Responding to the Notice of Arbitration under the HKIAC Arbitration Rules

Introduction

International arbitration has become the preferred mechanism for resolving commercial disputes, particularly in cross-border transactions. The Hong Kong International Arbitration Centre (HKIAC) stands as one of the leading arbitral institutions in Asia, ranking third globally as the most preferred seat for arbitration according to international surveys [1]. When a party receives a Notice of Arbitration under HKIAC Rules, the response mechanism becomes a critical juncture that shapes the entire arbitral process. The manner in which a respondent addresses the Notice of Arbitration can significantly influence procedural efficiency, jurisdictional determinations, and ultimately, the substantive outcome of the dispute.

The HKIAC Administered Arbitration Rules provide a structured framework for responding to arbitration notices, with the most recent 2024 Rules introducing several amendments aimed at enhancing procedural efficiency and integrity. These rules operate within the broader legal framework established by the Hong Kong Arbitration Ordinance (Cap. 609), which came into effect on 1 June 2011 and is modelled on the UNCITRAL Model Law on International Commercial Arbitration [2]. Understanding the procedural requirements, strategic considerations, and legal implications of responding to a Notice of Arbitration is essential for any party engaged in HKIAC arbitration proceedings.

The Legal Framework Governing Arbitration in Hong Kong

The Arbitration Ordinance (Cap. 609)

Hong Kong’s arbitration regime is governed primarily by the Arbitration Ordinance (Cap. 609), which replaced the previous fragmented legislative framework with a unified system based on the UNCITRAL Model Law. The Ordinance applies to arbitrations where the seat is Hong Kong, regardless of where the arbitration agreement was concluded. Section 3 of the Ordinance establishes two fundamental principles: first, that parties should be free to agree on how their dispute should be resolved, subject to necessary public interest safeguards; and second, that courts should interfere in arbitration only as expressly provided in the Ordinance [2].

The Ordinance adopts the 2006 revisions of the UNCITRAL Model Law, which grant Hong Kong courts and tribunals expanded powers to issue interim measures in support of arbitration. Section 34 of the Ordinance, incorporating Article 16 of the Model Law, empowers arbitral tribunals to rule on their own jurisdiction, including objections regarding the existence or validity of the arbitration agreement [3]. This competence-competence principle allows tribunals to proceed with hearings on jurisdictional challenges without awaiting court intervention, though parties retain limited rights to challenge jurisdictional determinations through subsequent court proceedings.

HKIAC Administered Arbitration Rules

The HKIAC has issued multiple iterations of its Administered Arbitration Rules, with the 2024 Rules representing the most recent version, effective from 1 June 2024. The 2024 Rules apply to all arbitrations where the Notice of Arbitration is submitted on or after that date, unless parties have agreed otherwise. These Rules introduce significant enhancements over previous versions, including mandatory diversity considerations in arbitrator appointments, expanded powers for tribunals concerning information security, and stricter time limits for closing proceedings [4].

Article 5 of the 2024 HKIAC Rules specifically governs the Answer to the Notice of Arbitration, requiring respondents to submit their response within 30 days of receiving the Notice. This Article establishes comprehensive requirements for what must be included in the Answer, ranging from basic contact information to substantive responses on jurisdictional challenges and counterclaims. The Rules also permit respondents to include their Statement of Defence with the Answer if the claimant included the Statement of Claim with the Notice, thereby streamlining the initial pleadings exchange [5].

Requirements for Responding to the Notice of Arbitration under the HKIAC Rules

Mandatory Time Limits

Under Article 5.1 of the 2024 HKIAC Rules, the respondent must communicate an Answer to the Notice of Arbitration to both HKIAC and the claimant within 30 days from receipt of the Notice. This time limit is calculated according to Articles 3.1 to 3.5 of the Rules, which govern written communications and time limit calculations. Time limits begin to run on the day following receipt of the written communication, and if the last day falls on an official holiday or non-business day at the place of receipt, the time limit extends until the first following business day [5].

Failure to respond within this timeframe does not automatically result in default judgment or termination of the proceedings. Article 26.2 of the Rules provides that if the respondent fails to communicate its Answer without showing sufficient cause, the tribunal may proceed with the arbitration notwithstanding such failure. However, the strategic disadvantages of missing this deadline are substantial, as the respondent loses the opportunity to influence critical procedural matters such as arbitrator selection, seat determination, and the number of arbitrators, while also potentially waiving certain objections under the waiver provisions of Article 32 [6].

