This article examines the strengths of Hong Kong maritime arbitration which are summarized as follows:

□ A long history of resolving maritime disputes by industry peers. A specialized arbitration group, the Hong Kong Maritime Arbitration Group (the “HKMAG”), which was originally established by a group of commercial and legal professionals, has been formally relaunched as an independent arbitral body focusing on resolving maritime disputes for the users.

□ A strong pool of knowledgeable and experienced shipping professionals including arbitrators, lawyers and experts. Arbitration may be held in English or Chinese.

□ The only common law jurisdiction within China.

□ A robust legal system based on the rule of law and judicial independence.

□ The courts generally adopt a pro-arbitration stance.

□ Internationally recognised and reputable seat of arbitration.

□ A modern, comprehensive, well structured and user-friendly arbitration law.

□ Worldwide enforceability of arbitration awards.

□ HKMAG arbitration can be ad-hoc or administered.

□ The use of HKMAG Terms and Small Claim Procedures brings the practice of maritime arbitration in Hong Kong in line with London.

□ HKMAG is an eligible institution for application to the Chinese courts for interim measures.

□ Maritime arbitration is conducted in an efficient, expeditious and costs conscious manner.

□ Well-devised and industry-accepted arbitration clauses.

expert evidence in arbitration hearings.

There is no requirement for parties to Hong Kong arbitration to be legally represented. Self- representation in maritime arbitration is not uncommon. However, given the increasing complexity of disputes, it is recommended to seek advice and assistance from legal professionals. There are many competent lawyers in Hong Kong who are conversant in shipping and international trade matters and can provide efficient and responsive services at reasonable costs. Foreign legal representation in arbitration proceedings is  also  allowed here.3

In Hong Kong, a good number of people with commercial, technical and legal knowledge and experience reside here offering to act as maritime and commercial arbitrators and mediators.  Many of them are members of the Hong Kong Maritime Arbitration Group (the “HKMAG”). The HKMAG was set up in 2000 by a group of maritime professionals with diverse backgrounds, expertise and industry experience. It was  an informal group with the aim of  promoting the use   of maritime arbitration and mediation in Hong Kong. In order to cope with the needs of the  rapidly changing market, the HKMAG established itself as an independent  organisation  in  March 2019 (www.hkmag.org.hk). The business of the HKMAG is conducted through the HKMAG Committee. The members of the HKMAG Committee are Full Members of the HKMAG. Other membership categories include Members and Supporting Members. The members of the HKMAG either come from the industry or have close ties with it.

The HKMAG emphasises on the importance of the legal, commercial and technical knowledge and practical experience of its members. An arbitrator who has the relevant expertise and experience would be in a better position to grasp the issues in dispute and ask pertinent questions. He or she would have less difficulty, for examples, in deciding whether a specific discovery should be allowed or what reasonable inference may be drawn from the submissions and evidence available before him or her.

Commercial men who have recurring experience of arbitration and litigation would  be  able  to tell that in many cases the  finding of  facts plays a pivotal role in the determination of the fate     of the disputes. Given the diverse background and ethnic origins of the members  of  the  HKMAG, they are more conscious of the cultural differences between East and  West. This  allows them to take a more objective view of the available  evidence  and  give  appropriate  weight to it, particularly when Asian parties  and  witnesses  are involved  in  the  proceedings. The effect of cultural differences is generally accepted as a valid concern in international arbitration. It will be risky to ignore this factor.

Some of the HKMAG's members can read and write Chinese and English. They not only

know the language but also understand the meaning behind. This is important, for example,  in  the case of the use of instant communications in the negotiation of a contract where the  underlying meaning can only be properly understood in the combination with commercial/technical knowledge and understanding of the language used. While bilingual proficiency may not be crucial in the context of maritime arbitration  where  English  is  commonly used as the working language, the use  of  Chinese  in  documentary  and  oral  evidence is not uncommon. The  translation  expenses  could  be  huge  and  there  is  a  chance that the evidence, especially oral evidence, can be lost in translation. With bilingual arbitrators sitting in the tribunal, such expenses can be reduced or even avoided.

The importance of a proper understanding of the cultural and linguistic differences can be seen in a London arbitration case which ended up in an appeal before the High Court of Justice of England: Jiangsu Shagang Group Co Ltd and Loki Owning Company Ltd[2018] EWHC 330 (Comm)4.

