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| The New Arbitration Ordinance was passed by Legco on 10 November 2010, but will not come into effect until a later date, likely to be early 2011, writes Dean Lewis, a partner at Pinsent Masons. The existing Arbitration Ordinance provides separate regimes for international and domestic arbitration, whereas the new law provides a unitary regime of arbitration for both, and adopts the UNCITRAL Model Law on international commercial arbitration (but makes a number of additions and modifications to this). The Model Law does not include some of the “domestic” provisions which the construction industry in Hong Kong is familiar with, such as arbitration by a single arbitrator in the absence of agreement, consolidation of arbitrations, the ability of the Court to decide a preliminary point of law, setting aside of an award on grounds of misconduct and appealing on a point of law. The Model Law contains limited grounds for setting aside an award but these do not include errors of law, no matter how serious. These changes are significant for the construction industry in Hong Kong, and through representations made by the Hong Kong Construction Association the New Law provides for exceptions. Schedule 2 to the Ordinance contains all the existing domestic provisions, including those referred to above and these can apply to arbitration in two situations: First, if an arbitration agreement expressly provides that they are to apply and, secondly, for a period of six years after the New Law comes into effect, if an arbitration agreement provides that arbitration is to be treated as “domestic”, they will automatically apply. It is therefore an automatic opt-in to the Schedule 2 for all arbitration agreements which provide that they are to be treated as domestic arbitration. In addition to this, if a construction contract results in an automatic opt-in to Schedule 2, then any sub-contract (of any tier) which includes an arbitration agreement will also be deemed to have opted-in automatically to Schedule 2. In all cases, the automatic opt-in will not apply if the arbitration agreement expressly provides otherwise and also the automatic opt-in down the line will then not apply. The New Arbitration Ordinance will significantly alter the practice of arbitration in Hong Kong, and all contractors, sub-contractors and suppliers must review their Standard Forms of Contracts to ensure they accurately produce the intended result. |
