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Asian Dispute Review

april 2017

Since 1999 April 2017

pp. 53-100

Sponsored by

Hong Kong International Arbitration Centre Chartered Institute of Arbitrators (East Asia Branch)

Hong Kong Institute of Arbitrators Hong Kong Mediation Council

The Publishing Team
General Editors
April 2017

53 Editorial

Romesh Weeramantry John Choong

International Arbitration
Consulting and Technical Editor 54 The Challenges to International Arbitration
Sir Vivian Ramsey

Arbitration in Asia
60 Challenges Against Arbitrators: The HKIAC Way
Robert Morgan
Jay Santiago
Editorial Advisory Board
Lijun Cao
67 Singapores Highest Court Confirms Pro-arbitration Approach
Henry Chen
Michael Hwang SC to Shareholder Disputes
Neil Kaplan CBE QC SBS Koh Swee Yen
Gabrielle Kaufmann-Kohler
Julian Lew QC
Michael Moser Mediation in Asia
Yoshimi Ohara 72 Mediating Commercial Disputes: A Call to Action in Hong
Hi-Taek Shin
Supervisory Board Julian Copeman, May Tai & Anita Phillips
Paul Barrett (Chartered Institute of Arbitrators, East Asia Branch)
Chiann Bao (Hong Kong International Arbitration Centre)
Vod K S Chan (Hong Kong Mediation Council) In-house Counsel focus
Paul Varty (Hong Kong Institute of Arbitrators)
79 How to Choose International Arbitration Rules: An Arbitrators
Editorial Assistants View
Colin Ballantine
Man Sing Yeung & Robert Morgan
Navin G Ahuja

Copy Assistant Jurisdiction Focus

Janet Hammond
87 Hong Kong Update
All enquiries to the Asian Dispute Review's Editors should be sent to
asiandr-editor@hkiac.org Cameron Hassall & Thomas Walsh

book review
93 Datuk Professor Sundra Rajoo: Law, Practice and Procedure
of Arbitration (2nd Edition)
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Hong Kong International Arbitration Centre
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pp. 53-1

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We commence this issue of Asian Dispute Review with an article in which Sir Vivian Ramsey discusses the
challenges facing international arbitration. Jay Santiago then provides an insight into the determination of
challenges to arbitrators by HKIAC. This is followed by an article by Koh Swee Yen which looks at the arbitrability
of shareholder disputes in Singapore, as well as a piece by Julian Copeman, May Tai and Anita Phillips on recent
developments in Hong Kong mediation. Our In-House Counsel Focus article by Man Sing Yeung and Robert
Morgan provides an arbitrators view on how to select institutional international arbitration rules.

Recent developments in arbitration in Hong Kong are discussed in our General Editors
Jurisdiction Focus by Cameron Hassall and Thomas Walsh. Finally, Robert
Morgan reviews Datuk Professor Sundra Rajoos latest text, Law, Practice and
Procedure of Arbitration.

Julian Copeman Sir Vivian Ramsey
Herbert Smith Freehills International judge, arbitrator and mediator
Hong Kong Singapore and London

Cameron Hassall Jay Santiago

Clifford Chance Hong Kong International Arbitration Centre
Hong Kong Hong Kong

Koh Swee Yen May Tai

WongPartnership LLP Herbert Smith Freehills
Singapore Hong Kong

Robert Morgan Thomas Walsh

Consulting and Technical Editor, Asian Dispute Review Clifford Chance
Brisbane/Hong Kong Hong Kong

Anita Phillips Man Sing Yeung

Herbert Smith Freehills Li & Partners
Hong Kong Hong Kong

[2017] Asian Dispute Review 53

Arbitration in asia

Challenges Against Arbitrators:

Jay Santiago

This article discusses the determination of challenges to arbitrators by the Hong Kong
International Arbitration Centre (HKIAC). It focuses on (1) the challenge procedure before the
HKIAC, (2) the costs of challenge proceedings and (3) the HKIACs evaluation of challenges.

