1 Legal framework 1.1 What is the relevant legislation on arbitration in your jurisdiction? Are there any significant limitations on the scope of the statutory regime - for example, does it govern oral arbitration agreements? The Arbitration Ordinance (AO) (Cap 609) applies to arbitration under an arbitration agreement, regardless of whether the agreement is entered into in Hong Kong or the place of arbitration is in Hong Kong. In order for an arbitration to be valid, the AO adopts Option I of Article 7 of the UNCITRAL Model Law, which requires an arbitration agreement to be "in writing" (see question 10).
Pursuant to Section 6 of the AO, the AO applies to the government and the offices set up by the Central People's Government in the Hong Kong Special Administrative Region. However, this is subject to the common law defence of crown immunity or sovereign immunity.
1.2 Does this legislation differentiate between domestic arbitration and international arbitration? If so, how is each defined? Before the AO came into effect, Hong Kong used to have rules for two distinct regimes - one for international arbitration and one for domestic arbitration. Since the current AO came into effect, parties may choose between application of provisions in the main body of the AO or application of Schedule 2 provisions. The provisions in the main body of the AO do not distinguish between international and domestic arbitration, whereas Schedule 2 of the AO allows parties to opt in certain provisions from the former domestic arbitration regime.
1.3 Is the arbitration legislation in your jurisdiction based on the UNCITRAL Model Law on International Commercial Arbitration? The AO largely replicates the UNCITRAL Model Law on International Commercial Arbitration and reflects Hong Kong's position as a Model Law jurisdiction.
The AO makes numerous references to the UNITRAL Model Law. For instance, Section 4 of the AO stipulates that: "[t]he provisions of the UNCITRAL Model Law that are expressly stated in this Ordinance as having effect have the force of law in Hong Kong subject to the modifications and supplements as expressly provided for in this Ordinance." In a number of sections that follow, the AO typically reproduces the exact wording of the Model Law article in the first subsection of each relevant AO section. The subsections that follow the quotation of the Model Law provision supplement, modify or otherwise qualify the application of that Model Law provision.
The drafting structure of the AO is designed to be self-contained and user friendly such that users of arbitration would not have to cross-refer to the Model Law if such needs arose. Therefore, Schedule 1 of the AO reproduces the full text of the UNITRAL Model Law, sets out cross-references to the relevant provisions in the AO and distinguishes the provisions that have not been adopted in the AO.
1.4 Are all provisions of the legislation in your jurisdiction mandatory? The AO contains relatively few provisions that cannot be excluded by the parties.
Certain mandatory rules apply, including the following:
The parties must be treated equally, and the tribunal must be independent and act fairly and impartially towards the parties (Section 46). The arbitration agreement must be in writing (Section 19). The tribunal has the power to make orders for security for costs, discovery, the collection of evidence and the preservation of property (Section 56). The court has the power to order recovery of the tribunal's fees (Section 62). The tribunal has the power to withhold an award for non-payment of the arbitrators' fees and expenses (Section 78). The court has the power to set aside an award (Section 81). 1.5 Are there any current plans to amend the arbitration legislation in your jurisdiction? For issues on third-party funding, see question 37.
1.6 Is your jurisdiction a signatory to the New York Convention? If so, have any reservations been made? Hong Kong is a party to the New York Convention as a result of China extending the territorial application of this convention to Hong Kong.
Upon acceding to the New York Convention, China included two reservations: the reciprocity principle and the 'commercial' reservation.
The reciprocity principle means that China, and as a result Hong Kong, applies the convention only to the recognition and enforcement of awards made in the territory of states considered as contracting states under the New York Convention.
The commercial reservation means that only enforcement of arbitral awards arising out of commercial disputes, whether contractual or not, is permitted in China, and thus Hong Kong, under the New York Convention. Disputes between foreign investors and host states are expressly excluded.
1.7 Is your jurisdiction a signatory to any other treaties relevant to arbitration? The Hong Kong Department of Justice website lists all of the treaties that are in force and are applicable to Hong Kong (www.doj.gov.hk/eng/laws/interlaw.html).
In addition to the New York Convention, Hong Kong is a party to a number of other treaties and conventions relevant to arbitration, including:
the Hague Convention for the Pacific Settlement of International Disputes 1899; the Hague Convention for the Pacific Settlement of International Disputes 1907; the Statute of the Hague Conference on Private International Law 1951 (as amended 2007); the Vienna Convention on the Law of Treaties 1969; the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States 1965; the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters 1970; and 16 bilateral investment treaties. 2 Arbitrability and restrictions on arbitration 2.1 How is it determined whether a dispute is arbitrable in your jurisdiction? The following types of dispute are not arbitrable:
actions in rem against ships; criminal cases; competition and antitrust disputes; divorce proceedings; guardianship applications; and matters reserved for resolution by state agencies and tribunals (eg, taxation, immigration and national welfare entitlements). 2.2 Are there any restrictions on the choice of seat of arbitration for certain disputes? There is no default seat requirement under the Arbitration Ordinance (AO). The parties are free to agree on the place of arbitration (Section 48 of the AO, adopting Article 20 of the Model Law). Failing such agreement, the place of arbitration will be determined by the tribunal having regard to the circumstances of the case, including the convenience of the parties.
3 Arbitration agreement 3.1 What are the validity requirements for an arbitration agreement in your jurisdiction? Section 19 of the Arbitration Ordinance (AO) (adopting Option I of Article 7 of the Model Law) requires that an arbitration agreement be in writing.
The term 'in writing' is broadly defined and includes an arbitration agreement whose content is recorded in any form - even if the arbitration agreement itself has been concluded orally, by conduct or by other means.
The definition expressly includes:
electronic communications; an agreement in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by the other; and a reference in a contract to any document containing an arbitration clause, provided that the reference is such as to make that clause part of the contract. 3.2 Are there any provisions of legislation or any other legal sources in your jurisdiction concerning the separability of arbitration agreements? Yes. Section 34(1) of the AO (adopting Article 16(1) of the Model Law) provides that the arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.
3.3 Are there provisions on the seat and/or language of the arbitration if there is no agreement between the parties? There is no default seat under the AO. The parties are free to agree on the place of arbitration...