In 厦門新景地集團有限公司 formerly known as 厦門市鑫新景地房地產有限公司 v. Eton Properties Limited and Another, the Hong Kong Court of Appeal approved the enforcement of the terms of an arbitration award made by CIETAC against Eton Properties, a Hong Kong company.

The CIETAC award required Eton Properties to pay compensation to the applicant and to "continue to perform the agreement", as well as to reimburse the applicant's arbitration fees. Eton Properties had failed to deliver to the applicants certain land in Xiamen, which was to have been transferred under a contract of sale, and the CIETAC tribunal found that Eton Properties had breached its agreement with the applicant. The applicant applied to the Hong Kong courts for an enforcement order against Eton Properties, which was granted.

Eton Properties then appealed against the order, arguing that it was now impossible to deliver the land which was the subject matter of the dispute and, further, because of a restructuring that had been undertaken, the shares could no longer be transferred. Instead, it offered to submit itself to further CIETAC arbitration for a determination of what alternative remedies (including damages) the applicant might be entitled to.

In refusing Eton Properties' appeal, the court found that under the provisions of the Arbitration Ordinance in Hong Kong, the court may either enforce the award or refuse it; there was no jurisdiction to remit the case to CIETAC. The court decided that impossibility of performance was not sufficient reason to justify a refusal to enforce an award on public policy grounds.

The court drew a technical distinction between specific performance, which includes a specific time frame within which performance must occur, and its order in this case, which supported the CIETAC award and did not specify any time for performance.

It is more common for courts in Hong Kong to deal with the enforcement of awards providing for the payment of monetary damages, rather than one dealing with orders to perform an agreement. Nonetheless, the robust approach taken by the courts in the present case underscores the pro-enforcement stance taken in Hong Kong, and the seriousness with which parties should treat an award that has been made against them.

A new Arbitration Bill was introduced to the Legislative Council in Hong Kong this year and had its first reading in July 2009 (see Legal update, Arbitration Bill introduced before Legislative Council). The Bill is expected to be enacted in the 2009/10 legislative session at the earliest.

Under Hong Kong's current Arbitration Ordinance (Cap. 341), there are separate regimes for domestic and international arbitration. The Arbitration Bill proposes to abolish this distinction and to create a unitary regime based on the UNCITRAL Model Law. Under the new law, users of standard form contracts would still be able to opt in to certain provisions of the former domestic regime.

One major proposed change is the revised Article 17, which sets out broad powers for the arbitral tribunal to order interim measures, define the interim measures that may be awarded and set out conditions to be satisfied for an interim measure to be granted. The arbitral tribunal will also be empowered to grant a preliminary order as part of the application for an interim measure.

The proposed unitary regime will result in more extensive changes to the current domestic arbitration regime, which is largely based on the previous English arbitration law. For example, unless parties agree otherwise, local courts will have far less power to intervene in arbitration, and will no longer have the power to consolidate arbitrations or to review arbitral awards on questions of law. The proposed Bill does, however, provide an "opt-in" mechanism under which parties may agree that certain standard provisions will apply by agreement.

For both domestic and international arbitrations, the new Bill also provides a provision to safeguard confidentiality, contemplates that in certain circumstances, an arbitrator may also act as a mediator and empowers the tribunal to make a peremptory order if the parties fail to file their statement of claim or statement of defence.

The Hong Kong International Arbitration Centre (HKIAC) Administered Arbitration Rules (the Rules) were introduced on 1 September 2008. Prior to the introduction of the Rules, parties conducting international arbitrations in Hong Kong would often conduct them under the UNCITRAL Arbitration Rules, as supplemented by the HKIAC Procedures for the Administration of International Arbitration (the Procedures). This position has now been improved, since the Rules are self-contained, internally consistent, and have been specifically tailored for use in international arbitrations conducted in Hong Kong.

In the relatively short time since the Rules have been introduced, they have rapidly established themselves as a viable set of rules for use in international arbitrations conducted in Hong Kong. In the past year, there have been a growing number of cases which have been administered under those Rules.

The Rules are based on the UNCITRAL Arbitration Rules, to provide for some degree of continuity, while also adopting features from the "the light touch" administered approach of the Swiss International Rules of Arbitration. In terms of content, the Rules are consistent with best practice as reflected in the rules of other international institutions. Under the Rules, the procedure for commencement of proceedings, appointment of arbitrators, constitution of the tribunal and replacement of arbitrators are all broadly similar to what is set out under other international arbitration rules.

However, the Rules do differ from other international rules in some respects, in line with the "light touch" approach favoured by the HKIAC. Thus, for example, parties are given the freedom to decide whether the fees of the arbitral tribunal are to be agreed, or to be based on scale fees published by the HKIAC; and there is no scrutiny process for awards.

The Rules also expressly deal with the appointment of the tribunal in multi-party situations and include provisions dealing with the joinder of third parties - issues which are not dealt with under the current version of the UNCITRAL Arbitration Rules, which were drafted back in 1976.

Given Hong Kong's status as an international financial centre and the significant number of Sino-foreign disputes which are resolved in Hong Kong, there is little doubt that the Rules will only grow further in popularity in the coming years.