ABLJ | Recent developments in HK's arbitration landscapes
原文首发于Asia Business Law Journal2022年5/6双月号
Hong Kong is the beating heart of arbitration in Asia. Nestled within the firmament of China’s Greater Bay Area, its status as a leading arbitration hub has been reinforced over the years by the pro-arbitration attitude that infuses Hong Kong courts, all underpinned by the introduction of innovative arrangements enhancing the dispute resolution experience for those who choose arbitration in the city.
The past 12 months have seen a continuation of this trend and this article focuses on three recent developments:
1. the recent trilogy of judicial decisions re-examining the nature of tiered dispute resolution clauses;
2. the prospective introduction of legislation allowing outcome-related fee structures in arbitration; and
3. the entry into effect of provisions of the supplemental arrangement concerning mutual enforcement of arbitral awards between Mainland of China and Hong Kong – which not only further enhances the reciprocal enforcement of awards but also, for the first time, allows simultaneous enforcement of awards between both jurisdictions.
TIERED CLAUSES
The issue of whether non-compliance with a pre-arbitral requirement in a tiered arbitration clause deprives a tribunal of jurisdiction, or whether it simply goes to the admissibility of claims, is an issue that has bedevilled courts worldwide in recent years.
It came before the Hong Kong courts for the first time in C v D (2021). The relevant arbitration clause provided that the dispute shall be referred to arbitration “if any dispute cannot be resolved amicably within 60 business days of a party’s request in writing for such negotiation”. There was a dispute over whether the requisite written request had been issued. Having found that there was such compliance, the tribunal proceeded with the arbitration.
The unsuccessful party applied to the Hong Kong Court of First Instance under section 81 of the Arbitration Ordinance to set aside the award on the grounds that the tribunal lacked jurisdiction. The key issue was whether compliance with the condition precedent went to the jurisdiction of the tribunal (and thus was reviewable by the court), or the admissibility of the claim (which could not be reviewed by the court).
Justice Godfrey Lam held that the issue went to admissibility and accordingly dismissed the challenge. This decision has since been followed in two Hong Kong first instance decisions – T v B (2021) and Kiln Civil Engineering v GTECH Engineering (2021).
The approach has also been followed in subsequent decisions in England & Wales, in NWA v NVF (2021), concerning an unsuccessful attempt to set aside an award on the grounds that mediation was not first sought as required by the multi-tiered arbitration clause, and in Australia, in Nuance Group v Shape Australia (2021).
The recent jurisprudence invariably relies on the “tribunal versus claim” test advocated by Swedish legal scholar and international arbitrator, Jan Paulsson. Based on the test, objections targeted at the tribunal – in the sense the claim should not be arbitrated due to a defect in or omission to consent to arbitration – are jurisdictional, while objections targeted at the claim – in that the claim itself is defective and should not be raised at all – are matters of admissibility. Examples of matters of admissibility include limitation and res judicata issues.
By contrast, the opposite view was reached in International Research Corp v Lufthansa Systems Asia Pacific (2012), which held that non-compliance with the pre-arbitration tiers of a tiered dispute resolution clause is capable of vitiating the parties’ consent to arbitrate, thus impinging on the tribunal’s jurisdiction. This approach is, in turn, consistent with that adopted for years by the English courts, which have since flipped to the position now occupied by the Hong Kong courts.
By the judgment dated 7 June 2022, the Court of Appeal affirmed Justice Lam’s decision and held that non-compliance with a condition precedent to arbitration went to the “claim” because, inter alia, the objection was that reference to arbitration was premature, not that the substantive claim could never be referred to arbitration.
There is every expectation that C v D will work its way to the Hong Kong Court of Final Appeal, where the duelling approaches adopted by the courts of two of Asia’s leading arbitration hubs will undoubtedly be the subject of further elucidation – and whose outcome will be keenly awaited across the arbitration world.
OUTCOME-RELATED FEE STRUCTURES
On 25 March 2022, the Hong Kong government gazetted the Arbitration and Legal Practitioners Legislation (Outcome Related Fee Structures for Arbitration) (Amendment) Bill, 2022, which is expected to become law later this year.
This will allow lawyers in Hong Kong to enter into outcome-related fee structure (ORFS) agreements with their clients in arbitration and arbitration-related court proceedings such as those relating to interim measures and enforcement of awards.