Mandatory Contents of the Answer

Article 5.1 of the 2024 HKIAC Rules establishes eight mandatory elements that must be included in the Answer to the Notice of Arbitration. First, the Answer must contain the name, address, telephone and facsimile numbers, and email address of the respondent and its representatives, if different from the description in the Notice. This requirement ensures proper communication channels throughout the proceedings. Second, the respondent must include any plea that the arbitral tribunal lacks jurisdiction. Such jurisdictional challenges must be raised at this early stage or, at the latest, in the Statement of Defence, as Article 19.3 provides that late jurisdictional pleas may be admitted only if the delay is justified [5].

Third, the Answer must contain the respondent’s comments on the particulars set forth in the Notice regarding the claim’s nature and amount. Fourth, it must include the respondent’s answer to the relief or remedy sought by the claimant. Fifth, the respondent must provide a reasoned proposal as to the number of arbitrators—either one or three—if the parties have not previously agreed on this matter. Article 6.1 grants HKIAC the power to decide on the number of arbitrators if parties disagree, taking into account the circumstances of the case, including factors such as complexity, dispute value, and efficiency considerations [5].

Sixth, the Answer must include the respondent’s proposal and comments regarding arbitrator designation. Where a sole arbitrator is to be appointed, the respondent should either agree with the claimant’s proposal or suggest alternative candidates. Where three arbitrators are to be appointed, the respondent must designate one arbitrator in the Answer itself if the parties had agreed on three arbitrators before commencement. Seventh, consistent with Article 44’s transparency requirements regarding third-party funding, the respondent must disclose the existence of any funding agreement and identify any third-party funder. Finally, the eighth requirement mandates confirmation that copies of the Answer and supporting materials have been communicated simultaneously to all other parties, identifying the means of service used [5].

Optional Contents and Strategic Considerations

Beyond mandatory contents, Article 5.2 permits the Answer to include the Statement of Defence if the Notice contained the Statement of Claim. Including the Statement of Defence at this early stage can demonstrate preparedness and procedural efficiency, though it may also constrain flexibility if the respondent later discovers additional factual or legal grounds for defence. The decision to include the Statement of Defence should be made after carefully weighing these considerations, including the complexity of legal and factual issues, availability of evidence, and strategic positioning.

Article 5.3 addresses counterclaims, set-off defences, and cross-claims, stating that these should be raised with the Answer “to the extent possible.” Where a counterclaim is raised, the respondent must provide a copy of relevant contracts or legal instruments, a description of the counterclaim’s nature and amount, and the relief sought. While the Rules do not mandate inclusion of counterclaims at this stage—they may alternatively be raised in the Statement of Defence—early assertion of counterclaims can affect fee calculations, tribunal constitution considerations, and procedural scheduling. HKIAC may adjust its administrative fees and the tribunal’s fees based on counterclaim amounts, making early disclosure strategically important for cost planning [5].

Procedural Consequences of Responding to the Notice Under HKIAC Rules

Impact on Arbitrator Appointment

The respondent’s participation in arbitrator designation represents one of the most critical strategic aspects of responding to the Notice under HKIAC Rules. Under Article 8 of the 2024 HKIAC Rules, where the dispute is referred to three arbitrators and the parties had agreed on this before commencement, each party must designate one arbitrator in the Notice and Answer respectively. The two party-appointed arbitrators then jointly designate the presiding arbitrator within 30 days of the second arbitrator’s confirmation. If either party fails to designate an arbitrator, HKIAC will make the appointment, effectively depriving that party of influence over one-third of the tribunal’s composition [7].

The designation process is subject to HKIAC confirmation under Article 9, which considers any party agreement on arbitrator qualifications, factors affecting arbitration efficiency or integrity, disclosure statements, and diversity considerations introduced in Article 9A of the 2024 Rules. Article 11.4 requires prospective arbitrators to sign statements confirming their availability, impartiality, independence, and disclosing any circumstances likely to give rise to justifiable doubts about their impartiality or independence. The respondent’s timely participation in this process allows meaningful input into tribunal composition, which can significantly influence procedural approaches, evidentiary rulings, and substantive outcomes [7].

