6.01  The commencement of an arbitration is the starting point for the arbitral process and has important legal implications. The fact that an arbitration has commenced and the time of commencement may be relevant to the following questions:

1. (1)  whether a claim is brought within any limitation period specified in the relevant contract or legislation;¹

2. (2)  which version of the arbitration legislation at the seat of the arbitration applies;²

3. (3)  which version of the procedural rules specified in the arbitration agreement applies;³

4. (4)  which legal regime of interim measures (ie pre- or post-arbitration interim measures) applies;⁴ and

5. (5)  whether the condition for pursuing certain interim measures has been satisfied.⁵

6.02  This chapter discusses the process for commencing an arbitration under the HKIAC Rules (2018) and the procedural steps that follow. Section A outlines the procedure and requirements for commencing an arbitration (ie the submission of a Notice of Arbitration to HKIAC). Section B outlines the procedure and requirements for submitting an Answer to the Notice of Arbitration (Answer). Section C discusses the two types of fees charged by HKIAC in arbitrations under the HKIAC Rules (2018), namely the Registration Fee and the Administrative Fee.

The party initiating arbitration (the ‘Claimant’) shall communicate a Notice of Arbitration to HKIAC and the other party (the ‘Respondent’).

6.03  To commence an arbitration under the HKIAC Rules (2018), the claimant must deliver copies of a Notice of Arbitration to HKIAC and the respondent. This document puts HKIAC and the respondent on notice that the claimant has commenced an arbitration against the respondent under the HKIAC Rules (2018).

6.04  The practice of HKIAC has been for the claimant to take responsibility for delivering its Notice of Arbitration to the respondent.⁶ Delivery of the Notice of Arbitration is a critical step in an arbitration and any defect in such delivery may have serious consequences.⁷ Given the claimant’s dealings with the respondent prior to their dispute, the claimant (particularly when it is advised by counsel) should be well positioned to ensure effective delivery of the Notice of Arbitration to the respondent. After the claimant delivers the Notice of Arbitration to the respondent, HKIAC requires the claimant to provide confirmation of delivery together with documentary verification to allow HKIAC to confirm whether the Notice of Arbitration was delivered in accordance with the HKIAC Rules (2018) and to identify the date on which the respondent received the Notice of Arbitration.⁸

6.05  While the HKIAC Rules (2013) also require the claimant to deliver the Notice of Arbitration to the respondent, this requirement is not express.⁹ Article 4.1 of the HKIAC Rules (2018) makes it clear that the claimant is required to deliver the Notice of Arbitration to the respondent.

6.06  The Notice of Arbitration must be delivered to HKIAC and the respondent at the addresses and by the methods permitted in the HKIAC Rules (2018). Articles 3.1 and 3.2 of the HKIAC Rules (2018) set out the requirements for the delivery of written communications.¹⁰ These requirements apply to the delivery of the Notice of Arbitration.

6.07  In practice, the claimant often delivers electronic copies of the Notice of Arbitration to HKIAC and the respondent by email, followed by physical copies by hand, registered post, or courier service.¹¹ Under extenuating circumstances, HKIAC may allow for the Notice of Arbitration to be delivered by email only.

6.08  After receipt of the Notice of Arbitration and any supporting materials, HKIAC will review the documents and take the following steps:

1. (1)  register the case and assign a case reference;¹²

2. (2)  assign a case manager¹³ who serves as HKIAC’s primary point of contact for the parties and the arbitral tribunal;

3. (3)  assess, on a prima facie basis, whether HKIAC is able to accept and proceed with the arbitration and identify the applicable rules;

4. (4)  if the HKIAC Rules (2018) apply, examine whether the Notice of Arbitration complies with the requirements under Article 4.3 and check whether the registration fee has been paid under Article 4.4; and

5. (5)  communicate with the parties in respect of the next steps of the arbitration.

6.09  HKIAC is typically able to process a Notice of Arbitration and communicate the next steps to the parties within two business days after its receipt of the Notice of Arbitration.

An arbitration shall be deemed to commence on the date on which a copy of the Notice of Arbitration is received by HKIAC. For the avoidance of doubt, this date shall be determined in accordance with the provisions of Articles 3.1 to 3.5.

6.10  The date of commencement of an arbitration under the HKIAC Rules (2018) is the date on which HKIAC receives a copy of the Notice of Arbitration. This is consistent with the common practice of determining the date of commencement of an institutional arbitration.¹⁴ This practice promotes certainty and efficiency of determining the commencement date of an arbitration because the date on which the administering institution receives the Notice of Arbitration is relatively easy to establish.

6.11  The date of commencement of an ad hoc arbitration is typically determined by reference to the date on which the respondent receives the Notice of Arbitration. For example, Article 21 of the Model Law, given effect to by section 49(1) of the Arbitration Ordinance, provides that ‘[u]nless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent’.¹⁵ Since this provision is subject to any different agreement between the parties (including any institutional rules agreed by them), where an arbitration is governed by both the HKIAC Rules (2018) and the Arbitration Ordinance, it (p. 96) is commenced on the date when the Notice of Arbitration is received by HKIAC rather than the respondent.

6.12  Articles 3.1 and 3.5 of the HKIAC Rules (2018) contain rules to determine when a written communication is received by one or more recipients.¹⁶ These rules apply to the determination of the date of commencement of an arbitration under Article 4.2. For example, if the claimant delivers the Notice of Arbitration to HKIAC through multiple methods of communications pursuant to Article 3.1 or 3.2, the date of commencement is deemed to be the earliest day on which HKIAC receives the Notice of Arbitration through one of the methods pursuant to Article 3.3.

6.13  As noted at paragraph 6.01 above, the date of commencement has several legal implications. The claimant may strategically choose a particular date to commence an arbitration to avoid or benefit from those legal implications.

6.14  When commencing an arbitration in Hong Kong, the claimant should consider whether its claim is brought within any limitation period specified in the relevant contract or under Hong Kong law. If a claim is brought outside of a contractual or statutory time limit, the claimant may face a defence that the claim is time-barred.¹⁷

6.15  Section 14 of the Arbitration Ordinance sets out the primary rules on the limitation of actions in respect of arbitral proceedings under Hong Kong law. Section 14 provides that:¹⁸

1. (1)  The Limitation Ordinance (Cap 347) and any other Ordinance relating to the limitation of actions (limitation enactments) apply to arbitrations as they apply to actions in the court.

2. (2)  For the purposes of subsection (1), a reference in a limitation enactment to bringing an action is to be construed as, in relation to an arbitration, commencing the arbitral proceedings.

3. (3)  Despite any term in an arbitration agreement to the effect that no cause of action may accrue in respect of any matter required by the agreement to be submitted to arbitration until an award is made under the agreement, the cause of action is, for the purposes of the limitation enactments (whether in their application to arbitrations or to other proceedings), deemed to accrue in respect of that matter at the time when it would have accrued but for that term.

