 6 deals with the power of an arbitral tribunal to grant interim measures and preliminary orders.
Part 7 specifies the procedures for the conduct of arbitral proceedings and sets out the general powers exercisable by an arbitral tribunal when conducting arbitral proceedings.
Part 8 prescribes the procedures for the making of arbitral awards including the award on costs and interest on award of costs of the arbitral proceedings. It further provides for the circumstances under which arbitral proceedings are to be terminated and the mechanism for doing so.
Part 9 provides that recourse to the court against an arbitral award may be made by a party by an application for setting aside the award on specified grounds.
Part 10 retains the statutory scheme under the repealed Arbitration Ordinance for the enforcement of arbitral awards made, whether in or outside Hong Kong, in arbitral proceedings by an arbitral tribunal.
In Part 11, section 100 provides that all the optin provisions under Schedule 2 to the Ordinance will automatically apply to an arbitration agreement entered into before, or at any time within a period of 6 years after, the commencement of the Ordinance and which has provided that arbitration under the agreement is a domestic arbitration.
Part 12 contains miscellaneous provisions relating to the liability of an arbitral tribunal and a mediator appointed under section 32 or referred to in section 33 and other relevant bodies. It also provides for the power to make relevant rules of court and prescribes the procedures for making an application under the Ordinance.
Part 13 contains provisions relating to the repeal of the Arbitration Ordinance (Cap 341) and the relevant savings and transitional arrangements.
Part 14 provides that the consequential and related amendments are set out in Schedule 4.
Confidentiality provisions
A major feature of the new Arbitration Ordinance is the provisions on the protection of confidentiality in arbitration proceedings as well as court hearing related to those proceedings. In the 2010 International Arbitration Survey referred to above, 62% of the respondents said confidentiality is ‘very important’ to them in international arbitration. However, half of the participants in the survey wrongly thought that arbitration is confidential even when there is no confidentiality clause in the arbitration agreement or the chosen rules. 12% did not know whether arbitration is confidential in those circumstances.
The UNCITRAL Model Law does not say anything about confidentiality. Indeed, the drafters of the Model Law rejected even relatively narrow proposals to provide for the confidentiality of arbitral awards and hearings for the following reason:
“It may be doubted whether Model Law should deal with the question whether an award may be published. Although it is controversial since there are good reasons for and against such publication, the decision may be left to the parties or the arbitration rules chosen by them.” See Report of the Secretary-General on Possible Features of a Model Law on International Commercial Arbitration, UN Doc. A/CN.9/207, para 101 (1981)
Likewise, the UNCITRAL Notes for Organizing Arbitral Proceedings caution users of arbitration about the lack of common understanding in respect of confidentiality in arbitral proceedings and make the following points:
“(a)There is no uniform answer in national laws as to the extent to which the participants in an arbitration are under a duty to observe the confidentiality of information relating to the case;
(b)Parties that have agreed on arbitration rules or other provisions that do not expressly address the issue of confidentiality cannot assume that all jurisdictions would recognize an implied commitment to confidentiality;
(c)Participants in an arbitration might not have the same understanding as regards the extent of confidentiality that is expected.” (para 31)
Most jurisdictions which have adopted legislation for international arbitrations based on the Model Law do not provide for confidentiality in their legislation. The Federal Arbitration Act of the Unites States and the English Arbitration Act 1996 make no reference to confidentiality. There is no national legislation on confidentiality in Australia, and the High Court of Australia in Esso Australia [1995] 128 ALR 391 (HCA) at p 401 has declared that there is no general rule of confidentiality except that there is a rule of privacy in arbitration hearings. In Sweden, the Swedish Supreme Court held in Bulgarian Foreign Trade Bank Ltd v. AI Trade Finance Inc. (Case T-1881-99) that there is no implied duty of confidentiality in private arbitrations.
A major feature of the Ordinance is the provisions on the protection of confidentiality in arbitration proceedings as well as court hearing related to those proceedings. The Ordinance provides that as a starting point, court proceedings relating to arbitration are not to be heard in open court. Such proceedings will be heard in open court only if any party so applying can satisfy the court that for good reasons the proceedings ought to be heard in open court (see Sections 16 & 17 of the Ordinance). The Ordinance also provides that unless otherwise agreed by the parties or under any exceptions as provided for in the Ordinance, no party may publish, disclose or communicate any information relating to arbitral proceedings and awards(see Section 18 of the Ordinance). The Ordinance adheres to the international practice that arbitral awards should only be made public with the consent of the parties concerned, having regard to the private and confidential nature of arbitration. This provision seeks to strike a proper balance between safeguarding the confidentiality in arbitration and the need for parties in the arbitral proceedings to protect or pursue their legal rights or for them to enforce or challenge an arbitral award.
