Now In Force. Updated HKIAC Administered Arbitration Rules (2024).

The Hong Kong International Arbitration Centre (HKIAC) new 2024 Administered Arbitration Rules (2024 Rules) came into force on 1 June 2024. The 2024 Rules aim to enhance efficiency, flexibility and innovation in HKIAC arbitration. The amendments largely build on, rather than alter, the previous 2018 Rules. In this article, we set out the most significant amendments, with practical insights on what the 2024 Rules will mean for practitioners and arbitration users. At the end of this article, we include a summary table that compares and highlights the key developments between the 2018 and 2024 Rules.

1 NOTABLE UPDATES 2024 RULES

Key changes include:

a mandate encouraging parties, co-arbitrators and HKIAC to account for diversity when determining and confirming arbitrators;
new powers allowing the arbitral tribunal to give directions to parties to protect the security of information involved in the arbitration;
a new list of factors for arbitrators to consider when making costs determinations (which notably involve consideration of any adverse environmental impacts arising out of the parties’ conduct in the arbitration);
the introduction of a hard-stop time limit for the close of proceedings (45 days from the last oral or written submissions) and issuing of an award (3 months from the close of proceedings); and
express case management powers granted to the arbitral tribunal to assist in the efficient conduct of the arbitration, including determining preliminary issues and bifurcating proceedings.

The changes highlight the increasing importance that HKIAC places on diversity, efficiency, cybersecurity, and minimising the environmental impact of arbitration.

2 SUBSTANTIVE CHANGES IN 2024 HKIAC RULES

2.1 Designating and Confirming Arbitrators

In designating an arbitrator, new Article 9A of the 2024 Rules encourage parties and co-arbitrators to take into account considerations of diversity.

When confirming an arbitrator, the 2024 Rules at Article 9 also provide fresh factors that HKIAC must consider, namely:

factors that may affect the efficiency or integrity of the arbitration;
other relevant considerations; and
considerations of diversity.

‘Other relevant considerations’ may include, for example, the arbitrator’s impartiality and independence under Article 11.4 of the 2024 Rules.

2.2 Procedures for the Conduct of Arbitration

The 2018 Rules state that the arbitral tribunal should adopt suitable procedures for the conduct of arbitration to avoid unnecessary delay or expense, having regard to the complexity of the issues, the amount in dispute and the effective use of technology.

The 2024 Rules add a requirement at Article 13 that the arbitral tribunal must adopt suitable procedures that have regard to information security and environmental impact.

The 2024 Rules also introduce the following provisions on the conduct of arbitration:

Article 13.6 Preliminary issues: In addition to the powers at Article 43 (on Early Determination Procedure), the arbitral tribunal is expressly empowered, in its discretion and after consultation with the parties, to determine preliminary issues that could dispose of all or part of the case, bifurcate (i.e. divide up) proceedings, conduct the arbitration in sequential stages, and decide the stage of arbitration at which an issue shall be determined.
Article 13.8 Proposed changes to legal representatives to be communicated: After the arbitral tribunal is constituted, proposed changes or additions by a party to its legal representatives must be communicated to other parties, the arbitral tribunal, and HKIAC.
Article 13.9 Measures to avoid conflict of interest: After consulting with parties, the arbitral tribunal may take any measure necessary to avoid a conflict of interest arising from a change in party representation. This may be achieved by excluding the proposed new party representatives from participating in the arbitral proceedings.

2.3 Single Arbitration Involving Multiple Contracts

Both the 2018 Rules and 2024 Rules state that claims arising out of or in connection with more than one contract may be made in a single arbitration, provided that certain conditions are met. These criteria include:

common questions of law or fact arising under each arbitration agreement;
the rights to relief claimed are in respect of the same transaction or series of transactions; and
the arbitration agreements are compatible.

For further discussion on compatibility under Article 29, see our previous article on this topic.