Introduction Fifteen challenges were submitted to the HKIAC between

One of the key features of arbitration is that parties are 2011 and 2016. Of these, 11 resulted in decisions by the
free to choose their arbitrators. This free choice is, however, HKIAC. All 11 decisions rejected the challenges raised. Of the
subject to the parties agreement and the requirement that four challenges in which the HKIAC did not issue a decision,
arbitrators are to remain impartial and independent at all one was determined by the HKIAC to be a jurisdictional
times. A challenge against an arbitrator, which may lead to objection and was referred to the tribunal for decision; one
the termination of his/her mandate, is an available remedy in was subsequently withdrawn before the HKIAC was able to
arbitral proceedings to ensure that arbitrators are and remain issue a decision; in the remaining two cases, the challenged
impartial and independent and meet the qualifications agreed arbitrator resigned. Four challenges were pending with the
by the parties. HKIAC at the time of writing.

Arbitration in asia

Under the UNCITRAL Rules, an arbitrator may be challenged

A challenge against if circumstances exist that give rise to justifiable doubts as to
an arbitrator, which may his/her impartiality or independence. A party may also seek
lead to the termination the removal of an arbitrator if he/she fails to act, or in the

of his/her mandate, is an event of de jure or de facto impossibility in performing his/her

available remedy in arbitral functions.

proceedings to ensure that

Filing the Notice of Challenge
arbitrators are and remain
On 31 October 2014, HKIAC published a Practice Note on
impartial and independent the Challenge of an Arbitrator (the Practice Note),9 which lays
and meet the qualifications down the procedure for submitting challenges to the HKIAC.
agreed by the parties.
Under the Practice Note, a party intending to challenge an
arbitrator shall submit to the HKIAC a written and reasoned
Challenge procedure before the HKIAC Notice of Challenge within 15 days from either the date on
T h e H K I AC i s c o m p e t e n t t o d e t e r m i n e c h a l l e n g e s which the challenging party (i) was notified of the challenged
arising in arbitrations administered under (i) the HKIAC arbitrators confirmation or appointment by the HKIAC, or (ii)
Administered Arbitration Rules (2013 Edn) (the 2013 Rules) became aware or ought reasonably to have become aware of
or (ii) the UNCITRAL Arbitration Rules (2010 Edn) (the the grounds for challenging the arbitrator.10
UNCITRAL Rules)2 by virtue of the HKIAC Procedures for
the Administration of Arbitration under the UNCITRAL A Notice of Challenge should, in addition to being sent to
Arbitration Rules (2015 Edn) (the 2015 Procedures). The the HKIAC, be sent to (i) all other parties in the arbitration,
UNCITRAL Rules are the HKIACs ad hoc international (ii) the arbitrator who is being challenged, and (iii) where
arbitration rules, though the parties may agree to use them in applicable, the other members of the arbitral tribunal.11
relation to arbitrations with soft administration. The HKIAC
may also accept challenges arising from any other arbitration The applicable arbitration rules may provide a time limit
where the parties agree that it should decide the challenge. for the challenged arbitrator to withdraw and for the non-
The grounds for challenging an arbitrator in any challenge challenging party to agree with the challenge. For example,
proceeding before the HKIAC therefore depend on the the 2013 Rules provide a 15-day time limit from receipt of
applicable arbitration rules. the notice of challenge,12 and the UNCITRAL Rules provide
a 15-day time limit from the date of the notice of challenge.13
Under both the 2008 and 2013 editions of the Administered Under the Practice Note, should the challenged arbitrator
Arbitration Rules, any arbitrator may be challenged if refuse to withdraw and the non-challenging party disagree
circumstances exist that give rise to justifiable doubts as to with the challenge, the party making the challenge may elect
his/her impartiality or independence. The 2013 Rules add to pursue the challenge and request the HKIAC to decide it.14
three further grounds,6 viz that the arbitrator
Deciding the challenge
(1) does not possess qualifications agreed by the parties; In the event that the HKIAC is required to decide a challenge,
(2) has become de jure or de facto unable to perform his/her the institution will require the challenged arbitrator and
functions; and the non-challenging party each to submit an Answer to the
(3) has failed to act without undue delay. Notice of Challenge. 15 The challenging party may also be