Restrictions on Reporting of Court Proceedings under Section 17 of the Ordinance
Sections 2D of the Repealed Ordinance allowed a party to apply for court proceedings concerning arbitration to be heard otherwise than in open court. Section 2E of the Repealed Ordinance restricted the reporting of proceedings otherwise than in open court. These provisions were introduced to the Repealed Ordinance by the Arbitration(Amendment) (No. 2) Ordinance 1989 (64 of 1989). The legislative amendment was based on the recommendations put forward by the Law Reform Commission of Hong Kong (“the LRC”) in its 1987 Report on the Adoption of the UNCITRAL Model Law of Arbitration (“the 1987 Report”). The LRC has explained the reasons why reports in law reports and professional journals of court proceedings should be permitted, notwithstanding the general confidentiality requirements, as follows:
“As far as the decisions of the courts are concerned we would not like to see the extended confidentiality we have recommended interfere with the access of outside parties to judgments on the law. In most cases confidential information, including the identity of parties can be hidden by judicious editing. In the rare case where the facts so obviously identify the parties that confidentiality is not possible shortly after the event, the passage of time will remedy the problem. We therefore recommend that notwithstanding the general confidentiality requirements, reports in law reports and professional journals be permitted on the following conditions:
a)that such steps be taken as are reasonably practicable to hide any matter, including the identity of the parties, that any party reasonably wishes to remain confidential,
b)that if the court is satisfied that such matter cannot be hidden, the publication may be embargoed for such period not exceeding ten years as the court thinks appropriate.”(Emphasis added) pp 23-24, para 4.31.
Section 17(1)-(5) of the Ordinance adopts section 2E of the Repealed Ordinance to take into account the starting position of “closed court hearing” in Section 16 of the Ordinance. Section 17 provides as follows:
“(1)This section applies to proceedings under this Ordinance in the court heard otherwise than in open court(“closed court proceedings”).
(2)A court in which closed court proceedings are being heard must, on the application of any party, make a direction as to what information, if any, relating to the proceedings may be published.
(3)A court must not make a direction permitting information to be published unless—
(a)all parties agree that the information may be published; or
(b)the court is satisfied that the information, if published, would not reveal any matter (including the identity of any party) that any party reasonably wishes to remain confidential.
(4)Despite subsection (3), if—
(a)a court gives a judgment in respect of closed court proceedings; and
(b)the court considers that judgment to be of major legal interest, the court must direct that reports of the judgment may be published in law reports and professional publications.
(5)If a court directs under subsection (4) that reports of a judgment may be published, but any party reasonably wishes to conceal any matter in those reports (including the fact that the party was such a party), the court must, on the application of the party—
(a)make a direction as to the action to be taken to conceal that matter in those reports; and
(b)if the court considers that a report published in accordance with the direction made under paragraph (a) would still be likely to reveal that matter, direct that the report may not be published until after the end of a period, not exceeding 10 years, that the court may direct.
(6)A direction of the court under this section is not subject to appeal.”
Disclosure of Information Relating to Arbitral Proceedings and Awards Made in Those Proceedings
The 2010 UNCITRAL Arbitration Rules do not provide for confidentiality except in relation to an award, which may be made public only with the consent of all parties or where and to the extent disclosure is required of a party by legal duty, to protect or pursue a legal right or in relation to legal proceedings before a court or other competent authority(Art. 34(5)). Legislation of jurisdictions which is based on the Model Law usually contains provisions on confidentiality protection. However, those provisions are limited to discrete aspects of the arbitral process, while not addressing more general obligations. For example, Malta adopted the Model Law in its Arbitration Act. Section 44(5) of the Arbitration Act states: “The award may be made public only with consent of the parties.”
Whilst judicial opinion in other parts of the world remains divided as mentioned above, an authoritative statement has now emerged from the English Court of Appeal in Emmott v. Michael Wilson & Partners. ([2008] EWCA (Civ) 184 (CA); [2008] Bus LR 1361), which seems to have settled the juridical basis for the duty. It was held that the obligation of confidentiality in arbitration is implied by law arisen out of the nature of arbitration and is a substantive rule of law masquerading as an implied term. The content of the obligation may depend on the context in which it arises and on the nature of the information or documents in question. The limits of the obligation are still in the process of development on a case-by-case basis. The principal cases in which disclosure will be permissible include where it is reasonably necessary for the protection of the legitimate interests of an arbitrating party.