Jurisdictional Challenges and Prima Facie Review

Article 19 of the HKIAC Rules governs jurisdictional determinations, establishing the tribunal’s competence-competence to rule on its own jurisdiction. However, Article 19.5 grants HKIAC a preliminary gatekeeping function: the arbitration proceeds only if and to the extent that HKIAC is satisfied, prima facie, that an arbitration agreement under the Rules may exist. This prima facie determination does not prejudice the admissibility or merits of any party’s claims or defences, and jurisdictional questions remain subject to final determination by the constituted tribunal [6].

The respondent wishing to challenge jurisdiction must raise this plea in the Answer or, at the latest, in the Statement of Defence. Article 19.3 provides that a party is not precluded from raising jurisdictional challenges merely because it participated in arbitrator designation or appointment. However, delayed jurisdictional challenges face stricter scrutiny, with the tribunal admitting late pleas only if the delay is justified. The recent Hong Kong Court of Appeal decision in C v D [2022] HKCA 729 confirms that compliance with pre-arbitration procedural requirements typically raises questions of admissibility rather than jurisdiction, with tribunals having primary authority to determine such matters [8].

Waiver Implications

Article 32 of the HKIAC Rules establishes a waiver principle that applies throughout arbitral proceedings. A party that knows or ought reasonably to know that any provision or requirement under the Rules has not been complied with, yet proceeds without promptly stating its objection, shall be deemed to have waived its right to object. This provision has significant implications for respondents reviewing the Notice of Arbitration. Defects in the Notice—whether regarding service, content completeness, or procedural compliance—must be raised promptly in the Answer to preserve objection rights [6].

The waiver doctrine extends beyond procedural irregularities to substantive issues. In the context of proper notice requirements under Section 86(1) of the Arbitration Ordinance, Hong Kong courts have held that parties may waive notice defects through their conduct. The 2025 decision in CC v AC [2025] HKCFI 855 illustrates this principle, where the court refused to set aside an enforcement order despite the defendant’s claims of improper notice, finding that the defendant’s failure to maintain correct contact information and update the claimant of address changes constituted fault precluding reliance on notice defects [9].

Strategic Considerations in Crafting the Response

Evaluating Jurisdictional Challenges

The decision whether to challenge the tribunal’s jurisdiction represents a threshold strategic determination that shapes the entire arbitration trajectory. Jurisdictional challenges under Article 19 may be based on several grounds: the non-existence of an arbitration agreement, invalidity of the agreement under applicable law, expiration or termination of the agreement, or the dispute falling outside the agreement’s scope. The respondent must evaluate these grounds carefully, considering both the legal merits and strategic implications of mounting a jurisdictional challenge.

Where jurisdictional challenges have substantial merit, raising them in the Answer can lead to early dismissal, avoiding the costs and risks of full proceedings on the merits. However, weak or marginal jurisdictional challenges carry significant risks. They consume tribunal time and party resources, potentially delaying substantive hearings. More importantly, they may antagonize the tribunal and damage the respondent’s credibility on substantive issues. The Hong Kong courts apply high standards when reviewing jurisdictional determinations, rarely interfering with tribunal decisions absent clear legal error or procedural unfairness.

Arbitrator Selection Strategy

Arbitrator selection represents perhaps the most consequential strategic decision in the Answer’s preparation. The respondent must consider multiple factors when proposing or designating arbitrators: substantive expertise relevant to the dispute, experience with the applicable law and industry practices, availability and efficiency in managing proceedings, linguistic capabilities, and, increasingly under the 2024 Rules, diversity considerations. Article 9A encourages parties and co-arbitrators to consider diversity when designating arbitrators, while requiring HKIAC to take diversity into account when exercising appointment authority [7].

For three-member tribunals, the respondent designates one arbitrator who, together with the claimant’s designee, selects the presiding arbitrator. This structure creates opportunities for strategic coordination to influence presiding arbitrator selection. The respondent should research potential candidates’ prior decisions, procedural preferences, and professional reputation. Where the dispute involves technical issues, selecting an arbitrator with relevant expertise can enhance the tribunal’s understanding of complex matters. However, technical expertise must be balanced against juridical competence, as arbitrators must ultimately apply legal principles to factual findings.

