South China International Arbitration Center (Hong Kong) (SCIAHK) is a new Hong Kong registered arbitral institution. It is affiliated to the Shenzhen-based Shenzhen Court of International Arbitration (SCIA, also known as South China International Economic and Trade Arbitration Commission), but operates as an independent institution. SCIAHK’s Board recently approved the South China International Arbitration Center (Hong Kong) Arbitration Rules (the Rules), which came into force on 1 May 2022.
The most notable feature of the Rules is that they were drafted based on, and follow the structure and numbering of, the 2013 UNCITRAL Arbitration Rules. Hence, they will be a familiar document to many users. Appendix 5 to the Rules sets out a list of modifications to the 2013 UNCITRAL Arbitration Rules, providing a useful overview of the Rules.
By adding mechanisms such as consolidation, concurrent proceedings, expedited procedure, summary dismissal and emergency arbitration, the Rules demonstrate reflect best practice in international arbitration. The Rules further reflect certain special features of Mainland China seated arbitrations and SCIA administered arbitrations, including the med-arb procedure and the optional appellate procedure.
We set out below a summary of the key features of the Rules. The Rules largely mirror the rules of other leading arbitral institutions and that they will be welcomed by users and practitioners.
Features of the 2013 UNCITRAL Arbitration Rules
By adopting most of the articles of the 2013 UNCITRAL Arbitration Rules, the Rules have maintained many features of those rules. These include, for example, the list-procedure for the appointment of arbitrators (Article 8, paragraph 2; Article 9, paragraph 3) and joinder of third parties (Article 17, paragraph 5). Interestingly, the Rules have also maintained the reference to the appointing authority and the relevant provisions, and provided that where the Rules apply “the functions of the appointing authority under the UNCITRAL Arbitration Rules are fulfilled by the SCIAHK” (Article 6).
Consolidation, parallel proceedings and single arbitration under multiple contracts
Article 17 of the Rules adds three new paragraphs (paragraphs 6 to 8) to the original Article 17 of the 2013 UNCITRAL Arbitration Rules. These contain provisions on consolidation, parallel proceedings and single arbitrations under multiple contracts, thus incorporating these common features of modern institutional arbitration into SCIAHK’s Rules.
Paragraph 6 of Article 17 provides that SCIAHK may consolidate two or more arbitrations into a single arbitration upon the request of one or more parties. However, this may happen only if “all parties to all of the arbitrations consent to consolidation“.
Paragraph 7 of Article 17 provides that, where the same arbitral tribunal is constituted in two or more arbitrations and a common question of law or fact arises in the arbitrations, the arbitral tribunal may conduct these arbitrations at the same time, or one immediately after another, or suspend one arbitration until the determination of another arbitration. This provision requires the tribunal to consult with the parties as to the conduct of the concurrent proceedings and provides that the tribunal may hold concurrent oral hearings.
Paragraph 8 of Article 17 provides that claims under more than one contract may be brought in a single arbitration, provided that the following three conditions are satisfied: (a) a common question of law or fact arises under each arbitration agreement; (b) the rights to relief claimed relate to the same transaction or a series of related transactions; and (c) the arbitration agreements are compatible.
Article 23A introduces an expedited procedure into the Rules. A party may apply to SCIAHK for the arbitration to be conducted according to the expedited procedure, if the parties so agree or if the amount in dispute does not exceed the amount set by SCIAHK as published on its website (currently HK$ 10 million, approximately US$1.3 million).
Where the expedited procedure is adopted, the tribunal shall consist of a sole arbitrator unless the arbitration agreement provides for three arbitrators. The arbitration shall in principle be decided on documentary evidence only, unless the arbitral tribunal decides that it is appropriate to hold one or more oral hearings. The Rules further require the award to be rendered within six months from the date of the constitution of the arbitral tribunal, and SCIAHK may only extend this time limit in exceptional cases.