In the absence of legislation, a number of arbitral institutions publish redacted versions of arbitral awards and orders, for the purpose of providing guidance to parties, counsel and arbitrators. The International Chamber of Commerce (“ICC”) has for many years published“sanitized” extracts of arbitral awards in various publications(specifically, the ICC Court’s Bulletin, the ICCA Yearbook, specialized collections of ICC awards and Journal Du Droit International (Clunet)). When an award is published, it is redacted to remove the names of parties and other identifying facts. Although the parties are not consulted concerning publication, the ICC’s practice is not to publish even redacted versions of awards if one party volunteers an objection. (See the discussion of such practice by Gary B Born in International Commercial Arbitration, Kluwer, 2009, at p 2269). Other arbitral institutions also publish arbitral awards, typically in redacted form and only with the parties’consent. (Swiss International Arbitration Rules, Art. 43(3) and International Center for Dispute Resolution Rules, Art. 27(4) [permitting redacted publication of selected American Arbitration Association awards, only with the consent of all parties]).
The LRC in the 1987 Report has recommended against legislation to enforce confidentiality or to require that arbitral awards be reported for the following reasons:
“The situation in respect of arbitral proceedings themselves is, however, different. As arbitration is a matter of contract between the parties the courts should not be able to intervene either to enforce confidentiality or to require that arbitral awards be reported. We would like to see some arrangement whereby the Hong Kong International Arbitration Centre sought permission from arbitral parties and subsequently systematically published awards. It is not, however, an appropriate subject for legislation.” (p 23, para 4.30)
The HKIAC provides for such arrangement regarding the publication of awards as follows:
“An award may be published, whether in its entirety or in the form of excerpts or a summary, only under the following conditions:
(a)a request for publication is addressed to the HKIAC Secretariat;
(b)all references to the parties’ names are deleted; and
(c)no party objects to such publication within the time limit fixed for that purpose by the HKIAC Secretariat. In the case of an objection, the award shall not be published.”
(See Rule 39.3 of the HKIAC Administered Arbitration Rules)
The Hong Kong Institute of Arbitrators has recommended in its 2003 Report of Committee on Hong Kong Arbitration Law (“the 2003 Report”) that a provision to further safeguard the confidentiality in arbitration should be adopted. The 2003 Report recommended that a provision along the lines of section 14 of the New Zealand Arbitration Act 1996 should be adopted in the new Ordinance. Section 14 was as follows:
“(1)Subject to subsection (2), an arbitration agreement, unless otherwise agreed by the parties, is deemed to provide that the parties shall not publish, disclose, or communicate any information relating to arbitral proceedings under the agreement or to an award made in those proceedings.
(2)Nothing in subsection (1) prevents the publication, disclosure, or communication of information referred to in that subsection –
(a)If the publication, disclosure, or communication is contemplated by this Act; or
(b)To a professional or other adviser of any of the parties.”
The 2003 Report recommended that a further exception should be added to cover publication, disclosure or communication that a party is obliged to make by virtue of other provisions of the law. Section 18 of the Ordinance now gives effect to the above proposal.
Section 18 (1) of the Ordinance provides as follows:
“Unless otherwise agreed by the parties, no party may publish, disclose or communicate any information relating to—
(a)the arbitral proceedings under the arbitration agreement; or
(b)an award made in those arbitral proceedings.”
Section 18(2) provides as follows:
“Nothing in subsection (1) prevents the publication, disclosure or communication of information referred to in that subsection by a party—
(a)if the publication, disclosure or communication is made—
(i)to protect or pursue a legal right or interest of the party; or
(ii)to enforce or challenge the award referred to in that subsection,
in legal proceedings before a court or other judicial authority in or outside Hong Kong;
(b)if the publication, disclosure or communication is made to any government body, regulatory body, court or tribunal and the party is obliged by law to make the publication, disclosure or communication; or
(c)if the publication, disclosure or communication is made to a professional or any other adviser of any of the parties.”
Research has been conducted on the confidentiality protections under the arbitration institutional rules as well as the exceptions for disclosure. It is found that both the London Court of International Arbitration and the HKIAC make similar reference to the permissible disclosure if such disclosure is needed to protect or pursue a legal right or to enforce or challenge an award in legal proceedings.
