Hong Kong Promoted to Prime Center for Arbitration

The new Hong Kong Arbitration Ordinance enacted in November last year will take effect on June 1, 2011, the Department of Justice announced. The new Ordinance that introduces a unitary arbitration regime will largely benefit arbitration parties and make Hong Kong become a more preferred location for arbitration – especially in the Asia Pacific Region.

The new Arbitration Ordinance – Chapter 609 of the Laws of Hong Kong – will replace Chapter 341, the current Arbitration Ordinance. The most significant change the new Ordinance brought is that it cleared out the distinction in applicable rules for international and domestic arbitrations.

Under the current Ordinance, domestic arbitrators receive more intervention from the court and enjoy less party autonomy, compared to international arbitrators who have businesses placed in different states or outside the arbitration place. The new arbitration framework will enable unified rules to be applied to both types of arbitrators.

As Hong Kong has been making continuous attempts to reduce the differences between its regional arbitration system and the international regime, the new Ordinance directly drafted provisions of the Model Law – a United Nations law that provides an internationally recognized arbitration framework – into its body this time, making it more user-friendly. The current Ordinance was also amended to apply the Model Law principles back in 1992.

One of those newly-added provisions is the stipulation on the parties’ obligation to keep the arbitral proceedings and awards confidential. It grants the court the power to order the concealment of information that a party reasonably wishes to keep confidential, although a judgment or report on court proceedings may be published. The arbitral tribunal is also given powers to make interim orders in case of potential adverse consequences following noncompliance.

Some of the current provisions that do not appear in the Model Law are retained in the new Ordinance. For example, it still requires a party to broadly disclose relevant documents or information during the arbitration, by empowering the arbitral tribunal to directly discover documents or deliver interrogatories.

The new Ordinance also retains the provisions on enforcement of foreign arbitral awards in Hong Kong. The successful party will see an arbitral award made pursuant to the Model Law still enforceable in other jurisdictions, including mainland China.

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