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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Delhi High Court rules that third party funder has no liability to pay costs award against a losing funded party

In the recent case of Tomorrow Sales Agency Ltd v SBS Holdings Inc, a Division Bench of the Delhi High Court has refused to hold a third party funder liable for an adverse award. The Court has ruled that a third party funder which was not a party to an arbitration agreement, or the arbitral proceedings, or a party to the resultant arbitral award, could not be “mulcted with liability, which they have neither undertaken nor are aware of“.

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English Commercial Court rules that a party must act “promptly” in raising a challenge to the effectiveness of arbitral proceedings, and rejects application for set aside of partial award

Summary

In Radisson Hotels APS Denmark v Hayat Otel Işletmeciliği Turizm Yatırım Ve Ticaret Anonim Şirketi [2023] EWHC 892 (Comm) the Commercial Court has rejected an application made by Radisson Hotels APS (Radisson) to set aside, on the grounds of serious irregularity, a partial arbitral award relating to a hotel mismanagement claim brought by Hayat Otel Işletmeciliği Turizm Yatırım Ve Ticaret Anonim Şirketi (Hayat).

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HERBERT SMITH FREEHILLS SECURES VICTORY FOR AWARD CREDITORS IN HONG KONG CHALLENGE

The Hong Kong Court of First Instance has dismissed an application to set aside an award on due process and jurisdictional grounds, in a decision which again underlines the high bar facing parties seeking to challenge arbitral awards.  Herbert Smith Freehills appeared for the successful award creditors in the case, led by Simon Chapman KC and Kathryn Sanger.  (AI and others v. LG II and another [2023] HKCFI 1183)

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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 LIFTS STAY OF PROCEEDINGS BECAUSE ARBITRATION AGREEMENT SPENT

The Hong Kong Court of First Instance has lifted a stay of proceedings previously granted in favour of arbitration because the arbitration agreement was spent.  The tribunal had issued final awards and essentially ruled that the parties’ disputes should be determined by the Hong Kong courts.  The basis for the stay had therefore gone, notwithstanding that an application to set aside the awards at the seat was pending.  (ZS Capital Fund and Others v Astor Asset Management 3 Limited and Another [2023] HKCFI 1047.)

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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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SINGAPORE COURT OF APPEAL PARTIALLY SETS ASIDE ICC AWARD OVER ITS “FLEXIBLE APPROACH” TO DAMAGES

In CEF and another v CEH, the Singapore Court of Appeal partially set aside a €62 million ICC award concerning the construction of an iron and steel plant in Malaysia.

In its award, the Tribunal had adopted a “flexible approach” to damages and awarded damages for misrepresentation against the contractors of around RM 176m (around €39m), which was about 25% of the amount actually claimed, even though the Tribunal found that the evidence of the loss was deficient.

The Court of Appeal set aside that part of the award due to a breach of natural justice, as it found that the parties would not have reasonably anticipated the Tribunal’s decision.  Whilst this might at first suggest a wider opening for award debtors to challenge awards, the decision is quite specific to the facts. Continue reading