Thursday, August 12, 2021

INTERNATIONAL ARBITRATION & DISPUTE RESOLUTION: HONG KONG INTERNATIONAL ARBITRATION CENTER (HKIAC). I sincerely thank Dr. Ling Yang, The Deputy Secretary-General of HKIAC and Chief Representative of the Shanghai Office, whom I had the privilege to get to know and be colleagues with as Visiting Scholars at The Boston University School of Law, for taking the time to answer my questions about new frontiers in the Asia-Pacific International Arbitration and Dispute Resolution Scene. Ayça Akkayan Yıldırım

From: AYÇA AKKAYAN YILDIRIM & LING YANG
Date : August 12, 2021
To : Young Lawyers
Re : NEW FRONTIERS IN THE ASIA-PACIFIC INTERNATIONAL ARBITRATION SCENE: THE HONG KONG INTERNATIONAL ARBITRATION CENTRE PERSPECTIVE (PART II)

CLICK TO READ PART I

 

INTERNATIONAL ARBITRATION & DISPUTE RESOLUTION: HONG KONG INTERNATIONAL ARBITRATION CENTER (HKIAC)

I sincerely thank Dr. Ling Yang, The Deputy Secretary-General of HKIAC and Chief Representative of the Shanghai Office, whom I had the privilege to get to know and be colleagues with as Visiting Scholars at The Boston University School of Law, for taking the time to answer my questions about new frontiers in the Asia-Pacific International Arbitration and Dispute Resolution Scene. Ayça Akkayan Yıldırım

 

AAY: Who are the parties that use the HKIAC? What type of contracts are usually subject to a HKIAC arbitration clause? What kind of disputes do you see the most? Of course, the parties are free to choose any law to govern their contracts, but with which law is arbitration in Hong Kong most often combined with?

 

LY: Thank you very much for asking these questions. As I mentioned earlier, HKIAC does not just serve parties in Hong Kong or Asia. Parties who choose HKIAC to administer their arbitration are spread around the world. In 2020 and 2019, parties over 45 and 56 jurisdictions attended HKIAC’s arbitrations. The top 10 users at HKIAC in 2020 came from Hong Kong, Mainland China, BVI, USA, Cayman Islands, Singapore, South Korea, Malaysia, UK and UAE.

The cases filed to HKIAC also covered a great range of industries. The top ten most common disputes are related to international trade or sale of goods, maritime, corporate, banking and financial services, construction, professional services, insurance, intellectual property and employment.

As to the most popular governing law, over the past 5 years , the top three are Hong Kong Law, English Law and PRC Law, respectively.

 

AAY: Let’s focus more on your position in the HKIAC. I can imagine that working at an institution is very different from working at a law firm. How did you end up at the HKIAC, and what is your role there? What kind of knowledge and skills are needed for this unique job?

How does acting as tribunal deputy secretary, counsel or deputy counsel prepare young professionals for their future arbitral appointments?

 

LY: Thank you for asking this question. It’s crucial. There are many ways for young practitioners who are interested in international arbitration to get into this community. For example, they can join a law firm as an associate or join a well-known arbitration institution as a legal counsel, which could be a more straightforward way, or they can work with an internationally renowned arbitrator as a tribunal secretary.

If young practitioners are interested in being tribunal secretaries, I recommend they sign up the “Arbitral Tribunal Secretary Training Program” provided by HKIAC. Aiming to train the “international arbitrators of the future”, HKIAC has been the first arbitration institution in the world to offer the “Arbitral Tribunal Secretary Training Program” since 2015. The training has been held in Hong Kong, London, New York, Seoul, Singapore, Manila, Shanghai and Beijing. The program has been well received. The training team consists of leading international arbitrators and experienced tribunal secretaries. Through studying in small classes, interacting with mentors and one-on-one coaching, participants are able to gain comprehensive skills mastered by qualified tribunal secretaries. Of course, participants must pass a written test and an interview before being approved for the HKIAC Tribunal Secretary examination. After passing the examination, their name will be listed on the website of HKIAC, and then they can serve as tribunal secretaries once picked by tribunals.

