Key takeaways
- In CNG v. G and Another [2024] HKCFI 575, the Hong Kong court dismissed an application to set aside an arbitral award for lack of due process.
- Court emphasised that arbitral tribunal would be best placed to decide how to proceed with arbitration. Court would not interfere with tribunal’s case management decision in absence of serious denial of justice. Matters not raised with tribunal should not be brought before court for setting aside award or resisting enforcement.
- Arbitration and litigation should not be “a game of buying time and competing in resources”.
Facts
The Applicant and the First Respondent were the shareholders of a company, SIL. In 2014, the Applicant, the First Respondent and the Second Respondent (an affiliated company of the First Respondent) entered into a shareholder’s agreement (SHA).
Pursuant to disputes that arose as to the rights and obligations of the parties under the SHA, the First and Second Respondent (collectively, the Respondents) commenced a Hong Kong International Arbitration Centre arbitration. On 8 February 2023, the tribunal issued an award in favour of the Respondents (the Award).
Subsequently, the Applicant applied to the Hong Kong Court of First Instance to set aside the Award on the grounds that the tribunal’s failure to consider key issues in the arbitration and its imposition of an unreasonable arbitration timetable led to the Applicant being unable to present its case.
Decision
The Honourable Madam Justice Mimmie Chan (the Judge) revisited trite legal principles: In reviewing whether to overturn an arbitral decision, the Hong Kong courts generally adopt a policy of minimal curial intervention. The courts will not examine the correctness of the award but will give the tribunal a wide breadth of discretion and only step in when there is an apparent breach of natural justice.
Having reviewed the Award, the Judge found there was no evidence to indicate the tribunal had failed to consider key issues in the arbitration. The fact that the tribunal did not go over the full list of issues submitted by the Applicant is not an indication that it failed to consider key issues pertinent to the case. The Judge further adopted the analogy submitted by the Respondents’ counsel that “save as expressly agreed, a list of issues is not an exam paper, and I would add that it is not an exam paper with compulsory questions for the tribunal to answer them all.”
In respect of procedural decisions, the Judge held that the tribunal has discretion to decide on the timetable and management of the arbitration. The court is not to review the procedures and correctness of the case management decisions made by the tribunal unless there is evidence of a serious denial of justice. In the present case, the Judge found that, despite the Applicant’s complaints of an unreasonable arbitration timetable, it nonetheless was able to comply with all the procedural deadlines and never sought an adjournment of the hearing.
The Judge observed that the present case is a typical one, where a party that has agreed to submit its contractual disputes to the final and binding determination of arbitration uses all its means to find loopholes and problems in the award when it is dissatisfied with the results of the arbitration.
Given the lack of merit in the Applicant’s case, the Judge refused the Applicant’s set-aside application and ordered the Applicant to bear the legal costs of the Respondents on an indemnity basis with certificates for three counsel.
Conclusion
Losing parties in arbitral proceedings should be reminded that the setting aside application is not an opportunity for them to ask the court to identify defects in the tribunal proceedings, nor for them to rehearse arguments before the court that have already been made in the arbitral proceedings. As in the present case, the Applicant’s failing in the setting aside application would usually be ordered to bear the indemnity costs of the Respondents.
