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New Practice Note of HKIAC on Challenge of Arbitrator

Amy Lo

23 December 2014
The HKIAC has issued a new Practice Note (the "Practice Note") on the challenge of arbitrators (available at http://hkiac.org/en/news/509). The Practice Note, effective on 31 October 2014, supersedes the earlier challenge rules of the HKIAC. The Practice Note was prepared to codify procedures for parties to challenge an arbitrator by streamlining these rules into a single user-friendly document and creating a unitary system for filing and determining such challenges.

Wider scope

As well as consolidating existing rules, the Practice Note applies to a wider range of cases than the practice note on the same topic in 2013 which applied to arbitrations that adopted the HKIAC Administered Rules only.

First, this Practice Note governs challenges to arbitrators (in arbitrations administered by the HKIAC) occurring under a wider range of rules than its counterpart in 2013.  The applicable rules now consist of:

  • the 2013 HKIAC Administered Arbitration Rules;
  • the 2008 HKIAC Administered Arbitration Rules;
  • any other arbitration rules issued by HKIAC which designate the HKIAC to decide challenges to arbitrators
  • the 2010 UNCITRAL Arbitration Rules (with or without paragraph 4 of Article 1 as introduced in 2013);
  • the 1976 UNCITRAL Arbitration Rules; and
  • any other arbitration in which the parties agree this Practice Note shall apply.

Secondly, the grounds on which an arbitrator may be challenged have grown wider in scope. Whereas the 2013 practice note specified the particular circumstances under which a challenge could arise, this Practice Note makes it clear that a challenge may be brought against an arbitrator on 'any grounds specified in the applicable arbitration rules or law'.

Procedures

As before, a party seeking to challenge an arbitrator's appointment must submit a notice of challenge to the HKIAC, all other parties and other members of the tribunal either within 15 days after the confirmation of the appointment of that arbitrator has been notified to the challenging party, or within 15 days after that party became aware of or ought reasonably to have been aware of the circumstances giving rise to the challenge.

The notice of challenge must be in writing, state the reasons for the challenge, and be accompanied by payment of a non-refundable challenge registration fee of HK$50,000 to cover the HKIAC's fees and expenses, either by cheque or transfer to the account of the HKIAC.

The HKIAC will then decide on the challenge unless the challenged arbitrator withdraws or the non-challenging party agrees to the challenge.

The grounds of a challenge are limited to those set out in the notice of challenge.  The challenging party may amend or supplement these grounds only if the HKIAC considers it appropriate to allow such amendment, taking into account the circumstances of the case, and having consulted with the non-challenging party and the challenged arbitrator. The need to seek the opinions of the non-challenging party and arbitrator in question is a new requirement for the HKIAC.

Following receipt of the notice, the other parties are then given a chance to respond. Each other party to the arbitration and the challenged arbitrator may submit and answer to the notice of challenge, within such time as the HKIAC shall direct. The challenging party subsequently has the opportunity to comment on the answers to the notice of challenge within such time as the HKIAC shall direct.

No hearing is required unless the HKIAC deems such to be necessary. In the absence of such need, the HKIAC shall determine the challenge solely on the basis of written evidence and written submissions.

The HKIAC's decision as to the challenge will be in writing and communicated to the parties, the challenged arbitrator and, where applicable, other members of the tribunal. However, the Practice Note expressly provides that the HKIAC has no obligation to give reasons for its determination.

Consistency with the arbitration agreement and applicable laws

The Practice Note further seeks to establish a cohesive approach with express guidance in two new areas:

  1. Notices, documents and decisions submitted or produced in accordance with this Practice Note are now required to be communicated to the parties, the arbitral tribunal and HKIAC in accordance with any method specified in the arbitration agreement(s) or in any applicable arbitration rules or law.
  2. Where there is any discrepancy or inconsistency between the note and other provisions of the arbitration agreements or by the applicable arbitration rules or law, the other provisions shall prevail.

Conclusion

The new Practice Note offers a sleek and comprehensive look at procedures for challenges to arbitrators. It has expanded the set of circumstances in which such procedures apply and placed more emphasis on all parties in the arbitration, the arbitral tribunal and the HKIAC working together.

Amy Lo

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