4. (4)  If a court orders that an award is to be set aside, the period between—

   1. (a)  the commencement of the arbitral proceedings; and

   2. (b)  the date of the order of the court setting aside the award,

      must be excluded in computing the time prescribed by a limitation enactment for the commencement of proceedings (including arbitral proceedings) with respect to the matter submitted to arbitration.

(p. 97) 6.16  Section 4 of the Limitation Ordinance (Cap 347) (the Limitation Ordinance) sets out the limitation periods for bringing actions of contract or tort and certain other actions. In particular, section 4(1) provides for a six-year time limit for bringing actions founded on ‘simple contract or on tort’ and section 4(3) provides for a twelve-year time limit for bringing actions based on ‘a specialty’.¹⁹ Both time limits begin to run from the date on which the cause of action arises.

6.17  The failure to consider a limitation issue may have significant implications on the enforceability of an arbitral award. In A v B,²⁰ the Court of First Instance (CFI) considered whether an arbitral award should be set aside because the arbitrator had failed to deal with a limitation defence raised by the respondent. Mimmie Chan J held that the failure was sufficiently serious so as to justify the setting side of the award and made the following remarks:²¹

6.18  Notwithstanding the above, Chan J considered that the limitation defence was a separate and independent consideration in the sense that a finding on this issue could lead to a different outcome irrespective of the arbitrator’s decision on the merits. Therefore, the judge ordered remission of the award to the arbitrator for him to consider this issue.²²

6.19  In addition to limitation issues, the commencement date of an arbitration may also be relevant to the determination of which version of the procedural law and rules applies to the arbitration. For example, the Arbitration Ordinance applies generally to arbitral proceedings commenced in Hong Kong on or after 1 June 2011.²³ The HKIAC Rules (2018) apply generally to arbitral proceedings as defined in Article 1.1 in which the Notice of Arbitration is submitted to HKIAC on or after 1 November 2018.²⁴

6.20  The date on which an arbitration is commenced may also be relevant to the availability of certain types of interim measures. In an arbitration seated in Hong Kong under the HKIAC Rules (2018), a party may apply for interim measures from multiple authorities before and after the commencement of the arbitration. Prior to the commencement of the arbitration, a party may apply for interim measures from an emergency arbitrator,²⁵ the CFI,²⁶ or the (p. 98) mainland Chinese courts.²⁷ On or after the commencement of the arbitration, a party may apply for interim measures from an emergency arbitrator,²⁸ the arbitral tribunal,²⁹ the CFI,³⁰ or the mainland Chinese courts.³¹

The Notice of Arbitration shall include the following:

1. (a)  a request that the dispute be referred to arbitration;

2. (b)  the names and (in so far as known) the addresses, facsimile numbers and/or email addresses of the parties and their representatives;

3. (c)  a copy of the arbitration agreement invoked;

4. (d)  a copy of the contract(s) or other legal instrument(s) out of or in relation to which the dispute arises, or reference thereto;

5. (e)  a description of the general nature of the claim and an indication of the amount involved, if any;

6. (f)  the relief or remedy sought;

7. (g)  a proposal as to the number of arbitrators (i.e. one or three), if the parties have not previously agreed thereon;

8. (h)  the Claimant’s proposal and any comments regarding the designation of a sole arbitrator under Article 7, or the Claimant’s designation of an arbitrator under Article 8;

9. (i)  the existence of any funding agreement and the identity of any third party funder pursuant to Article 44; and

10. (j)  confirmation that copies of the Notice of Arbitration and any supporting materials included with it have been or are being communicated simultaneously to the Respondent by one or more means of service to be identified in such confirmation.

6.21  Article 4.3 prescribes the required contents of the Notice of Arbitration. The required contents provide HKIAC with the necessary information to take the following steps:

1. (1)  assess whether HKIAC will administer the arbitration pursuant to Article 1.1 or proceed with the arbitration on a prima facie basis pursuant to Articles 19.4 and 19.5;

2. (2)  calculate the initial deposit for HKIAC’s Administrative Fee pursuant to section 2 of Schedule 1;

3. (p. 99) (3)  set directions regarding the number of arbitrators (if not previously agreed by the parties) or the process for constituting the arbitral tribunal pursuant to any bespoke procedure agreed by the parties or Article 7 or 8, as applicable;

4. (4)  consider any procedural applications made before the constitution of the arbitral tribunal, such as applications for the joinder of an additional party under Article 27, consolidation under Article 28, or the Expedited Procedure under Article 42; and

5. (5)  contact all parties during the course of the arbitration.

6.22  The required contents under Article 4.3 also allow the respondent to prepare its response to the claim in the Answer pursuant to Article 5.

6.23  The HKIAC Rules (2018) include no requirement as to the form of the Notice of Arbitration except that it must be in writing.³² The Notice of Arbitration is not required to be signed, stamped, or notarized, nor is it required to be presented in any particular style or format. In practice, the Notice of Arbitration is often a relatively brief document in which the claimant describes the nature of its claim and reserves its right to particularize and substantiate its case in subsequent written submissions.

6.24  Each of the required contents of the Notice of Arbitration is discussed below.

6.25  The first and foremost requirement is that the Notice of Arbitration must include a request to refer the dispute to arbitration. Such a request should be expressed in clear and unequivocal terms. In HKIAC’s cases, the claimant has used different formulations to communicate a request for arbitration, such as ‘application for arbitration’, ‘demand for arbitration’, or ‘submission to arbitration’. HKIAC will treat these formulations as a request for arbitration for the purposes of Article 4.3(a), so long as the claimant’s intention to arbitrate can be identified.

6.26  It bears noting that Article 21 of the Model Law, given effect to by section 49(1) of the Arbitration Ordinance, requires the delivery of ‘a request for that dispute to be referred to arbitration’ when a party commences an arbitration. Article 4.3(a) of the HKIAC Rules (2013) requires the Notice of Arbitration to include a ‘demand that the dispute be referred to arbitration’. That language has been amended to ‘a request that the dispute be referred to arbitration’ in Article 4.3(a) of the HKIAC Rules (2018) to make it consistent with section 49(1) of the Arbitration Ordinance.

6.27  The inclusion of a request for arbitration in the Notice of Arbitration is particularly important where the claimant commences an arbitration under a clause that provides for multiple tiers of dispute resolution mechanisms. In that context, it is important for the claimant to identify clearly which dispute resolution mechanism it intends to invoke. If it intends to invoke arbitration, it must state that clearly in the Notice of Arbitration.

6.28  The Notice of Arbitration must provide the names and, in so far as available, the contact details of all parties and their representatives (if any). The contact details must include physical addresses, facsimile numbers, and/or email addresses. This requirement is satisfied if the claimant provides any of these contact details. In practice, it is common for the claimant to (p. 100) provide both physical and email addresses of the parties in the Notice of Arbitration, which are two common methods used to deliver written communications in arbitrations under the HKIAC Rules (2018).

