8. Number and appointment of arbitrators

8. Number and appointment of arbitrators

Parties are free to determine the number of arbitrators they wish to appoint. Most commercial arbitrations are heard by either one or three arbitrators. It is generally advisable to choose an odd number, usually one or three, to avoid the risk of a deadlocked or “hung” tribunal. 

A sole arbitrator is often chosen for its cost-effectiveness and speed. A three-member tribunal allows each party to nominate one arbitrator, with the third usually appointed by agreement, by the two party-nominated arbitrators, or by the institution or by the appointing authority. A three-member tribunal may be appropriate for international, technically complex or high-value disputes. 

It is generally preferable to agree the number of arbitrators and the appointment procedure when drafting the arbitration agreement, because parties may find it difficult to agree once a dispute has arisen. 

Role of the HKIAC as appointing authority 

If the parties fail to agree on the number of arbitrators, the Arbitration Ordinance (Cap. 609) provides two different default mechanisms depending on the regime applicable to the arbitration: 

1. Unitary regime: In most cases, the HKIAC has the statutory power to decide whether there should be either one or three arbitrators. 

2. Schedule 2 provisions: If the parties have expressly opted into Schedule 2 of the Arbitration Ordinance, or if it applies automatically (common in domestic construction disputes), a failure to agree on the number results in the dispute being submitted to a sole arbitrator by default. In this scenario, the HKIAC has no discretion to appoint three arbitrators. 

When the HKIAC is called upon to decide between one or three arbitrators under its statutory power, it must consider several factors, including: 

1. The amount in dispute and the complexity of the claim. 
2. The nationality of the parties and any relevant customs of the trade or profession. 
3. The urgency of the case and the availability of appropriate arbitrators. 

Parties are free to agree on a specific procedure for appointing the tribunal. In the absence of an agreement for a three-member tribunal: 

1. Each party appoints one arbitrator. 
2. The two party-appointed arbitrators then appoint the third (presiding) arbitrator. 
3. If a party fails to appoint their arbitrator within 30 days of a request, or if the two party-appointed arbitrators fail to agree on the third arbitrator within 30 days of their appointment, a party may request the HKIAC to make the necessary appointment. 

The HKIAC serves as the statutory default appointing authority for all arbitrations seated in Hong Kong where the parties’ agreed procedure fails. Decisions made by the HKIAC regarding appointments or the number of arbitrators are final and subject to no appeal and have the same legal effect as if made by the agreement of all parties. The HKIAC follows specific Appointment Rules and consults its Appointment Advisory Board, composed of industry stakeholders, when exercising these powers. 

While the HKIAC is the primary authority, the Court of First Instance retains residual powers to appoint arbitrators in specific circumstances, such as where the court orders the consolidation of two or more arbitral proceedings. 

Qualifications 

Parties can specify required qualifications for arbitrators, such as professional qualifications, industry experience, language proficiency, nationality or legal expertise. However, for international cases, it is common to prohibit a sole or presiding arbitrator from having the same nationality as any party to ensure perceived neutrality. 

The required qualifications must be drafted with precision. Under Hong Kong law, if a tribunal is constituted with an arbitrator who does not possess the specific qualifications agreed upon by the parties, the resulting award may be held void. Therefore, qualification requirements should be clear and not so restrictive that they make it impossible to constitute a tribunal.