Emergency arbitration in Hong Kong allows parties to bypass the Courts and obtain urgent interim relief from an emergency arbitrator (“EA”) before the arbitral tribunal is initially formed. The procedure is designed to provide a quick and efficient way of obtaining urgent interim relief measures.
The EA procedure is available under either administered or institutional arbitration. To commence EA proceedings in Hong Kong, a well-drafted arbitration clause in the contract should provide for: (i) Hong Kong law as the governing law and (ii) refer to an arbitral institution in Hong Kong which permits an EA to issue emergency relief.
The remit and jurisdiction of the EA is only for interim relief measures. The arbitral tribunal for the substantive arbitration will have to be separately designated by the parties, appointed after the EA’s award/order is determined.
The 2018 Administered Arbitration Rules of the Hong Kong International Arbitration Centre (“HKIAC”) (“2018 Rules”)
The 2018 Rules expressly permit the EA procedure. Schedule 4 of the 2018 Rules set out how to invoke the EA procedure. Some notable provisions are set out below:-
- A party is allowed to appoint an EA before filing of a Notice of Arbitration (Paragraph 1(a) of Schedule 4).
- Notice of the EA application shall be given to the responding party. Specifically, the EA application shall include “confirmation that copies of the [a]pplication and any supporting materials included with it have been or are being communicated simultaneously to all other parties to the arbitration by one or more means of service to be identified in such confirmation.” (emphasis our own) (Paragraph 2(j) of Schedule 4).
- If the HKIAC decides to accept an EA application, HKIAC shall seek to appoint the arbitrator within 24 hours (Paragraph 4 of Schedule 4).
- The emergency decision, order, or award in the emergency arbitration proceedings shall be made within 14 days from the date of the transmission of the case file to the EA (Paragraph 12 of Schedule 4).
- The EA procedure will be terminated if the applicant fails to submit a Notice of Arbitration to HKIAC within seven days of HKIAC’s receipt of the EA application, unless this time limit is extended (Paragraph 21 of Schedule 4).
- The provisions which apply to the imposition of interim measures by the arbitral tribunal, including those relating to the factors which the tribunal may take into account in deciding whether to impose interim measures, also apply to any emergency relief granted by the EA (Paragraph 11 of Schedule 4). The non-exhaustive list of considerations that should be taken into account include whether “harm not adequately reparable by an award of damages is likely to result” and whether “such harm substantially outweighs the harm that is likely to result to the party against whom the measure is directed if the measure is granted”.
- Subject to the possibility of making an emergency decision even if in the meantime the case file has been transmitted to the arbitral tribunal, the EA shall have no further power to act once the arbitral tribunal is constituted (Paragraph 18 of Schedule 4).
Enforcement of Emergency Arbitral Awards in Hong Kong
Emergency arbitration awards are expressly enforceable in Hong Kong through and by the Court.
Sections 22A and 22B of the Hong Kong Arbitration Ordinance (Cap. 609) expressly permit the parties to agree upon a set of arbitration rules which authorise an EA, appointed before a full tribunal is constituted, to deal with any applications for emergency relief (i.e. interim measures).
Under section 22B of the Hong Kong Arbitration Ordinance, emergency relief is enforceable with leave of the Court, whether the relief is granted by an EA within Hong Kong or in another jurisdiction.
There are two stages involved in the enforcement proceedings. The first stage involves making an ex parte application to the Court. Assuming that the award is prima facie enforceable, the Court will grant leave to enforce it, but will give the Respondent 14 days from the date of service of the Order to apply to have it set aside. The Applicant may not enforce the Order until after the expiry of this 14-day period or until after the determination of the application to set the Order aside, if such application is made.
A summary based on our previous experience is set out below:-
- The HKIAC in practice acts quickly in appointing the EA.
- The EA may request for a case management conference to discuss the agenda (e.g. introductions, parties participating, the procedural schedule with number of rounds of written submissions and submission dates).
- The HKIAC and the EA will drive the expedited timetable.
- The EA’s award/order is not directly enforceable against third parties (e.g. banks).
- The EA’s award/order will be recognised by the Hong Kong Court and converted promptly.
Pros and Cons of Emergency Arbitration
A non-exhaustive list of the pros and cons of the emergency arbitration procedure is set out below:-
|Assume that the Respondent will not pay any costs of the HKIAC and the EA
|Supported by HKIAC
|Applicant may have to pay for the costs of the HKIAC and the EA. The Applicant will have to budget for costs
|Enthusiasm from the EA
|Inter-partes (i.e. on notice), rather than ex-parte (without notice to the other side) application by the Applicant
|No oral hearing
|The inter-partes nature leaves room for the Respondent to dissipate assets during the period, from it being aware of the EA application until the EA’s order is registered with the Court
|The parties’ arguments and submissions are on paper
|The EA’s decision is on paper
|No need for expensive brief fee / refresher for barrister
|EA’s award/order is recognised quickly by the Court
There are a number of reasons why emergency arbitration may be preferable to a Court application for interim relief. These include the confidentiality of arbitration proceedings, a fast and compressed timetable and the flexibility inherent in the EA procedure etc.
The pro-arbitration stance of the Hong Kong Courts should give parties’ the comfort that emergency arbitral awards granted in their favour can be enforced in Hong Kong. In practice, the willingness and enthusiasm of Hong Kong to support arbitration is well known. In this regard, the HKIAC and the Hong Kong Courts are supportive of emergency relief in arbitration.
How we can help
If you need any advice or help on emergency arbitration, feel free to reach out to us for assistance.