6.29  After receipt of the parties’ contact details in the Notice of Arbitration, HKIAC will require verification from the claimant that the contact details provided for the respondent are those recognized under Article 3.1(b), (c) or (d) or 3.2 of the HKIAC Rules (2018), namely any of the following:

1. (1)  the address, facsimile number, and/or email address of the respondent as specified in any applicable agreement between the parties; or

2. (2)  if the address referred to at (1) above is not available, the address, facsimile number, and/or email address which the respondent holds out to the world at the time of delivery of the Notice of Arbitration; or

3. (3)  if the addresses referred to at (1) and (2) above are not available, the last known address, facsimile number, and/or email address of the respondent.

6.30  To provide the proof required by HKIAC, the claimant may, for example, point to any clause of the relevant agreement between the parties that specifies the respondent’s contact details or provide copies of the respondent’s official website, regulatory filings, public announcements, or past correspondence with the claimant which include the respondent’s contact information.³³

6.31  It is advisable that the claimant provides proof of the respondent’s contact details at the time of submitting the Notice of Arbitration to HKIAC. This would expedite the process for HKIAC to verify the respondent’s contact details in accordance with Article 3.1 or 3.2 of the HKIAC Rules (2018).

6.32  Where the Notice of Arbitration includes the name and contact details of a purported representative of the respondent, HKIAC will request the respondent to confirm the identity and contact details of its representatives in the arbitration (if any) and request the purported representative to confirm whether it represents the respondent in the arbitration.

6.33  As a matter of general practice, HKIAC does not require the claimant or its representative to provide proof of authority at the time the Notice of Arbitration is submitted. However, HKIAC, the arbitral tribunal, or emergency arbitrator may require the claimant or its representative to provide such proof as it considers appropriate.³⁴

6.34  The claimant must provide a copy of the arbitration agreement under which the arbitration is commenced when it submits the Notice of Arbitration. If the claimant seeks to commence a single arbitration under multiple contracts pursuant to Article 29 of the HKIAC Rules (2018), it must provide copies of all relevant arbitration agreements. In practice, the claimant often provides a full copy of the relevant contract(s) that includes the arbitration agreement(s) relied upon by it.

(p. 101) 6.35  A mere reference to or a quote of the arbitration agreement invoked in the Notice of Arbitration does not satisfy the requirement of Article 4.3(c).

6.36  As noted at paragraph 4.02 of Chapter 4, an ‘arbitration agreement’ is defined in Article 7(1) of the Model Law, given effect to by section 19(1) of the Arbitration Ordinance. Article 7(2) and (3) of the Model Law, given effect to by section 19(1) of the Arbitration Ordinance, provides that an arbitration agreement must be in writing and it is in writing if ‘its content is recorded in any form, whether or not the arbitration agreement or contract has been concluded orally, by conduct, or by other means’. Article 7(4) to (6) of the Model Law and section 19(2) and (3) of the Arbitration Ordinance go on to set out several situations in which the writing requirement of an arbitration agreement is satisfied.³⁵

6.37  The provision of the arbitration agreement is crucial for HKIAC’s performance of the following functions:

1. (1)  assessing whether HKIAC will administer the arbitration pursuant to Article 1.1 or proceed with the arbitration on a prima facie basis pursuant to Article 19.4 and 19.5;

2. (2)  identifying signatories to the arbitration agreement and the proper parties to the arbitration on a prima facie basis;

3. (3)  identifying any procedural matters that have been agreed by the parties, for example, the seat of arbitration, the governing law of the arbitration agreement, the language of the arbitration, the number of arbitrators, the procedure for appointing arbitrators, and/or any qualifications of the arbitrator(s);

4. (4)  identifying the date of the arbitration agreement to ascertain whether certain provisions of the HKIAC Rules (2018) apply to the arbitration;³⁶

5. (5)  deciding whether, prima facie, an additional party is bound by the arbitration agreement for the purposes of a request for joinder submitted before the constitution of the arbitral tribunal under Article 27.1(a); and

6. (6)  where multiple arbitration agreements are submitted, deciding whether the arbitration agreements are compatible for the purposes of a request for consolidation under Article 28.1(c) or a prima facie decision as to whether a single arbitration under multiple contracts has been properly commenced under Article 29.³⁷

6.38  Article 4.3(d) requires the claimant to provide a copy of or a reference to the contract(s) or other legal instrument(s) under which the dispute arises. If the claimant seeks to commence a single arbitration under multiple contracts pursuant to Article 29 of the HKIAC Rules (2018), it must provide copies of or references to all relevant contracts.

6.39  The reference to ‘other legal instrument(s)’ envisages disputes that may arise under legal instruments other than contracts. Such legal instruments may include, for example, deeds, (p. 102) certificates, bonds, legislation, or treaties. HKIAC has administered arbitrations commenced under legal instruments other than contracts.³⁸

6.40  While Article 4.3(d) of the HKIAC Rules (2013) requires only a reference to the underlying contract(s) or legal instrument(s), Article 4.3(d) of the HKIAC Rules (2018) requires a copy of or a reference to such contract(s) or legal instrument(s). HKIAC generally prefers to have a full copy of the contract(s) or legal instrument(s) in order to acquire a better understanding of the relevant provisions, underlying transaction(s), and the value of the dispute. A full copy of the contract(s) or legal instrument(s) allows HKIAC to identify any provisions therein that may affect the conduct of the arbitration, for example, any provisions naming the parties to the contract(s) or legal instrument(s), identifying any other related contract(s) or legal instrument(s), specifying any agreed methods of communications, and addressing the interplay between different language versions.

6.41  Where it is not feasible to provide a full copy of the contract(s) or legal instrument(s) at the time of commencing the arbitration, the claimant may provide a reference to the contract(s) or legal instrument(s) for the purposes of Article 4.3(d). However, HKIAC or the arbitral tribunal may request the claimant to provide a full copy at a later stage of the arbitration.

6.42  The Notice of Arbitration must include a description of the general nature of the claim. In practice, such a description often includes a brief summary of the background to the claim and the key issues in dispute. Article 4.3(e) does not prescribe the level of detail for such a description. However, sufficient information regarding the claim should be provided to enable the respondent to provide a meaningful response and to allow HKIAC to assess the complexity and nature of the dispute in order to make certain procedural decisions³⁹ or appoint an arbitrator⁴⁰ under the HKIAC Rules (2018).

6.43  The Notice of Arbitration must also indicate the amount in dispute, if available. If the claimant seeks non-monetary relief, the claimant should provide a reasonable estimate of the value of its claim. If the claimant is unable to provide such an estimate, HKIAC will produce its own reasonable estimate after consulting all parties and reviewing the documents submitted by them.⁴¹

6.44  HKIAC takes into account the amount in dispute in making several decisions: (1) fixing the initial deposit for its Administrative Fees pursuant to Schedule 1; (2) determining the arbitral tribunal’s fees if Schedule 3 applies; (3) determining the number of arbitrators pursuant to Article 6.1; (4) appointing an arbitrator pursuant to Article 7 or 8; and (5) deciding whether a party is eligible to apply for the Expedited Procedure pursuant to Article 42.1(a).