An independent and impartial legal system

The centre of gravity  of the global economy is  shifting eastward. Nowadays, many shipping    and trading activities usually involve one or more parties in Asia. All these activities will inevitably generate disputes. People would like to arbitrate their disputes  at a  place  close to  them for the sake of economy and convenience. Hong Kong, located at the centre of  Asian Pacific, is an ideal venue of arbitration.

However, without a good legal system, geographical convenience would not make Hong Kong a natural choice for arbitration.

The law of Hong Kong is based on the rule of law and judicial  independence.  Under  the principle of “One Country, Two Systems”, Hong Kong retains the English common law system after China resumed its sovereignty over Hong Kong in 1997. It is the only common law jurisdiction within China. Its legal system is widely recognised as neutral and fair. While there have been political and constitutional challenges in Hong  Kong  in  recent  years,  such  challenges demonstrate the uniqueness of Hong Kong and the determination of Hong Kong to uphold the core values, including the rule of law and judicial independence, that make it

distinctive.

Every seat of arbitration invariably emphasises the utmost importance of the  sacrosanct  principles of natural justice to arbitration. In Hong Kong, these principles are embodied in the Hong Kong Arbitration Ordinance (Cap. 609) (the “Arbitration Ordinance”), which is the curial  or procedural law applicable to arbitration.5

Section 46 (2) of the Arbitration Ordinance imposes a duty on the arbitral tribunal to treat the parties with equality. Section 46 (3) of the Arbitration Ordinance further requires the arbitral tribunal to be independent, to act fairly and impartially as between the parties and to adopt fair and suitable procedures to help the parties to resolve their disputes efficiently and costs effectively. These statutory requirements lay down the foundation of how arbitration is to be conducted in Hong Kong. This foundation is supported by a trustworthy legal system, the integrity of Hong Kong professionals and the low rate of corruption6 here.

In a recent English High Court judgment, Shagang South Asia (Hong Kong) Trading Co. Ltd.

v. Daewoo Logistics (The Nikolaos A) [2015] EWHC 194 (Comm),7 Lord Justice Hamblen8, when facing a dispute over the construction of an arbitration clause which provided for “Arbitration to be held in Hong Kong”, described Hong Kong as

“a well-known and respected arbitration forum with a reputation  for  neutrality,  not  least  because of its supervising courts.”

In The Nikolaos A, Lord Justice Hamblen held that the appointment of a London arbitrator was invalidly made, that the seat of the arbitration was Hong Kong and that the curial law (or procedural law) of the arbitration was Hong Kong law.

Neutrality, impartiality and independence are peculiar features in Hong Kong arbitration. These features are widely recognised by the users and arbitration practitioners worldwide:  see 2015 International Arbitration Survey conducted by White & Case in conjunction with Queen Mary University.9 According to the 2015 and 201810International Arbitration Surveys conducted by Queen Mary University, Hong Kong was ranked as one of the five most preferred seats of arbitration worldwide.

The Arbitration Ordinance (Cap 609)

The procedural or curial law applicable to Hong Kong seated arbitrations is the Arbitration Ordinance (Cap 609). It is mainly based on the UNCITRAL Model Law and supplemented by the provisions similar to those in the English Arbitration Act 1996. It respects the parties’ autonomy in arbitration and serves the purpose of maximising the authorities of the arbitrators and minimising court interventions. It is modern, comprehensive, well-structured and user- friendly and is amended as and when appropriate in order to keep abreast of international arbitration developments.11 Below are some features of the Arbitration Ordinance:

(i)                                        Hong Kong International Arbitration Centre (“HKIAC”) as the authority

The HKIAC12 is a non-profit making organisation incorporated in Hong Kong. It serves  a  number of roles and functions, one of which is to promote Hong Kong as a dispute resolution centre. It is an internationally renowned arbitration institution13 well-known to the arbitration community for its administered arbitration rules.14 It is also the authority empowered by the Arbitration Ordinance to exercise certain statutory powers.15

Section 23 of the Arbitration Ordinance confers power on the HKIAC to determine  the  number  of arbitrators if the parties fail to agree. This power allows the HKIAC to decide the dispute to    be heard by a sole arbitrator in appropriate cases.

The HKIAC is also empowered under section 24 of the Arbitration Ordinance to appoint a sole arbitrator, co-arbitrator or third arbitrator in the case of default or in a situation where no agreement has been reached.

