Hong Kong: Pro-Arbitration courts intervening only in rare and exceptional circumstances

The Hong Kong courts have traditionally shown strong deference to the autonomy of arbitral tribunals and the finality of arbitral awards.  In recent years, this position is further reinforced, demonstrated by the data  and judicial decisions. Those involved in arbitration-related proceedings before the Hong Kong courts should be aware that successful challenges are rare and the courts are reluctant to challenge or refuse enforcement of arbitral awards except in exceptional circumstances.

When will the Hong Kong courts set aside an award?

The Hong Kong courts have consistently adopted an arbitration friendly approach, applying a high threshold for challenges and only granting petitions on clear and compelling grounds.

Hong Kong is an UNCITRAL Model Law jurisdiction and Section 81 of the Arbitration Ordinance (Cap 609) incorporates Article 34 of UNCITRAL Model Law sets out the limited grounds based on which a Hong Kong-seated arbitral award may be challenged. These grounds include where:

• a party lacked capacity;
• the arbitration agreement is invalid;
• a party was not given proper notice or was unable to present its case;
• the arbitral award deals with matters beyond the scope of the parties’ submissions;
• the tribunal’s composition or the arbitral procedure did not accord with the parties’ agreement or with the Arbitration Ordinance; or
• the court finds that the dispute is non‑arbitrable or that the award is in conflict with public policy.

A review of the very limited number of Hong Kong court decisions granting setting aside applications over the past four years demonstrates that the courts typically set aside awards only where parties demonstrate fundamental jurisdictional defects or serious breaches of due process. For example:

CMB v Fund & Ors [2023] HKCFI 760
The Hong Kong Court of First Instance set aside part of an ICC award on the ground that the arbitrator lacked jurisdiction. The defendants sought a declaration of non-liability when the plaintiff had brought no claims meaning there was no actual dispute between the parties. 

Arjowiggins HKK2 Ltd v X Co [2022] HKCFI 128
The Court of First Instance set aside a partial final award on the ground that the tribunal had exceeded its jurisdiction. The Tribunal in that case had ordered the delivery of joint venture documents to the joint venture's compulsory liquidation group when that remedy had not been requested by the parties in their pleadings. 

W v AW [2021] HKCFI 1707
The Court of First Instance set aside an award on the ground that it was manifestly invalid. The Court found that the award constituted substantial injustice and grave unfairness as it contradicted the findings in a separate, earlier arbitral award between the same parties regarding the same disputes.

Hong Kong courts have consistently dismissed cases that do not meet this high bar. For example:

The Hong Kong courts' decisions also serve as a useful reminder to arbitration practitioners to act diligently, as court intervention after an award is rare. In particular, practitioners should:

• promptly inform the tribunal of procedural concerns and irregularities while the proceedings are ongoing;
• adequately address any procedural concerns or irregularities raised by the tribunal and/or the other parties and record the action taken by their client to address these concerns; and
• advise their client with a clear understanding of the high threshold and limited grounds to challenge arbitral awards in front the courts of Hong Kong.

Data reveals more set-aside applications but fewer successful applications

In Hong Kong, an application to enforce an arbitral award as a judgment requires leave from the court. A setting-aside application against the award can be raised as a defence and against the court order granting leave for enforcement. Alternatively, an arbitral award can also be challenged by a party directly with the courts. In practice, the former is more common.

There is no comprehensive, publicly available official data on the challenges against arbitral awards in Hong Kong. This notwithstanding, statistics relating to the enforcement of arbitral awards in Hong Kong published by the Hong Kong International Arbitration Centre (the “HKIAC”) provide valuable insight into the prevailing trends in relation to challenges raised against enforcement actions.

While these statistics may not be exhaustive with respect to all Hong Kong court proceedings regarding challenges of arbitral awards, they offer a reliable indication of the general landscape:

Those figures show that:

• There has been a clear increase in the number of enforcement applications over the past few years, with the number of applications nearly doubling between 2021 and 2024. In large part, this is due to the fast-increasing number of arbitration cases in Hong Kong.
• At the same time, there is a noticeable decrease in the percentage of setting-aside applications brought, from 24% in 2021 to around 12% in 2022 and 2023 and 16% in 2024. One important reason for this decrease is that the prospects of successfully obtaining a setting-aside order has consistently remained very low, with challenges being successful in just over 3% of cases since 2021, a total of just 8 arbitral awards.
• The overwhelming majority of arbitral awards are upheld and successfully enforced in Hong Kong.
• The above data lends further support to the long-established, high threshold to obtain courts orders to set aside arbitral awards in Hong Kong. The very modest number of challenges that go in front of the courts face an uphill battle, reflecting the Hong Kong courts’ reluctance to interfere with arbitral decisions except in the most exceptional circumstances.

Conclusion

The available statistics and recent judicial decisions together paint a clear picture: Hong Kong courts will intervene only in rare and exceptional cases where there are fundamental jurisdictional defects or serious breaches of due process and practitioners are discouraged from seeking to undermine the finality of arbitral awards by bringing unmeritorious challenges.