Paragraph 30.1 of the Arbitration Rules of the London Court of International Arbitration (effective 1 January 1998) provides as follows:
“Unless the parties expressly agree in writing to the contrary, the parties undertake as a general principle to keep confidential all awards in their arbitration, together with all materials in the proceedings created for the purpose of the arbitration and all other documents produced by another party in the proceedings not otherwise in the public domain - save and to the extent that disclosure may be required of a party by legal duty, to protect or pursue a legal right or to enforce or challenge an award in bona fide legal proceedings before a state court or other judicial authority.” (Emphasis added)
HKIAC Administered Arbitration Rules, rule 39.1 reads as follows:
“Unless the parties expressly agree in writing to the contrary, the parties undertake to keep confidential all matters and documents relating to the arbitral proceedings, including the existence of the proceedings as well as all correspondence, written statements, evidence, awards and order not otherwise in the public domain, save and to the extent that a disclosure may be required of a party by a legal or regulatory duty, to protect or pursue a legal right or to enforce or challenge an award in legal proceedings before a judicial authority. This undertaking also applies to the arbitrators, the tribunal-appointed experts, the secretary of the arbitral tribunal and the HKIAC Secretariat and Council.” (Emphasis added)
Such an exception is also consistent with the latest statement of the English law on confidentiality and its exception in the case of Emmott ( “where it is reasonably necessary for the protection of the legitimate interests of an arbitrating party” at para. 107 of the Judgment).
Automatic opt-in mechanism to cater for the special circumstances of the construction industry
In the legislative process, deputations from the construction industry pointed out that the under the Repealed Ordinance, a domestic subcontract in the construction industry did not need to expressly refer to domestic regime as it would automatically apply. Without an express opt-in, all subcontracts would have been governed by the international unitary regime under the Ordinance. The status quo of local construction subcontractors would immediately change when the Ordinance came into force. In response, the Administration introduced the automatic optin mechanism for the construction industry. In Part 11 of the Ordinance, section 100 provides that all the opt-in provisions under Schedule 2 to the Ordinance will automatically apply to an arbitration agreement entered into before, or at any time within a period of 6 years after, the commencement of the Ordinance and which has provided that arbitration under the agreement is a domestic arbitration. Schedule 2 of the Ordinance includes provisions for:
? Arbitration by a sole arbitrator in the absence of agreement;
? Appeal against an arbitral award on a question of law;
? Consolidation of arbitrations by the court;
? Determination of a preliminary question by the court; and
? Challenging an arbitral award on the grounds of serious irregularity
Section 101 provides that where: (a) all the provisions in Schedule 2 automatically apply to an arbitration agreement in a construction contract under section 100; and (b) the whole or any part of the construction operations to be carried out under the construction contract is subcontracted to any person under another construction contract which also includes an arbitration agreement, then all the provisions in Schedule 2 would also apply to the arbitration agreement in the subcontract.(subject to any contrary agreement of the parties in accordance with Section 102). In addition, section 100 is not applicable to “non-local subcontractors” to avoid opt-in provisions in Schedule 2 being imposed on unwary non-local subcontractors, thereby undermining Hong Kong’s reputation as an international arbitration centre.
Compatibility with the Model Law
With the Ordinance coming into operation in June 2011, Hong Kong has a unified arbitration regime based on the Model Law. It is believed that the structure of the Ordinance has achieved the important objective that Hong Kong is to be seen as conforming to the Model Law. A. Redfern and M. Hunter, Law and Practice of International Commercial Arbitration, (4th ed., Sweet & Maxwell, London, 2004), p.633 stated that the following unofficial definition of what could constitute “Model Law conformity” has been used:
“1. When reading the national statute, the impression must be given that the legislator took the Model Law as basis and made certain amendments and additions, but did not simply take the Model Law as one amongst various models or follow only its ‘principles’;
2. The bulk of the Model Law provisions must be included (70 to 80 per cent); and
3. The law must contain no provision incompatible with modern international commercial arbitration (e.g. foreigners may not be arbitrators, no-excludable appeal on errors of law).”