The 2024 Rules go on to state that in such circumstances, once proceedings have been properly commenced, parties shall be deemed to have waived their right to designate an arbitrator. HKIAC will instead appoint an arbitrator with or without regard to any party’s designation (Article 29.2).

2.4 Close of Proceedings

The 2024 Rules introduce a hard-stop date for the close of proceedings at Article 31, being no later than 45 days from the last directed substantive oral or written submissions. The arbitral tribunal will make such a declaration when it is satisfied that the parties have had a reasonable opportunity to present their case in relation to the entire proceedings or a discrete phase of proceedings. These changes mean the arbitral tribunal must declare proceedings closed anywhere from 0 – 45 days after the last directed substantive oral or written submissions (excluding submissions on costs). After this time, no further submissions or arguments may be made.

However, the arbitral tribunal may, on its own initiative or on application of a party, under Article 31.4 decide to reopen proceedings anytime before an award is made.

2.5 Apportioning Costs of Arbitrationn

Under the 2018 Rules, the arbitral tribunal was given powers to apportion costs of the arbitration if it determines that the apportionment was “reasonable”.

The 2024 Rules maintain the arbitrator’s power to determine the reasonableness and apportionment of costs. Additionally, Article 34.4 enumerates factors that the tribunal may consider when making these determinations, including:

the relative success of the parties;
the scale and complexity of the dispute;
the conduct of the parties in relation to the proceedings;
any outcome-related fee structure agreement; and
any adverse environmental impact arising out of the parties’ conduct in the arbitration.

Both the 2018 Rules and 2024 Rules include the existence of any third party funding arrangement as a relevant factor for the tribunal to consider in this context.

2.6 Information Security

The 2024 Rules introduce a new Article 45A pertaining to information security. The new article:

allows parties to agree on ‘any reasonable measures’ to protect information that is shared, stored or processed in relation to the arbitration;
empowers the arbitral tribunal, after consultation with parties, to give directions to the parties to protect the security of information stored, shared or processed in relation to the arbitration; and
empowers the arbitral tribunal, after consultation with the parties, to make a decision, order or award in respect of any breach of the information security measures agreed by the parties or directed by the arbitral tribunal.

2.7 Arbitrators’ Fees

The 2024 Rules introduce a new sub-article 2.1 in Appendix 2^[1]that states that HKIAC may review an arbitral tribunal’s fees and expenses and make adjustments where HKIAC considers it appropriate in the circumstances. Any adjustments made must be communicated to the arbitral tribunal and parties as soon as possible.

3 WHAT DO THESE CHANGES MEAN FOR PRACTITIONERS AND ARBITRATION USERS

Timely delivery of awards: The introduction of a 45-day time limit, coupled with the existing rule whereby awards must be issued no later than 3 months from the date the arbitral tribunal declares proceedings closed, provides practitioners and parties with certainty that awards will be issued within about 4.5 months from the last directed submission. The defined timeframe is a helpful addition to HKIAC’s procedures and will encourage the timely delivery of awards.
Information security and environmental impact: The new changes highlight the importance HKIAC places on enhancing information security and minimising negative environmental impacts associated with arbitration:
- Supporting the Green Pledge – Campaign for Greener Arbitrations, the new 2024 Rules provisions will encourage parties and arbitration users to proactively consider environmentally sustainable practices. Now, adverse environmental impacts arising out of the parties’ conduct in the arbitration will be considered when apportioning costs, and mitigating environmental impacts will be a factor considered by the tribunal when determining directions during arbitration.
- The new Article 45A – Information Security provides the arbitral tribunal with the discretion to give directions to protect the security of information in the context of the arbitration and to sanction any breach of such measure. Parties must therefore be mindful that any information sharing platform or other measure adopted does not breach any information security measures as may be directed by the arbitral tribunal or agreed between the parties. This enhanced approach to information security strengthens the integrity of arbitral proceedings.
Transparent and ongoing communication: Note the new powers bestowed on the arbitral tribunal to “take any measures necessary to avoid a conflict of interest arising from a change in party representatives”, which may entail excluding new representatives from participation in arbitral proceedings. The HKIAC Rules do not elaborate on how such conflict will be determined, but the IBA Guidelines on Conflicts of Interest (2024) may be a useful reference. The 2024 Rules are fully alert to the need to protect the integrity of proceedings from bias. Practitioners and parties must therefore ensure they are alert to minimise the risk of such conflict arising. Additionally, new provisions regarding the need to communicate proposed changes of party representatives to the tribunal enshrine the importance of early and open communication with the tribunal as to the identity of possible party representatives.