[2017] Asian Dispute Review 61

Arbitration in asia

required to submit a comment on those answers.16 Answers It is noteworthy that under s 26 of the Hong Kong Arbitration
and comments thereon shall be submitted to the HKIAC Ordinance (Cap 609) (the Ordinance), which applies art 13
and copied to all those who have received the Notice of of the 2006 version of the UNCITRAL Model Law, if the
Challenge. The challenge shall be determined on the basis challenge is not upheld by HKIAC, the challenging party may,
of written evidence and written submissions alone, unless the within 30 days after having received notice of the decision
HKIAC decides that it is appropriate to hold one or more oral rejecting the challenge, apply to the courts to decide the
hearings. challenge.20 The decision of the court cannot be appealed.21
While such a request is pending, the tribunal, including the
Under its Proceedings Committee Regulations, the HKIAC challenged arbitrator, may continue the arbitral proceedings
will appoint a Challenge Panel to consider a challenge. The and make an award.22 HKIAC is aware of only one instance
Challenge Panel will comprise one or three members drawn in which a party has submitted a challenge to the Hong Kong
from the HKIAC Council and/or its International Advisory courts following the formers rejection of a challenge.23 The
Board. As of 31 December 2016, the HKIAC has constituted challenge was dismissed by the Court of First Instance for
three-member panels in seven of the 11 challenges that (inter alia) having been filed out of time and lacking merit.24
resulted in decisions, and four one-member panels. A
Challenge Panel is deemed constituted upon all panel Costs of challenge proceedings
members acceptance of their nomination and confirmation of In accordance with the Practice Note, all challenges lodged
their impartiality and independence. with the HKIAC shall be accompanied by payment of a non-
refundable Challenge Registration Fee of HK$50,000. 25 The
The Challenge Panel will submit to the HKIAC, within such HKIAC may, at any time during the challenge proceedings,
time as the institution may direct (usually within 7-14 days and after giving the challenging party the opportunity to
from receipt of the relevant files), a non-binding reasoned submit any written comments, require that party to deposit
recommendation on whether to uphold the challenge. a further sum to meet the institutions additional fees and
expenses, taking into account (inter alia) the nature of the
Following receipt of a recommendation, the HKIAC shall case and the nature and amount of work performed by it.26
issue a decision as soon as possible. It may adopt, revise Non-payment of the Challenge Registration Fee and any
or reject the recommendation. It has been the HKIACs additional requested deposits shall result in the dismissal of
practice to issue reasoned decisions on challenges a practice the challenge.27
which reflects the institutions recognition of the benefits of
transparency in challenge proceedings. On balance, the Challenge Registration Fee takes into
consideration the need to dissuade parties from filing frivolous
challenges which may cause delay in the proceedings, 28
It has been the HKIACs without preventing parties with valid and legitimate objections

practice to issue reasoned from commencing challenge proceedings.

decisions on challenges a
practice which reflects the Where an arbitrator is successfully challenged under the 2013
Rules, the HKIAC shall determine any fees payable to him/
institutions recognition of the
her, having taken into account the circumstances of the case
benefits of transparency in and the challenged arbitrators reasonable fees and expenses.
challenge proceedings. Thus, in addition to payment of the Challenge Registration
Fee of HK$50,000 and any further sums, parties may be

Arbitration in asia

requested to pay any reasonable fees due to the arbitrator, as has rejected challenges arising from the following procedural
determined by the HKIAC in accordance with Schedule 2 or conduct of the tribunal:
Schedule 3 of the 2013 Rules.
(1) a decision to disallow the presentation of additional
witnesses whose proposed testimonies were merely
corroborative of prior testimonies;
[T]he Challenge
(2) a decision to disallow the challenging party to see certain
Registration Fee takes into parts of documentary evidence showing confidential
consideration the need information relating to third parties to the arbitration;
to dissuade parties from and
filing frivolous challenges (3) a sole arbitrators refusal to allow a respondent to seek

which may cause delay in further discovery and to adduce factual witness evidence

the proceedings, without where the respondent failed to identify the relevance of

preventing parties with valid this to the issues of fact.