Counterclaims and Defensive Strategy

The decision whether to assert counterclaims in the Answer requires careful consideration of timing, strategic positioning, and procedural implications. Article 5.3 states that counterclaims should be raised with the Answer “to the extent possible,” though they may alternatively be raised in the Statement of Defence. Early assertion of counterclaims demonstrates proactive case management and may influence HKIAC’s determinations regarding tribunal composition, procedural scheduling, and fee calculations under Schedules 1 through 3 [5].

However, premature counterclaim assertions carry risks. Where the respondent lacks complete factual or documentary support for counterclaims, early pleading may expose weaknesses that skilled opposing counsel can exploit. Additionally, counterclaims trigger fee obligations based on claimed amounts, imposing immediate cost consequences. The respondent must balance these competing considerations, often requiring expedited factual investigation and legal analysis within the 30-day response period. Where genuine uncertainty exists regarding counterclaim merits or quantum, the respondent may strategically elect to reserve counterclaims for the Statement of Defence, when additional discovery and analysis time becomes available.

Regulatory Compliance and Third-Party Funding Disclosure

Mandatory Funding Disclosure Requirements

Article 44 of the 2024 HKIAC Rules mandates disclosure of third-party funding arrangements, reflecting broader Hong Kong legislative reforms that came into effect on 1 February 2019. These amendments to the Arbitration Ordinance removed common law prohibitions on maintenance and champerty for arbitration proceedings, explicitly permitting third-party funding while imposing disclosure obligations to ensure transparency and manage conflicts of interest. Under Article 44, when a funding agreement exists, the funded party must communicate written notice to all other parties, the tribunal, any emergency arbitrator, and HKIAC, disclosing both the fact that a funding agreement has been made and the identity of the third-party funder [10].

The Answer to the Notice of Arbitration represents the first opportunity for disclosure where funding agreements exist at commencement. Article 5.1(g) specifically requires inclusion of funding information in the Answer. Failure to disclose funding arrangements can have serious consequences, including adverse inferences regarding the respondent’s financial position, potential cost allocation implications, and, in extreme cases, challenges to arbitral awards. The disclosure requirement extends throughout the proceedings—parties must update their disclosures if funding arrangements change or new funding is obtained after the Answer is submitted.

Security for Costs Considerations

Third-party funding disclosure directly relates to security for costs applications under Article 24, which empowers tribunals to order parties to provide security for arbitration costs. The existence of third-party funding may influence tribunals’ decisions on security for costs applications, though such funding alone does not automatically justify security orders. Tribunals typically consider multiple factors: the applicant’s ability to recover costs if successful, the respondent’s assets and financial condition, the respondent’s conduct affecting cost exposure, and relevant policy considerations regarding access to justice and procedural fairness.

Respondents should anticipate that claimants may seek security for costs where third-party funding is disclosed, and should prepare responses addressing the tribunal’s analytical framework. Arguments may focus on the funder’s creditworthiness and commitment to the proceeding, the respondent’s independent financial capacity, the claim’s merits and prospects of success, and proportionality concerns regarding security amounts relative to the dispute’s value. The 2024 Rules’ emphasis on efficiency and integrity, reflected in Article 13.10’s grant of broad powers to HKIAC to preserve arbitration integrity, may influence tribunals’ receptiveness to security for costs applications where funding arrangements present risks to cost recovery [6].

Enforcement and Challenge Considerations

Grounds for Setting Aside Awards

The manner in which a respondent addresses the Notice of Arbitration can significantly affect later opportunities to challenge arbitral awards. Section 81 of the Arbitration Ordinance, incorporating Article 34 of the UNCITRAL Model Law, establishes limited grounds for setting aside awards. These grounds include: party incapacity under applicable law, invalidity of the arbitration agreement, improper notice of arbitral proceedings or arbitrator appointments preventing case presentation, the award addressing disputes not contemplated by the arbitration agreement or exceeding its scope, improper tribunal composition or procedure, and non-arbitrability or public policy violations [11].

