While arbitrators have powers similar to those of the Hong Kong courts with respect to the granting of remedies, the parties to an arbitration are generally unable to appeal or challenge the awards issued by the tribunal.
What remedies may an arbitral tribunal grant?
Under the rules of the Hong Kong Arbitration Ordinance (Cap. 609) (“HKAO”), an arbitral tribunal has the power to grant any remedy that may be granted by the Hong Kong Courts (with the exception of making orders that are binding on non-parties to the arbitration). This can include awards for damages and restitution, specific performance of contracts, interim measures (including injunctions), requiring the claimant to give security for the costs of the arbitration, awarding interest (simple or compound) to the principal sum of monetary awards, etc.
Can the tribunal make awards for the costs of the arbitration?
As part of its broad powers, the tribunal can direct which party is liable to pay the costs of the arbitration and on what basis. While the awarding of costs is at the tribunal’s discretion, the usual order is that the losing party is required to pay the winning party’s costs. The costs of the arbitration include the costs incurred by the parties in the course of the arbitration (such as professional fees), the arbitrators’ fees, fees paid to the arbitration institution, and other costs of the hearing.
Once an award to costs has been made, the parties may agree the sum to be paid to the party in whose favour the award was made. If no agreement is reached, the party whose costs are to be paid submits its bill of costs to court for “taxation”. In the taxation process, the party’s costs are assessed by a court official, and any costs that were not properly or reasonably incurred will be disallowed.
Can arbitration awards be appealed or otherwise challenged?
Perhaps the single most defining characteristic of arbitration as a form of dispute resolution is the power of tribunals to issue awards that are usually final, binding, and not subject to review on the merits. Unless otherwise agreed by the parties, an award made by an arbitral tribunal is final and binding on the parties. Furthermore, and unless the parties have opted into the right to appeal on a point of law, there is no general right of appeal against an award.
The HKAO allows for challenges to an award only on procedural grounds, and these are generally limited to circumstances where:
- A party was under some incapacity.
- The arbitration agreement is not valid.
- A party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or the party was otherwise unable to present his case.
- The composition of the tribunal or the procedure was not in accordance with the parties’ agreement.
- The award is in conflict with Hong Kong’s public policy.
An award can also be challenged on the grounds that a “serious irregularity” occurred during the proceedings (but only if the parties have opted into this right) or following a successful challenge to an arbitrator who participated in the proceedings resulting in the award.
While the lack of a meaningful right to appeal an award accelerates the final resolution of the dispute (by removing another step in the litigation process), it also eliminates an important safeguard intended to ensure fairness. Furthermore, just as judges make mistakes, so do tribunals. The mistakes may not result from corruption or prejudice, but simply from a misunderstanding of the law or a failure to correctly assess the importance of certain evidence. The ability of a party to appeal a judgment/award is an important method of correcting such mistakes that is generally not available in the arbitration process.
Our team at Hugill & Ip has extensive experience in dealing with Dispute Resolution issues – so if you need further advice on this subject, get in touch with us.
This article is for information purposes only. Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances.