Hong Kong Court Rejects Set Aside Application

Phillip Rompotis reviews the decision of the Hong Kong High Court in Arjowiggins HKK2 Limited v X Co [2016] HKCFI 1901, where the court firmly rejected a set aside application under the Arbitration Ordinance.

The party sought to set aside the award under s.81 of the Ordinance on the basis that: (i) the arbitration agreement between the parties was not valid under the law to which the parties have subjected it (pursuant to s.81(1) of the Arbitration Ordinance / Article 34(2)(a)(i) of the Model Law); (ii) the Award dealt with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contained decisions on matters beyond the scope of the submission to arbitration (pursuant to s.81(1) of the Arbitration Ordinance / Article 34(2)(a)(iii) of the Model Law); and (iii) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties (pursuant to s.81(1) of the Arbitration Ordinance / Article 34(2)(a)(iv) of the Model Law). None of the arguments succeeded.

A consistent theme running through the decision is the fact that the Respondent had participated in the arbitration from beginning to end, knowing of the potential defects in the proceedings, yet consciously refrained from raising or directing the matter to the arbitral tribunal’s attention. This was construed by the Court as clear evidence of the Respondent’s submission to the jurisdiction of the HKIAC Tribunal, stating:

“[t]here is a duty of good faith which required the Respondent in this case to bring to the notice of the Tribunal any objections it may have …. Not having done so, choosing instead not only to fully participate in the Arbitration … the Respondent had deprived the Tribunal of the opportunity to rectify any alleged … defect in the arbitral process, and is estopped and precluded now from raising this complaint and objection as to alleged invalidity and lack of arbitration agreement.”

The Court also emphasised that “[o]pposition to enforcement and recognition of awards based on unmeritorious technical points or minor procedural complaints have always been viewed with disfavor by the Hong Kong courts”, an approach which is consistent with the general pro-enforcement bias embedded under the New York Convention and Model Law regimes.

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About Phillip Rompotis

Phillip practices as a barrister and arbitrator in Hong Kong. He has over 25 years’ litigation and arbitration experience in commercial disputes relating to construction & engineering, financial services, joint venture & shareholders agreements, technology, trusts, property and landlord & tenant. He is a Fellow of the Chartered Institute of Arbitrators, the Singapore Institute of Arbitrators, the Malaysian Institute of Arbitrators, and a member of various lists/panels of arbitrators.

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