Kluwer Arbitration Blog Publishes Review of Hong Kong's Arbitration Year 2011
Hong Kong’s arbitration year in review: a Christmas blog by Kluwer Arbitration blog . Here's the introduction.
Full article at http://kluwerarbitrationblog.com/blog/2011/12/14/hong-kongs-arbitration-year-in-review-a-christmas-blog/
2011 has delivered some significant arbitration developments in Hong Kong, most of which (with some exceptions!) have been undoubtedly positive. So, what were the highlights of the Hong Kong arbitration year – and what challenges might lie ahead?
First, Hong Kong’s new Arbitration Ordinance (cap. 609) came into effect on 1 June 2011 (blogged here). Drawing heavily on the internationally-recognised and accepted framework of the UNCITRAL Model Law, the new Ordinance was designed to provide maximum party autonomy and minimal court intervention. With a host of features including expanded provisions on interim measures and a new codified obligation of confidentiality, the new Ordinance sets a high standard in modern arbitration legislation and has been enthusiastically welcomed by the arbitration community.
Second, the Court of Final Appeal in Democratic Republic of the Congo v. FG Hemisphere Associates FACV Nos 5, 6 & 7 clarified the law in relation to sovereign immunity in Hong Kong. Whilst immunity will apply to the enforcement of court judgments and arbitral awards (wherever rendered) in Hong Kong, it is clear that it will not apply to arbitral proceedings (blogged here). Parties can therefore include Hong Kong arbitration clauses in their contracts with states, safe in the knowledge that sovereign immunity cannot be pleaded as a bar to the jurisdiction of the arbitral tribunal. But could sovereign immunity prevent the courts of Hong Kong from exercising supervisory jurisdiction over an arbitration seated here? That question remains unanswered for now, but there are compelling reasons (including obiter dicta of the Court of Appeal in the Congo case) to suggest that it would not, and that the courts of Hong Kong could exercise supervisory jurisdiction notwithstanding a claim of sovereign immunity. It’s also unlikely that state owned entities would be entitled to immunity before the Hong Kong courts (blogged here), restricting the cases in which sovereign immunity would be a live issue to the small number specifically involving sovereign states.
Third, Hong Kong’s pro-enforcement credentials were on clear display in a number of cases upholding the enforcement of arbitral awards in Hong Kong. In two of the most prominent, Shandong Hongri Acron Chemical Joint Stock Company Limited v. PetroChina International (Hong Kong) Corporation Limited CACV 31/2011 and Gao Haiyan and another v. Keeneye Holdings Limited and another CACV 79/2011 (reported here), the Court of Appeal enforced arbitral awards rendered in mainland China and emphasised that the enforcing court should take a mechanistic approach to enforcement and must not review the merits of the award. The court’s readiness in the PetroChina case to enforce against a mainland state owned entity also illustrates the judicial independence which makes Hong Kong such an attractive venue, particularly in China-related cases.
Fourth, an international arbitral award rendered in Hong Kong was set aside by the Court of First Instance under Article 34(2) of the UNCITRAL Model Law in Pacific China Holdings Ltd v. Grand Pacific Holdings Ltd HCCT 15/2010. This is a rare example of the power to set aside being exercised by the Hong Kong courts, in this case on the basis of procedural irregularities. The case is notable for its discussion of the circumstances in which the court’s residual discretion not to set aside an award (Article 34(2) of the Model Law states that an award “may” be set aside) should be exercised. The court considered that the applicant in a set-aside case had to establish that “it cannot be said that if the violation had not occurred the result could not have been different“. The judgment raised concerns for arbitrators and counsel given the frequency with which thorny procedural issues arise in practice, and the result of the appeal which is currently pending is therefore likely to be followed with interest.
