2. Requirements for validity

2. Requirements for validity 

1. Consent to arbitrate 

For an arbitration agreement to be valid and enforceable in Hong Kong, its terms must be certain and demonstrate a clear intent to arbitrate. The parties must clearly and unequivocally agree to submit their disputes to arbitration, thereby waiving their right to bring claims before Hong Kong courts. 

A valid agreement must contain an element of compulsion, typically using mandatory language such as “shall” rather than merely providing an option to litigate. An agreement that merely offers an "option" to choose between arbitration and litigation is generally not considered a valid arbitration agreement. 

Parties may sometimes include a provision known as a Scott v Avery clause, which adds a layer of compulsion to the arbitration process. This type of clause stipulates that the obtaining of an arbitral award is a condition precedent to any right of action in a court of law. Consequently, a party cannot successfully sue in court until he has first completed the arbitration and received a final award. These clauses do not fully oust the court’s jurisdiction but serve as a substantive defence that effectively postpones court access until the private resolution process is finished. 

2. Identification of the parties 

It is essential that the parties bound by the agreement are properly identified. An arbitrator has no authority to decide a dispute between parties other than those to the arbitration agreement. 

3. Identification of the disputes (scope) 

The agreement must define the “defined legal relationship” and the specific categories of disputes or claims that will be subject to arbitration. This is often achieved through broad "connecting phrases” such as disputes "relating to" or “arising in connection with” the contract. 

While the courts lean in favour of giving effect to these clauses (a “pro-arbitration” approach), they will refuse to enforce an agreement if it is found to be null and void, inoperative, or incapable of being performed. Additionally, the subject matter of the dispute must be arbitrable. For instance, matters involving criminal charges, certain family law issues, or specific state-reserved functions like taxation cannot be referred to arbitration under Hong Kong law.