Arbitration Bill Passes

On 12 November 2010 the Hong Kong Arbitration Bill passed its remaining stages and has become law. However it will only be brought into effect by a notice by the Secretary for Justice in the Government Gazette (most likely within the next six months).

The new Ordinance replaces the current Ordinance. It is intended to simplify arbitration law in Hong Kong and make it more user friendly by following the Uncitral Model Law (UML) layout from "Arbitration Agreement" through to "Recognition and Enforcement of Awards".

Features of interest are:

• There are no longer separate provisions governing domestic and international arbitrations.
• The UML provisions previously applicable to international arbitrations (including most of the 2006 amendments to UML) now apply to all arbitrations together with most of the other provisions which previously applied to all arbitrations. The enforcement arrangements for New York Convention and China Mainland awards remain in place.
• Articles 17 - 17G of UML (introduced by the 2006 amendments) allow the Tribunal to order interim measures (this includes Mareva and other injunctions and Anton Pillar orders) and to grant preliminary orders ex parte for a limited period in an emergency. Interim measures can be effective as they are enforceable by the Court.
• The Tribunal will normally assess recoverable costs unless the parties specifically agree to Court taxation.
• Parties will be able to opt in to one or more of the following Schedule 2 provisions in their arbitration agreement (see Section 99):
  
  
  1. Single arbitrator
  2. Consolidation of arbitrations
  3. Decision of preliminary question of law by the Court
  4. Challenging the arbitral award on the ground of serious irregularity
  5. Appeal against an arbitral award on question of law
     
     
• These Schedule 2 provisions will also automatically apply if the arbitration agreement states it is a domestic agreement. However this only applies to existing arbitration agreements or those entered into within six years of the commencement of the new Ordinance (see Section 100).
• If the Schedule 2 provisions automatically apply to a construction contract those provisions will be deemed to apply to any related construction subcontract with an arbitration agreement down the line of subcontracts so long as there is no foreign element involved in the subcontract (see Sections 101 and 102 for details). "Construction Contract" is as defined by Section 2(1) of the Construction Industry Council Ordinance (Cap.587).

For inquiries related to this Legal Update, please contact:

David Boyle (david.boyle@mayerbrown.com)

Robin Peard (robin.peard@mayerbrown.com)