6.45  At the time of commencing an arbitration, the claimant must specify the relief or remedy sought by it in its Notice of Arbitration. These are matters which the claimant submits to the arbitral tribunal for determination and the respondent is required to respond to these matters during the arbitration.

6.46  It is not permissible for the claimant to commence an arbitration first and reveal its relief or remedy sought at a later stage. However, the claimant may amend or supplement its claim at a later stage with leave of the arbitral tribunal.⁴²

6.47  A party may seek any type of relief or remedy, provided that such relief or remedy is within the scope of the arbitration agreement and permitted under the applicable law. In arbitrations under the HKIAC Rules (2018), parties have sought a wide range of relief and remedies, including but not limited to:

1. (1)  an order to pay a sum due under a contract or damages for breach of contract;

2. (2)  an order for specific performance (eg transfer of shares or trademarks, the reinstatement/removal of a director to/from the board of a company, or the production of financial documents);

3. (3)  a declaration in respect of the validity, termination, rescission, or a breach of contract, the fulfilment of certain conditions specified in a contract, or breach of duty of care or good faith;

4. (4)  injunctive relief (eg restraining a party from exercising its shareholder rights, or enjoining a party from infringing another party’s intellectual property rights);

5. (5)  an order to pay interest of the claim; and

6. (6)  an order to pay the costs of the arbitration.

6.48  Where the parties have not agreed on the number of arbitrators, the claimant is required to propose a number (ie one or three) in the Notice of Arbitration. The respondent will respond to the claimant’s proposal in the Answer.⁴³ If the parties fail to agree on the number of arbitrators within thirty days from the date on which the Notice of Arbitration is received by the respondent, HKIAC shall determine the number of arbitrators.⁴⁴

6.49  The claimant should provide reasons for its proposal on the number of arbitrators.⁴⁵ This will allow the respondent to understand the basis for the claimant’s proposal and provide a meaningful response. A reasoned proposal will also assist HKIAC in determining the appropriate number of arbitrators in the event that the parties cannot agree.

6.50  In some cases, even though the parties have previously agreed on the number of arbitrators, the claimant may wish to propose a different number in the Notice of Arbitration given the nature and complexity of the dispute that has arisen. In such cases, HKIAC will normally set a short time limit for the respondent to comment before its submission of the Answer. If the (p. 104) respondent agrees with the different number proposed by the claimant, the arbitral tribunal will be constituted based on the subsequently agreed-upon number. If the respondent does not agree, the arbitral tribunal will be constituted in accordance with the number originally agreed between the parties.

6.51  Where the parties have not agreed on the number of arbitrators and the Notice of Arbitration does not include any proposal in that respect, HKIAC will set a time limit for the claimant to make such a proposal.⁴⁶ If the claimant fails to do so within the time limit, HKIAC will determine the number of arbitrators in the absence of any party agreement within thirty days after the respondent receives the Notice of Arbitration.⁴⁷

6.52  Where the parties have agreed on the number of arbitrators before the arbitration commences, the claimant shall provide its proposal and any comments with respect to the designation of a sole arbitrator or its designation of an arbitrator for a three-member tribunal in the Notice of Arbitration.

6.53  In cases in which the parties have agreed to refer the dispute to a sole arbitrator, the claimant may choose to propose one or multiple candidates. When doing so, the claimant should include the candidate(s)’ contact details. If, instead of names or in addition to names, the claimant prefers to include requisite qualifications of the potential sole arbitrator or suggest a specific method of appointment (eg the use of a list procedure or direct appointment by HKIAC), it should make those comments known to HKIAC and the respondent. The respondent will respond to the claimant’s proposal and comments in the Answer.⁴⁸ HKIAC will take into account the proposal and any comments made by all parties when confirming or appointing the sole arbitrator.⁴⁹

6.54  If the Notice of Arbitration does not include the claimant’s proposal or comments in respect of the designation of the sole arbitrator, HKIAC will set a time limit for the claimant to make such a proposal or comments.⁵⁰ If the claimant fails to do so within the time limit, HKIAC will appoint the sole arbitrator in the absence of any joint designation by the parties within thirty days after the respondent receives the Notice of Arbitration.⁵¹

6.55  Where the parties have agreed to refer their dispute to a three-member tribunal, the claimant shall designate an arbitrator in the Notice, with his or her contact details, curriculum vitae, and proposed hourly rate. HKIAC will contact the claimant-designated arbitrator to acknowledge that he or she has been designated by the claimant and begin with the confirmation process pursuant to Article 9 of the HKIAC Rules (2018).

6.56  If the claimant fails to designate an arbitrator in the Notice, it will be requested to do so within a time period set by HKIAC.⁵² If the claimant fails to do so within the time limit, HKIAC will appoint the arbitrator on behalf of the claimant.⁵³

(p. 105) 6.57  Where the parties have not agreed on the number of arbitrators before the arbitration commences, the claimant is not required to make a proposal or designation of an arbitrator in the Notice of Arbitration. HKIAC will request the claimant to do so after the number of arbitrators is determined.⁵⁴

6.58  As noted at paragraph 6.50 above, in cases where the claimant proposes a number of arbitrators that is different from the number previously agreed between the parties, HKIAC will set a short time limit for the respondent to respond. Pending the respondent’s response, the claimant is not required to make a proposal or designation of an arbitrator in the Notice of Arbitration. HKIAC will request the claimant to make a proposal or designation in accordance with the applicable appointment procedure following the determination of the number of arbitrators.

6.59  The requirement that the Notice of Arbitration discloses the existence of any funding agreement and the identity of any third party funder corresponding to Article 44 of the HKIAC Rules (2018) is a new provision on disclosure of third party funding of arbitration.⁵⁵

6.60  Article 44.1 requires a funded party to disclose to all other parties, the arbitral tribunal, any emergency arbitrator, and HKIAC: (1) the fact that a funding agreement has been made; and (2) the identity of the third party funder.⁵⁶ Article 44.2 sets out the time at which the disclosure referred to at Article 44.1 shall be made where a funding agreement is entered into before or after the commencement of the arbitration.⁵⁷ These provisions are broadly in line with the relevant amendments to the Arbitration Ordinance in respect of third party funding of arbitration.⁵⁸

6.61  If the claimant entered into a funding agreement before commencing the arbitration, it shall disclose the information required by Articles 4.3(i) and 44.1 in the Notice of Arbitration. The information required to be disclosed is limited to the existence of the funding agreement and the identity of the funder. No other information in respect of the funding agreement is required to be disclosed. The requirement for disclosure in the Notice of Arbitration is consistent with section 98U(2)(a) of the Arbitration Ordinance which requires a funded party to disclose the required information of any funding agreement made on or before the commencement of the arbitration ‘on the commencement of the arbitration’.

6.62  If the claimant did not enter into a funding agreement before commencing the arbitration, it is not required to confirm the non-existence of a funding agreement in the Notice of Arbitration.