and legitimate objections

In one case, the respondent refused to pay its share of the
from commencing challenge initial deposits for the costs of the arbitration. Consequently,
proceedings. the sole arbitrator ordered the respondent to deposit security
for costs with the HKIAC, without first soliciting comments
from the parties. The respondent challenged the sole
Evaluation of challenges determined by the HKIAC arbitrator on this basis. While noting that the issuance of such
An arbitrator is required to maintain impartiality and an order was unusual, the HKIAC found that, in the absence
ind e pe n de n ce a t a l l t i m e s t h ro u g h o u t t h e arbit ral of evidence of bias and taking into account the procedural
proceedings. Independence means that there are no history of the case, the order was a legitimate function of the
unacceptable external relationships or connections between sole arbitrators exercise of case management which did not
an arbitrator and a party or its counsel (such as financial, amount to conduct indicative of apparent bias.
professional, employment, or personal relations), while
impartiality means that an arbitrator is subjectively unbiased
and not predisposed towards one party.30
In general, it is rare
Under Hong Kong law, apparent or actual bias must be for challenges based on an
established to show lack of impartiality or independence on arbitrators conduct of arbitral
the part of an arbitrator. This is determined by asking the proceedings to be upheld.
question whether an objective fair-minded and informed
observer, having considered the relevant facts, would
conclude that there was a real possibility that the tribunal was In another case, the tribunal ordered that a party could only
biased. submit rebuttal statements if it first obtained prior permission
from the tribunal. According to the respondent, the tribunal
Allegation of bias relating to procedural conduct accepted the claimants rebuttal statements without the
In general, it is rare for challenges based on an arbitrators claimant first obtaining permission. The respondent
conduct of arbitral proceedings to be upheld. The HKIAC challenged the full tribunal on this basis. In rejecting the

[2017] Asian Dispute Review 63

Arbitration in asia

challenge, the HKIAC held that wrong procedural decisions, and the claimants counsel in relation to the arbitration
at times, or even unjust procedural decisions, are not textbook work; and (b) the Orange List, relating to the close
necessarily indicative of, and should not be automatically personal friendship relationship between the arbitrator and
construed as, evidence of apparent bias. the claimants counsel. After considering the IBA Guidelines
and applying the objective test, the HKIAC rejected the
Relationship with a partys creditor challenge on the ground that the relationship did not equate
A claimant challenged the respondents designated co- to the existence of a close personal friendship between the
arbitrator on the ground that the challenged arbitrator was a challenged arbitrator and the claimants counsel. The HKIAC
partner in a law firm representing the respondents creditor likewise found that communications between the arbitrator
in a corporate rehabilitation case in a local court. While the and the claimants counsel on an unrelated book project was,
claimant expressly admitted that it would appear that there on its own, insufficient to raise justifiable doubts as to the
was no conflict of interest, it argued that these circumstances arbitrators impartiality and independence.
created an inherent incentive or unconscious bias on the
part of the challenged arbitrator to find against the claimant The HKIAC applied the same objective test for apparent
in the arbitration to ensure a larger recovery for the creditor- bias in deciding whether to confirm the designation of an
client in the rehabilitation proceedings. In rejecting the arbitrator under the 2013 Rules, rather than in a challenge
challenge, the HKIAC concluded that there was no real proceeding. In the relevant case, the HKIAC decided not
possibility that the challenged arbitrator was biased, or that to confirm the respondents designated co-arbitrator in
there was any real likelihood that the challenged arbitrator light of the following facts: (i) the arbitrator and two of the
might be influenced by factors other than the merits of respondents counsel were members of the same barristers
the case. The HKIAC noted (inter alia) that the challenged chambers; (ii) one of the respondents counsel had been the
arbitrator had voluntarily disclosed the relationship and arbitrators pupil for three months several years earlier; and
confirmed that he had no involvement in the rehabilitation (iii) the arbitrator recently led one of the respondents counsel
proceedings or with the creditor-client. As such, the HKIAC in two cases before the Hong Kong courts and there was a
noted that instead of having unconscious bias, the arbitrator reasonable chance that they would continue to work together
was likely to be consciously cautious and careful to avoid bias as advocates on one of the cases. The claimant objected to
or any perception of it. the confirmation of the arbitrator and indicated that if he was
confirmed, it would file a formal challenge. Taken together,
Relationship with a partys counsel the HKIAC considered that these circumstances would cause
A claimant-designated arbitrator disclosed that he had an objective, fair-minded and informed observer to conclude
agreed, before his designation, to assist in the preparation that there was a real possibility of bias. The respondent was
of a chapter of an arbitration textbook of which several granted time to designate another arbitrator.
members of the law firm representing the claimant were
the principal authors. He clarified that he would not receive Connection with a partys counsel and an arbitrators
any compensation for such work. The respondent filed a spouse
challenge on the ground that such circumstances gave rise The respondent challenged the claimants designated
to justifiable doubts, the situation being similar to situations arbitrator on the ground that the challenged arbitrator and
set out in the following lists in the 2014 IBA Guidelines on the claimants lead counsel had been in the same class at
Conflicts of Interest in International Arbitration (the IBA law school 18 years previously and that both had attended
Guidelines): (i) the Waivable Red List relating to unavoidable pupillage at the same chambers 16 years previously. The
ex parte contact and communications between the arbitrator respondent also alleged that the arbitrator and the wife of

