Rising to the challenge

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Joanne Lau, who took over as secretary-general of the Hong Kong International Arbitration Centre in late February, explains why concerns over the city’s future as a leading Asian hub for alternative dispute resolution are misplaced, with the total amount under dispute more than doubling to a record USD11.9 billion in 2023. Caroline Wang reports

 

It seems Hong Kong is fated to be compared with regional peers like Singapore, and discussions about the state of arbitration are no exception.

Speaking to China Business Law Journal a week after taking over as secretary-general of the Hong Kong International Arbitration Centre (HKIAC), Joanne Lau was keen to play down such winner-takes-all comparisons, and to set out her plans to ensure Hong Kong’s future as a dispute resolution hub.

“I think it’s a very good thing that Asia has two top-notch arbitration institutions,” says the 35-year-old Hong Kong native, who joined the centre after more than a decade at Allen & Overy.

“There may be a lot of noise or comparisons, but I believe that HKIAC will consistently provide high-quality services to our users,” she says.

To a certain degree, the rivalry between Hong Kong and Singapore follows a cyclical pattern. Before 2015, Hong Kong held a significant lead in terms of annual new arbitrations. Singapore’s reputation as an arbitration centre has gained in recent years, with the Lion City attracting more cases and generally winning the public perceptions battle. Hong Kong’s critics say the city risks becoming sidelined as a bit player.

A respite came in 2022, when the HKIAC received 344 new cases. That was the highest number since 2009, and closed the gap with Singapore. But any notions that the Singapore International Arbitration Centre (SIAC) was losing steam were quickly snuffed out when it revealed it had already received a record 332 arbitration cases in the first three months of 2023.

The latest data by the HKIAC unveiled a decline of 20% in the total number of arbitration cases in 2023, with a recorded figure of 281 compared to 2022. In stark contrast, however, the total amount under dispute for the year more than doubled to a record HKD92.8 billion (USD11.9billion) from HKD43.1 billion a year earlier.

Lau explains that many parties are taking advantage of mechanisms afforded under the HKIAC’s rules to streamline their arbitration process, including by commencing a single arbitration under multiple contracts. She expands that “more than half of HKIAC’s 2023 caseload are corporate and commercial disputes and construction disputes. Many disputes in these sectors are complex and high value, contributing to a record-breaking total amount in dispute.”

According to the HKIAC, of the arbitration filings received in 2023, almost 60% arose from contracts signed in 2020 or later, “reaffirming that parties continue to recognise HKIAC’s unique strengths and outstanding case administration services”.

Parties from more than 60 jurisdictions used the centre in 2023, says Lau. Nearly 90% of new cases over the previous three years were international, involving at least one party not from Hong Kong.

“Hong Kong is still a very popular arbitration destination,” she says.

Although still young, Lau radiates confidence in her ability to rise to the challenges of her new role, as well as in the future of HKIAC.

She has obtained a first-class honours law degree from the University of Oxford and later a professional certificate in law from the University of Hong Kong. In 2012, she joined Allen & Overy, where she specialised in international arbitration and was promoted to partner in 2021.

While in private practice, Lau had close ties with HKIAC. From 2020 to 2022, she served as the co-chair of the centre’s young arbitration practitioners’ group, HK45, and was also a member of the Proceedings Committee. She says her experience as a practitioner gives her valuable insights that can be applied as she makes the transition to her role at an arbitration institution.

“From my previous role as an arbitration counsel, I can understand what an arbitration practitioner or user would expect from an arbitration institution, such as efficient services and high-quality appointment of arbitrators.”

As secretary-general, her primary responsibilities are case management and promoting the advantages and strengths of HKIAC as an arbitration institution. Lau says she hopes to engage with arbitration professionals from different regions, take on board their views, and continually enhance Hong Kong’s arbitration offering.

