1.    Introduction

        To discuss arbitration in the brief time frame of this presentation requires that a very large and complex subject be reduced to the most significant highlights. Arbitration is one of a number of alternative dispute resolution (ADR) methods. The “alternative” in ADR is generally understood to mean alternative to litigation in the courts.

        Parties choose arbitration over litigation for a number of reasons. The most common reasons are cost, simplicity, flexibility, speed, and finality.

        Other reasons are freedom to select the decision maker (the arbitrator), privacy, and informality. Moreover, parties may represent themselves without the need for hiring lawyers thereby further reducing the cost of the process.

        For these reasons, and for the additional reasons I will discuss below, arbitration is the most appropriate method in many situations for the resolution of disputes between consumers and suppliers of goods and services.

2.    Arbitration in Context

• Definition

        A consensual dispute resolution process in which a neutral third person renders a final and binding decision to settle the dispute.

• The ADR Continuum

        Arbitration is one of a number of dispute resolution processes, ranging from the completely voluntary, non-binding (e.g., negotiation, mediation) to the involuntary, binding (e.g., litigation)

3.    Arbitration - Compared and contrasted (with mediation and litigation)

(Exhibit A)

4.    Fundamentals

• Agreement

• Law

• Rules

5.    The Arbitration Agreement

a. Basic Types

• future disputes

• existing disputes

b. Elements of the arbitration agreement

• intention to arbitrate

• scope/jurisdiction

• institutional vs ad hoc

• rules

• arbitrators (number, selection method, expertise)

• place

• governing law/substance

• language

6.    The Arbitration Law

• governs the arbitration proceedings

• defines the role of the courts in the arbitration process
  (e.g. stays, enforcement of agreements, default appointments, interim relief, recourse, appeal, enforcement of awards)

• distinguished from rules

• provides for recourse against, appeal from, and enforcement of arbitration awards

• separate arbitration statute/civil procedure law/other

• structure of arbitration law in HK

7.    The Arbitration Rules

• agreed to by the parties to govern the internal operation of the proceedings

• institutional rules or “ad hoc”.

  • HKIAC Domestic Rules
  • UNCITRAL
  • ICC Rules

• distinguish from arbitration law (enacted by a legislature)

• rules can be modified as agreed by the parties. Contrast with law.

8.    The Arbitration Process [per Rules]

• comparison with court procedures (litigation)

• initiation

• pleadings

• composition/Selection of Tribunal

• Interim Relief

  • partial awards
  • interlocutory/interim award

• Pre-Hearing matters

  • pre-hearing meetings
  • pre-hearing orders
  • discovery/information exchange
  • defining issues to be determined
  • scheduling

• The Hearing

  • procedure/UNCITRAL, HKIAC
  • order of proof
  • evidence (rules of evidence - hearsay, best evidence, not usually applied).
  • Experts
  • presentation of evidence
    • witness
    • documents
  • documents only

• The Award

  • defined
  • reasoned

9.    “Appeal”

• generally, no right of appeal with respect to the merits, but see HK Ordinance, Sections 23, 23A, and 23B

10.    Recourse against the award

• Application to court to vacate, set aside, or annul the award.

• Typical grounds--misconduct of the arbitrator, agreed rules not followed, award beyond scope of submission, subject matter not arbitrable.

11.    Enforcement

• As if it were a court judgment

• Internationally, better than a court judgment
  e.g. US/UK, no reciprocal judgment enforcement, but cf arbitration awards.

12.    HK Arbitration (Amendment) Ordinance 1966 (eff June 27, 1997)

• Structure and principal features

13.     UNCITRAL Model Law on International Commercial Arbitration
(“UNCITRAL Model Law”)

• Principal features and relationship to Hong Kong Arbitration Ordinance.

14.    United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards. (“New York Convention”)

• Principal features and relationship to Hong Kong Arbitration Ordinance.

15.    Hong Kong Arbitration System

1. Introduction

2. History
3. Structure

Part I    Preliminary — Definitions

1. Overall objective: "to facilitate the fair and speedy resolution of disputes by arbitration without unnecessary expense." (2AA)
   
   

2. 2 fundamental principles

• party autonomy

• limited court involvement

3. - writing requirement (2AC)

- definition broadened

("'writing' includes any means by which information can be recorded")

Part IA    Provisions Applicable to Both Domestic & International

1. arbitrator can act as conciliator

2. arbitrator responsibilities: to act fairly and impartially, …avoid unnecessary delay & expense...etc.

3. arbitrator’s powers:

1. Require claimant to give security for costs.

2. To secure money in dispute.

3. To grant interim injunction.

4. Dismiss or stay if security for costs is not posted.

5. Extend time to commence arb proceedings.

6. Dismiss for unnecessary delay.

7. Award any relief a court could.

4. Powers of Court: 2GC

5. New powers (2GG)

- awards, orders, or directions--enforceable in the same way as a judgment, order or direction of the court
- enforceable as if made by court.

Part II    Domestic

1. International can be made domestic by agreement.

2. Consolidation — as before

3. Kompetenz/Kompetenz — Tribunal can determine own juris. (13B)

(Article 16 of Model Law is to apply to domestic same as international)
- independence of arbitration clause.

4. Appeal of award. (s.23(3)
   Judicial review available under limited circumstances.

5. Court may also decide preliminary point of law. (s.23A(1))

6. "Exclusion agreement" to avoid/waive judicial review. (s.23B(1))

Part IIA    International

2. UNCITRAL Model Law (5th Sched) applies.
   (but parties can agree that domestic applies)
   
   

3. New functions given to HKIAC. 34(C)(3) and (5)
   - to carry out 11(3) and 11(4) of Model Law.
   (appointing authority on default of parties to agree on arb.)
   - decide number, if parties don’t agree.
   
   

3. Court functions under UNCITRAL Model Law.
   - challenge of arbitrator
   - enforcing agreement to arbitrate
   - removal of arb
   - jurisdiction of Tribunal
   - setting aside award
   - enforcing award

Part IV    Enforcement of Convention Awards

1. Enforceable directly under 2GG.
   - same as if award made in HK

2. Grounds for refusal are New York Convention grounds (s.44).

3. HK/Mainland enforcement problem.

4. Ng Fung Hong Case
   - CIETAC award could not be directly enforced in HK.

5. Resolution of enforcement problem between HK/Mainland.
   Arbitration (Amendment) Ordinance 2000.(eff 1 Feb 2000).
   (adds Part IIIA to Ordinance: “Enforcement of Mainland Awards”)

16.    Hong Kong International Arbitration (Centre) — HKIAC (1985)

1. UNICITRAL Rules for International arbitration cases.

2. Own Rules for Domestic arbitration cases

3. Mediation Rules

4. Panels.

17.    Consumer Dispute Resolution Schemes.

a. Designed to be a speedy, simple, inexpensive, effective, and fair means of resolving disputes between consumers and suppliers of goods and services.

b. Combine mediation as a first step, with arbitration to follow. Or parties can only agree to mediate or to arbitrate without combining the 2 processes.

c. Promulgated by the Chartered Institute of Arbitrators in England where a number of such schemes have been put into operation.

d. Envisaged that trade bodies would be able to tailor the schemes to suit their own particular needs with minor variation to the core rules.

e. In most cases, the arbitration should be based on documents only, although there is provision for counter-claims, site inspections and hearings as necessary.

f. Arbitrator fees and administrative costs to be paid by the sponsoring body with consumer paying a small registration fee.

26 April, 2000

Exhibit A.