Several of these grounds relate directly to issues that should be raised in the Answer. Improper notice challenges must be based on actual notice defects rather than technical non-compliance. The recent CC v AC decision demonstrates Hong Kong courts’ approach: where the respondent specified an address for service in the contract but failed to maintain that address or notify the claimant of changes, the court held that the respondent bore responsibility for resulting notice issues and could not successfully challenge the award based on improper notice [9]. Jurisdictional challenges that were not timely raised in the Answer or Statement of Defence face significant hurdles, as Article 32’s waiver provisions may preclude later objections to matters known at commencement.

Recognition and Enforcement Implications

Hong Kong’s status as a New York Convention signatory and its arrangements for mutual enforcement of awards with Mainland China make enforcement considerations critical when responding to the Notice. Section 86(1) of the Arbitration Ordinance establishes grounds for refusing enforcement of Convention awards, mirroring the UNCITRAL Model Law’s provisions. These grounds largely parallel the setting-aside grounds under Section 81, including improper notice of proceedings, excess of tribunal authority, improper composition or procedure, and non-arbitrability or public policy violations [11].

The respondent must recognize that defenses to enforcement may be waived through failure to raise them at appropriate stages. The Answer represents the first procedural opportunity to preserve enforcement challenges. Where the respondent believes the dispute is non-arbitrable under Hong Kong law or that proceeding would violate public policy, these objections should be raised immediately. Similarly, procedural irregularities in the Notice or arbitration agreement defects must be asserted promptly to avoid waiver. The consequences of failing to raise such objections extend beyond the immediate arbitration to future enforcement proceedings, where courts typically defer to waivers and jurisdictional determinations made during the arbitral process.

Practical Guidelines for Drafting the Answer

Document Organization and Clarity

The Answer should be organized logically, addressing each mandatory element required by Article 5.1 in a clear, numbered format that facilitates reference by the tribunal, HKIAC, and opposing counsel. The document should begin with formal identification of the parties and their representatives, ensuring complete contact information including multiple communication channels. Where representatives differ from those identified in the Notice, the Answer should explicitly clarify the accurate representation structure and communication preferences.

Jurisdictional challenges, if any, should be addressed comprehensively in a dedicated section, setting forth both factual and legal grounds with specificity. The Answer should reference relevant contractual provisions, applicable law authorities, and factual circumstances supporting the jurisdictional challenge. Conclusory assertions without supporting analysis are insufficient and may undermine the respondent’s credibility on later substantive issues. The section addressing the claim’s nature and amount should respond specifically to the claimant’s characterizations, identifying factual disputes, challenging legal characterizations, and contesting quantum calculations with supporting analysis and documentation where available within the response timeframe.

Arbitrator Proposals and Justification

The section addressing arbitrator numbers and selection should include reasoned analysis supporting the respondent’s position. Article 5.1(e) specifically requires “reasoned proposal” regarding the number of arbitrators, moving beyond the 2018 Rules’ requirement for mere proposals. The respondent should articulate factors supporting its position: for sole arbitrator proposals, emphasize efficiency considerations, cost reduction, and dispute characteristics suitable for single-arbitrator determination; for three-arbitrator proposals, emphasize complexity, dispute value, need for diverse expertise, and the parties’ sophisticated commercial relationship justifying enhanced tribunal composition [5].

Where proposing or designating specific arbitrators, the Answer should include brief biographical information demonstrating relevant qualifications, expertise, and experience. The respondent should address how proposed candidates satisfy any qualifications specified in the arbitration agreement and explain why the candidates are particularly suitable for the dispute’s specific characteristics. For three-arbitrator tribunals, the respondent should consider whether the designated arbitrator’s professional background and approach complement or contrast with the claimant’s designee, considering strategic implications for presiding arbitrator selection.

Documentary Evidence and Procedural Completeness

Article 5.1(h) requires confirmation that the Answer and supporting materials have been communicated simultaneously to all other parties, identifying the means of service. The respondent should document service through contemporaneous records—email transmission confirmations, courier receipts, registered mail tracking numbers—sufficient to establish compliance with Article 3’s communication provisions. Where multiple service methods are employed, each should be identified with corresponding documentary proof [5].

