1. Reform of Arbitration Law The New Arbitration Ordinance (Chapter 609) #359905 Frank Poon Solicitor General (Acting) Department of Justice Hong Kong SAR Government 13 December 2010

2. Department of Justice 2 Introduction Government Policy on Arbitration Why reform? Unitary regime Opting-in system Confidentiality Judges as arbitrators Commencement and transitional arrangement

3. Department of Justice 3 Government Policy Promote Hong Kong as a regional centre for international arbitration CE’s 2007 Policy address – reaffirmed on the occasion of HKIAC’s 25 th Anniversary

4. Department of Justice 4 Benefits of Arbitration $ - Economic contribution – Services – Trade and investment Supporting HK’s role as a leading international finance centre Improving our legal Infrastructure – Rule of law – Judicial resources

5. Department of Justice 5 HK’s Comparative Advantages Strong legal profession Strong institutions – Court – Arbitration professionals and institutions Statutory framework Mainland and Greater China

6. Department of Justice 6 Challenges Competition – Regional and International Mainland – Foreign Investment Enterprises Taiwan – Economic Framework Cooperation Agreement India

7. Department of Justice 7 Statutory Framework for Arbitration - Current Law – Why Reform The Arbitration Ordinance Cap 341 Separate regimes for Domestic and International Arbitration Some provisions common to both regimes

8. Department of Justice 8 Differences between Regimes Domestic awards – subject to judicial review and appeal on a point of law Determination by the court of a preliminary point of law International regime allows recourse to court in very limited circumstances

9. Department of Justice 9 Purpose and Object of the Reform Unify the domestic and international arbitration regimes on the basis of UNCITRAL Model Law Enhance perception of HK as a Model Law Jurisdiction Consolidate arbitration law in an Ordinance and make it more user-friendly for local and international users

10. Department of Justice 10 New Arbitration Ordinance Implementation of recommendations in the 2003 Report by HKIAC/HKIArb Bill finalised after over 6 months of consultation Enacted on 10 November 2010 but NOT yet in force - http://www.hkiac.org/newspdf/ord017-10-english.pdf

11. Department of Justice 11 Object and Principles of the New Ordinance Facilitate fair and speedy resolution of disputes by arbitration without unnecessary expenses Parties’ autonomy (subject to safeguards) Minimal court’s intervention (section 3)

12. Department of Justice 12 Structure of the New Ordinance Follows the same order as the UNCITRAL Model Law References made to each article of the Model Law as to its application/disapplication

13. Department of Justice 13 Structure of the New Ordinance Applicable articles are reproduced with adaptation/modifications and given the force of law (section 4) Designed to be self-contained (e.g. incorporation of provisions in Limitation Ordinance, Cap 347 relating to arbitral proceedings) (section 14)

14. Department of Justice 14 Unitary Regime One arbitration regime – no more distinction between “international” and “domestic arbitration” Opt-in system for provisions applicable to domestic arbitration under Cap. 341 (Part 11 and Schedule 2 of the new Ordinance)

15. Department of Justice 15 Optional Provisions in Schedule 2 Appeal against an arbitral award on question of law Challenging an award on ground of serious irregularity Determination of a dispute by a sole arbitrator Consolidation of arbitrations, or for hearings to be heard at the same time or one immediately after another Determination of preliminary question of law by the Court of First Instance

16. Department of Justice 16 How to Opt-in section 99 : an arbitration agreement may provide as to whether any or all of the provisions in Schedule 2 apply section 100 : an arbitration agreement entered into before or within 6 years of the commencement of the Ordinance which provide that an arbitration is a “domestic arbitration” – all provisions in Schedule 2 apply - TRANSITIONAL

17. Department of Justice 17 Statutory Arbitration Where any other Ordinance provides that the Arbitration Ordinance applies to an arbitration under that Ordinance, that Ordinance is deemed to have expressly provided that all the provisions in Schedule 2 apply - section 5(3)(b)

18. Department of Justice 18 Automatic Opting-in to Schedule 2 Provisions for Construction Sub- Contracts (section 101) Where a construction contract has opted in under section 100 (by referring to arbitration being “domestic arbitration”), then sub- contracts with an arbitration agreement are deemed to have opted in to the Schedule 2 provisions (but see exceptions).

19. Department of Justice 19 Exceptions to Automatic Opting in for Construction Sub-contracts If there is NO arbitration agreement in the sub-contract If parties agree or the arbitration agreement provides that the automatic opting in provisions (section 100 or 101) do not apply (see section 102(A)) If the arbitration agreement provides that any of the provisions in Schedule 2 does or does not apply (see section 102(b))

20. Department of Justice 20 Exceptions to Automatic Opting in for Construction Sub-contracts Sub-contractor is not based in Hong Kong Substantial part of the construction operations subcontracted is to be performed outside Hong Kong

21. Department of Justice 21 Meaning of Construction Contract and Construction Operations “Construction contract” means a contract between an employer and a contractor under which the contractor carries out construction operations but does not include a contract of employment. (section 2(1) of Cap. 587) “Construction operations” is defined in Schedule 1 of Cap. 587

22. Department of Justice 22 Confidentiality Duty of confidence (section 18) relating to – arbitral proceedings under an arbitration agreement; – award made in the arbitral proceedings

23. Department of Justice 23 Exceptions to Confidentiality Protect a legal right or interest of a party Enforce or challenge an award before a court or other judicial authority in or outside HK Obliged by law to make disclosure to Government body, regulatory body, court or tribunal Disclosure to professional or other advisers of the party

24. Department of Justice 24 Court’s Proceedings under the New Arbitration Ordinance Starting point - closed court hearing (section 16) Exceptions – on the application of a party; or – on court’s own initiative

25. Department of Justice 25 Reporting of Court Proceedings heard Otherwise than in Open Court (section 17) Upon application, the Court must make a direction on what information, if any, may be published Direction for publication subject to parties’ agreement or the court being satisfied that the information would not reveal any matter that a party reasonably wishes to remain confidential

26. Department of Justice 26 Judgment of Major Legal Interest The court must direct that it may be published (section 17(4)) Any party may apply for information to be concealed if he reasonably wishes to conceal such information Upon such an application, the court must made direction as to the action to be taken to conceal the information – May include a direction that the report may not be published for up to 10 years

27. Department of Justice 27 Judges as Arbitrators? No special provisions for judges acting as arbitrators – Many arbitrators available in HK and overseas, including retired judges – Avoid perception of court intervention

28. Department of Justice 28 Judges NOT to Serve as Arbitrators To be implemented by administrative means Exceptions: – where an Ordinance provides for appointment of a judge(s) as arbitrator(s) – where a judge has been acting as an arbitrator prior to taking up judicial appointment

29. Department of Justice 29 Entry into Force of the New Ordinance Will come into operation on a day to be appointed by the Secretary for Justice by notice in the Gazette (section 1(2)) Consultation with stakeholders on readiness

30. Department of Justice 30 Transitional Arrangement Upon Commencement (Schedule 3) Arbitral proceedings and related court proceedings in respect of arbitrations that are commenced before coming into force of the Ordinance will be governed by the old Arbitration Ordinance (Cap. 341) Meaning of Commencement: – Domestic – section 31(1) of Cap 341 – International – Article 21 of Model Law

31. Department of Justice 31 Thank You THE END