In China International Fund Ltd v Dennis Lau & Ng Chun Man Architects & Engineers  1 HKC, the Court of Appeal upheld the constitutionality of Section 81(4) of the Arbitration Ordinance (Cap 609). That section provides that to appeal a Court of First Instance (CFI) decision on the setting aside of an arbitration award, leave to appeal must first be obtained from the CFI.
By an arbitration award, the Respondent had been awarded over US$7.55 million in respect of works it had carried out under an architectural consultancy contract. The CFI dismissed the Applicant’s application to set aside the award. The Applicant sought the CFI’s leave to appeal that decision, but leave was refused.
Notwithstanding the apparent finality of the matter after the CFI’s refusal of leave, as provided in section 81(4) of the Arbitration Ordinance, the Applicant applied to the Court of Appeal seeking such leave. Article 82 of the Basic Law provides that the power of final adjudication of the Hong Kong Special Administrative Region shall be invested in the Court of Final Appeal. The Applicant argued that section 81(4) was therefore unconstitutional because it disproportionally restricts the power of final adjudication by the Court of Final Appeal under Article 82 of the Basic Law.
The Court of Appeal accepted that because section 81(4) of the Arbitration Ordinance has the effect of limiting appeals to the Court of Appeal, which in turn would limit appeals to the Court of Final Appeal, Article 82 of the Basic Law was engaged and the section must therefore be examined against the proportionality test i.e. was section 81(4) no more than necessary to accomplish its legitimate aim?
The Court of Appeal held that the restriction in section 81(4) was no more than necessary to achieve its legitimate aim of promoting speed, finality and reduction of costs in arbitration and parties’ autonomy in choosing their own dispute resolution process. It came to this conclusion as it found that:
Since the Court of Appeal came to the clear conclusion in this case that it had no jurisdiction to entertain the leave application, the application was dismissed.
This case emphasizes again the court’s pro-arbitration approach and, as the Court of Appeal said, the limitation on the right to appeal is consistent with the philosophy underpinning arbitration and that philosophy does not cease to apply when the matter comes to court by way of challenge to the arbitral award. To allow multiple rounds of leave applications would, the Court of Appeal said, undermine the legitimate aim of finality and speed and reduction of costs of dispute resolution by arbitration.
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