Back whence it came: Hong Kong Court remits Award for serious irregularity

A tribunal had decided liability and awarded sums as due on a basis not advanced by the claimant. In P v M [2018] HKCFI 2280, The Hong Kong Court of First Instance decided that this approach breached the “fundamental rule of natural justice that each party should be given the fair and reasonable opportunity to present its case and to deal with the case of its opponent.” The relevant parts of the Award were declared a nullity, and it was remitted to the tribunal to hear submissions on the issues that it had decided were determinative.

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HONG KONG COURT REFUSES SET ASIDE, REJECTS PUBLIC POLICY CHALLENGE

In Paloma Co. Ltd. v. Capxon Electronic Industrial Co. Ltd [[2018] HKCFI 1147], the Hong Kong Court of First Instance rejected a public policy challenge to a New York Convention Award rendered by a tribunal in Japan. The Respondent applied to set aside leave to enforce the Award, alleging that the tribunal’s conduct was biased, and violated basic concepts of morality, justice and public policy.

Deputy Judge Keith Yeung found that there was no evidence of bias on the part of the tribunal, nor any error or matter which would warrant setting aside the award. Yeung DJ relied on Hebei Import & Export Corp. v Polytek Engineering Co. Ltd. [(1999) 2 HKCFAR 111] to reiterate that, in order to refuse enforcement of an award under the New York Convention, the award must be so fundamentally offensive to the jurisdiction’s notions of morality and justice that this could not reasonably be overlooked. In the absence of such conflict, the Court would not look into the merits, nor review any alleged errors or reasoning of the tribunal.

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HONG KONG COURT OF APPEAL: COMMON LAW ACTIONS AVAILABLE TO ENFORCE ARBITRAL AWARDS

Two key developments emerge from the long-running proceedings in Xiamen Xinjingdi Group Co Ltd v Eton Properties Ltd [2016] 2 HKLRD 1106 and Xiamen Xinjingdi Group Co Ltd v Eton Properties [2018] HKCFI 910. The Hong Kong Court of Appeal (CA) has held that, when parties enter into an arbitration agreement, they make an implied promise that they will honour the terms of any subsequent arbitral award. If one party fails to honour the award, this may give rise to a separate cause of action at common law, for which the Hong Kong courts have jurisdiction to grant a full range of remedies, including damages. These proceedings also confirm that the Hong Kong Court of First Instance (CFI) has statutory powers to stay proceedings before it, pending the determination of an application for leave to appeal to the higher courts. Continue reading

HK Court reconciles jurisdiction and arbitration clauses to order s.20(1) stay

In Neo Intelligence Holdings Ltd v Giant Crown Industries Ltd HCA 1127/2017, the Hong Kong Court of First Instance held that an arbitration clause was not necessarily superseded by a clause in a supplemental agreement that conferred non-exclusive jurisdiction on the Hong Kong courts.

While the two clauses did not sit “wholly happily” together, it was at least possible that the parties intended the jurisdiction clause to govern post-award enforcement, or to indicate the lex arbitri. As a result, the court’s proceedings should be stayed and the question of jurisdiction referred to the arbitral tribunal. The applicant for a stay need only show that there is a prima facie, or plainly arguable, case that the parties are bound by an arbitration clause. Once that threshold is met, it is for the arbitral tribunal to determine its own jurisdiction.

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