04 IN CONVERSATION WITH CHIANN BAO
INTERNATIONAL ARBITRATION 1/3LY
CHI ANN I have to admit that when I first arrived in post I didn’t really knowwhat to expect. Generally, I feel we’ve come a long way as an arbitration community over the last four years. We have always had a lot to offer but I believe that Hong Kong is putting itself forwardmuchmore confidently than it might have done previously. We’ve also been able to generatemore support for the Centre, both fromwithin and outside Hong Kong. I think that’s the key to its sustainability. The profile of our secretariat has changed quite a bit during my time, as demands have changed. For example, with the establishment of our Administered Arbitration Rules in 2008, we necessarily requiredmoremulti-lingual, multi-qualifiedmanpower. K IM There seems to be a lot of support from the government in Hong Kong for making arbitrationwork the way it’s designed to work. There have been several recent legislative developments which strengthen and support the arbitral regime, for example, the emergency arbitrator back up provisions. CHI ANN The government has been incredibly supportive in the ways that matter, and nowwith the legislation properly in place, we do really have excellent arbitration infrastructure.
K IM And have you found so far that arbitrators are receptive to these caps on fees and the standard terms? CHI ANN This was certainly a very sensitive issue as you might imagine. But we consulted awide range of users and arbitrators, and ultimately chose a rate that could be tolerated by themarket. I think it’s worked. For example, we have had an instance inwhich an arbitrator refused to accept the cap and, interestingly, the Claimant refused to agree to go beyond the cap. HKIAC then proposed a different arbitrator, of equal stature, who would accept the capped rate. This was accepted by the parties and the arbitration proceeded accordingly. K IM I think a lot of our clients would be pleased to hear that! Youmentioned before that one of themajor rule changes was in relation to consolidation and joinder. What sort of disputes were coming before the HKIACwhere that was an issue? CHI ANN Well, as you know, consolidation is often an issue in construction disputes. But it can also become an issue with other types of disputes involvingmultiple parties and possibly multiple contracts. For example, with corporate and commercial disputes, parties would seek to join a party or consolidate arbitrations prior to the constitution of the tribunal. Under our previous rules (and this is true of many other institutional rules), HKIAC did not have the power to assist parties with this; it was a power that restedwith the tribunal. Having these newprovisionsmakes for a significantlymore efficient and cost-effective process. And, importantly, you can achieve a certainty of outcome between the different disputes, rather than inconsistent outcomes which can cause a lot of difficulties.
From the Secretariat perspective, I was keen to establish systems that facilitated the efficient handling of complex arbitrations. Previously, we encountered numerous instances where arbitrations would stall prior to the constitution of the tribunal because there were no proper rules in place for the institution to address issues such as joinder and consolidation. Of course times have also changed since we introduced our Administered Arbitration Rules in 2008. The international trend towards emergency arbitration procedures has prompted many institutions, including HKIAC, tomake available similar procedures. We have also established tools bywhich to control time and costs, including allowing parties to choose how theywant to pay their arbitrators. K IM Just on that issue, within the newHKIAC Rules, parties can choose between the schedule and paying arbitrators based on an hourly rate. Is that themain provision you are referring to, in terms of the ability to control time and cost? CHI ANN Exactly. There are four major sets of fees associatedwith arbitration: the registration fee; the institution’s fees; the arbitrator’s fees and the lawyers’ fees. Arbitrator remuneration is definitely an areawhere institutions can play ameaningful role. Since our 2008 rules, we have given parties the choice of how theywish to remunerate their arbitrators. This can be an important choice because disputes with high value claims and/or counterclaims are not necessarily themost complex disputes. As such, they don’t necessarilywarrant parties paying on a percentage of value of claimbasis. In 2013, we included a cap for hourly rates as well as a set of standard terms of appointment. This was so that parties would not have to negotiate terms of appointment once they had identified a suitable arbitrator.
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K IM You’vementioned rule changes and, in particular, the Administered Arbitration Rule changes. There was amajor re-issue of those rules in 2013. What was the impetus for that? CHI ANN While we are not an institution that desires rule change for the sake of change, we felt there was a real need by users for certain amendments.
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