Hong Kong is today home to about half a dozen arbitration institutions that fiercely compete for disputes work. To stay competitive, centres need to stay abreast of developments and client needs.

The number of arbitration cases being adjudicated in Hong Kong – one of the world’s most popular and improved arbitral seats — is on the rise, but so is the number of arbitration institutions. There are some half a dozen arbitration centres in the city, and the competition for cases is only set to intensify.

With the likes of the Hong Kong International Arbitration Centre (HKIAC), China International Economic and Trade Arbitration Commission Hong Kong Arbitration Center (CIETAC), Hong Kong Institute of Arbitrators (HKIAB), Chartered Institute of Arbitrators (CIArb) and International Chamber of Commerce (ICC) all vying for cases, centres cannot afford to not stay abreast of client requirements as well as new trends.

The key area in the battle is the arbitration rules, which is why centres need to ensure they stay updated with the latest developments in that space.

“It is important for arbitration institutions to stay abreast of these developments and to continue to come up with innovative solutions for the parties that will enable institutions to remain attractive and to bring in more cases,” says Alfred Wu, a dispute resolution partner at Norton Rose Fulbright. “Rules of arbitration of an institution are probably the most important factors for parties to decide whether to choose the institution.”

Arbitration institutions know how important this is, with several recently releasing new and improved rules. Even the HKIAC, which is already the most preferred arbitral institution in Asia and third in the world, according to the Queen Mary University of London and White & Case’s 2015 International Arbitration Survey, has not taken its top spot for granted.

“A key driving principle underlying the attractiveness of HKIAC to users is our time and cost-effective process under the 2013 Administered Arbitration Rules while maintaining a ‘light-touch’ approach,” says Sarah Grimmer, the secretary-general of HKIAC.

The centre recently proposed a set of amendments to its 2013 rules for administered arbitrations. The proposed new rules include catering for third-party funding in arbitrations – allowing third-party funders to finance arbitration costs in return for a percentage of the award – which Hong Kong just passed in June and takes effect later this year.

“In an effort to continue providing users with a set of innovative rules that can effectively and efficiently resolve disputes, HKIAC has initiated a revision process to consider ways of enhancing the market-leading 2013 Rules,” explains Grimmer. “Proposed revisions include, among others, establishing an online database for the submission and service of written communications, introducing a set of default procedures on the conduct of arbitral proceedings in two or more languages, and incorporating a provision to allow multiple proceedings to be heard concurrently.”

The public consultation process for the revision of the 2013 Rules commenced on 29 August and will conclude on 2 October.

FINGER ON THE PULSE

Another area where arbitration institutions can differentiate themselves on is fees, which centers have structured differently.

“Corresponding to market demand, fees charged by arbitration institutions are already quite competitive,” says Wu. “Arbitration institutions should constantly maintain a high level of awareness of the market that they operate in and structure their fees to suit the demands of users of their services.”

“Arbitration institutions should further maintain a fine balance in the level of fees charged by arbitrators on their panels,” he adds. “A low fee level for arbitrators will unlikely attract quality arbitrators, and too high a fee level will deter parties from using the institutions.”

And finally, arbitration institutions need to constantly keep a finger on the pulse of the desires of the users when it comes to value-added services to avoid lagging behind, says Wu.

He explains: “These demands are wide ranging and will range from a demand for greater transparency in the institution’s administration of arbitrations, the conduct and performance of arbitrators on its panel, the vetting of awards by the institution to enhance effectiveness in enforcement, to the provision of better facilities at the arbitration centers in support of the holding of arbitration hearings.”