HKIAC updates Practice Notes on costs of arbitration

From time to time, the HKIAC issues practice notes to supplement its Administered Arbitration Rules, to facilitate arbitrations governed by those Rules. On 1 June 2016, two updated HKIAC Practice Notes came into effect in respect of the costs of arbitration, to supplement the provisions on costs of arbitration under the 2013 HKIAC Administered Arbitration Rules. Parties to an HKIAC administered arbitration have a choice about how the arbitration tribunal’s fees are determined. Such fees can be calculated either on the basis of agreed hourly rates (Schedule 2) or on the basis of the amount in dispute (Schedule 3). The two updated Practice Notes relate to these Schedules and are entitled “Practice Notes on the Costs of Arbitration Based on Schedule 2 and Hourly Rates” and Practice Notes on the Costs of Arbitration Based on Schedule 3 and the Sum in Dispute”.

The updated Practice Notes replace the Practice Notes on Arbitral Tribunal’s Fees, Expenses, Terms and Conditions effective on 1 November 2013. They clarify and detail HKIAC’s practice of paying fees and expenses of arbitrators, tribunal secretaries and the HKIAC under the Rules. New provisions include a section indicating the amount of HKIAC administrative fees payable where the parties settle or terminate their case at different stages of the arbitral proceedings. Another new provision expressly permits a party to seek a separate award from the arbitral tribunal to reimburse that party for any deposit which it has paid on behalf of another party.

Both Practice Notes cover the following:

• Declaration of acceptance and statement of impartiality and independence to be signed by the prospective arbitrator before confirmation of his/her appointment.
• Payments to the arbitral tribunal, including:
  • when, how and from which funds payments to the tribunal are to be made;
  • requests for payment by the arbitrator;
  • in respect of Schedule 3 costs, assessment of a request for interim payment.
• The arbitral tribunal’s fees (how they are to be calculated)
• The arbitral tribunal’s expenses, including:
  • by whom payable;
  • reimbursement;
  • expenses to be reimbursed where the arbitrator is required to travel outside his/her usual place of residence or business and those to be reimbursed where there is no such requirement.

• Fees and expenses of the secretary to the arbitral tribunal, including:
  • how calculated;
  •  by whom payable;
  • amounts payable when travel outside of the secretary’s usual place of residence or business is required.

• HKIAC’s administrative fees, including:
  • by whom payable;
  • percentages payable in the event of withdrawal or termination of arbitration.

• Deposits for costs, including:
  • when payable and by whom;
  • supplementary deposits;
  • payment of further deposits e.g. on consolidation of proceedings or where additional parties are joined.

• Administrative support (HKIAC facilities for holding hearings and meetings at its premises)

The new Practice Notes should be welcomed by users of HKIAC administered arbitrations since they provide clarity on many issues which frequently arise in such arbitrations.