Arbitration in asia

the claimants lead counsel had worked in the same law

firm 15 years previously. The challenged arbitrator submitted
representations that he and the lead counsel were part of
different social circles at law school and had not maintained
regular contact, apart from occasional meetings at legal
events and conferences. In the absence of any information
contradicting the arbitrators representations, HKIAC rejected
the challenge.

Citing Jung Science Information Technology Co Ltd v ZTE

Corporation,33 the HKIAC ruled that

[w]here the objection arises from an association

between the adjudicator and the legal representative
for a litigant there must be a cogent and rational link Nationality of the arbitrator
between the association and its capacity to influence the A respondent challenged the claimants designated arbitrator
decision to be made in the particular case before it can on the basis of (inter alia) his Singaporean nationality. As
be concluded that the adjudicator might not bring an the arbitration clause provided that the presiding arbitrator
impartial and unprejudiced mind to the resolution of the should be a national of either Hong Kong or Singapore, the
dispute. It is the capacity of the association to influence respondent argued that there was a risk that two arbitrators
the decision rather than the association as such that is could be Singaporeans, which was a situation to be avoided
disqualifying. as, according to the respondent, the claimant had close links
to Singapore. The HKIAC rejected the challenge on the
ground that there was nothing in the applicable arbitration

The remedy of rules and the parties arbitration agreement to prevent the

challenging an arbitrator claimant from designating a Singaporean co-arbitrator.

ensures that arbitrators

Qualifications of the arbitrator
are qualified, impartial In a case where the arbitration agreement provided that
and independent. [D]ue the languages to be used in the arbitration proceedings
process is maintained through were English and Chinese, and where the governing law
clear procedures on how a was PRC law, the respondent challenged the claimants

challenge should proceed and designated arbitrator on the ground that he was neither

ensures transparency through bilingual in English and Chinese nor qualified to practise PRC

the issuance of reasoned law. In rejecting the challenge, the HKIAC noted that the
qualifications invoked by the respondent were not required
decisions for the benefit of
by the arbitration agreement and therefore did not provide
the parties and arbitrators grounds for challenging the arbitrators appointment. Such
concerned. qualifications could not be unilaterally imposed.

