IMechE Seminar Arbitration & Engineering
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1 IMechE Seminar Arbitration & Engineering Presented by Man Sing Yeung FHKIS, FRICS, FCIArb Chartered Arbitrator Accredited Mediator/Adjudicator, Solicitor, Partner of Li & Partners
2 Arbitration & Engineering Part 1 Introduction to Arbitration
3 What is arbitration? A method by which disputes are resolved judicially, with binding effect, by an impartial arbitral tribunal, not a Court of Law
4 What is arbitration? A method by which disputes are resolved judicially, with binding effect, by an impartial arbitral tribunal, not a Court of Law e.g. monetary claims, injunctions, demand for action,etc.
5 What is arbitration? A method by which disputes are resolved judicially, with binding effect, by an impartial arbitral tribunal, not a Court of Law Award recognized and can be enforced by Court
6 What is arbitration? A method by which disputes are resolved judicially, with binding effect, by an impartial arbitral tribunal, not a Court of Law A sole arbitrator or a panel of arbitrators the umpire
7 What is arbitration? A method by which disputes are resolved judicially, with binding effect, by an impartial arbitral tribunal, not a Court of Law Private forum instead of a conventional court
8 Difference with litigation By consent only Only possible if the disputing parties all agree by arbitration agreement or clause Consent can be pre-dispute or post-dispute
9 Difference with litigation Autonomy in dispute resolution Civil procedures in litigation are rigid Arbitration procedures are flexible and tailor-made so long as all parties agree
10 Difference with litigation Award is usually final Decision in District Court and Court of First Instance (High Court) can be appealed to the Court of Appeal and Court of Final Appeal Arbitration agreement usually provides award to be final and binding
11 Advantages of arbitration Confidentiality Flexibility Expertise Finality of awards Enforcement internationally
12 Advantages of arbitration Confidentiality c/f court proceedings which are usually open to the public and media Commercial considerations on company reputation Flexibility Expertise Finality of awards Enforcement internationally
13 Advantages of arbitration Confidentiality Flexibility Tailor-made procedures by consent Expertise Finality of awards Enforcement internationally
14 Advantages of arbitration Confidentiality Flexibility Expertise Arbitral tribunal with professional knowledge Especially important in certain industries such as construction and engineering Finality of awards Enforcement internationally
15 Advantages of arbitration Confidentiality Flexibility Expertise Finality of awards No appeal quick resolution Enforcement internationally
16 Advantages of arbitration Confidentiality Flexibility Expertise Finality of awards Enforcement internationally Hong Kong is a signatory of New York Convention Award is enforceable in all signatory countries
17 Disadvantages of arbitration Not necessarily quicker or cheaper Awards cannot bind a third party Court s assistance required for interim relief (e.g. urgent injunction) Does not establish a binding precedent for future cases
18 Arbitration in Hong Kong s20 Arbitration Ordinance (Cap. 609): 1) A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed. 2) Where an action referred to in paragraph (1) of this article has been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the court.
19 Arbitration in Hong Kong s20 Arbitration Ordinance (Cap. 609): 1) A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed. 2) Where an action referred to in paragraph (1) of this article has been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the court.
20 Arbitration in Hong Kong s20 Arbitration Ordinance (Cap. 609): 1) A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed. 2) Where an action referred to in paragraph (1) of this article has been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the court.
