Read the full judgment text of HCCT 54/2008 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 30 April 2009 before Hon Reyes J.
Arbitration — enforcement of New York Convention award — enforcement under Arbitration Ordinance (Cap. 341) s.44 — public policy ground for non-enforcement — narrow test requiring award to shock the Court's conscience or violate fundamental notions of morality and justice — penalty clause argument — liquidated damages clause alleged to be penalty and excessive — failure of Respondent to raise penalty point during arbitration causes estoppel in enforcement proceedings — court will not re-examine merits or error of arbitrator — enforcing court must not usurp supervising court's jurisdiction — parties bound by arbitration agreement to accept outcome absent egregious injustice — costs awarded on indemnity basis to successful Applicant. The Applicant and Respondent entered into a commission agreement governed by Danish law and ICC arbitration. Respondent breached the agreement by not paying commissions and circumventing the agreement through affiliated companies, leading to a US$3 million award for liquidated damages. The Respondent opposed enforcement in Hong Kong on public policy grounds contending the award was based on a penalty clause. The Hong Kong Court held that public policy objection is narrow and requires shock to conscience; Respondent’s penalty arguments were not raised in arbitration and so estopped now. The award was rational and within the contractual and legal context. The enforcement application was granted and costs awarded on an indemnity basis reflecting the Respondent’s unmeritorious challenge. This judgment reinforces the limited scope for resisting enforcement on public policy, the importance of raising all defenses promptly during arbitration, and the court’s reluctance to disturb foreign arbitral awards except in extreme cases.
Legal issues: Whether enforcement of arbitral award contrary to public policy · Estoppel from raising penalty clause argument in enforcement proceedings
Outcome: Application to refuse enforcement dismissed; enforcement order made absolute.
Cited by 2 cases