Hong Kong Courts’ Pro-Enforcement Stance in relation to foreign arbitration awards

In the recent case of 廣東長虹電子有限公司 v Inspur Electronics (HK) Ltd, the judge at first instance had granted the Applicant leave to enforce a Mainland arbitration award. The Respondent applied to set aside such leave, but the court refused. The Respondent then applied for leave to appeal that refusal, but the Court of Appeal made it clear, that (in light of section 84(3) of the Arbitration Ordinance (which is applicable to Mainland arbitration awards) and reading it together with section 14(3)(ea)(v) of the High Court Ordinance), where a judge refuses to set aside leave granted to enforce an arbitration award, there can be no appeal from that refusal.

Such approach, the court said, highlighted the underlying philosophy in respect of the court’s limited role in the enforcement of arbitration awards, namely that parties who have undergone arbitration should have finality as speedily as possible and with as little expense as possible.  There is, the court said, a deliberate policy of restricting the rights of appeal.

Although Counsel for the Respondent, conceded that the court had no jurisdiction to grant leave to appeal the judge’s said decision, he sought to argue (based on an English case authority) that the court still had a residual jurisdiction to set aside the refusal of leave to appeal in certain situations where that decision had been reached unfairly or by improper process.

The court accepted that it did have such residual discretion to set aside a refusal to grant leave to appeal where such decision had been reached unfairly, but said that in the present case there was absolutely no basis for suggesting that the judge did not act fairly towards the Respondent in refusing to grant leave to appeal and it could not see any substantial defect in the fairness of the process. The fact that the judge below did not regard the grounds of appeal reasonably arguable was a view she was, rightly or wrongly, entitled to hold and as such, could not be a ground for challenging the fairness of the process.

The Respondent’s application for leave to appeal was therefore dismissed with costs awarded to the Applicant on an indemnity basis.

This decision reinforces the “enforcement biased” policy of the Hong Kong Courts in dealing with foreign and Mainland arbitration awards.  Even the Court of Appeal accepted that even though it has a residual jurisdiction to set aside refusal of leave to appeal, such jurisdiction will only be exercised when there is a substantial defect in the fairness of the process. The costs ordered against the Respondent on an indemnity basis is also a good reminder that if one fails in challenging an arbitration award, one should expect to pay higher costs.

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Kwok Kit (KK) Cheung

Partner | Litigation and Dispute Resolution

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