[2017] Asian Dispute Review 65

Arbitration in asia

De facto inability to perform ones duty as an arbitrator

1 Available at http://www.hkiac.org/sites/default/files/ck_filebrowser/
The HKIAC rejected a challenge filed on the ground that the
arbitrator was de facto unable to perform his duties because of 2 Available at http://www.uncitral.org/pdf/english/texts/arbitration/arb-
his inaccurate Chinese translations in a bilingual (English and
3 Available at http://www.hkiac.org/sites/default/files/ck_filebrowser/
Chinese) arbitral proceeding. Defining de facto inability to PDF/arbitration/2015_Procedures_for_the_Administration_of_
mean unavailability, illness or physical or mental incapacity, 4 HKIAC Practice Note on the Challenge of an Arbitrator (2014): see
the HKIAC ruled that the grounds of the challenge did not note 9 below.
5 Article 11.4 (2008); article 11.6 (2013).
constitute de facto inability of an arbitrator to perform his 6 Article 11.6.
duties. 7 Article 12.1.
8 Article 12.3.
9 Available at http://staging.hkiac.org/sites/default/files/ck_filebrowser/
Challenge filed out of time PDF/arbitration/4_Practice%20Note_2014_0.pdf.

In a case conducted under the UNCITRAL Rules, the 10 Paragraphs 4 and 5.

11 Ibid.
challenged arbitrator disallowed the presentation of 12 Article 11.7.
additional witnesses whose proposed testimonies, he 13 Article 13.1.
14 Paragraph 8.
determined, were merely corroborative of prior testimonies.
15 Paragraph 10.
The respondent challenged the arbitrator on this basis 30 16 Paragraph 11.
days later. 17 Paragraph 12 (notes 15 and 16 above refer).
18 Paragraph 13.
19 These practice provisions are internal to the HKIAC and not publicly
The HKIAC denied the challenge. Noting the 15-day time available.
20 Article 13(3) of the Model Law.
limit to file a notice of challenge under art 13.1 of the
21 Ibid.
UNCITRAL Rules, it found that the respondent was aware 22 Ibid.
of the grounds raised in the challenge at the time of the 23 Gong Benhai v Hong Kong International Arbitration Centre [2014] 2
HKLRD 537.
arbitrators decision, and had thus filed the challenge in 24 Editorial note: See Robert Morgan & Joe Liu, Hong Kong Court Strikes
an untimely manner. In denying the challenge, the HKIAC out First Ever Claim against HKIAC [2014] Asian DR 142.
25 Paragraph 5.
also considered its underlying merits, concluding that the
26 Paragraph 6.
arbitrators actions were within his discretionary authority 27 Paragraph 5.

and did not constitute apparent bias. 28 Editorial note: It is noteworthy that the unsuccessful plaintiff in Gong
Benhai v HKIAC (note 23 above), not having been deterred by a
similar costs requirement in the now superseded HKIAC Challenge
Rules (2008), was ordered by Mimmie Chan J in the Court of First
Conclusion Instance to pay indemnity costs.

The ability to choose an arbitrator is a fundamental feature 29 UNCITRAL Model Law (applied by s 25 of the Ordinance), art 12;
2013 Rules, art 11.1; UNCITRAL Rules, art 11.
of arbitration. This allows the parties to choose qualified 30 Gary B Born, International Commercial Arbitration (2nd Edn, 2014,
Kluwer Law International), pp 1775-1776.
arbitrators who are equipped with the expertise to resolve
31 Jung Science Information Technology Co Ltd v ZTE Corporation (2008)
issues raised in the arbitral proceedings. The remedy of 4 HKLRD 776.
32 Available at www.ibanet.org/Publications/publications_IBA_guides_
challenging an arbitrator ensures that arbitrators are qualified, and_free_materials.aspx#Practice Rules and Guidelines.
impartial and independent. 33 Note 31 above, at [54].

When determining challenges, the HKIAC ensures that due

process is maintained through clear procedures on how a
challenge should proceed and ensures transparency through
the issuance of reasoned decisions for the benefit of the
parties and arbitrators concerned. adr