Automatic opt-in provisions for arbitration to lapse in Hong Kong

Out-Law Analysis | 19 May 2017 | 11:37 am | 1 min. read

ANALYSIS: Businesses operating in Hong Kong should urgently review existing contracts to account for an upcoming change in the law relating to dispute resolution.

Automatic opt-in provisions for domestic provisions of Hong Kong's Arbitration Ordinance, including the right of appeal on a point of law, are about to lapse. From next month, businesses that provide in their agreements for arbitration will no longer be able to assume that domestic disputes will be settled in line with the domestic provisions in the Ordinance.

Parties to an arbitration agreement who want to continue using any of the provisions that only apply to the former domestic regime will now have to expressly opt in to them, and anyone negotiating a contract that provides for arbitration should consider whether any of the provisions should be included.

The Ordinance, which came into effect in June 2011, unified the separate arbitration regimes that were in place for domestic and international arbitration at the time. It included a limited exception where an arbitration agreement expressly providing for 'domestic' arbitration would be deemed to automatically opt-in to the domestic arbitration provisions, including for any sub-contracts that did not expressly opt out. That was, however, only to run for six years and will lapse on 1 June.

The provisions include the default requirement of a sole arbitrator, consolidation of arbitrations, the ability of the court to decide a point of law, setting aside an award for serious irregularity and appeal on point of law.

Public procurers in Hong Kong have been opting in to the domestic provisions in their standard forms of contract and it remains to be seen what policy will be adopted in future. To maintain the status quo they will need to amend their standard forms of contract. Main contractors and sub-contractors need to urgently consider the approach they desire and provide accordingly in their contracts.

Hong Kong-based Dr Dean Lewis is an arbitration expert with Pinsent Masons, the law firm behind Lewis was involved in the drafting of the Arbitration Ordinance, including the domestic provisions.