The new regime will permit damages-based arrangements (DBAs), namely “no win no fee”, and so-called hybrid DBAs, or “no win low fee”. Therefore, it has a broader scope than the recently passed Singapore Legal Profession (Amendment) Act, which only legalised conditional fee arrangements (CFAs) and continues to prohibit any uplift fees calculated as a percentage of the financial benefit received by the client.
The move reflects a sea change in attitude to the ORFS in Hong Kong, where the government and legal community have traditionally held to concerns regarding potential conflicts of interest should lawyers be allowed a stake in the financial outcome of a case.
As the Hong Kong Law Reform Commssion recognised in its December 2021 report (on which the bill is based), such concerns are less pertinent, if at all, in the arbitration field, where parties are typically sophisticated business entitles that should be able to understand and negotiate fee models with their lawyers.
Nevertheless, to address such concerns, the bill and its subsidiary legislation will put in place various safeguards to preserve the integrity of the arbitration – including the capping DBA payment at 50% of the financial benefit received by the client, and a minimum cooling-off period of seven days during which the client may terminate the ORFS arrangement.
The bill dovetails with the 2017 amendment to Hong Kong’s Arbitration Ordinance, which allowed third-party funding for arbitration taking place in Hong Kong to further liberalise fee arrangements for arbitrations and open up funding options. This will benefit not only parties who have a strong case but have limited means, but also those who might prefer their litigation costs to be kept off the books; or for their lawyers to share incentives and risks by having skin in the game.
The bill also aims to facilitate the alignment of arbitration regimes between Hong Kong and Mainland of China, where the ORFS is already permitted. This will provide Hong Kong lawyers with greater flexibility as they work with their mainland counterparts – a welcome change, especially in light of the breadth of opportunities for arbitration services arising from the Guangdong-Hong Kong-Macau Greater Bay Area.
SUPPLEMENTAL ARRANGEMENT
Hong Kong’s attractive leading status as an arbitration hub is further reinforced by the entry into effect of articles 2 and 3 of the Supplemental Arrangement on 19 May 2021, the principal consequences of which are twofold.
The first is to enhance the reciprocal enforcement of awards between Mainland of China and Hong Kong by extending its scope to cover all awards of Mainland-seated tribunals that are rendered pursuant to PRC Arbitration Law.
Second, award claimants now have the option of applying for simultaneous enforcement of their awards in mainland and Hong Kong courts – a distinct and unique weapon in their award enforcement armoury.
CONCLUSION
The new developments covered in this article are but a subset of exciting new developments that contribute to the rich tapestry of judicial, legislative and policy measures that serve to further enhance Hong Kong’s position as one of the world’s leading arbitration hubs – and solidify its status as a centre of legal excellence within the PRC.
请点击“阅读原文”参阅本文于Asia Business Law Journal刊载页面。
说 明：文章仅代表作者个人观点，不应视为HKIAC的立场或观点。
关于作者
吴振辉 御用大律师
Temple Chambers in Hong Kong吴大律师经验丰富，专门从事商业诉讼和仲裁，他拥有很多年的庭审经验，并在不同的司法管辖区担任仲裁，包括英国、香港、新加坡、马来西亚、英属维京群岛、开曼群岛和卢森堡。他在350多个案件中担任辩护律师，并于30多个仲裁案件中担任仲裁员（分别作为首席仲裁员、独任仲裁员和边仲裁员），其中的案件均根据不同的条例下进行，包括有国际商会、香港国际仲裁中心、伦敦国际仲裁院、伦敦海事仲裁员协会、新加坡国际仲裁中心、常设仲裁法院和联合国国际贸易法委员会。2018年他成为英国最年轻的御用大律师之一，他在法律名录中被描述为“大律师界的超级巨星”，“就是最好”，“亚洲相关仲裁的知名人士之一”和“杰出的辩护人”。
邓俊杰 大律师
Temple Chambers in Hong Kong邓大律师从事广泛的民事业务，并在涉及公司，破产，商业，公法和禁令救济等领域的案件中接受指导。陈楚杰 大律师
Temple Chambers in Hong Kong陈大律师2018年被认许为英国大律师，2021年被认许为香港执业大律师。他是牛津大学法学学士、硕士，擅处理商事合同纠纷、公司纠纷、商事仲裁、衡平法等。陈大律师有撰写中文法律意见及参与中文审讯的经验。相关阅读