The King & Wood Mallesons team, including Paul Starr, Felicity Ng, and Sian Knight, were delighted to provide input to the HKIAC’s Rules Revision Committee during the 2024 Rules Consultation process. With comprehensive experience of the arbitration framework in Hong Kong, China Mainland, and overseas, we stand ready to address any queries that you may have on the new HKIAC 2024 Rules and support your arbitration needs.

4 SUMMARY TABLE

This summary table sets out significant changes in the 2024 Rules compared to the 2018 HKIAC Administered Arbitration Rules.

Note: This table excludes all grammatical and stylistic changes.

Topics	2018 Rules	2024 Rules
Written communications	Under the 2018 Rules at Article 3, a range of communication methods are nominated, including: communication to the address, fax number or email address of the addressee or its representative; communication to the address, fax number or address specified in the agreement between the parties; communication to the last known address, fax number or email address of the addressee; uploaded to any secured online repository that the parties have agreed to use.	Under Article 3 of the 2024 rules, there is the addition of communication through any other form of electronic communication that the parties have agreed to use, subject to approval by HKIAC and the arbitral tribunal, once constituted.
Notice of arbitration	Under Article 4 of the 2018 Rules, the Notice of Arbitration and Answer shall include, among others, the names, addresses, fax numbers and/or email addresses of the parties and their representatives. The Notice of Arbitration and Answer must include a ‘proposal’ as to the number of arbitrators if the parties have not previously agreed.	Under Article 4 of the 2024 Rules, the Notice of Arbitration and Answer must also include the telephone number of the parties and their representatives. The Notice of Arbitration and Answer must include a ‘reasoned’ proposal as to the number of arbitrators if the parties have not previously agreed.
Confirmation of the arbitral tribunal and diversity	Under Article 9 of the 2018 Rules, HKIAC must take into account the agreement by the parties as to an arbitrator’s qualifications and the arbitrator’s disclosures, if any, as to their impartiality and independence.	Under Article 9 of the 2024 Rules, HKIAC must also take into account any factors that may affect the efficiency or integrity of the arbitration when designating an arbitrator. Under the 2024 Rules Article 9A, parties and co-arbitrators are encouraged to take into account considerations of diversity when designating arbitrators. Additionally, when exercising its authority to appoint arbitrators under the Rules, HKIAC shall take into account considerations of diversity along with other relevant considerations.
Replacement of an arbitrator	The 2018 Rules, at Article 12, state that a substitute arbitrator may be appointed where an arbitrator dies, has been successfully challenged, has been otherwise removed or has resigned.	Article 12 of the 2024 Rules states that a substitute arbitrator may also be appointed when an arbitrator has had his or her appointment revoked.
General provisions	The 2018 Rules, at Article 13.1, state that the arbitral tribunal should adopt suitable procedures for the conduct of arbitration to avoid unnecessary delay or expense, having regard to the complexity of the issues, the amount in dispute, the effective use of technology, and that each procedure should ensure equal treatment of parties.	Article 13.1 of the 2024 Rules adds the requirement that the arbitral tribunal must adopt suitable procedures that have regard to information security and environmental impact.
General provisions	Article 43 of the 2018 Rules provides for an Early Determination Procedure, whereby the arbitral tribunal has the power to decide on points of law or fact on the basis that: such points of law or fact are manifestly without merit or outside the arbitral tribunal’s jurisdiction; or even if such points of law or fact are submitted by another party and assumed to be correct, no award could be rendered in favour of that party.	In addition to Article 43 of the 2024 Rules (which continues to provide for Early Determination Procedure), Article 13.6 of the 2024 Rules expressly empowers an arbitral tribunal to, at its discretion and after consulting with the parties, determine preliminary issues that the arbitral tribunal considers could dispose of all or part of the case, bifurcate proceedings, conduct the arbitration in sequential stages, and decide on the stage of the arbitration at which the issue shall be determined, or otherwise adopt procedures to decide the case efficiently.