Even though there are challenges, on the positive side, Hong Kong has benefited from its robust infrastructure in dispute resolution and unique judicial arrangements with mainland China, the successful adoption of the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and the Hong Kong Special Administrative Region, and the Belt and Road Initiative.

Significantly, since the introduction of the Hong Kong-mainland China arrangement in October 2019 and as at the end of 2023, HKIAC had processed 105 applications and is aware of court orders preserving assets totalling RMB15.8bn (USD2.2billion).

Hong Kong was ranked as the third-most preferred arbitration destination globally after London and Singapore in the 2021 International Arbitration Survey, published every three years by Queen Mary University of London and White & Case.

Maintaining Hong Kong’s position ultimately depends on improving the quality of service, says Lau. “Just because I say it’s good doesn’t mean others will think it’s good,” she says. “We still need to go back to the most fundamental aspect of our service.”

When choosing an arbitration venue, clients should consider the experience of the courts and the arbitration institutions, as well as the competence level of lawyers, says Lau. “The most important thing is to focus on what is really relevant to arbitration,” she adds.

Hong Kong has a comprehensive and mature set of arbitration legislation and procedures, with HKIAC committees comprising experienced lawyers from different parts of the world and responsible for appointing arbitrators and handling arbitration procedure issues.

Many lawyers in Hong Kong’s arbitration community are proficient in both Chinese and English, which is a big advantage in handling disputes related to the mainland, says Lau, who is fluent in Cantonese and Mandarin.

Currently, there are two major events that need to be completed for the Hong Kong arbitration community. In 2018, Hong Kong won the right to host the International Commercial Arbitration Commission (ICCA) Congress, referred to by Lau as the Olympics of the arbitration community. This is much larger in scale than Hong Kong Arbitration Week and will be held from 5-8 May this year.

The selection of Hong Kong to host the ICCA Congress is a recognition of the jurisdiction’s “high position in international dispute resolution”, she says. “We also hope that Hong Kong and HKIAC will continue to play an important role in thought leadership, and the ICCA is a good opportunity to showcase thought leadership.”

Arbitration in Hong Kong has responded to shifting social demands and technological developments, releasing a draft of proposed amendments to the HKIAC Administered Arbitration Rules earlier this year.

The development of emerging technology prompted the HKIAC to include information security content in the new amendments. The revised draft added an information security clause in article 47 to protect the information shared, stored and processed in an arbitration.

“The usual style of HKIAC’s case management is light touch, allowing parties to choose the most suitable procedures for them, but there are still some aspects, such as information security, that we see the need to respond to,” says Lau.

Other amendments include strengthening mechanisms for initiating a single arbitration under multiple contracts, clarifying the power of the arbitration tribunal to resolve preliminary issues, and defining the powers of emergency arbitrators.

Lau says that the amendments aim to reduce arbitration time and costs, improve efficiency and enable parties to obtain results faster. The draft amendments also include an effort to encourage diversity in the composition of tribunals.

“We hope to encourage everyone to consider diversity when appointing arbitrators. This is also new in the rules,” she says.

In the 2021 International Arbitration Survey, 32% of respondents said they hoped that arbitration tribunals could appoint more diverse arbitrators. The revision of the HKIAC Administered Arbitration Rules also encourages diversity in arbitration tribunals, stating that diversity will be considered as a factor when exercising the power to appoint arbitrators.

Lau says that in addition to racial and age diversity, gender diversity is also included. She points out that the proportion of women in senior roles in the legal profession has always been low, and the HKIAC has always been focused on this. HKIAC founded Women in Arbitration (“WIA”) in 2018, and WIA now has 1,260 members from 48 jurisdictions, and has held 25 events to date.

In 2023, the proportion of cases in which female arbitrators were appointed in HKIAC was 34%, compared to 27% in 2021. Still, more progress is needed: that number was 46% in SIAC in 2022.

“Of course, there is still a lot of work to be done,” says Lau. “I am the fourth female Secretary-General and I will continue to work hard for gender diversity.”

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