21 Arbitration in Hong Kong s20 Arbitration Ordinance (Cap. 609): Therefore in general a Court will: 1. Stay a court proceeding 2. Refer the matter to arbitration 3. Honour an award in arbitration
22 Arbitration & Engineering Part 2 The Process of Arbitration
23 Types of Arbitration Arbitration Institutional Ad Hoc International Rules Domestic Rules Institutional Rules Custommade Rules
24 Institutional or Ad Hoc Institutional arbitration Administered by arbitration institutions (e.g. HKIAC, CIETAC, etc.) Professional services (including appointment of arbitrators if parties cannot agree) Tried-and-tested set of procedural rules Administration fees
25 Institutional or Ad Hoc Ad hoc arbitration Not administered Custom-made procedural rules or adopt institutional rules May be cheaper Difficult to agree on rules after dispute has arisen
26 Institutional Rules Used by institutional arbitration Can be opted by domestic arbitration also E.g. HKIAC Arbitration Rules International Rules or Domestic Rules
27 International or Domestic Main features International - 1 or 3 arbitrators - The Arbitration Ordinance and HKIAC International Rules mainly adopted the UNCITRAL Arbitration Rules - Enforcement worldwide Domestic - Sole arbitrator - Courts had greater power : Power to consolidate 2 or more related arbitrations Power to determine point of law Possible to appeal on question of law
28 Arbitration Process HKIAC Arbitration Source:
29 Arbitration Process HKIAC Arbitration Source:
30 Arbitration Process HKIAC Arbitration Source:
31 Arbitration Process HKIAC Arbitration Source:
32 Arbitration & Engineering Part 3 Arbitration Clauses
33 When will a Court recognize an arbitration agreement? s19 Arbitration Ordinance (Cap. 609): 1. There is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
34 When will a Court recognize an arbitration agreement? s19 Arbitration Ordinance (Cap. 609): 1. There is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.
35 When will a Court recognize an arbitration agreement? s19 Arbitration Ordinance (Cap. 609): 2. May be in the form of an arbitration clause in a contract or in the form of a separate agreement
36 When will a Court recognize an arbitration agreement? s19 Arbitration Ordinance (Cap. 609): 2. May be in the form of an arbitration clause in a contract or in the form of a separate agreement usually pre-dispute usually post-dispute
37 When will a Court recognize an arbitration agreement? s19 Arbitration Ordinance (Cap. 609): 3. Must be in writing
38 What if the dispute is whether the contract is valid? Even if the arbitration clause is a clause in the contract, it is treated as a separate and stand-alone clause An arbitration clause can be valid even if the whole contract does not have effect anymore
39 What if the dispute is whether the contract is valid? Therefore: 1. The arbitration clause applies to disputes of validity of the contract 2. The arbitration clause survives termination of the contract 3. Paradox is avoided
40 Principles of drafting an arbitration clause Precise, clear and unambiguous Ambiguous or defective arbitration clauses can lead to lengthy litigation, which would defeat the primary purpose of an arbitration agreement
41 Essential elements of an arbitration clause Agreement to arbitrate Scope of arbitration Finality of awards
42 Essential elements of an arbitration clause Agreement to arbitrate Must express the parties clear intention to arbitrate instead of going to a Court
43 Essential elements of an arbitration clause Agreement to arbitrate Shall be referred to arbitration May be referred to arbitration Shall be referred to an expert
44 Essential elements of an arbitration clause Scope of arbitration Usually as wide as possible in order to catch all (except when the parties wanted to limit the scope) Otherwise some parts of an dispute may fall outside the scope and require to be submitted to Court which defeats the whole purpose
45 Essential elements of an arbitration clause Scope of arbitration All disputes, controversies and differences Each dispute May lead to more than A dispute 1 arbitration required
46 Essential elements of an arbitration clause Scope of arbitration arising out of or in connection with this contract arising out of this contract Tort or other non-contractual claims not covered
47 Essential elements of an arbitration clause Finality of awards Should allow no appeal against an award, particularly appeal in Court Finally settled Finally resolved