General provisions	Article 13.8 of the 2018 Rules states that only changes to legal representatives need to be communicated to the arbitral tribunal, the counterparty and their representatives.	Article 13.8 of the 2024 Rules amends this rule to state that proposed changes or additions (not just actual) must be communicated to the arbitral tribunal, the counterparty and their representatives.
General provisions	The 2018 Rules do not contain provisions on conflict of interest arising from change in party representation. The 2018 Rules allow HKIAC to revoke an arbitrator’s appointment in various circumstances, including in the context of Joinder of Additional Parties (Articles 27.13 and 27.14), Consolidation of Arbitrations (Articles 28.8 and 28.9) and Expedited Procedure (Article 42.3).	In the 2024 Rules, Article 13.9 permits an arbitral tribunal to, after consulting with the parties, take any measure necessary to avoid a conflict of interest arising from a change in party representation, including by excluding the proposed new representatives from participating in the arbitral process. Additionally, the new Article 13.10 allows HKIAC to, after consultation with parties, take any measure necessary to preserve the efficiency or integrity of the arbitration. Within this general power, a specific example is included whereby HKIAC may revoke the appointment of an arbitrator where it considers that the arbitrator is prevented from or has failed to fulfil their functions in accordance with the Rules.
Single arbitration under multiple contracts	The 2018 Rules, at Article 29, state that claims arising in connection with more than one contract may be heard concurrently where certain circumstances are met.	Article 29 of the 2024 Rules retains the ability to host a single arbitration for claims under multiple contracts. However, the 2024 Rules, at Article 29.2, also state that where HKIAC is satisfied that an arbitration has been properly commenced, parties will be deemed to have waived their rights to designate an arbitrator. HKIAC will appoint the arbitral tribunal with or without regard to any party’s designation.
Closure of proceedings	The 2018 Rules, at Article 31, provide wide discretion to the arbitral tribunal to determine when proceedings close.	Article 31 of the 2024 Rules introduces a hard-stop date for the close of proceedings, being no later than 45 days from the last directed substantive oral or written submissions in respect of the discrete phase of the proceedings (excluding submissions on costs). After this time, no further submissions or arguments may be made or evidence produced.
Costs of the arbitration	Under the 2018 Rules, Article 34, the term “costs of the arbitration” includes: fees of the arbitral tribunal; reasonable travel and expenses incurred by the arbitral tribunal; the reasonable costs of expert advice and other assistance required by the arbitral tribunal, including fees and expenses of the tribunal secretary; reasonable costs of legal representation and experts (if claimed during arbitration); and Registration fee and Administrative Fees payable to HKIAC.	Under Article 34 of the 2024 Rules, the “Costs of the arbitration” now additionally include costs of any Emergency Relief proceedings.
Costs of the arbitration	The 2018 Rules at Article 34.4 provide that the arbitral tribunal may take into account any third-party funding agreement when apportioning or determining the costs of the arbitration.	Article 34.4 of the 2024 Rules maintains the arbitrator’s power to determine the reasonableness and apportionment of costs and additionally enumerate factors that the tribunal may consider when making these determinations, including: the relative success of the parties; the scale and complexity of the dispute; the conduct of the parties in relation to the proceedings; any outcome-related fee structure agreement; and any adverse environmental impact arising out of the parties’ conduct in the arbitration.