(ii)                                      The arbitral tribunal may rule on its own jurisdiction

Pursuant to section 34 of the Arbitration Ordinance, an arbitral tribunal may rule on its own jurisdiction. The jurisdictional challenges that we usually come across in maritime arbitration include:

i.      whether the parties have reached a binding charterparty

ii.       whether a bill of lading has incorporated an arbitration clause of a charterparty

iii.        whether the parties are bound by the arbitration agreement

iv.        whether an arbitral tribunal is properly constituted

v.             whether the arbitrator has fulfilled the qualification  requirements  of  the  arbitration agreement

vi.        whether the dispute falls within the scope of the arbitration clause

vii.         whether the arbitration is properly commenced

viii.          whether the arbitration clause is valid

(iii)                                    Interim measures

Also, an arbitral tribunal is empowered by section 35 of the Arbitration Ordinance  to grant  interim measures in the form of an award. This section provides powerful  weapons  to  the parties:

a.       to maintain or restore the status quo – for example, to restrain a party from withdrawing its specially built vessel from a pool operation by way of an award: see, for example,

Lauritzen Cool AB v. Lady Navigation Inc. (2004) EWHC 2607 (Comm);16

b.       to obtain an anti-suit injunction from the arbitral tribunal to restrain proceedings brought in a foreign jurisdiction in breach of the arbitration clause. This situation usually happens in a cargo claim under a bill of lading where the jurisdiction clause provides for arbitration in Hong Kong, but the cargo interests commence court proceedings at the discharge port: see, for examples, Ever Judger Holding Co Ltd v Kroman Celik Sanayii Anonim Sirketi [2015] 3 HKC 246;17;

c.        to preserve assets for the purpose of satisfying subsequent awards. This interim measure could be in the form of a freezing order. A freezing order is used to prohibit a party, usually a respondent to an arbitration, from removing, dissipating or disposing of its assets so that the claimant's claim would not become nugatory if it later succeeds in the arbitration;18 and

d.       to preserve evidence. The use of this interim measure promotes fair resolution of the issues in dispute. For example, in a shipbuilding dispute where the condition of manual welding is in question, an inspection by way of non-destructive testing before the transfer of ownership of the subject vessel to a third party could provide the tribunal and the parties with relevant evidence to consider the complaint.

The Arbitration Ordinance recognises the parties’ needs for interim measures, particularly in a situation where the arbitration is yet to commence or the arbitral tribunal is yet to be properly constituted. As a result, section 45 of the Arbitration Ordinance provides that the court may grant interim measures in relation to arbitral proceedings “which have been or are to be commenced in or outside Hong Kong”.

(iv)                                   General powers of the tribunal and power to order security for costs

In addition to the power of granting interim measures, the arbitral tribunal also has the powers under section 56 of the Arbitration Ordinance to make various orders in the course of arbitration proceedings. The powers are mainly related to evidence. For instance, the arbitral tribunal can order discovery of documents, direct evidence to be given by affidavit and make an order of sample taking, inspection or preservation of the relevant property. Section 56(1)(d)(i) allows the arbitral tribunal to give an order to sell the relevant property. This power is useful, for example, in dealing with perishable goods under lien by a shipowner for unpaid hire: see Dainford Navigation Inc v PDVSA Petroleo SA (The “Moscow Star”) [2017] EWHC 2150.19 In that case, the Owners applied to the English High Court under section 44(2)(d) of the English Arbitration Act 1996 for an order for sale of cargo which was subject to a contractual lien being exercised by the Owners for unpaid time charter hire. Section 44(2)(d) of the English Arbitration Act 1996 is similar to sections 56(1)(d)(i) and 60(1)(a) of the Arbitration Ordinance. It is worth noting that the power is only available to the English court. In contrast, the Arbitration Ordinance confers power onto the Hong Kong seated arbitral tribunal (section 56(1)(d)(i)) and the Hong Kong court (section 60(1)(a)) to make such order.

Section 56(1)(a) of the Arbitration Ordinance gives power to an arbitral  tribunal  to  grant  security for costs of the arbitration. It allows the arbitral tribunal to require a party bringing a  claim or a counterclaim to provide security for the costs of another party in case the claim or counterclaim fails and the claiming party does not pay the costs awarded against it.

