ENFORCEMENT OF MAINLAND PRC AWARD REFUSED IN HONG KONG DUE TO CONDUCT OF ARBITRATOR ATTENDING BY VIDEO CONFERENCE

The Hong Kong Court of First Instance has refused to enforce a Chengdu Arbitration Commission award on public policy grounds, due to “serious irregularities” in the conduct of an arbitrator who attended the hearing by video conference which resulted in a lack of apparent justice and fairness (Song Lihua v Lee Chee Hon [2023] HKCFI 2540).

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HONG KONG TO APPLY COMMERCIAL EXCEPTION TO STATE IMMUNITY FOLLOWING LANDMARK CHANGE IN PRC LAW

Foreign states will no longer be immune from suit or execution in Hong Kong in respect of certain commercial activities and assets, with effect from 1 January 2024.

Hong Kong follows the same approach to foreign state immunity as the PRC, as confirmed in the well-known Congo case in 2011.  The PRC has previously adopted the “absolute” doctrine of foreign state immunity (which does not include any exception for commercial activities).  On 1 September 2023, however, the PRC adopted a new Foreign State Immunity Law which will apply the “restrictive” doctrine of immunity, in line with many other jurisdictions (reported in detail here).  The PRC government has confirmed that Hong Kong and Macau should follow the rules and policies set out in the new law.

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HONG KONG COURT UPHOLDS CLAIMANT’S JURISDICTIONAL CHALLENGE IN RELATION TO NON-PARTY SEEKING JOINDER

The Hong Kong Court of First Instance has set aside an HKIAC award on jurisdiction at the request of the claimant, overturning the tribunal’s ruling that a party seeking to be joined to the arbitration and substituted in the claimant’s place was the true principal to the contract (R v. A, B and C [2023] HKCFI 2034).

The decision of Mimmie Chan J confirms that a dispute as to the proper parties to an arbitration agreement is a true matter of jurisdiction which can be reviewed and decided by the Hong Kong courts.  It also provides helpful guidance on the relevant legal principles governing the approach of the courts to jurisdictional questions, including the approach to new evidence and arguments which were not placed before the tribunal.

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English Commercial Court rejects consumer’s public policy challenge to arbitration award due to insufficiently “close connection” of the contract to UK

In Eternity Sky Investments Ltd v Mrs Xiaomin Zhang [2023] EWHC 1964 (Comm), the English Commercial Court has rejected a challenge to an arbitration award on the grounds of public policy. Although the applicant argued that the terms of the underlying contract were unfair for the purposes of English consumer legislation, the court held that there was no “close connection” with the UK and therefore that the legislation did not apply. Continue reading

HONG KONG COURT REFUSES LEAVE TO APPEAL RARE SUCCESSFUL CHALLENGE TO AWARD

The Hong Kong Court of First Instance has rejected an attempt by an award creditor to appeal against a rare successful challenge to an arbitral award.

In CIC v Wu and Ors [2023] HKCFI 700, Mimmie Chan J had refused to enforce the award because the “grossly unfair and unjust” procedure adopted by the tribunal amounted to an egregious denial of due process (see our previous blog post for further details).  The decision arose from unusual facts and illustrated the readiness of the Hong Kong courts to intervene to prevent injustice in truly exceptional cases.

The Court has now refused leave to appeal that ruling on the ground that an appeal would have no reasonable prospects of success (CIC v Wu and Ors [2023] HKCFI 1055).

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HONG KONG COURT REFUSES TO ENFORCE AWARD DUE TO “GROSSLY UNFAIR AND UNJUST” PROCEDURE

The Hong Kong Court of First Instance has refused to enforce an arbitral award because the procedure adopted by the tribunal was so “seriously flawed” and “egregious” that due process was denied (CIC v Wu and Ors [2023] HKCFI 700).

The unusual facts of this case underline the high threshold to successfully challenge arbitral awards on due process grounds in Hong Kong, whilst illustrating the willingness of the courts to intervene to prevent injustice in exceptional cases.

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HKIAC 2022 CASE STATISTICS SHOW STRONG GROWTH AND CONTINUED APPEAL OF HONG KONG AS A LEADING SEAT

The HKIAC’s arbitration caseload reached its highest level for more than a decade last year, according to the institution’s recently released 2022 case statistics.  The figures underline Hong Kong’s continuing international appeal as well as its unique strengths as a seat for China-related disputes.  They also show that Hong Kong’s arbitration third party funding regime, introduced in 2019, is now firmly established and increasingly popular with parties.  This suggests that success-based fee arrangements, recently allowed in the jurisdiction, may also see rapid adoption.

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