48 Other elements of an arbitration clause Institution Seat of arbitration Arbitrators Procedural rules Language Etc.
49 An example of well-drafted arbitration clause "Any dispute, controversy, difference or claim arising out of or relating to this contract, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered by the Hong Kong International Arbitration Centre (HKIAC) under the HKIAC Administered Arbitration Rules in force when the Notice of Arbitration is submitted. The law of this arbitration clause shall be Hong Kong law. The seat of arbitration shall be Hong Kong. The number of arbitrators shall be three. The arbitration proceedings shall be conducted in English. Source:
50 An example of well-drafted arbitration clause "Any dispute, controversy, difference or claim arising out of or relating to this contract, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered by the Hong Kong International Arbitration Centre (HKIAC) under the HKIAC Administered Arbitration Rules in force when the Notice of Arbitration is submitted. The law of this arbitration clause shall be Hong Kong law. The seat of arbitration shall be Hong Kong. The number of arbitrators shall be three. The arbitration proceedings shall be conducted in English. Clear intention to arbitrate
51 An example of well-drafted arbitration clause "Any dispute, controversy, difference or claim arising out of or relating to this contract, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered by the Hong Kong International Arbitration Centre (HKIAC) under the HKIAC Administered Arbitration Rules in force when the Notice of Arbitration is submitted. The law of this arbitration clause shall be Hong Kong law. The seat of arbitration shall be Hong Kong. The number of arbitrators shall be three. The arbitration proceedings shall be conducted in English. Wide scope covering all possible disputes
52 An example of well-drafted arbitration clause "Any dispute, controversy, difference or claim arising out of or relating to this contract, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered by the Hong Kong International Arbitration Centre (HKIAC) under the HKIAC Administered Arbitration Rules in force when the Notice of Arbitration is submitted. The law of this arbitration clause shall be Hong Kong law. The seat of arbitration shall be Hong Kong. The number of arbitrators shall be three. The arbitration proceedings shall be conducted in English. Finality of awards
53 An example of well-drafted arbitration clause "Any dispute, controversy, difference or claim arising out of or relating to this contract, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered by the Hong Kong International Arbitration Centre (HKIAC) under the HKIAC Administered Arbitration Rules in force when the Notice of Arbitration is submitted. The law of this arbitration clause shall be Hong Kong law. The seat of arbitration shall be Hong Kong. The number of arbitrators shall be three. The arbitration proceedings shall be conducted in English. Institutional arbitration specified
54 An example of well-drafted arbitration clause "Any dispute, controversy, difference or claim arising out of or relating to this contract, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered by the Hong Kong International Arbitration Centre (HKIAC) under the HKIAC Administered Arbitration Rules in force when the Notice of Arbitration is submitted. The law of this arbitration clause shall be Hong Kong law. The seat of arbitration shall be Hong Kong. The number of arbitrators shall be three. The arbitration proceedings shall be conducted in English. Procedural rules specified
55 An example of well-drafted arbitration clause "Any dispute, controversy, difference or claim arising out of or relating to this contract, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered by the Hong Kong International Arbitration Centre (HKIAC) under the HKIAC Administered Arbitration Rules in force when the Notice of Arbitration is submitted. The law of this arbitration clause shall be Hong Kong law. The seat of arbitration shall be Hong Kong. The number of arbitrators shall be three. The arbitration proceedings shall be conducted in English. Governing law is Hong Kong Law
56 An example of well-drafted arbitration clause "Any dispute, controversy, difference or claim arising out of or relating to this contract, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered by the Hong Kong International Arbitration Centre (HKIAC) under the HKIAC Administered Arbitration Rules in force when the Notice of Arbitration is submitted. The law of this arbitration clause shall be Hong Kong law. The seat of arbitration shall be Hong Kong. The number of arbitrators shall be three. The arbitration proceedings shall be conducted in English. Seat is Hong Kong
57 An example of well-drafted arbitration clause "Any dispute, controversy, difference or claim arising out of or relating to this contract, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered by the Hong Kong International Arbitration Centre (HKIAC) under the HKIAC Administered Arbitration Rules in force when the Notice of Arbitration is submitted. The law of this arbitration clause shall be Hong Kong law. The seat of arbitration shall be Hong Kong. The number of arbitrators shall be three. The arbitration proceedings shall be conducted in English. Number of arbitrators
58 An example of well-drafted arbitration clause "Any dispute, controversy, difference or claim arising out of or relating to this contract, including the existence, validity, interpretation, performance, breach or termination thereof or any dispute regarding non-contractual obligations arising out of or relating to it shall be referred to and finally resolved by arbitration administered by the Hong Kong International Arbitration Centre (HKIAC) under the HKIAC Administered Arbitration Rules in force when the Notice of Arbitration is submitted. The law of this arbitration clause shall be Hong Kong law. The seat of arbitration shall be Hong Kong. The number of arbitrators shall be three. The arbitration proceedings shall be conducted in English. Language
59 Arbitration & Engineering Part 4 Q & A
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