Hong Kong Arbitration Ordinance – end of the automatic opt-in

Parties entering into an agreement on or after 1 June 2017 that provides for arbitration in Hong Kong can no longer rely on Section 100 of Hong Kong's Arbitration Ordinance and automatically opt-in to Schedule 2 simply by providing for "domestic arbitration" in their arbitration agreements.  Parties wishing to apply specific provisions of Schedule 2 must now expressly opt in pursuant to Section 99 of the Arbitration Ordinance.  The opt-in provisions under Schedule 2 include: 

• having the dispute submitted to a sole arbitrator (para. 1 of Sch. 2);
• consolidation of arbitrations by the court (para. 2 of Sch.2);
• determination of preliminary points of law by the court (para. 3 of Sch. 2);
• challenges to awards permitted on grounds of serious irregularity (paras. 4 and 7 of Sch. 2); and
• appeals to the courts allowed on questions of law arising from arbitral awards (paras. 5, 6 and 7 of Sch. 2)

However, Section 100 will continue to have effect for arbitration agreements providing for "domestic arbitration" that were entered into before 1 June 2017.

Background

The Arbitration Ordinance (Cap 609) abolished the dual regime for ‘international’ and ‘domestic’ arbitrations and created a unitary framework for the conduct of all arbitration in Hong Kong although Hong Kong legislators chose to retain the key features of the ‘domestic’ regime in a series of ‘opt-in’ provisions set out in Schedule 2 of the new Ordinance.

Under Section 100 of the Arbitration Ordinance, the various ‘opt-in’ provisions set out in Schedule 2 apply automatically to all arbitration agreements which provided for ‘domestic arbitration’ and which were entered into before, or within six years of, the new Ordinance coming into effect (i.e. until 31 May 2017) unless the parties opted out.

Beginning 1 June 2017, it is no longer sufficient for parties who conclude a Hong Kong arbitration agreement simply to provide for "domestic arbitration" if they wish to opt-in to Schedule 2. 

From 1 June 2017, parties who want to opt in to some or all of the provisions of Schedule 2 must state expressly which provisions are to apply. 

However, arbitration agreements providing for "domestic arbitration" that were concluded before 1 June 2017 will not be affected.  In addition, Schedule 2 will continue to apply to arbitration agreements contained in every construction subcontract even though these may have been entered into after 31 May 2017 for as long as the arbitration agreement in the main construction contract provides for "domestic arbitration" and was entered into before 31 May 2017.