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Policy Statement & Submission

2008/07/11

Reform of the Law of Arbitration in Hong Kong and Draft Arbitration Bill

11th July 2008


Mr Ian Wingfield
Solicitor General
Department of Justice
Legal Policy Division
Queensway Government Offices
66 Queensway
Hong Kong

By post and fax: 21809928



Dear Mr Wingfield,


Consultation Paper: Reform of the Law of Arbitration in Hong Kong and Draft Arbitration Bill

The Hong Kong General Chamber of Commerce is pleased to provide its views in response to the above.

We agree with the aim of unifying the whole of Hong Kong arbitration law based on the UNCITRAL Model Law, including its recent amendments.

As regards the specific proposals on which comments have been sought:

1. Clause 5.3(b) - deeming provision

We agree with the proposal.

2. Clause 14(4) - exclusion of appeal in respect of extension of limitation period after setting aside

We do not agree with this proposal. We consider that the impact of the exercise of discretion to extend limitation periods so significant that it should be subject to appeal, perhaps with a requirement of leave to appeal. The consultation paper only addresses the inconvenience of an appeal against an order to extend the limitation period. One can indeed envisage such appeals being brought abusively. However, the burden of that ought not to be too great. The opposite situation - inability to appeal against a discretionary refusal to extend the limitation period - seems likely to be a greater menace.

3. Clause 15 - leave to appeal requirement

We agree with the proposal.

4. Clauses 20(1) and (2) - leave to appeal requirement

We agree with the proposal.

5. Clause 20(6) - exclusion of appeal regarding security in admiralty matters

We agree with the proposal. The distinction between this proposal and that under clause 14(4) lies in the relatively minor nature of the issue under clause 20(6).

6. Clause 31(8) - whether refusal of leave to appeal ought to be appealable

We suggest that the decision on leave to appeal should not be subject to appeal.

7. Clause 32 - judges as arbitrators

We agree with this proposal.

8. Clause 46 - interim measures where seat is outside Hong Kong

We agree that there should be no requirement of reciprocity, i.e. that the proposal in para 6.15(1) should be rejected. Although certain jurisdictions do not yet provide for relief on the same liberal basis, we do not think that a reciprocity requirement would improve matters. It is better for Hong Kong to set an example in this regard, remembering also that the main question ought to be one of justice between the particular parties.

We agree with the proposals in para 6.15(2) and 6.17.

9. Clause 59(7) - appeal against exercise of power to extend time for commencement of arbitration proceedings

We agree with the proposal.

We observe that allowing an appeal in such a case would seem consistent with allowing an appeal in the circumstances envisaged by clause 14(4) (see above).

10. Clause 60(5) - appeal against exercise of power to dismiss or prohibit in cases of delay

We agree with the proposal.


11. Clause 62 - whether enforcement of interim orders should require reciprocity

We agree that a requirement of reciprocity is not appropriate. First, there is an issue of justice as under clause 46 (above). Secondly, as the consultation paper rightly points out, a requirement for reciprocity would most likely lead to such applications becoming bogged down in expert evidence and the like, thereby undermining their utility, all for no useful purpose.

12. Clause 67 - appeal against decision whether to enforce settlement

We agree with the proposal.

13. Clause 75 - forthwith costs orders

We agree with the proposal.

14. Clause 80(1)(c) - interest on costs

We agree with the proposed clause 80(1)(c).

15. Clause 82 - whether decision of CFI to set aside should be subject to appeal

We strongly believe that such a decision should be subject to appeal with leave. The main danger is that a single judge may one day inappropriately set aside an award, thereby damaging Hong Kong's reputation as an arbitration seat. Retaining the possibility for the Court of Appeal to intervene to correct such errors is important and would facilitate the development of the law. And if one grants the possibility of an appeal upon the setting aside of an award, one cannot very well refuse such possibility in the event that setting aside is refused.

16. Clauses 85, 88 and 93 - whether decision of CFI to enforce (or not enforce) foreign or mainland award should be subject to appeal

As under clause 82, we believe there should be an appeal, with leave. The reason is analogous to that under clause 82. A single judge may one day inappropriately refuse enforcement of such an award, thereby damaging Hong Kong's reputation as a place which honours its international (and intra-China) obligations. Retaining the possibility for the Court of Appeal to intervene to correct such errors is important. There is some possibility for abuse, of course, particularly by parties seeking to avoid enforcement, but that can be controlled by judicious use of the court's discretion as to whether to grant leave to appeal or to stay execution pending appeal.

17. Clauses 100 to 103

Although unusual, we think that the opting-in system is a reasonable compromise to address the concerns which have evidently been expressed. However, we do have some concerns as to the restrictions placed by Clause 102 on party autonomy (given that Clause 102 would operate to apply Schedule 3 to an arbitration agreement contained in a sub-contract which does not stipulate that any arbitration should be domestic).

18. Schedule 3, section 2(2) and (5)

We believe that the court should have the power to appoint the same arbitrator to hear arbitral proceedings that have been ordered to be heard at the same time or immediately one after another.

We agree with the alternative proposal in the draft Bill in relation to the power of the arbitral tribunal to make costs orders.

We hope that this is of assistance. Thank you for the opportunity to comment. We are also grateful for the extension of the deadline.

Yours sincerely,

David O'Rear
Chief Economist
Hong Kong General Chamber of Commerce

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