The Hong Kong International Arbitration Centre (“HKIAC”) has recently released a Practice Note on Consolidation of Arbitrations which serves to supplement the consolidation regime contained in the 2013 HKIAC Administered Arbitration Rules (“Rules”).
Consolidation refers to a mechanism whereby two or more separate but related arbitrations can be merged into a single arbitration. Disputes involving multi-party and multi-contract transactions often lead to multiple proceedings which run the risk of inconsistent decisions and escalated costs. Consolidation can help minimise this risk, and at the same time, provide a time-and-resource-efficient way of dealing with complex disputes of such nature.
Pursuant to Article 28 of the Rules, the HKIAC has the power, at the request of a party (“Request”), to consolidate two or more pending arbitrations where:
a. the parties agree to consolidate; or
b. all of the claims in the arbitrations are made under the same arbitration agreement; or
c. the claims are made under more than one arbitration agreement, a common question of law or fact arises in both or all of the arbitrations, the rights to relief claimed are in respect of, or arise out of, the same transaction or series of transactions, and HKIAC finds the arbitration agreements to be compatible.
The Practice Note, which came into effect on 1 January 2016, applies to arbitrations in which parties submit a Request under Article 28 of the Rules on or after 1 January 2016.
The Practice Note sets out in detail the contents and particulars required to be included in the Request and any comments on the Request.
Apart from Article 28, the Rules also provide for two other mechanisms to deal with arbitrations involving multiple contracts/transactions/parties. Article 27 allows an additional party to be joined to an existing arbitration provided that, prima facie, the additional party is bound by the arbitration agreement giving rise to the arbitration. Under Article 29, a claimant is permitted to commence a single arbitration in relation to a series of transactions under multiple contracts.
The Practice Note is a positive development in Hong Kong’s consolidation regime which has made it easier to deal with arbitrations involving multiple claimants and multiple respondents with overlapping interests. Parties opting for HKIAC arbitration in such cases no longer need to incorporate extensive consolidation and joinder provisions within their arbitration agreement.
The Practice Note and the Rules are available on the HKIAC website.
Contacts
Brooke Holden, Partner
Tel +852 3405 7671
brookeholden@gallhk.com
Ashima Sood, Legal Analyst
Tel +852 3405 7628
ashimasood@gallhk.com
