Deminor Wiki - Hong Kong International Arbitration Centre (HKIAC)

History

The Hong Kong International Arbitration Centre was established in 1985 by a group of leading businesspeople and professionals to meet the growing need for dispute resolution services in Asia. The institution emerged from the recognition that Hong Kong required a world-class arbitration facility to support its transformation into a major international financial centre. Initially funded with assistance from the business community and the Hong Kong government, HKIAC was designed to provide neutral, efficient dispute resolution services that would complement Hong Kong's common law system inherited from British colonial rule. Today, the Centre operates independently of both the business community and government, maintaining its own budget and funds.

Throughout the 1990s and early 2000s, HKIAC evolved from a regional arbitration centre into an institution of global significance. The 1997 handover of Hong Kong from British to Chinese sovereignty created unique challenges and opportunities, as HKIAC had to maintain its international character whilst operating within the "One Country, Two Systems" framework. This period saw the institution strengthen its rules, expand its panel of arbitrators, and establish itself as the preferred arbitration venue for China-related disputes. Under the chairmanship of Neil Kaplan CBE KC SBS from 1991 to 2004, often referred to as the "Father of Hong Kong Arbitration", HKIAC underwent significant development and gained international recognition.

The watershed moment for HKIAC's relationship with litigation funding came with the passage of the Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Ordinance 2017, which explicitly permitted third-party funding for arbitration and mediation proceedings in Hong Kong. The relevant provisions came into effect on 1 February 2019, following the issuance of a Code of Practice for Third Party Funding of Arbitration on 7 December 2018. This reform positioned HKIAC at the forefront of the Asian arbitration market, particularly as competing jurisdictions maintained restrictions on litigation funding. The institution responded by incorporating specific provisions addressing funded parties in its 2018 Administered Arbitration Rules, demonstrating its commitment to accommodating the evolving needs of international commercial dispute resolution.

Institutional Framework and Governance

HKIAC operates under a sophisticated governance structure that ensures independence and adherence to international standards. The institution is governed by a Council composed of businesses and professionals of several nationalities, supported by an International Advisory Board that provides guidance and advice on policy matters. Administration of arbitration is conducted by the Secretariat through the Centre's Secretary-General, with qualified legal counsel and deputy counsel available to act as tribunal secretaries in various proceedings.

Third-Party Funding Framework

HKIAC has distinguished itself through its progressive approach to third-party funding in arbitration. Following Hong Kong's legislative reforms permitting third-party funding in 2017, HKIAC became one of the first major arbitration institutions to comprehensively address funding in its rules and practices. The 2018 HKIAC Administered Arbitration Rules require parties to disclose the existence of third-party funding arrangements and the identity of funders at the commencement of proceedings or upon entering into such arrangements.

Litigation Funding Context

HKIAC's embrace of third-party funding reflects broader trends in international arbitration towards recognising funding as a legitimate tool for access to justice and risk management. The availability of funding has particular significance for arbitrations involving Asian parties, where traditional reluctance to engage in formal dispute resolution can be overcome when financial barriers are removed.

The intersection of HKIAC arbitration and litigation funding has created new dynamics in case management and strategy. Funders evaluating HKIAC-administered cases consider factors including the institution's track record for efficient case management, the enforceability of awards across jurisdictions, and the sophistication of arbitrators in handling funded cases. HKIAC's reputation for producing enforceable awards, particularly in mainland China under the Arrangement Concerning Mutual Enforcement of Arbitral Awards, enhances the attractiveness of funding HKIAC arbitrations.

Broader Industry Context

HKIAC's role extends beyond arbitration administration to influencing broader legal services trends in Asia. The institution's embrace of third-party funding has catalysed development of a sophisticated litigation finance ecosystem in Hong Kong, attracting international funders and creating opportunities for local legal professionals. Law firms have developed specialised practices advising on funded arbitrations, whilst barristers' chambers have adapted advocacy strategies for funded cases.

Conclusion

The Hong Kong International Arbitration Centre has established itself as a pivotal institution in the global arbitration landscape, particularly through its progressive approach to third-party funding. By embracing litigation finance whilst maintaining robust procedural safeguards and transparency requirements, HKIAC has created a model for other arbitration centres seeking to balance access to justice with institutional integrity. The centre's sophisticated rules, world-class facilities, and strategic position as a gateway between East and West make it an attractive venue for funded arbitrations. As the litigation funding industry continues to mature and expand globally, with market projections indicating substantial growth, HKIAC's experience provides valuable insights into successfully integrating funding into institutional arbitration frameworks. The institution's ongoing commitment to innovation, diversity, and international best practices ensures its continued relevance in an evolving dispute resolution landscape, whilst its role in facilitating funded arbitrations contributes significantly to improving access to justice for commercial parties across the Asia-Pacific region and beyond.