Skuld legal advisory on arbitration rule differences in England and HK

Skuld has issued a Member Advisory on the differences between arbitration in Hong Kong and London. Assistant vice-president and lawyer Rita Lau noted that, while London arbitration is the most popular platform for resolution of charterparty disputes, where the parties involved are based in Hong Kong or Mainland China it is quite common for the parties to opt for arbitration in Hong Kong. Where the seat of arbitration is London, the procedure is governed by the Arbitration Act 1966 of England and Wales. Where the seat of arbitration is Hong Kong, the procedure is governed by the Arbitration Ordinance, Cap 609.

In a London arbitration, if there is no prior stipulation as to the number of arbitrators, the tribunal consists of a sole arbitrator. However, in a Hong Kong arbitration, if the charterparty does not specify the number of arbitrators, the matter is referred to the Hong Kong International Arbitration Centre (HKIAC) who determine whether the matter should be referred to one or three arbitrators. The HKIAC charges a HKD8,000 ($1,050) fee for this service.

If it is decided that there will be one arbitrator, but the counterparties cannot agree on who this should be, there are once again differences between English and Hong Kong law.

In a London arbitration Skuld notes that a claimant may face “considerable difficulty” if the opponent refuses or fails to agree on an arbitrator. An application has to be made to the English court for the appointment of an arbitrator, which then needs to be served on the opponent, who may be resident outside the jurisdiction. If this is the case, the claimant must obtain the leave of the court to serve the proceedings. The requirements for service of documents are far more stringent in court proceedings than in arbitration: service cannot be effected by email, fax or post (which they can be in arbitration proceedings). Service within the EU is relatively straightforward, but if service is to be effected in a country where translation of all relevant documents is necessary and/or where there is a complicated service procedure “the process may well take months and be costly”.

In Hong Kong these complications do not arise. No matter where the domicile of the opponent, the claimant can apply to the HKIAC for the appointment of a sole arbitrator. The HKIAC will either appoint the claimant’s chosen arbitrator or one of its own choice.

Finally, when it comes to an appeal, the rules are tougher in Hong Kong than in England. In London a party can challenge an arbitration award on the grounds of the tribunal’s lack of substantive jurisdiction or serious irregularity affecting the tribunal, the proceedings or the award. The law also provides for an appeal against an award on a question of law.

In Hong Kong there are very limited circumstances in which a party to a Hong Kong arbitration may challenge or appeal the tribunal’s award. Unlike London arbitration, a party in a Hong Kong arbitration has no right to appeal against an award on the ground that the tribunal has erred in law. The full advisory is available at https://www.skuld.com/topics/legal–defence/defence/comparison-of-hong-kong-and-london-arbitration/