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Reform of Arbitration Law The New Arbitration Ordinance (Chapter 609)

Reform of Arbitration Law The New Arbitration Ordinance (Chapter 609). #359905. Frank Poon Solicitor General (Acting) Department of Justice Hong Kong SAR Government 13 December 2010. Introduction. Government Policy on Arbitration Why reform? Unitary regime Opting-in system

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Reform of Arbitration Law The New Arbitration Ordinance (Chapter 609)

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  1. Reform of Arbitration LawThe New Arbitration Ordinance(Chapter 609) #359905 Frank Poon Solicitor General (Acting) Department of Justice Hong Kong SAR Government 13 December 2010

  2. Introduction • Government Policy on Arbitration • Why reform? • Unitary regime • Opting-in system • Confidentiality • Judges as arbitrators • Commencement and transitional arrangement Department of Justice

  3. Government Policy • Promote Hong Kong as a regional centre for international arbitration • CE’s 2007 Policy address – reaffirmed on the occasion of HKIAC’s 25th Anniversary Department of Justice

  4. Benefits of Arbitration • $ - Economic contribution • Services • Trade and investment • Supporting HK’s role as a leading international finance centre • Improving our legal Infrastructure • Rule of law • Judicial resources Department of Justice

  5. HK’s Comparative Advantages • Strong legal profession • Strong institutions • Court • Arbitration professionals and institutions • Statutory framework • Mainland and Greater China Department of Justice

  6. Challenges • Competition – Regional and International • Mainland – Foreign Investment Enterprises • Taiwan – Economic Framework Cooperation Agreement • India Department of Justice

  7. Statutory Framework for Arbitration -Current Law – Why Reform The Arbitration Ordinance Cap 341 • Separate regimes for Domestic and International Arbitration • Some provisions common to both regimes Department of Justice

  8. Differences between Regimes • Domestic awards – subject to judicial review and appeal on a point of law • Determination by the court of a preliminary point of law • International regime allows recourse to court in very limited circumstances Department of Justice

  9. Purpose and Object of the Reform • Unify the domestic and international arbitration regimes on the basis of UNCITRAL Model Law • Enhance perception of HK as a Model Law Jurisdiction • Consolidate arbitration law in an Ordinance and make it more user-friendly for local and international users Department of Justice

  10. New Arbitration Ordinance • Implementation of recommendations in the 2003 Report by HKIAC/HKIArb • Bill finalised after over 6 months of consultation • Enacted on 10 November 2010 but NOT yet in force - http://www.hkiac.org/newspdf/ord017-10-english.pdf Department of Justice

  11. Object and Principles of the New Ordinance • Facilitate fair and speedy resolution of disputes by arbitration without unnecessary expenses • Parties’ autonomy (subject to safeguards) • Minimal court’s intervention (section 3) Department of Justice

  12. Structure of the New Ordinance • Follows the same order as the UNCITRAL Model Law • References made to each article of the Model Law as to its application/disapplication Department of Justice

  13. Structure of the New Ordinance • Applicable articles are reproduced with adaptation/modifications and given the force of law (section 4) • Designed to be self-contained (e.g. incorporation of provisions in Limitation Ordinance, Cap 347 relating to arbitral proceedings) (section 14) Department of Justice

  14. Unitary Regime • One arbitration regime – no more distinction between “international” and “domestic arbitration” • Opt-in system for provisions applicable to domestic arbitration under Cap. 341 (Part 11 and Schedule 2 of the new Ordinance) Department of Justice

  15. Optional Provisions in Schedule 2 • Appeal against an arbitral award on question of law • Challenging an award on ground of serious irregularity • Determination of a dispute by a sole arbitrator • Consolidation of arbitrations, or for hearings to be heard at the same time or one immediately after another • Determination of preliminary question of law by the Court of First Instance Department of Justice