The granting of an order for security for costs is influenced by various factors. Generally, the arbitral tribunal will not make an order without cogent evidence showing that there is a real risk that the claimant will not pay the costs of the respondent who has successfully defended the claim. However, the common use of brass plate companies by commercial people for organising and conducting their shipping and trading business makes them  more vulnerable to such application.

The failure to provide security for costs as ordered will  either  lead to a  situation  where  the  claim will be stayed or dismissed. The provision of security may be problematic due to the requirement of a satisfactory form of security. If the party has the support of the Defence Club,

then a letter of undertaking from the Defence Club is usually acceptable. Otherwise, the arrangement will take more time than one could think of and at the end of the day security in the form of a cash deposit may be the only option. This perhaps explains why the sanction of a stay sometimes proves to be more appropriate as this will allow more time for the necessary arrangement to be made.

(v)                                     Extension of time limit

Section 58 of the Arbitration Ordinance provides that  the  arbitral tribunal  may  make  an  order to extend time where the arbitration agreement stipulates that a claim is to be barred after the elapsing of a certain period of time. This kind of time bar provision is commonly found in the arbitration clause of a charterparty. However, the  case law  reveals  that  it is  difficult to  obtain an extension of time: see, for example, the English authority Perca Shipping Ltd v Cargill Inc [2012] 3759 (QD) 12D.20 In that case, the  English  High  Court  considered  the  application  under section 12 of the Arbitration Act 1996, the wording of which resembles section 58 of the Arbitration Ordinance, and refused to extend the time bar for commencing arbitration  proceedings.

(vi)                                   Striking out for want of prosecution

Section 59 of the Arbitration Ordinance allows the arbitral tribunal to  make  an  award  dismissing a party’s claim and an order prohibiting the party from commencing further arbitral proceedings in respect of the claim if it is satisfied that the party has unreasonably delayed in pursuing the claim in the arbitral proceedings. This power is  useful  where  the  claimant  has been dilatory in prosecuting its claims, a situation which we usually find in maritime disputes:  see, for example, Dera Commercial Estate v Derya Inc [2018] EWHC 1673 (Comm).21

(vii)                                 Finality of the award

Under section 73 of the Arbitration Ordinance, an award issued by an arbitral tribunal is final and binding on the parties and is not subject to a review of its merits. It can be set aside only in certain specified circumstances22 but the issues of facts and law in dispute are irrelevant to the consideration.23

If parties want to have a limited right of appeal against an award on a question of law similar to that as provided in the English Arbitration Act 1996, they can agree to the opt-in provisions which appear in Schedule 2 of the Arbitration Ordinance to form part of the arbitration agreement which allows them to appeal on a question of law: see, for example, Maeda Kensetsu Kogyo Kabushiki Kaisha and others v Bauer Hong Kong Limited [2017] HKCFI 1582; HCMP 1342/2017.24

Schedule 2 also contains opt-in provisions which are similar to that as provided in the English Arbitration Act 1996 and allows an award to be challenged on grounds of serious irregularity.

Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures  in Aid of Arbitral Proceedings by the Courts of the Mainland and of the HKSAR

As briefly introduced above, the parties to an arbitration may choose to seek interim  measures from a court or tribunal. The choice depends on a number of practical and legal considerations. Two fundamental questions need to be asked: 1. whether the  particular  interim measure sought is available from a court or tribunal and 2. the effectiveness of the interim measure which may be granted by a court or tribunal. The situation will become more complicated in international arbitration where a foreign party is involved and interim measures may be required in different jurisdictions.

Enforcement of an order or award in relation to an interim measure  issued  by  an  arbitral  tribunal is a challenge in international arbitration. Different jurisdictions may have different attitudes. Some jurisdictions may enforce the tribunal’s order or award if it finally disposes of certain issues. Some may  not as  they  do  not consider  it appropriate  to treat interim measures  as an award. Interim measures are measures in aid of arbitration proceedings. They may not   finally determine the merits of a substantive point in arbitration. This  makes  enforcement  through national courts uncertain and  undermines  the  effectiveness  of  these  powerful  weapons.

In Hong Kong, section 61 of the Arbitration Ordinance provides that an interim measure order issued by an arbitral tribunal, whether in or outside Hong Kong, will be enforceable in the same manner as an order of the court that has the same effect. However, other jurisdictions may not have similar provisions in their arbitration law.

Parties may want to seek interim measures from national courts, especially when the issue of enforcement is in consideration or when the required interim measures involve a third party. However, whether or not such interim measures are available in aid of foreign arbitration proceedings depends very much on the procedural law of the particular national court.