It is important to note that the HKIAC list of approved tribunal secretaries is not just for the sole use of HKIAC arbitrations. Instead, the list is intended to provide a pool of highly trained tribunal secretaries from which tribunals worldwide could choose.

Therefore, I believe becoming a tribunal secretary is a good gateway for young practitioners if they want to have more contacts with the international arbitration community.

 

AAY: What do you love most about your position?

 

LY: What I like most about this job is that HKIAC is really an international platform that I could learn a lot from my colleagues, arbitrators, counsels and other partners of HKIAC. Other than that, like HKIAC’s rules, light touch is the typical feature of the staff management, which means everybody at HKIAC has great freedom to fulfil his or her role at HKIAC. For example, almost of my all ideas to promote HKIAC have been supported by Sarah Grimmer, Secretary-General of HKIAC, and of course, supported by the team. I should say, the working style at HKIAC is quite encouraging and straightforward. From the perspective of outsiders, due to the reputation of HKIAC in the world, especially in the Mainland, HKIAC is an excellent platform to make new friends.   

 

AAY: I noticed that the HKIAC’s legal staff is composed of highly qualified individuals admitted in both civil and common law jurisdictions. Could you please tell us about the diversity policy of the HKIAC and the rationale behind it?

 

LY: Thank you for paying attention to our Secretariat. The HKIAC Secretariat consists of legal and administrative staff of seven nationalities who can work in nine languages. So obviously, the Secretariat is very international. And the composition of the Secretariat is one facet of our diversity policy.

Indeed, HKIAC has always been deeply committed to the diversity in international arbitration. Besides the Secretariat, just as I’ve just mentioned, we launched the WIA in 2018, focusing on women in arbitration. HKIAC has also been developing a young community named as HK 45 for young practitioners since 2012. HK45 is the group for all young arbitration practitioners in Asia and beyond. This initiative aims to promote the use of arbitration and Hong Kong as a seat, to provide a platform for members to learn from each other and leading professionals, and to help Hong Kong remain an inclusive and welcoming place for arbitration lawyers who practice in the region irrespective of young and old. To achieve those aims, HK45 organizes regular seminars, careers events and socials, and together with HKIAC, publish a newsletter with a readership of over 5000 people. Also, the membership of HK45 is free.

Generally, we have done lots of work on improving gender diversity and age diversity in and beyond HKIAC. As to the rationale of the diversity policy, we just believe that each one should be given the equal opportunity to demonstrate his or her talent and ability. Only with the joint effort of people with diverse backgrounds can HKIAC be more dynamic and creative.

 

AAY: Arbitration practice has become more and more global, cross cultural and transnational. Do you think that the HKIAC has been acting as a global platform for alternative dispute resolution by bringing different global players together? What makes the HKIAC unique?

 

LY: Indeed, HKIAC is not merely a Hong Kong or Asian dispute resolution institution. It has actually grown into a world-class arbitration institution. For example, the background of the legal counsel, the members of the three committees, namely the Proceedings, Appointments, and the Finance and Administration Committees, are all very international. In terms of the arbitration cases we handled last year, 6.6% of new arbitration cases involved no Asian parties, and 86% of administered arbitrations were international. Admittedly, HKIAC’s users also feature great diversity, coming from different parts of the world.

As to what makes HKIAC unique, I believe the most important is that the organizational structure of HKIAC is very different from other well-known arbitration institutions. Namely, HKIAC has an international governance mechanism that guarantees the independence of HKIAC, i.e. it operates independently from the government.

In addition, the services provided by HKIAC are closely associated with the pro-arbitration approach taken by Hong Kong. I may give you examples to illustrate this point. Firstly, we know that the provision regarding the default seat of arbitration stipulated in HKIAC rules is unique. Under the HKIAC rules, the default seat of arbitration will be Hong Kong. And parties referring to the HKIAC Administer Arbitration Rules in their contracts would be able to enjoy all the advantages and features brought by Hong Kong as a seat of arbitration.

