Read the full judgment text of HCCT 38/2021, HCCT 28/2023, HCCT 52/2023 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 29 December 2023 before Hon Mimmie Chan J in Chambers.
Arbitration — Public policy — Illegality defence — Model Law Article 34 review — Finality of awards — Application of Patel v Mirza approach to illegality — Scope of arbitrator's jurisdiction — Limitation clauses in arbitration agreement — The dispute concerns the enforcement and setting aside of arbitral awards following a BVI court decision setting aside a share placement as made for an improper purpose under section 121 of the BVI Business Companies Act. The arbitrator applied the older Tinsley test on illegality, dismissing claimant's restitution claims and upholding defendant's counterclaim for damages. The claimant sought to set aside the awards on public policy grounds arguing the arbitrator erred in not applying the Patel multifactorial approach recognized by the Hong Kong Court of Appeal in Monat. The respondent argued finality and exclusivity of arbitrator's findings prevent challenge except on jurisdiction or procedural irregularity. The Court held that under Article 34(2)(b)(ii) of the Model Law and persuasive authorities including Betamax, the supervisory court may review whether enforcing the award conflicts with current public policy and remit issues to the arbitrator to reconsider relief accordingly. The Court further found that challenges based on Clause 6.10(e) concerning limitations on damages raised as jurisdictional objections were in fact challenges to admissibility and must be raised early, failing which they cannot support setting aside, consistent with Model Law Article 16 and local case authority. The Court therefore suspended the setting aside proceedings for 3 months to allow the arbitrator to apply the Patel/Monat approach and continued the interim preservation order restraining disposal of funds pending further arbitration.
Legal issues: Application of public policy on illegality in arbitration awards · Jurisdictional scope under Clause 6.10(e) of the SPA
Outcome: Setting aside proceedings suspended for 3 months under Article 34(4) with matter remitted to the arbitrator to reconsider relief applying the current public policy approach; G’s application to set aside on Clause 6.10(e) ground dismissed; interim preservation order continued.
Cites 3 cases