Proposed Amendments to HKIAC Rules put the Emergency into Emergency Arbitration

The HKIAC’s proposed amendments include enhancements to the mechanism by which a single arbitration can proceed under multiple contracts, clarifications of arbitral tribunal’s powers to address preliminary issues and new provisions concerning information security matters and arbitrator diversity. 

In addition, the HKIAC’s proposals clarify the scope of Emergency Arbitrators’ powers by expressly confirming that an Emergency Arbitrator can issue orders in the period between the Emergency Arbitrator’s appointment and his/her issuance of the Emergency Decision. This confirmation should be welcomed by HKIAC arbitration users for the reasons explained in this post.

Emergency Arbitration Under the 2018 HKIAC Rules

Schedule 4 of the 2018 HKIAC Rules contains an Emergency Arbitration mechanism. This mechanism, which works well in practice, enables a party to obtain interim measures from an Emergency Arbitrator prior to the constitution of the arbitral tribunal. Generally, the HKIAC will appoint an Emergency Arbitrator within 24 hours of receiving an application who will then issue his/her Emergency Decision within 14 days.

Depending upon the circumstances, the HKIAC’s Emergency Arbitrator mechanism provides a party who urgently needs interim measures at the outset of a dispute with a viable alternative to applying to national courts. 

HKIAC’s Proposals Confirm Emergency Arbitrators’ Broad Powers

The 2018 HKIAC Rules, like the arbitration rules of most other major arbitral institutions, do not expressly address whether an Emergency Arbitrator has the power during Emergency Arbitration proceedings to issue an order imposing interim measures on the parties until such time as the Emergency Arbitrator can issue the Emergency Decision (e.g., to temporarily preserve the status quo between the parties prior to the Emergency Decision).

The HKIAC’s proposed amendment, via an addition to paragraph 10 of Schedule 4, confirms that the Emergency Arbitrator is so empowered: “The Emergency Arbitrator shall have the power to make any order within the period referred to in paragraph 12 of this Schedule [i.e., the 14-day period for the Emergency Arbitrator to issue the Emergency Decision], pending the Emergency Decision.”

The HKIAC’s proposed clarification of Emergency Arbitrator’s powers is welcome for at least two reasons.

First, as a practical matter, Emergency Arbitrators should have the power to issue orders that temporarily bind the parties, which can be termed ‘preliminary orders’ or ‘interim-interim orders’, in the temporal gap between the Emergency Arbitrator’s appointment and the issuance of the Emergency Decision. Absent this power, the purpose for which a party initiated Emergency Arbitration proceedings may be frustrated since the other party would, for example, be free to take the wrongful conduct that the Emergency Arbitration proceedings were initiated to prevent.

Second, while Emergency Arbitrators could potentially already imply this power under the 2018 HKIAC Rules, the HKIAC’s proposal removes any ambiguity in this regard. This is welcome since Emergency Arbitration mechanisms work best when the scope of an Emergency Arbitrator’s powers is addressed in detail. This reduces the scope for ‘due process paranoia’ by Emergency Arbitrators and avoids the need for Parties to incur the time and costs in briefing, and Emergency Arbitrators deciding, such issues, which can materially delay the issuance of the Emergency Decision.

With respect to how a party could use the proposed amendment in practice, a party might submit its request for a ‘preliminary order’ at the same time, or shortly after, it submits its application to the HKIAC to appoint an Emergency Arbitrator. The Emergency Arbitrator, once appointed, could then provide the respondent party with a reasonable opportunity to be heard on the request (e.g., several hours) before deciding whether to issue the order.

The HKIAC’s proposed amendment, if implemented, could achieve a similar outcome to Article 25(7) of the 2022 Prime Finance Arbitration Rules (“The emergency arbitrator shall have the power to grant interim relief in the form of a preliminary order prior to rendering the decision on emergency measures”) and paragraph 8 of Schedule 1 to the 2016 SIAC Arbitration Rules (“The Emergency Arbitrator shall have the power to order or award any interim relief that he deems necessary, including preliminary orders that may be made pending any hearing, telephone or video conference or written submissions by the parties”).

Conclusion

Hong Kong, as a world-class seat of arbitration, already offers arbitrating parties a sophisticated and comprehensive regime for interim relief. Parties can obtain and, where necessary, enforce interim relief from Emergency Arbitrators, arbitral tribunals and the Hong Kong courts, as well as having access to interim relief from the courts of Mainland China via the Arrangement between Mainland China and Hong Kong. The HKIAC’s proposed reforms to its Emergency Arbitration mechanism complement this regime.

For an analysis of Emergency Arbitration in Mainland China, see here.

For further information on resolving disputes in Asia and internationally, including how to obtain interim measures from Emergency Arbitrators, arbitral tribunals and national courts, please contact our international arbitration team.