First ever proceedings brought against the HKIAC dismissed by the High Court

On 18 March 2014, Hong Kong's High Court (Court of First Instance) dismissed proceedings against the Hong Kong International Arbitration Centre ("HKIAC") brought by a Mainland individual. The claimant brought proceedings against the HKIAC to challenge its refusal to disqualify two arbitrators in arbitration proceedings in Hong Kong, which he had brought against a Mainland company, in respect of a loan repayment. This is the first time that proceedings have been brought against the HKIAC. On 28 April 2014, the High Court issued its reasons for having dismissed the claimant's proceedings.

The claimant had challenged the impartiality and independence of two of the three arbitrators, after they had refused to order disclosure of certain evidence in the manner he requested. The claimant had sought to overturn the HKIAC's decision rejecting his challenge and also sought a refund of the arbitrators' US$6,500 fees and to initiate new arbitration proceedings.

The High Court dismissed the claimant's proceedings and held that the HKIAC was not the proper defendant in proceedings seeking a court decision on an arbitrator challenge and that under the Arbitration Ordinance, the proper defendant was the respondent in the arbitration. The court also confirmed that arbitral institutions are immune from suit by virtue of section 105 of the Arbitration Ordinance, which provides that a person who appoints an arbitral tribunal or administers arbitrations is not liable in law for the consequences of exercising that function, unless exercised dishonestly.

The court held that the claimant's application was not filed within the 30-day time limit specified in the Arbitration Ordinance and rejected his argument that he missed the filing deadline because the HKIAC had failed to notify him of the time limit, as the HKIAC had no obligation to inform him of such deadline.

The court also held that any challenge against the appointment of arbitrator must be based on the specific reasons set out in Article 12 of the Model Law. Any error of fact or law made by the arbitrator in reaching his decision is not a ground for challenge.

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Kwok Kit (KK) Cheung

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