6.63  As indicated at paragraphs 6.04–6.07 above, the claimant is required to deliver a copy of the Notice of Arbitration and any supporting materials to the respondent. Article 4.3(j) requires the claimant to provide a confirmation that copies of the Notice of Arbitration and (p. 106) any supporting materials have been or are being delivered to the respondent at the same time when they are being submitted to HKIAC. In doing so, the claimant must also identify one or more means that are used to deliver the Notice of Arbitration and supporting materials. The means of delivery used must be one of those permitted by Article 3.1 or 3.2.⁵⁹

6.64  To satisfy the requirement of Article 4.3(j), a statement of confirmation in the Notice of Arbitration is sufficient. Following receipt of the Notice of Arbitration, HKIAC will request the claimant to provide documentary verification to confirm proper delivery of the Notice of Arbitration to the respondent pursuant to Article 3.1 or 3.2 and establish the date of receipt by the respondent pursuant to Article 3.3 and 3.4.⁶⁰

The Notice of Arbitration shall be accompanied by payment to HKIAC of the Registration Fee as required by Schedule 1.

6.65  At the time of submitting the Notice of Arbitration, the claimant must pay the Registration Fee to HKIAC in the amount set by HKIAC on its website on the date the Notice of Arbitration is submitted.⁶¹

6.66  If the claimant fails to pay the Registration Fee at the time of submitting the Notice of Arbitration, HKIAC will set a time limit for the claimant to make the payment.⁶² If the Registration Fee remains unpaid after this time limit expires, HKIAC will notify the parties that the arbitration shall be deemed not to have commenced without prejudice to the claimant’s right to submit the same claim at a later date in a new filing of the Notice of Arbitration.⁶³

6.67  The Registration Fee covers primarily the work undertaken by HKIAC to process the Notice of Arbitration and to correspond with the parties regarding the next steps at the initial stage of the arbitration. The Registration Fee is non-refundable unless HKIAC determines otherwise in exceptional circumstances.⁶⁴ In general, HKIAC will not refund the Registration Fee if the claimant subsequently withdraws the Notice of Arbitration. If the claimant fails to pay the Registration Fee before its withdrawal of the Notice of Arbitration, HKIAC will still ask the claimant to make the payment unless it determines otherwise in exceptional circumstances.

6.68  The claimant may pay the Registration Fee through multiple methods. Acceptable methods of payment include payment by cheque, bank transfer, or PayPal.⁶⁵

6.69  Payment of the Registration Fee should be made in Hong Kong dollars. Amounts in currencies other than Hong Kong dollars will be converted into Hong Kong dollars at the exchange rate published by HSBC on the date the Notice of Arbitration is submitted.⁶⁶

(p. 107) 6.70  After paying the Registration Fee, the claimant should provide HKIAC with proof of payment including the identity of the paying party, the names of all parties in the arbitration, and any other information that can help HKIAC identify the payment.

The Notice of Arbitration may include the Statement of Claim.

6.71  The claimant has discretion to decide whether to submit the Statement of Claim together with the Notice of Arbitration or at a later time. In the former case, the claimant may elect to treat the Notice of Arbitration as the Statement of Claim.

6.72  In most cases, the claimant files the Statement of Claim after the arbitral tribunal is constituted and in accordance with the procedural timetable issued by the tribunal. In some cases, the claimant files the Statement of Claim along with the Notice of Arbitration to accelerate the arbitral process.

If the Notice of Arbitration does not comply with these Rules or if the Registration Fee is not paid, HKIAC may request the Claimant to remedy the defect within an appropriate time limit. If the Claimant complies with such directions within the applicable time limit, the arbitration shall be deemed to have commenced under Article 4.2 on the date the initial version was received by HKIAC. If the Claimant fails to comply, the arbitration shall be deemed not to have commenced under Article 4.2 without prejudice to the Claimant’s right to submit the same claim at a later date in a subsequent Notice of Arbitration.

6.73  Article 4.6 addresses the situation in which the Notice of Arbitration is submitted to HKIAC in a form that does not comply with the requirements under Article 4.3 or is not accompanied by payment of the Registration Fee as required under Article 4.4.

6.74  Notably, the corresponding provision of the HKIAC Rules (2013) refers to circumstances in which the Notice of Arbitration is ‘incomplete’.⁶⁷ Article 4.6 of the HKIAC Rules (2018) changes that wording to non-compliance with the rules to cover a broader set of scenarios, including those where the Notice of Arbitration may be complete but contains information that does not conform to the relevant requirements.

6.75  Where the Notice of Arbitration is not in compliance with the HKIAC Rules (2018), HKIAC will set a time limit for the claimant to remedy the non-compliance. If the claimant remedies the non-compliance within the time limit, the arbitration will be deemed to have commenced on the date the initial version of the Notice of Arbitration was received by HKIAC. The purpose of this approach is to make sure that the date of commencement of the arbitration is not affected by the subsequent time taken by the claimant to ensure compliance of the Notice of Arbitration with the requirements under the HKIAC Rules (2018).

(p. 108) 6.76  If the claimant fails to remedy the non-compliance within the time limit set by HKIAC, the arbitration will be deemed not to have commenced. In contrast, if the Notice of Arbitration is incomplete pursuant to Article 4.7 of the HKIAC Rules (2013), the arbitration shall not only be deemed not to have commenced but the Notice of Arbitration shall be deemed not to have been validly submitted. The language that the Notice of Arbitration would be deemed not to have been validly submitted has been removed in the updated provision set out in Article 4.6 of the HKIAC Rules (2018). The reason for the removal of this language is that, based on public feedback, it was understood that, in some jurisdictions, such language might mean that, regardless of whether the Notice of Arbitration complied with the relevant requirements under the applicable rules, once the Notice of Arbitration was submitted, the running of the statute of limitation would be suspended.⁶⁸ Confusion could be triggered in such circumstances and possibly lead to a dispute as to whether the relevant statute of limitation under the laws of those jurisdictions had validly been suspended.

6.77  Where HKIAC notifies the parties that the arbitration is deemed not to have commenced under Article 4.6, this does not preclude the claimant from filing a new Notice of Arbitration with respect to the same claim at a later time.

Where an amendment is made to the Notice of Arbitration prior to the constitution of the arbitral tribunal, HKIAC has discretion to determine whether and to what extent such amendment affects other time limits under the Rules.

6.78  It is not uncommon that the claimant may seek to amend the Notice of Arbitration during an arbitration. This may take place before or after the constitution of the arbitral tribunal.

6.79  The claimant may also be invited by HKIAC to amend its Notice of Arbitration before the constitution of the arbitral tribunal if it is filed in a manner that does not comply with the HKIAC Rules (2018). A typical example is that the claimant submits a single Notice of Arbitration under multiple contracts where the requirements for commencing such a single arbitration under Article 29 have not been satisfied on a prima facie basis.⁶⁹ Where HKIAC decides not to proceed with the single arbitration pursuant to Article 19.5,⁷⁰ it may invite the claimant to file a separate Notice of Arbitration under each contract and amend the original Notice of Arbitration accordingly.

