South China International Arbitration Center (Hong Kong) (SCIAHK) published its first set of arbitration rules

The South China International Arbitration Center (Hong Kong) recently published its first set of arbitration rules for arbitrations administered by the SCIAHK (SCIAHK Rules) which came into force on 1 May 2022.

The SCIAHK Rules are based on the UNCITRAL Arbitration Rules (as revised in 2010, with new Article 1, paragraph 4, as adopted in 2013) (UNCITRAL Rules 2013) with modifications clearly listed in Appendix 5 under the subject “Notes to these Rules”. New articles to the UNCITRAL Rules 2013 are conveniently numbered as Article xA or xB.

The SCIAHK Rules are a set of modern international arbitration rules. By following the UNCITRAL Rules 2013, they are different from the typical arbitration institutional rules in mainland China. They have incorporated many procedures developed in the past decade to narrow the inherent limits of arbitration as a private process and to increase arbitration proceedings’ overall efficiency. These procedures include, for example, rules for joinder of additional parties (Article 17(5)), consolidation of multiple arbitrations (Article 17(6)), concurrent arbitrations (Article 17(7)) and commencement of a single arbitration under multiple contracts (Article 17(8)). They also include rules for expedited procedures for disputes below the monetary threshold of HK$10,000,000 (Article 23A) and summary dismissal of manifestly unmeritorious claims or claims manifestly outside the jurisdiction of the tribunal (Article 23B). Wide powers for the tribunal to order interim relief, and the emergency arbitrator procedure, are also available under Article 26(10) and Appendix 1 of the SCIAHK Rules.

We summarize below some other aspects of the SCIAHK Rules which may be of interest to arbitration users.

Composition of the arbitral tribunal (Articles 7, 8, 10 and 10A)

In the absence of agreement, the default number of arbitrators under the SCIAHK Rules is three. SCIAHK adopts a list-procedure as the default means to appoint the sole arbitrator or the presiding arbitrator in a three-member tribunal.

SCIAHK maintains a panel of arbitrators. However, differently from other typical institutional rules in mainland China which require parties to nominate arbitrators from their panel, the SCIAHK Rules do not impose the same requirement. The parties are free to nominate arbitrators both from and outside of the panel.

Use of information technology in arbitration proceedings (Article 17A) 

The SCIAHK Rules expressly provide the SCIAHK and the arbitral tribunal with the power to conduct the arbitration proceedings by using information technology, unless the parties agree otherwise. To be more specific, the arbitral tribunal may decide that all communications be made by electronic means, an oral hearing be conducted virtually via conference call or videoconference and examination of witnesses and documents be done virtually. It is likely that this development was triggered by the COVID-19 pandemic during which the use of information technology has been tested and proven to be effective in arbitration proceedings. It is certainly a welcome development, extending the use of such technology beyond the pandemic where appropriate.

Seat and language (Articles 18 and 19)

The default position under the SCIAHK Rules is that the seat of arbitration shall be Hong Kong if the parties have not otherwise agreed. As to the language of the arbitration, the SCIAHK Rules allow the parties to communicate either in Chinese or in English in the absence of an agreement before the constitution of the tribunal. The tribunal shall, promptly after its appointment, determine the appropriate language to be used in the proceedings.

Mediation (Article 30A) 

The parties may apply to the mediator of their own choice, the SCIAHK or other meditation institutions recognized by the SCIAHK for mediation. More importantly, the SCIAHK Rules allow for the arbitral tribunal to conduct the mediation if the parties agree. This procedure is generally referred to as the “arb-med” procedure which is widely adopted by mainland China arbitration commissions. The “arb-med” procedure used to raise concerns that the arbitrators’ legal judgment could be prejudiced by being exposed to the information exchanged in the mediation. The SCIAHK Rules seek to address such concerns by not allowing acceptance or opposition by parties or the tribunal during mediation to be invoked as a ground for supporting any claims in the subsequent arbitration should the mediation fail. It is further provided that if an arbitrator has obtained any confidential information when he/she is conducting the meditation, the arbitrator should disclose such information to all other parties should he/she consider that the confidential information is material to the outcome of the arbitration. 

Optional appellate arbitration procedure (Article 39A, Appendix 2) 

The SCIAHK Rules provide for an appeal procedure if all parties agree in writing to this optional procedure provided that the laws of the seat of the arbitration do not prohibit the appeal procedure. Under the procedures set out in Appendix 2, the appellate party shall apply for an appeal within 15 days of receiving the original award and the appeal will be heard by a different tribunal comprised of three members unless the parties otherwise agree. The introduction of an appellate procedure in arbitration is a very novel topic. It would be interesting to see the SCIAHK’s appellate arbitration procedure adopted in a real case in the future. 

Costs of SCIAHK arbitration 

SCIAHK charges HK$5,000 as a registration fee and administrative fees are charged in accordance with the fee schedule in Appendix 3, Article 2 of the SCIAHK Rules. The SCIAHK’s administrative fees are capped at HK$315,300 for arbitrations with a disputed amount of HK$400,000,001 or more. 

Under the SCIAHK Rules, tribunals charge either according to a fee schedule or based on hourly rates. The default way for arbitrators to charge fees is by the fee schedule under Appendix 4, Article 1. An arbitrator’s hourly rate is capped at HK$6,500 per hour unless parties otherwise agree with the arbitrators. 

Comments 

It is worth noting that, in September 2019, the PRC Supreme People's Court confirmed the SCIAHK as one of the institutions in Hong Kong on the list of qualified arbitral institutions under the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings (Interim Measures Arrangement). Parties can therefore apply for preservation orders from the PRC courts under the Interim Measures Arrangement in aid of their SCIAHK arbitration in Hong Kong. 

Whilst related, the SCIAHK is different from the Shenzhen Court of International Arbitration. It is a relatively new arbitration institution which administers arbitrations seated in Hong Kong. The SCIAHK Rules are modern and provide parties with means to resolve disputes in an effective and efficient manner. We look forward to seeing how they are adopted in real cases.