Article 23B of the Rules empowers the arbitral tribunal to dismiss one or more claims, counterclaims or defences that are manifestly without merit, or manifestly outside the jurisdiction of the tribunal. Pursuant to this article, a request for summary dismissal shall be made as soon as possible (unless the tribunal directs otherwise) and shall state in detail the factual and legal basis supporting the request. The Rules further require the tribunal to decide on the summary dismissal request within 30 days from the filing of the request.
Article 26(10) of the Rules provides that a party who needs urgent interim measures prior to the constitution of the tribunal may apply for urgent interim relief pursuant to the Emergency Arbitrator Procedure set out in Appendix 1 to the Rules. Appendix 1 sets out detailed rules for the Emergency Arbitrator Procedure under the Rules. The emergency arbitrator is required to render a decision, order or award on the application within 14 days from the date on which the file was transmitted to the emergency arbitrator.
Article 30A sets out detailed provisions for a mediation in the arbitration procedure (“med-arb”) under the Rules. Paragraph 2 of Article 30A permits the arbitral tribunal to stay the arbitration proceedings, act as mediator(s) and conduct mediation if the parties so desire. The paragraph further provides that the arbitrator(s) who have served as mediator(s) may continue to serve on the arbitral tribunal if the arbitration resumes, unless the parties agree or the applicable laws provide otherwise.
If the mediation results in a successful settlement, the parties may request the arbitral tribunal to record the settlement terms in an arbitral award (Article 30A, paragraph 6).
Where the mediation fails, any admissions or opinions made during the mediation shall not be relied upon in the subsequent arbitration proceedings (Article 30A, paragraph 7); and any confidential information obtained by the tribunal from one party during the mediation should be disclosed to all other parties to the extent that it is material to the subsequent arbitration proceedings (Article 30A, paragraph 8).
Optional appellate procedure
Under Article 39A of the Rules, subject to any prohibition under the law of the seat, the parties may opt in an optional appellate procedure, as detailed in Appendix 2 to the Rules, by agreement in writing. The optional appellate mechanism is also available under the rules of SCIA, SCIAHK’s Shenzhen-based affiliate institution.
Section 73(2)(b) of the Hong Kong Arbitration Ordinance recognises the right of the parties to opt in an appellate procedure. The appellate procedure, however, does not apply to expedited procedures or any applications made under the opt-in provisions listed in Schedule 2 of the Arbitration Ordinance (Article 39A, paragraph 3).
The optional appellate procedure under the Rules is set out in detail in Appendix 2. Any application for the appellate arbitration shall be made within 15 days of the appellant’s receipt of the award (Appendix 2, Article 2). The appellate arbitral tribunal shall consist of three arbitrators, none of whom shall be selected from the original arbitral tribunal (Appendix 2, Article 4). The appellate tribunal may either affirm or modify the original award, and the award rendered by the appellate arbitral tribunal shall be final and binding upon all parties (Appendix 2, Article 4).
Other notable features
Other highlights of the Rules include:
- Electronic conduct of arbitration: The Rules expressly acknowledge that, unless otherwise agreed by the parties, SCIAHK and tribunals may conduct arbitrations electronically, including electronic communications, virtual oral hearings and virtual examination of evidence (Article 17A).
- “Off-panel” appointment: The parties may appoint arbitrator(s) from the panel of arbitrators published on the SCIAHK’s website or outside the panel (Article 10A). This is a useful clarification, given that most Mainland China-based arbitral institutions require arbitrators to be appointed from their panels of arbitrators.
- Confidentiality: Unless otherwise agreed, all parties, party representatives, arbitrators, experts, witnesses, tribunal secretaries and SCIAHK shall keep all information relating to the arbitration confidential (Article 43A);
- Third-party funding and insurance: If an arrangement is made for third party funding or insurance, the funded or insured party shall notify in writing all other parties, the arbitral tribunal and SCIAHK of this fact as soon as possible and provide the name of the third-party funder or insurer. The funded or insured party is also required to notify any subsequent changes to the funding or insurance arrangement (Article 43B).
For more information, please contact May Tai, Partner, Helen Tang, Partner, Weina Ye, Partner, Kath Sanger, Partner, Briana Young, Professional Support Consultant or your usual Herbert Smith Freehills contact.