6.80  If the claimant amends the Notice of Arbitration before the constitution of the arbitral tribunal, HKIAC will consider what procedural impact is made on the arbitral process and what procedural directions should be set as a result of the amendment. Such procedural directions often pertain to the subsequent time limits under the HKIAC Rules (2018). In that respect, HKIAC will consider the nature of the amendment and the time at which such an amendment is made to set the subsequent time limits.

6.81  If the amendment is not substantive, for example, change of contact details or rectification of any clerical or typographical errors, HKIAC may not amend the subsequent time limits. If (p. 109) the amendment is substantive, for example, the addition, substitution, or removal of a party, changes to the claims or relief sought, or the filing of separate Notices of Arbitration, HKIAC may extend the subsequent time limits to give the respondent sufficient time to respond. In either case, the claimant must deliver copies of the amended Notice of Arbitration and any supporting materials to HKIAC and the respondent pursuant to Article 3.1 or 3.2 and provide documentary verification of delivery pursuant to Article 4.8.

6.82  If the claimant seeks to amend the Notice of Arbitration after the constitution of the arbitral tribunal, the tribunal will decide whether to allow such an amendment and the impact of the amendment on the subsequent proceedings pursuant to Article 18.1.⁷¹

The Claimant shall notify, and lodge documentary verification with, HKIAC of the date the Respondent receives the Notice of Arbitration and any supporting materials included with it.

6.83  As indicated at paragraph 6.04 above, after the claimant provides the confirmation of delivery of the Notice of Arbitration to the respondent as required by Article 4.3(j), HKIAC will request the claimant to provide documentary verification to ensure proper delivery in accordance with Article 3.1 or 3.2 and to identify the date of receipt by the respondent in accordance with Article 3.3 and 3.4. HKIAC typically asks for such documentary verification as soon as it becomes available.

6.84  In past cases, the claimant submitted the following types of documentary verification to satisfy the requirement of Article 4.8: (1) email delivery or read receipts; (2) fax transmission reports; (3) courier delivery status reports; and (4) acknowledgement of receipt by the respondent. These documents must specify the date of receipt, the identity of the recipient, and the method of delivery. HKIAC may ask the claimant to provide further information or documents if the documentary verification provided does not contain sufficient information required by HKIAC.

6.85  Once HKIAC is able to identify the date of receipt of the Notice of Arbitration by the respondent based on the documentary verification provided by the claimant, it will set the deadlines for the subsequent procedural steps, for example, (1) the deadline for the respondent to submit the Answer;⁷² (2) the deadline for the parties to agree on the method for determining the arbitral tribunal’s fees;⁷³ (3) the deadline for the parties to agree on the number of arbitrators (if applicable);⁷⁴ (4) the deadline for the parties to designate jointly the sole arbitrator (if applicable);⁷⁵ and (5) the deadline for the respondent to designate an arbitrator (if applicable).⁷⁶

6.86  The Answer is the first pleading submitted by the respondent under the HKIAC Rules (2018). It provides the first opportunity for the respondent to respond formally to the Notice of Arbitration and to raise any counterclaim, set-off defence, or cross-claim.

6.87  Article 5 sets out the required contents of the Answer and the time limit for submitting the Answer, as well as information that should be included in any counterclaim, set-off defence, or cross-claim.

6.88  The respondent has thirty days from its receipt of the Notice of Arbitration to communicate the Answer to HKIAC and the claimant. HKIAC may amend this time limit if the circumstances of the case so justify.⁷⁷

6.89  If the respondent fails to submit the Answer within the time limit specified in Article 5.1 or any amended time limit set by HKIAC, HKIAC will notify the parties that the respondent has failed to submit the Answer and will proceed to the next step of the arbitration.

6.90  Article 5 does not contain any requirement as to the form of the Answer except that it must be in writing. Like the Notice of Arbitration, the Answer is not required to be signed, stamped, or notarized, nor is it required to be presented in any particular style or format, provided that it includes the required contents set out in Article 5.1. In practice, the Answer is often a relatively brief document in which the respondent responds to the contents of the Notice of Arbitration, including the relief or remedy sought therein, and reserves its right to particularize and substantiate its case in subsequent written submissions.

6.91  Where there is more than one respondent, respondents may submit a joint Answer or each of them may submit a separate Answer.

6.92  Each of the required contents of the Answer is discussed below.

6.93  The Answer must confirm the name and contact details of the respondent and any of its representatives. HKIAC will use the contact details confirmed in the Answer to communicate with the respondent or its representative in accordance with Article 3.1(a). The contact details must include the respondent’s and its representative’s physical addresses, facsimile numbers, and/or email addresses. It is common to provide both physical and email addresses which are two common methods used to deliver written communications in arbitrations under the HKIAC Rules (2018).

6.94  As a matter of general practice, HKIAC does not require the respondent or its representative to provide proof of authority at the time when the Answer is filed. However, HKIAC, the arbitral tribunal or emergency arbitrator may require the respondent or its representative to provide such proof as it considers appropriate.⁷⁸

6.95  If the respondent takes the position that an arbitral tribunal constituted under the HKIAC Rules (2018) does not have jurisdiction to determine the dispute, it shall raise a plea to that effect in the Answer to the extent possible.⁷⁹ The respondent’s jurisdictional objection may include, but is not limited to, an objection in respect of the existence, validity, or scope of the arbitration agreement, the arbitrability of the dispute, and the applicability of the HKIAC Rules (2018).

6.96  While the HKIAC Rules (2018) encourage any jurisdictional objection to be raised as early as possible, any failure to raise such an objection in the Answer will not prevent the respondent from raising it at a later stage. Pursuant to Article 19.3 of the HKIAC Rules (2018), a jurisdictional objection shall be raised no later than in the Statement of Defence, or with respect to a counterclaim, in the Defence to the Counterclaim. Notwithstanding this, the arbitral tribunal may admit a later jurisdictional objection if it considers the delay justified.⁸⁰

6.97  The Answer must include the respondent’s response to the claimant’s description of the claim and any indication of the amount in dispute. Article 5.1(c) does not prescribe the level of detail for the respondent’s response: the respondent may deny the claimant’s description of the dispute with or without its own description. If the respondent disagrees with the claimant’s indication of the amount in dispute, it may provide its own assessment of the amount in dispute.

6.98  HKIAC’s use of information provided under this head to make certain procedural decisions and to appoint arbitrators is discussed at paragraphs 6.42 and 6.44 above.

6.99  The Answer must include the respondent’s response to the relief or remedy sought by the claimant in the Notice of Arbitration. The respondent may deny the claim or oppose the relief or remedy sought with or without reasons in the Answer. The respondent may reserve its right to submit a full defence in subsequent written submissions.

6.100  Where the parties have not agreed on the number of arbitrators and the claimant proposes a number in the Notice of Arbitration, the respondent is required to respond to it in the Answer. If the respondent agrees with the number proposed by the claimant, the arbitral tribunal will be constituted in accordance with the agreed number. If the respondent disagrees, HKIAC will determine the number pursuant to Article 6.1, unless it amends the time limit for the parties to agree pursuant to Article 3.6.