These unsatisfactory situations exist in Mainland China. The parties to a foreign seated arbitration who want to have interim measures in China may find themselves in a difficult position as the Chinese courts have been unwilling to grant interim measures in aid of foreign arbitration proceedings and would not enforce an interim measure order issued by foreign arbitral tribunals. It is worth pointing out that maritime claims receive special treatment in China as the Chinese maritime courts used to grant interim measures in aid of foreign arbitration proceedings under the Special Maritime Procedure law25 and the Interpretation of the Supreme People’s Court on the Application of the Special Maritime Procedure Law.26 However, the scope of application is limited to “the ship, the cargo carried by the ship and the ship’s fuel and supplies”27 but not other properties.

In 2019, the Supreme People’s Court of the People’s Republic of China and the Department  of Justice of the Hong Kong SAR signed the “Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the HKSAR".28 Under the Arrangement, parties to arbitral proceedings seated in Hong Kong and administered by the eligible arbitral institutions which have been designated would be able to apply to the Chinese courts for interim measures.29 The types of interim measures available from the Chinese courts include “property preservation, evidence preservation and conduct preservation” measures. The application should be made to the  Intermediate  People’s Court in the place of residence of the respondent or the place where the property or evidence is situated. A letter from the eligible institution certifying its acceptance of the relevant arbitration case should be provided along with other documents and information as specified in Articles 4 and 5 of the Arrangement. The institution is responsible for the transmission of the application to the appropriate Chinese Court. The applicant is also permitted to deliver the application directly to the Chinese Court if the transmission of the application by the institution may cause delay. Upon receipt of the application, the Chinese Court will verify with the institution the existence of the arbitration. If the application is made before the commencement of the arbitration, the applicant should provide a letter from the institution certifying its acceptance of the arbitration case within 30 days after the interim measure is taken. The Arrangement is only applicable before the arbitration award is made.

The significance of the Arrangement is that parties to China-related transactions now have  the means to seek interim measures from the Chinese courts as long as  they  agree  to arbitrate their disputes through arbitration in Hong Kong before a qualifying institution.

The Arrangement came into effect on 1 October 2019. Hong Kong is the only jurisdiction which has signed an arrangement with Mainland on interim measures in aid of arbitral proceedings. The Hong Kong Maritime Arbitration Group (“HKMAG”) is one of the qualifying institutions under the Arrangement.30

Enforcement of the award

Arbitration is a civilized and consensual method of resolving commercial disputes. However, if enforcement of the rights as allowed in the award turns out to be difficult if not impossible, it serves little purpose for the parties to invest time and money to go through the arbitration process. This is particularly the case since many companies involved in charterparties, bills of lading and international trade contracts are located in different jurisdictions. It is not hard to imagine that enforcement in foreign states can be a nightmare.

The New York Convention on the Recognition and Enforcement of Foreign  Arbitral  Awards31 (the “New York Convention”)  has  alleviated much of this concern. The New  York Convention   is an international convention ratified by  more than 150 countries and places  around the world.  Its purpose is to provide a convenient means to recognise and enforce foreign arbitral awards. Article III of the New York Convention provides that:

“Each Contracting State shall recognise arbitration awards as binding and enforce them in accordance with the rules of procedure of the territory  where the award is  relied  upon,  under  the conditions laid down in the following articles. There  shall  not  be  imposed  substantially more onerous conditions or higher fees or charges  on  the  recognition  or  enforcement  of  arbitral awards to which this Convention applies than are imposed on the recognition or enforcement of domestic arbitral awards.”

Article I 2. of the New York Convention states that the term arbitral awards “shall include not  only awards made by arbitrators appointed for each case but also those made by  permanent arbitral bodies to which the parties have submitted”. In short,  both  ad-hoc  arbitration awards  and institutional arbitration awards are recognised by and  can  be  enforced  under  the  New  York Convention.

Hong Kong is a signatory to the New  York Convention and the awards  issued in  Hong Kong  can be enforced in all states to the Convention.

There are also arrangements between China and Hong Kong to facilitate the enforcement of Hong Kong arbitral awards in China: Arrangement Concerning Mutual Enforcement of Arbitral

Awards between Mainland China and Hong Kong32: see, for example, the decision by  the  Nanjing Court in Ennead Architects International LLP v. Fuli Nanjing Dichan Kaifa Youxian Gongsi (2016) Su 01 RenGang No.133.

