COURT’S REFUSAL TO INTERVENE ARBITRAL AWARD

March 2024

The Court of First Instance stressed in the judgment of CNG and G & G HKCFI 575 of 2024 that arbitration is a consensual process of final dispute resolution to which the parties voluntarily submit and the court is not a venue to provide an opportunity to go through an arbitral award with a “fine-tooth comb”, to look for defects and imperfections under the guise that the tribunal has failed to act in accordance with the agreed rules. No party shall be entitled to rehearse once again before the court arguments already made before the tribunal in the hope that the court may be persuaded to come to a different conclusion.

The action is about an arbitral award brought under Article 34 of the UNCITRAL Model Law (section 81 of the Arbitration Ordinance). The applicant CNG applied to set aside the arbitral award and pleaded the failure by the tribunal to give adequate reasons for the award, to give the parties a reasonable opportunity to present their cases and to consider various issues raised. Amongst those grounds put forward comprised the compressed timetable, late admission of evidence, running of an un-pleaded case and unfair examination of witnesses.

Her Ladyship Madam Justice Mimmie Chan rejected the applicant’s application and remarked that the action “is a typical example of a party which has agreed to submit the contractual disputes to the final and binding determination of an arbitral tribunal, but being aggrieved when the tribunal makes an award against it, makes all attempts to find loopholes and problems in the award.”. In particular:

Any inference that an arbitrator had missed one or more important pleaded issues can only be drawn if it is shown that the inference is “clear and virtually inescapable”, otherwise, the court must respect the arbitral award.
It is not necessary for the tribunal to set out each and every step or reason why it reaches the conclusion and a failure to deal with an argument or a submission made on or relating to an issue is not equivalent to a failure to deal with an issue.
The tribunal has full discretion to decide on the timetable for and on the case management of the arbitration. The court should not interfere with the agreed procedure and decision of the arbitrator if there is no miscarriage of justice.
The Model Law permits the court to set aside an award if a party was “unable to present” the case. The court is minded to look at a due process which can satisfy basic minimum requirement and is generally accepted as essential to a fair hearing. While all parties have a same deadline and an equal chance to present their arguments and examine witnesses during the process of arbitration, the court could not find any justification to set aside the arbitral award.

The action demonstrates the court’s firm adherence to a policy of minimal intervention to set aside an arbitral award under section 81 of the Arbitration Ordinance. Her Ladyship indeed indicated that if any unwarranted application is made, the court would consider to levy wasted costs order. That obviously marks a high threshold for similar application in future.