Hong Kong court provides guidance on award challenges for failure to deal with an essential issue

The Hong Kong Court of First Instance has provided further clarity on when awards can be set aside for failure to deal with an essential issue, dismissing a challenge on the basis that the points in question were not the focus of submissions to the tribunal (X and YCo v ZCo [2024] HKCFI 695).

Simon Chapman KC of Herbert Smith Freehills appeared for the successful award creditor in the case, which emphasises that the onus is on the parties and their lawyers to clearly identify the key issues to be determined by the tribunal, and to include these in any list of issues.

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HONG KONG COURT REMITS AWARDS TO ARBITRATOR FOLLOWING CHANGE IN LAW OF ILLEGALITY DEFENCE

The Hong Kong Court of First Instance (“CFI”) has suspended set-aside proceedings in respect of two HKIAC awards on liability and quantum and remitted the matter to the arbitrator (G v. N [2023] HKCFI 3366).

The decision centred on the arbitrator’s denial of relief to the claimant due to the illegality of the underlying transaction, based on English authority which had ceased to be good law in Hong Kong only a few days before the arbitrator’s decision.

Mimmie Chan J emphasised that any error of law on the issue of illegality was not subject to review, but that the court had the power and duty to consider whether the denial of relief to the claimant rendered the awards contrary to the public policy of Hong Kong “as at today”.

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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

English Commercial Court takes rare decision to refuse enforcement of arbitration award on public policy grounds in crypto case

The English Commercial Court has refused to enforce a foreign-seated arbitration award on the grounds that to do so would be contrary to public policy. The case concerned a dispute between Mr Chechetkin and the Payward group, which operates the Kraken cryptoasset trading platform. Payward received a favourable arbitration award in California which it sought to enforce in England.

Whilst emphasising that mandatory B2C arbitration is not in itself unfair, the English Court concluded that in the particular circumstances of the case, enforcement of the JAMS arbitration award would be contrary to public policy, because the specific public policy embodied in UK consumer legislation and the Financial Services and Markets Act 2000 (FSMA) required the issues in this case to be governed by English law and not to be decided overseas. Continue reading

AUSTRALIAN FEDERAL COURT REAFFIRMS HIGH THRESHOLD FOR REFUSING ENFORCEMENT OF AWARD ON PUBLIC POLICY GROUNDS

In a recent application to enforce an arbitral award, the Federal Court of Australia rejected the award debtor’s arguments that it would be contrary to public policy to enforce the award, where allegations of procedural unfairness had already been determined in foreign courts.  In doing so, the Court reaffirmed the high threshold required for an Australian court to refuse enforcing a foreign arbitral award on public policy grounds, and the importance of international harmony and concordance of approach.

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NEW SOUTH WALES SUPREME COURT SETS ASIDE ARBITRATION AWARD TO PROTECT THE INTEGRITY OF THE ARBITRATION PROCESS

INTRODUCTION AND TAKEAWAY

In a recent decision, the Supreme Court of New South Wales set aside an arbitral award on the basis that the arbitrator had failed to give one party a proper opportunity to present its case. While there is a high bar for judicial intervention in arbitration proceedings, Australian courts will act to protect the integrity of the arbitration process when arbitrators fail to uphold its fundamental safeguards.

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Hong Kong Court Clarifies Threshold for Setting Aside Awards

A Hong Kong Court recently adopted a resoundingly pro-arbitration stance in a decision which emphasised the high thresholds of irregularity that would need to be established before an arbitration award can be set aside.

In LY v HW, [2022] HKCFI 2267, the Court dismissed an application to set aside an award based on claims that the Tribunal had failed to deal with the key issues and failed to provide sufficient reasons for its decision in the award. This decision underlines the narrow manner in which grounds for refusal of enforcement are to be construed and fortifies the enforceability of arbitration awards in Hong Kong. Continue reading

PRIVY COUNCIL CONSIDERS EXTENT OF SUPERVISORY COURT’S POWER TO SET ASIDE ARBITRAL AWARDS ON GROUNDS OF PUBLIC POLICY

In the recent decision in Betamax Ltd v State Trading Corporation (Mauritius) [2021] UKPC 14 the Judicial Committee of the Privy Council (the “Privy Council“) found that the Supreme Court of Mauritius was wrong to set aside an international arbitration award on the basis that the award was contrary to the public policy of Mauritius, in circumstances where the tribunal had found the underlying contract was not illegal and had the jurisdiction to do so.

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