The Model Law comprises 47 articles. Of these, 36 articles (about 77%) are incorporated in the Ordinance verbatim and in their entirety. When reading the Ordinance, it appears that the legislator took the Model Law as basis and made certain amendments and additions, but did not simply take the Model Law as one amongst various models or follow only its ‘principles’. As a result of the enactment of the Ordinance, Hong Kong’s arbitration law becomes in tune with the latest and best international practice. However the Ordinance has also introduced some changes to the Model Law. Details of the provisions of the Ordinance which involve changes to the Model Law can be found, for example, in Peter Caldwell, ‘The New Hong Kong Arbitration Ordinance’, Asian Dispute Review 14 (January 2011). The most significant ones of those changes are as follows:
Scope of application of the Ordinance
Section 5 of the Ordinance provides that the Ordinance applies to an arbitration under an arbitration agreement, whether or not the agreement is entered into in Hong Kong, if the place of arbitration is in Hong Kong. Section 7 of the Ordinance provides that section 5 has effect in substitution for Article 1 of the Model Law. The Ordinance applies irrespective of whether or not the arbitration agreement is entered into in Hong Kong. If the place of arbitration is outside Hong Kong, a few provisions of the Ordinance will still apply. These provisions include:
? application for court proceedings in Hong Kong to be stayed and for the dispute to be referred to arbitration (section 20);
? application to the courts in Hong Kong for the grant of interim measure of protection (sections 21 and 45);
? application to the Court of First Instance in Hong Kong for directions on the preservation, detention or sale of relevant property relating to arbitral proceedings (section 60);
? application to the Court of First Instance in Hong Kong for the enforcement of the orders or directions of an arbitral tribunal (section 61); and
?Recognition and enforcement of arbitral awards under Part 10 of Cap. 609.
Number of arbitrators
Article 10 of the Model Law recognises the freedom of parties to determine the number of arbitrators. Article 10(2) provides that: “failing such determination, the number of arbitrators shall be three.” Section 23(3) applies to the exclusion of Article 10(2) of the Model Law and provides that the number of arbitrators is to be either 1 or 3 as decided by the HKIAC.
Equal treatment of parties
Article 18 of the Model Law provides that: “The parties shall be treated with equality and each party shall be given a full opportunity of presenting his case.” Section 46(1) provides for the substitution of Article 18 of the Model Law by subsection (2) and (3). Section 46(2) provides that the parties shall be treated with equality. It is identical to the first part of Article 18 of the Model Law. The requirement that an arbitral tribunal is to be independent when conducting arbitral proceedings or when exercising its powers is added under section 46(3)(a) to give effect to the recommendation in the 2003 Report. Section 46(3)(b) requires that the parties should be given a “reasonable” opportunity to present their cases. However the term “full” opportunity is used in Article 18 of the Model Law. This change followed the recommendation in the 2003 report that the word“reasonable” should be used in place of “full”. According to the 2003 Report:
“We accept that Article 18 of the Model Law [make] it difficult for an arbitrator to prevent a party from calling unnecessary factual witnesses, an excessive number of expert witnesses or making repetitive submissions as such arbitrator may be accused of partiality and/or his award may be set aside under Article 36(1)(a)(ii). It is important, as confirmed by the submission from HKIAC and the experience of Committee members who sit as arbitrators, that the arbitrator should have the power to control unreasonable conduct by a party. We therefore recommend that Article 18 of the Model Law be amended by substituting “reasonable”for “full”.” (para. 26.4 of the 2003 Report)
Recognition and enforcement of arbitral awards
Part 10 of the Bill corresponds to Chapter VIII of the Model Law and relates to the recognition and enforcement of arbitral awards. Sections 82 and 83 of the New Ordinance state that Articles 35 and 36 of the Model Law which provide for the recognition and enforcement of arbitral awards and grounds for refusing their recognition or enforcement do not have effect. Before the enactment of the Ordinance, an award made in the Mainland by a recognized Mainland arbitral authority ("the Mainland award"), and an award made in a State or territory (other than China or any part of China) which is a party to the New York Convention ("Convention award"), can be enforced in Hong Kong. The procedures for the enforcement of Mainland awards and Convention awards under the Ordinance remain the same. The grounds for refusal of enforcement of Mainland awards are identical to the New York Convention. An arbitral award which is neither a Mainland award nor a Convention award is also enforceable at the discretion of the Court under Section 84 of the Ordinance. Section 86 of the Ordinance provides that the enforcement of such an award may be refused on any of the grounds specified in that provision. Those grounds for refusal are identical to the New York Convention, except that section 86(2)(c) gives the court a discretion to refuse the enforcement of such arbitral award if ‘for any other reason the court considers it just to do so’.
Conclusion
The Ordinance represents a milestone in the reform of arbitration law in Hong Kong. It is a major initiative of the HKSAR Government to make Hong Kong a friendlier place for arbitration. With the enactment of the Ordinance, the arbitration law of Hong Kong has become clearer, more certain, and more easily accessible to arbitration users and practitioners from across the world.