Supporting materials annexed to the Answer should be selected strategically, including documents essential to jurisdictional challenges, critical correspondence establishing factual context, and key substantive documents supporting defenses or counterclaims. However, the respondent should avoid overwhelming document production at this stage, as the Statement of Defence provides additional opportunity for evidence submission. The emphasis should be on documents necessary to establish the Answer’s key positions, demonstrate preparedness and seriousness, and provide the tribunal and opposing party with essential context for understanding the respondent’s perspective on the dispute.

Conclusion

Responding to the Notice of Arbitration under HKIAC Rules represents a critical juncture that establishes the foundation for the entire arbitral proceeding. The 30-day response period demands rapid mobilization of legal and factual resources to address mandatory disclosure requirements, formulate jurisdictional and substantive positions, participate meaningfully in arbitrator selection, and preserve strategic flexibility for subsequent proceedings. The 2024 HKIAC Rules’ enhancements, including mandatory reasoned proposals for arbitrator numbers, expanded diversity considerations, and explicit third-party funding disclosure requirements, reflect the institution’s commitment to transparency, efficiency, and integrity in arbitral proceedings.

The legal framework governing HKIAC arbitration, anchored in the Arbitration Ordinance (Cap. 609) and informed by Hong Kong’s pro-arbitration judicial approach, provides parties with procedural certainty while preserving party autonomy and limiting judicial interference. The Answer to the Notice of Arbitration operates within this framework, serving multiple functions: formal response to the claimant’s allegations, assertion of jurisdictional or procedural challenges, participation in tribunal constitution, disclosure of funding arrangements, and preservation of rights that may be waived through inaction. Strategic approaches to drafting the Answer must balance competing considerations of thoroughness and efficiency, assertiveness and credibility, immediate disclosure and procedural flexibility.

References

[1] Queen Mary University of London and White & Case, “2021 International Arbitration Survey: Adapting arbitration to a changing world” (2021), available at: https://www.globallegalinsights.com/practice-areas/international-arbitration-laws-and-regulations/hong-kong/

[2] Jones Day, “Hong Kong Strengthens Position as Leading Jurisdiction for International Arbitration with Major Overhaul of Legislative Framework” (22 July 2011), available at: https://www.jonesday.com/en/insights/2011/07/hong-kong-strengthens-position-as-leading-jurisdiction-for-international-arbitration-with-major-overhaul-of-legislative-framework

[3] Lexology, “Arbitration in Hong Kong” (11 June 2019), available at: https://www.lexology.com/library/detail.aspx?g=9a9d2ea2-5223-4f1f-966e-ed64032bd85d

[4] Herbert Smith Freehills Kramer, “HKIAC launches updated rules” (21 August 2024), available at: https://www.hsfkramer.com/notes/arbitration/2024-05/hkiac-launches-updated-rules

[5] Hong Kong International Arbitration Centre, “2024 HKIAC Administered Arbitration Rules” (effective 1 June 2024), available at: https://www.hkiac.org/arbitration/rules-practice-notes/administered-arbitration-rules/hkiac-administered-2024-1

[6] Hong Kong International Arbitration Centre, “2018 HKIAC Administered Arbitration Rules” (effective 1 November 2018), available at: https://www.hkiac.org/arbitration/rules-practice-notes/hkiac-administered-2018

[7] Vinson & Elkins LLP, “Guide to Arbitral Institutions and the Seat of Arbitration in Hong Kong” (2024), available at: https://www.velaw.com/insights/guide-to-arbitral-institutions-and-the-seat-of-arbitration-in-hong-kong/

[8] Herbert Smith Freehills Kramer, “Hong Kong Court of Appeal rules on landmark case regarding escalation clauses – C v D [2022] HKCA 729” (22 May 2024), available at: https://www.hsfkramer.com/notes/arbitration/2022-06/hong-kong-court-of-appeal-rules-on-landmark-case-regarding-escalation-clauses

[9] Global Arbitration News, “You’ve been served: giving proper notice of Hong Kong arbitrations – CC v AC [2025] HKCFI 855” (18 March 2025), available at: https://www.globalarbitrationnews.com/2025/03/18/youve-been-served-giving-proper-notice-of-hong-kong-arbitrations/

[10] Global Legal Insights, “International Arbitration Laws and Regulations 2025 – Hong Kong” (8 April 2025), available at: https://www.globallegalinsights.com/practice-areas/international-arbitration-laws-and-regulations/hong-kong/

Published and Authorized by Dhrutika Barad