Another example I’d like to take is the “2019 Interim Measures Arrangement”. Under the “Interim Measures Arrangement”, Hong Kong has become the first and the only jurisdiction outside the Mainland where parties to arbitral proceedings administered by Hong Kong arbitral institutions would be able to apply to the Mainland courts for interim measures. Such an arrangement between Hong Kong and Mainland China, which is one of the most dynamic economy, would definitely increase the attractiveness of Hong Kong and HKIAC. Since the “Interim Measures Arrangement” came into force in 2019, HKIAC has been the first and only arbitral institution to circulate the practice, data and FAQ on the Interim Measures Arrangement. So far, HKIAC has dealt with 47 cases concerning applying for interim measures.

To conclude, first, the HKIAC’s case administration has been illustrating the best practice in international arbitration. Second, HKIAC is also the statutory appointing authority for Hong Kong seated ad hoc arbitrations under the Hong Kong Arbitration Ordinance, which also makes HKIAC different from other arbitration institutions. Thirdly, in the past 36 years, HKIAC has dealt with a large number of Asia-related, especially China-related cases, which allows HKIAC to accumulate a lot of experience related to business in this region. Because of these reasons, HKIAC has become unique among all of the arbitration institutions.

 

AAY: I also would like to hear your insights about the competition between major “global” Arbitral institutions in the region and worldwide. In what ways can competition help the maturing of arbitration in ASIA and in the broader world?

 

LY: This is a very interesting question. But I have also got a question on this topic. Is there really a competitive relationship between arbitration institutions in Mainland China? I serious doubt it. Taking the region of Mainland China for example, there are over 250 arbitration institutions in Mainland China, which seems like a lot of institutions, and the market is expected to be very competitive. However, if you check the data provided by the Supreme People’s Court and CIETAC about the number of commercial disputes resolved with arbitration and litigation in 2019, you may find that disputes resolved with arbitration were far less than those with litigation. The number of the former only amount to about one-tenth or even less of that of the latter. These data reveal that most parties in China have not yet appreciated the value of arbitration and still consider litigation as the best choice when disputes arise. There is no doubt that arbitration is not a mainstream option in the Chinese dispute resolution market because there is a limited understanding of arbitration.

After HKIAC became the first to set up a representative office in Mainland China, ICC, SIAC, KCAB, and other foreign arbitration institutions have set up their representative offices in China one by one. Is the relationship between these foreign arbitral institutions and domestic arbitral institutions one of competition? I don’t think so. We should have more of a cooperative relationship instead. Our common aim should be to cooperate so as to send a message to the parties on Mainland as to why they should choose arbitration as a better method of dispute resolution. I am also happy to see that since HKIAC set up its office in Shanghai and has been launching a series of programs and initiatives, other arbitration institutions, including domestic ones, have gradually taken steps on this issue in Mainland. I do believe and hope that we could work together to build a better arbitration community benefitting more parties in Mainland China.

 

AAY: Will international arbitration continue to attract an increasing number of users? What is the HKIAC’s trajectory for the future? What do you think the future will bring?

 

LY: As to me, I still unswervingly believe that international arbitration remains the preferred option for cross-border dispute resolution. Although there are means of dispute resolution such as mediation and litigation, arbitration is still the first choice due to enforcement concerns and other reasons. As for my vision for HKIAC, I would like it to serve not just Chinese or Asian users, but also to win the trust of global parties and serve them by making good use of Hong Kong’s arbitration system to resolve their disputes effectively. I will do my best to introduce HKIAC’s best practice in international arbitration to parties and practitioners in this industry. I believe our colleagues at headquarters and in Seoul will also present our best practice and experience to more users outside of Asia, either in similar or different ways, attracting them to choose HKIAC and Hong Kong when disputes arise.

All in all, I hope that we can continue to promote our best practice in international arbitration to the world in the future.

 

AAY: Lastly, what would be your parting message for our readers?  

 

LY: Most people would admit that there has never been a time like this moment, when the international community and various domestic societies have been so divided. In such circumstances, disputes unavoidably will arise among people on a large scale. Therefore, an effective dispute resolution mechanism is vital for the peaceful development of the world. For this reason, I believe that a neutral dispute resolution venue like Hong Kong is of great importance to the world.

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