A similar reciprocal enforcement arrangement has recently been made between Hong Kong and Macau: Arrangement Concerning Reciprocal Recognition and Enforcement of Arbitral Awards between Hong Kong and Macao34.

Enforcing a Hong Kong seated arbitration award in non-Convention states or places such as Taiwan is also achievable. In Taiwan, the law of arbitration is contained in the  Taiwan  Arbitration Act.35 It provides the means of recognition and enforcement of foreign arbitration awards. One of the requirements for recognising and enforcing a foreign arbitration award in Taiwan is whether the seat  of the arbitration of the award will reciprocally enforce an award of    a Taiwan arbitral tribunal.36 Such reciprocal requirement does  not  pose  difficulty  to  Hong  Kong as non-Convention awards can also be  enforced  here  in  the  same  manner  as  a  judgment of the court but only with the leave of the court.

So far as the enforcement of an arbitration award in Hong Kong is concerned, the recent judgment of KB v S and Others [HCCT 13/2015] 37 emphasises among other things that enforcement should be “almost a matter of administrative procedure” and the courts should  be “as mechanistic as possible”. This case is one of the many examples that demonstrates    the pro-arbitration and pro-enforcement approach of the Hong Kong courts.

Enforcement in Hong Kong is easy  and  simple.  Documents  to  be  supplied  for  enforcement are stated in section 88 of the Arbitration Ordinance. They  are  1)  the  duly  authenticated  original award or a duly certified copy of it, 2) the original arbitration agreement or a duly  certified copy of it and 3) a translation of the award or the agreement if it is not in English or Chinese which are both official languages in Hong Kong. There are a  limited  number  of  grounds for the refusal to enforce arbitral  awards  which  are similar  to  those  as  provided  by the New York Convention.

In short, an arbitral award made in Hong Kong may be enforced in Hong Kong in the same manner as a judgment of the court, in China under the reciprocal arrangement and internationally under the New York Convention.

Substantive law

The substantive law of maritime contracts refers to the choice of law by the parties in their contract to govern the substantive dispute under  their  contract.  English  law  is  usually  agreed as the governing law in maritime contracts due to its transparency, predictability, pro-business approach and wealth of legal precedents. In the U.S. case Senator Linie GMBH & Co KB v Sunway Line., F 3d 145 (2d Cir. 2002), Sotomayor Circuit Judge said:

“in matters of commercial law our decisions should conform to the English decisions, in the absence of some rule of public policy which would forbid.”

The importance of English law in commercial contracts is further reflected in an international arbitration survey conducted by Queen Mary University in 2010.38 The survey results revealed that 40% of the interviewees said that the most frequently used governing law in their contracts was English law.

If there is no mention of the governing law in the contract and arbitration is to be conducted in Hong Kong, then it is probably the case that Hong Kong law will apply. As already mentioned,  the English common law system applies in Hong Kong. English commercial law is therefore closely followed and adopted here to  resolve  commercial  disputes.  Commercial  men  who  used to regulate their business in accordance with English law  should  feel  comfortable arbitrating their disputes in Hong Kong.

Ad-hoc and administered arbitrations

The vast majority of Hong Kong maritime arbitrations are conducted on an ad-hoc basis. Ad- hoc arbitration is different from institutional arbitration. The latter refers to arbitrations being administered or supervised by professional arbitration organisations in accordance with their rules. Generally speaking, in comparison with institutional arbitration, ad-hoc arbitration is more cost-effective and efficient. There are misconceptions of some users in Asia that only an award published under the institutional rules will be enforced by courts, that such award may be considered as more authoritative and that the conduct of an administered arbitration is more structured. They are not necessarily correct. Shipping people who used to arbitrate their disputes on an ad-hoc basis would agree that enforcement of an ad-hoc arbitration award is the same as an award issued in an institutional arbitration. Taking China as an example, although the Arbitration Law of the People’s Republic of China only recognises institutional arbitration, the Chinese courts recognise and enforce ad-hoc arbitral awards made in a state which is party to the New York Convention. So far as awards of Hong Kong seated arbitrations are concerned, the "Arrangement Concerning Mutual Enforcement of Arbitral

Awards between Mainland China and Hong Kong" has made no differentiation between  an ad-hoc award and an  award  issued  in  accordance  with  the  administered  arbitration  rules. Both of them will be enforced under the Arrangement. The mere fact that it is an administered award does not make it more authoritative. As will be discussed below, there is no lack of structure in ad hoc arbitration in Hong Kong as it is supported by the Arbitration Ordinance. Experienced arbitrators, who are the masters of procedures39, can devise suitable arbitration procedures which can promote efficiency and maintain flexibility.