  16. How to Opt-in • section 99 : an arbitration agreement may provide as to whether any or all of the provisions in Schedule 2 apply • section 100 : an arbitration agreement entered into before or within 6 years of the commencement of the Ordinance which provide that an arbitration is a “domestic arbitration” – all provisions in Schedule 2 apply - TRANSITIONAL Department of Justice

  17. Statutory Arbitration • Where any other Ordinance provides that the Arbitration Ordinance applies to an arbitration under that Ordinance, that Ordinance is deemed to have expressly provided that all the provisions in Schedule 2 apply - section 5(3)(b) Department of Justice

  18. Automatic Opting-in to Schedule 2 Provisions for Construction Sub-Contracts (section 101) • Where a construction contract has opted in under section 100 (by referring to arbitration being “domestic arbitration”), then sub-contracts with an arbitration agreement are deemed to have opted in to the Schedule 2 provisions (but see exceptions). Department of Justice

  19. Exceptions to Automatic Opting in for Construction Sub-contracts • If there is NO arbitration agreement in the sub-contract • If parties agree or the arbitration agreement provides that the automatic opting in provisions (section 100 or 101) do not apply (see section 102(A)) • If the arbitration agreement provides that any of the provisions in Schedule 2 does or does not apply (see section 102(b)) Department of Justice

  20. Exceptions to Automatic Opting in for Construction Sub-contracts • Sub-contractor is not based in Hong Kong • Substantial part of the construction operations subcontracted is to be performed outside Hong Kong Department of Justice

  21. Meaning of Construction Contract and Construction Operations • “Construction contract” means a contract between an employer and a contractor under which the contractor carries out construction operations but does not include a contract of employment. (section 2(1) of Cap. 587) • “Construction operations” is defined in Schedule 1 of Cap. 587 Department of Justice

  22. Confidentiality • Duty of confidence (section 18) relating to • arbitral proceedings under an arbitration agreement; • award made in the arbitral proceedings Department of Justice

  23. Exceptions to Confidentiality • Protect a legal right or interest of a party • Enforce or challenge an award before a court or other judicial authority in or outside HK • Obliged by law to make disclosure to Government body, regulatory body, court or tribunal • Disclosure to professional or other advisers of the party Department of Justice

  24. Court’s Proceedings under the New Arbitration Ordinance • Starting point - closed court hearing (section 16) • Exceptions • on the application of a party; or • on court’s own initiative Department of Justice

  25. Reporting of Court Proceedings heard Otherwise than in Open Court (section 17) • Upon application, the Court must make a direction on what information, if any, may be published • Direction for publication subject to parties’ agreement or the court being satisfied that the information would not reveal any matter that a party reasonably wishes to remain confidential Department of Justice

  26. Judgment of Major Legal Interest • The court must direct that it may be published (section 17(4)) • Any party may apply for information to be concealed if he reasonably wishes to conceal such information • Upon such an application, the court must made direction as to the action to be taken to conceal the information • May include a direction that the report may not be published for up to 10 years Department of Justice

  27. Judges as Arbitrators? • No special provisions for judges acting as arbitrators • Many arbitrators available in HK and overseas, including retired judges • Avoid perception of court intervention Department of Justice

  28. Judges NOT to Serve as Arbitrators • To be implemented by administrative means • Exceptions: • where an Ordinance provides for appointment of a judge(s) as arbitrator(s) • where a judge has been acting as an arbitrator prior to taking up judicial appointment Department of Justice

  29. Entry into Force of the New Ordinance • Will come into operation on a day to be appointed by the Secretary for Justice by notice in the Gazette (section 1(2)) • Consultation with stakeholders on readiness Department of Justice

  30. Transitional Arrangement Upon Commencement (Schedule 3) • Arbitral proceedings and related court proceedings in respect of arbitrations that are commenced before coming into force of the Ordinance will be governed by the old Arbitration Ordinance (Cap. 341) • Meaning of Commencement: • Domestic – section 31(1) of Cap 341 • International – Article 21 of Model Law Department of Justice

  31. Thank You THE END Department of Justice

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