Enforcement of Arbitral Awards

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Enforcement of Arbitral Awards

 

Are foreign arbitral awards enforceable in Hong Kong?

Hong Kong is an arbitration-friendly jurisdiction.  The courts regularly hear and grant applications for the recognition and enforcement of both domestic and international arbitral awards and take a pro-arbitration approach.

In order to enforce an arbitral award in Hong Kong, an application must be made to the High Court for leave to enforce it.  Once leave is obtained, the award is then enforceable in the same way as any judgment.

What conventions is Hong Kong party to for the enforcement of arbitral awards?

Hong Kong is party to three main conventions and agreements for the enforcement of arbitral awards, including:

1. An arrangement between Hong Kong and Mainland China for the recognition and enforcement of arbitral awards – applicable for awards made in Mainland China;
2. An arrangement between Hong Kong and Macau – applicable for awards made in Macau; and
3. The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards – commonly referred to as the New York Convention – applicable for awards made in New York Convention countries which include nearly all United Nations member states.

Otherwise, non-convention awards are also enforceable under the Arbitration Ordinance, with leave of the Court.

What is the procedure?

The procedure for applying for leave to enforce an arbitral award is broadly similar, whatever the category of award.

The first stage involves making an ex parte application to the Court (that is without notice to the other side).  The Applicant must make full and frank disclosure of all relevant information.

Assuming that the award on its face is enforceable, the Court will grant leave to enforce it but will give the Respondent 14 days from the date of service of the Order in which to apply to have it set aside.

The Applicant may not enforce the Order until after the expiry of this 14-day period or until after the determination of the application to set the Order aside, if such application is made.

On what grounds can the recognition and enforcement of arbitral awards be refused?

The grounds on which leave to enforce arbitral awards may be refused are set out in the Arbitration Ordinance which is modelled on the United Nations Commission on International Trade Law Model Law– or ‘UNCITRAL Model Law’ – and which mirror the approach set out in the New York Convention.

The grounds for refusal of enforcement are almost identical for all types of award.  They are exclusively procedural.

A party challenging an Order for leave to enforce an arbitral award must prove that:

1. A party to the arbitration was under some incapacity; or
2. The arbitration agreement was not valid; or
3. They were not given proper notice of the appointment of the arbitrator or the arbitral proceedings or were otherwise unable to present their case; or
4. The award deals with matters not contemplated by or falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the arbitration; or
5. The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the parties’ agreement or the law of the country where the arbitration took place; or
6. The award has not yet become binding on the parties or has been set aside or suspended by a competent authority.

The Court may also refuse to enforce an award if made in respect of matters not capable of settlement by arbitration under Hong Kong law or where it would be contrary to public policy to do so.

For New York Convention awards, Mainland awards and Macau awards, the reasons are exhaustive.  The Court cannot refuse to enforce these awards for any other reasons.  In other cases, the Court also has a discretion to refuse enforcement for any other reason where it considers it “just to do so”.

Can the Hong Kong enforce interim relief granted by foreign tribunals?

Hong Kong courts have the jurisdiction to enforce interim measures (including injunctive relief) ordered by an arbitral tribunal in proceedings both in and outside Hong Kong. However, leave of court is required.

Leave to enforce an order or direction for interim relief made outside Hong Kong will not be granted, unless the party seeking to enforce it can demonstrate that it belongs to a type of order or direction that may be made in Hong Kong by an arbitral tribunal in relation to arbitral proceedings.

In summary

Numerous Hong Kong judgments show that the Hong Kong courts consistently take a pro-arbitration stance and emphasise that the courts will only interfere in very limited circumstances in cases involving matters where the parties have agreed to arbitrate.

This pro-arbitration approach underpins Hong Kong’s position as a popular and arbitration-friendly jurisdiction and gives confidence to companies and individuals seeking to resolve their disputes by way of arbitration that arbitral awards made in their favour can easily be enforced in Hong Kong.

 

This video is for informational purposes only. Its contents do not constitute legal or professional advice.