The practice of Hong Kong maritime arbitration, the HKMAG Terms and the Procedures for the Administration of Arbitration

(i)       The practice

The practice of ad-hoc maritime arbitration in Hong Kong is similar to that  conducted  in  London. People who used to arbitrate in London will find no difficulties in arbitrating in Hong Kong. The arbitration procedures for ad-hoc arbitration in Hong Kong, which are governed  by  the Arbitration Ordinance,  are flexible and  less formal. An arbitral tribunal can tailor-make a    set of agreed procedures with the parties that will streamline the particular arbitration process. This can lead to a quicker resolution of the disputes with less cost involved.

A large number of maritime arbitrations are  conducted  in  accordance  with  the  London Maritime Arbitrators Association Terms (the “LMAA Terms”) and the LMAA Small Claims Procedure (the “LMAA SCP”). These procedural rules are specifically designed for use in maritime arbitration to promote cost-effectiveness and time efficiency.  They  fit  in  the Arbitration Ordinance well and work fine in Hong Kong arbitrations. It is because although the Arbitration Ordinance is based on the UNCITRAL Model Law, it has imported some relevant provisions from the English Arbitration Act 1996. The lawyers and arbitrators here are familiar with the usage of the LMAA Terms.

The following striking features of ad-hoc maritime arbitration in Hong Kong make it more efficient and affordable when compared with other types of arbitration:

1.                   a sole arbitrator is frequently appointed in the resolution of maritime disputes by agreement of the parties or in a situation of default appointment;

2.
arbitration proceedings are usually conducted before two party-appointed arbitrators without the needs to appoint a third as per  the parties’ agreement or  the LMAA  Terms.  The  third arbitrator will only be appointed if circumstances  so require it (for example, in the case of    a hearing) or the two arbitrators are unable to agree with each other (which rarely occurs as

far as procedural matters are concerned);

3.                   maritime disputes are usually resolved by way of documents only.

(ii)        The HKMAG Terms and Small Claims Procedures

With the permission of the LMAA, the Hong Kong Maritime Arbitration Group (the HKMAG) has wholesale adopted the LMAA Terms and the LMAA SCP and made them the HKMAG  Terms (2017) and the HKMAG Small Claims Procedure (2017) with changes made  to  incorporate references to Hong Kong procedural law. They  are  intended  to  be  used  in  maritime arbitration in Hong Kong. This brings Hong Kong maritime arbitration in line with international practices.

The HKMAG Terms are largely the same as the LMAA Terms and therefore need no introduction. There are, however, two points which are worth mentioning.

1.   One of the problems which we usually face  in Hong  Kong maritime arbitration  is the use of   a poorly drafted arbitration  clause where  the number  of arbitrators  is  not specified. According to the  Arbitration Ordinance, a party who wishes to refer a dispute to  arbitration  may require     to make an application to HKIAC to decide whether the dispute should be heard by a sole arbitrator or  three arbitrators.40  This will  bring delay and  incur costs unnecessarily.  Paragraph   9 (a) of the HKMAG Terms  deals with the problem  by making it clear  that the default number  of arbitrators is three. Paragraph 9 (b) (i) provides an appointment mechanism (i.e. a 14-day default procedure) to ensures a speedy establishment of an arbitral tribunal. Under the default procedure, if a party fails to appoint its arbitrator within 14 calendar days of receipt of a notice from the other  party  requesting it to do so, the arbitrator already appointed can be appointed      as sole arbitrator. The mechanism, in fact, mirrors the Bimco / LMAA arbitration clause which was considered as an  industry  standard: see Transgrain Shipping BV v. Deiulemar  Shipping  SpA (in liquidation) and Eleni Shipping Ltd (2014) EWHC 4202 (Comm)41. Paragraph 9 (b) (ii) provides  that the two arbitrators  thus  appointed can dispense with the  need  of appointment  of  a third arbitrator until a substantive hearing or if they cannot agree on any matter  in relation to  the arbitration.

（TBD）