6.101  Where the parties have agreed on the number of arbitrators, the respondent is not required to comment on the number in the Answer. If the claimant proposes a number that is different to the one previously agreed by the parties, HKIAC will normally set a short time limit for the respondent to comment before its submission of the Answer. Once the respondent has commented, it is no longer required to comment on the matter again in the Answer.

6.102  If the respondent disagrees with the claimant’s proposal on the number of arbitrators, it should provide reasons for its position. As indicated at paragraph 6.49 above, a reasoned proposal and response will assist HKIAC in determining the appropriate number of arbitrators in the event that the parties fail to agree.

6.103  Where the parties have agreed to refer the dispute to a sole arbitrator, the respondent must provide its proposal and any comments regarding the designation of a sole arbitrator. If the respondent agrees with the claimant’s proposed candidate, HKIAC will commence the process for confirming the agreed candidate pursuant to Article 9 of the HKIAC Rules (2018). If the respondent does not agree, it may propose another candidate with his or her name and contact details. The respondent may also provide any comments or respond to the claimant’s comments in relation to the qualifications of the sole arbitrator or the method of appointment (eg the use of a list procedure or direct appointment by HKIAC). HKIAC will take into account the proposal and any comments made by all parties when confirming or appointing the sole arbitrator.⁸¹

(p. 113) 6.104  Where the parties have agreed to refer the dispute to a three-member tribunal, the respondent shall designate an arbitrator in the Answer. When designating an arbitrator, the respondent must provide the name and contact details of the designated arbitrator. HKIAC will use the contact details to approach the designated arbitrator and commence the process for confirming the arbitrator pursuant to Article 9 of the HKIAC Rules (2018).

6.105  If the respondent fails to designate an arbitrator in the Answer or within an amended time limit set by HKIAC, HKIAC will appoint the arbitrator on behalf of the respondent.⁸²

6.106  Where the parties have not agreed on the number of arbitrators at the time the respondent is due to submit the Answer, the respondent is not required to designate an arbitrator in its Answer. Once the number of arbitrators is determined, HKIAC will then invite the respondent to designate.⁸³

6.107  If the respondent has entered into a funding agreement before its submission of the Answer, it shall disclose the existence of the funding agreement and the identity of the funder in the Answer in the same manner discussed at paragraphs 6.59–6.62 above.⁸⁴

6.108  Under Article 5.1(h) of the HKIAC Rules, the respondent must serve a copy of the Answer and any supporting materials to all other parties and HKIAC. The commentary on Article 4.3(i) in paragraph 6.63 applies, mutatis mutandis, to the confirmation of service of the Answer.

6.109  HKIAC does not require documentary verification for the delivery of the Answer from the respondent. A confirmation that the Answer has been or is being served on all other parties is sufficient for HKIAC to proceed to the next step. This is different from the requirement for serving the Notice because HKIAC does not need to confirm the date of receipt of the Answer by the claimant to set the time limits for subsequent procedural steps.

The Answer to the Notice of Arbitration may also include the Statement of Defence, if the Notice of Arbitration contained the Statement of Claim.

6.110  Where the Notice of Arbitration contains the Statement of Claim, the respondent has discretion to decide whether to submit the Statement of Defence together with the Answer or at a later time. In the former case, the respondent may elect to treat the Answer as the Statement of Defence. The respondent is able to exercise this discretion only if the claimant has submitted the Statement of Claim together with or as part of the Notice of Arbitration.

6.111  In most cases, the respondent files the Statement of Defence after the arbitral tribunal is constituted and in accordance with the procedural timetable issued by the tribunal.

Any counterclaim, set-off defence or cross-claim shall, to the extent possible, be raised with the Respondent’s Answer to the Notice of Arbitration, which should include in relation to any such counterclaim, set-off defence or cross-claim:

1. (a)  a copy of the contract(s) or other legal instrument(s) out of or in relation to which it arises, or reference thereto;

2. (b)  a description of the general nature of the counterclaim, set-off defence and/or cross-claim, and an indication of the amount involved, if any;

   and

3. (c)  the relief or remedy sought.

6.112  As indicated at paragraph 6.86 above, the Answer provides the first opportunity for the respondent to raise any counterclaim, set-off defence, or cross-claim.⁸⁵ Any such claim or defence shall be raised with the Answer to the extent possible. This prevents the submission of such claim or defence at a late stage, which may cause disruption to the arbitral proceedings.

6.113  If the respondent intends to file a counterclaim, set-off defence, or cross-claim with the Answer, the Answer should include, in addition to the contents required by Article 5.1: (1) a copy of the contract(s) or other legal instrument(s) giving rise to the counterclaim, set-off defence, or cross-claim, or reference thereto; (2) a description of the general nature of the counterclaim, set-off defence, and/or cross-claim and an indication of the amount in dispute (if any); and (3) a statement of the relief or remedy sought. The commentary on Article 4.3(d), (e), and (f) at paragraphs 6.38–6.47 above applies, mutatis mutandis, to the contents of the Answer under Article 5.3.

6.114  Any failure to raise a counterclaim, set-off defence, or cross-claim in the Answer does not prevent the respondent from raising it in the Statement of Defence pursuant to Article 17.3.⁸⁶

HKIAC shall transmit the case file to the arbitral tribunal as soon as it has been constituted, provided that any deposit requested by HKIAC has been paid, unless HKIAC determines otherwise.

6.115  Once the arbitral tribunal is constituted, HKIAC will generally transmit the case file to the tribunal if all deposits requested by HKIAC have been paid in full. Notwithstanding this general rule, HKIAC may decide to transmit the case file in certain circumstances even if a requested deposit has not been paid.

6.116  In contrast with Article 5.6 of the HKIAC Rules (2013), Article 5.4 of the HKIAC Rules (2018) now also requires that payment of any deposit requested by HKIAC is also paid in addition to the Registration Fee.

(p. 115) 6.117  This new requirement, inspired by Article 16 of the ICC Rules (2017), ensures that HKIAC holds sufficient funds to cover its and the arbitral tribunal’s fees and expenses at the initial stage of the arbitration before the arbitral tribunal receives the case file and commences its work.⁸⁷ It prevents the situation where the parties settle their dispute and terminate the arbitration shortly after the case file is transmitted to the arbitral tribunal and HKIAC does not have sufficient deposit to pay any outstanding fees and expenses of the tribunal.

6.118  Unlike Article 16 of the ICC Rules (2017), Article 5.4 of the HKIAC Rules (2018) provides that HKIAC retains discretion to transmit the case file to the arbitral tribunal even if any of its requested deposits is not paid. For example, HKIAC may transmit the case file in circumstances where the tribunal requests HKIAC to do so knowing that HKIAC does not have sufficient deposits to cover the tribunal’s fees or circumstances require that HKIAC transmits the case file without delay.

6.119  The case file is transmitted to the arbitral tribunal electronically unless the tribunal requests that a physical copy be delivered.