Deposit for costs	Article 41.4 of the 2018 Rules provides that where a party’s deposit for arbitration costs is not paid within 30 days after HKIAC requests it, the tribunal may order the suspension or termination of the arbitration or continue with the arbitration on such basis and in respect of such claim or counterclaim as the tribunal considers fit.	Article 41.4 of the 2024 Rules adds an alternative course of action in circumstances where the arbitral tribunal is not yet constituted. Here, HKIAC may suspend or cease to administer the arbitration.
Expedited procedure	The 2018 Rules, Article 42, put forward an expedited procedure to be used in nominated circumstances. As part of the expedited procedure, the arbitral tribunal shall decide the dispute on the basis of documentary evidence only, unless it decides it is appropriate to hold one or more hearings. Additionally, under the expedited procedure at Article 42.2, the tribunal must communicate the award to the parties within six months from the date when HKIAC transmitted the case file to the tribunal. HKIAC may extend this time limit in exceptional circumstances. Under the 2018 Rules at Article 42.3, any party could request HKIAC’s decision that the expedited procedure no longer applies to the case.	The 2024 Rules, Article 42, modify the expedited procedure such that the arbitral tribunal shall decide the dispute on the basis of written submissions and documentary evidence. Under Article 42.2 of the 2024 Rules, HKIAC’s power to extend the time limit for communicating the arbitral award to parties under the expedited procedure is amended – now, HKIAC may extend this time limit in ‘appropriate’ circumstances. Under the 2024 Rules at Article 42.3, any party, or the arbitral tribunal, may request HKIAC’s decision that the expedited procedure no longer apply to the case.
Information security	The 2018 Rules do not contain provisions regarding information security.	Article 45A of the 2024 Rules introduces a new section on information security which stipulates that: parties may agree on any reasonable measures to protect information shared, stored or processed in relation to arbitration; the arbitral tribunal may, after consulting with the parties, give directions to the parties to protect the security of any information shared, stored or processed in relation to the arbitration, taking into account the circumstances of the case; and the arbitral tribunal may, after consulting with the parties, make a decision, order or award in respect of any breach of the information security measures agreed by the parties or directed by the arbitral tribunal, pursuant to this Article.
Fees and expenses payable to arbitrators	The 2018 Rules do not contain an express power for HKIAC’s review of an arbitral tribunal’s fees.	Schedule 2, Article 5 of the 2024 Rules introduces a new sub-article that states that HKIAC may review an arbitral tribunal’s fees and expenses, and make adjustments where HKIAC considers it appropriate in the circumstances. Any adjustments made must be communicated to the arbitral tribunal and parties as soon as reasonably possible.
Arbitral tribunal’s fee rates	Schedule 2, Article 9 of the 2018 Rules states that an arbitrator shall be remunerated at an hourly rate for all work reasonably carried out in connection with the arbitration.	Schedule 2, Article 9 of the 2024 Rules further clarifies the period that the arbitrator must be renumerated for, being from the date of the arbitrator’s confirmation or appointment until the final decision, award or other, unless HKIAC determines otherwise.
Cancellation or postponement fees	Schedule 2, Article 10 of the 2018 Rules provides that where bookings are cancelled under certain circumstances (including at the request of the arbitral tribunal, or at a party’s request), HKIAC will not charge a fee or will only charge a percentage of the fee.	Schedule 2, Article 10 of the 2024 Rules provides that where bookings are either cancelled or postponed under certain circumstances, HKIAC will not charge a fee or will only charge a percentage of the fee.
Emergency arbitrator procedure	Under Schedule 4 of the 2018 Rules, an emergency arbitrator has the power to rule on objections that the arbitrator has no jurisdiction.	In addition to ruling on objections, Schedule 4, Article 10 of the 2024 Rules provides that emergency arbitrators have the power to make any preliminary or interim order that the arbitrator deems necessary before making the Emergency Decision.