6.120  In arbitrations under the HKIAC Rules (2018), parties are required to pay the Registration Fee and the Administrative Fee in respect of HKIAC’s case administration services.⁸⁸ Schedule 1 contains detailed provisions on the determination and payment of these fees. This schedule is part of the HKIAC Rules (2018) and may be amended from time to time.⁸⁹ At the time of writing, the current version of Schedule 1 came into force on 1 November 2018.⁹⁰ An arbitration that commences under the HKIAC Rules (2018) is governed by the version of Schedule 1 that is in force on the date the Notice of Arbitration is submitted.⁹¹

When submitting a Notice of Arbitration, the Claimant shall pay a Registration Fee in the amount set by HKIAC, as stated on HKIAC’s website on the date the Notice of Arbitration is submitted.

6.121  As discussed in paragraph 6.65 above, the claimant must pay the Registration Fee when submitting the Notice of Arbitration. The Registration Fee shall be paid in the amount stated on HKIAC’s website on the date the Notice of Arbitration is submitted. Schedule 1 deliberately does not specify the amount of the Registration Fee, as HKIAC may update the amount on its website from time to time.

(p. 116) 6.122  At the time of writing, the amount of the Registration Fee stated on HKIAC’s website is HK$8,000.⁹² As shown in Table 6.1, the Registration Fee charged by HKIAC is competitively lower than that charged by other major arbitral institutions.

6.123  It bears noting that HKIAC does not charge an additional Registration Fee when a party submits a new claim, counterclaim, or cross-claim.⁹³ This retains the practice set out in the HKIAC Rules (2013) that amended the HKIAC Rules (2008), where the respondent had to pay the Registration Fee for filing a counterclaim.

If the Claimant fails to pay the Registration Fee, HKIAC shall not proceed with the arbitration subject to Article 4.6 of the Rules.

6.124  If the claimant fails to pay the Registration Fee at the time of submitting the Notice of Arbitration, HKIAC will set a time limit for the claimant to pay. If the claimant fails to pay within the time limit, HKIAC will not proceed with the arbitration and the arbitration shall be deemed not to have commenced pursuant to Article 4.6.

The Registration Fee is not refundable save in exceptional circumstances as determined by HKIAC in its sole discretion.

6.125  The Registration Fee is a one-time, non-refundable payment,⁹⁴ save in exceptional circumstances in which HKIAC may determine otherwise.⁹⁵

(p. 117) 6.126  Exceptional circumstances are determined by HKIAC in its sole discretion, for example, where the claimant has wrongfully paid the Registration Fee to HKIAC with no intention of commencing an arbitration under the HKIAC Rules (2018).

HKIAC’s Administrative Fees shall be determined in accordance with the following table (Table 6.2):

6.127  HKIAC’s Administrative Fee is determined by reference to a percentage of the total amount in dispute.

6.128  The formula for calculating the Administrative Fee is set out in Table 6.2 above. The Administrative Fee for all (except the first and tenth) categories is calculated based on the aggregate of a base figure and a percentage of the amount in dispute over a particular figure. The Administrative Fee for the first and tenth categories is a fixed amount, which represents the minimum and maximum amounts of the Administrative Fee (ie HK$19,800 and HK$400,000, respectively). Unless the amount in dispute falls within the first or tenth category (which results in the minimum or maximum Administrative Fee), the higher the amount in dispute is, the higher the Administrative Fee will be.

6.129  An online calculator is available on HKIAC’s website to provide an estimate of the Administrative Fee based on the amount in dispute in a case.⁹⁶

6.130  As shown in Table 6.3, HKIAC’s Administrative Fee is competitively lower than that charged by other major arbitral institutions.

(p. 118)

Claims and counterclaims are added for the determination of the amount in dispute. The same rule applies to any set-off defence or cross-claim, unless the arbitral tribunal, after consulting with the parties, concludes that such set-off defence or cross-claim will not require significant additional work.

6.131  As indicated at paragraphs 6.127–6.128 above, the amount in dispute determines the formula for calculating the Administrative Fee in a case. Paragraph 2.2 of Schedule 1 sets out the general rule for establishing the amount in dispute, which is that HKIAC will aggregate the amounts of all claims, counterclaims, set-off defences, and cross-claims to calculate the total amount in dispute. However, an exception to this is that the amount of a set-off defence or cross-claim may not be added to the amount in dispute if the arbitral tribunal, after consulting with the parties, concludes that the determination of such a claim or defence will not add significant work.

An interest claim shall not be taken into account for the calculation of the amount in dispute, except where HKIAC determines that doing so would be appropriate.

6.132  When calculating the amount in dispute, HKIAC does not include the amount of an interest claim unless it determines otherwise. For that purpose, an interest claim is a claim for simple or compound, pre- or post-award interest on a monetary claim or costs of the arbitration from a date, at a rate, and on other terms as determined by the arbitral tribunal under the applicable rules or law.⁹⁷ Where a party claims interest as part of its principal claim and based on a formula specified in the relevant contract (eg payment of a lending interest or interest in respect of distribution of shares), HKIAC will generally consider the amount of such an interest claim as part of the amount in dispute.

(p. 119) 6.133  The approach under paragraph 2.3 of Schedule 1 of the HKIAC Rules (2018) represents a departure from that under the HKIAC Rules (2013) which provide that ‘[a]n interest claim shall not be taken into account for the calculation of the amount in dispute. However, when the interest claim exceeds the amounts claimed in principal, the interest claim alone shall be considered in calculating the amount in dispute.’⁹⁸ The approach under the HKIAC Rules (2018) provides greater flexibility to allow HKIAC to consider whether to include an interest claim in the amount in dispute given the nature of such a claim and the circumstances of the case.

Where there are alternative claims, only the principal claim shall be taken into account for the calculation of the amount in dispute, except where HKIAC considers it appropriate to take into account the amount of any alternative claim.

6.134  Paragraph 2.4 of Schedule 1 is a new provision introduced in the HKIAC Rules (2018) to address the situation where a party raises an alternative claim to its principal claim. In that situation, HKIAC will generally only consider the principal amount in the calculation of the amount in dispute, irrespective of whether the principal amount is higher or lower than the alternative amount.

6.135  Like the approach to interest claims, paragraph 2.4 of Schedule 1 preserves the ability of HKIAC to take into account the amount of any alternative claim if it considers it appropriate to do so.

Pursuant to Articles 18.2, 27.15, 28.10 or 30.2 or where in the opinion of HKIAC there are exceptional circumstances, HKIAC may depart from the table in paragraph 2.1 when calculating its Administrative Fees.

6.136  Paragraph 2.5 of Schedule 1 specifies the circumstances in which HKIAC may depart from the amount of the Administrative Fee calculated in accordance with paragraph 2.1 of Schedule 1. These circumstances include the following:

1. (1)  A party amends its claim or defence.⁹⁹

2. (2)  A party submits a request to join an additional party.¹⁰⁰

3. (3)  A party submits a request to consolidate multiple arbitrations.¹⁰¹

4. (4)  Multiple arbitrations are conducted concurrently.¹⁰²

5. (5)  Exceptional circumstances in which HKIAC considers it justified to adjust the Administrative Fee.