Hong Kong court dismisses claim against HKIAC

In yet another example of robust judicial support for arbitration in Hong Kong, the Hong Kong Court of First Instance has dismissed a claim brought against the HKIAC by a party to an HKIAC administered arbitration.

The plaintiff in the Court Proceeding, Mr Gong Benhai, the Claimant in an ongoing HKIAC arbitration, sought to 'set aside' a decision by the HKIAC under the 2008 HKIAC Challenge Rules, in which the HKIAC had rejected Gong's challenge regarding two arbitrators.

The Court Proceeding was filed in February 2014 and promptly dismissed on 18 March 2014, with a judgment published in Chinese on 28 April 2014. Gong was ordered to pay the HKIAC's costs of the hearing.

Amongst the reasons for dismissing the action, the Court observed:

• The HKIAC was not the proper defendant to the Court Proceeding. The proper defendant should have been respondent in the arbitration.
• The claim was time-barred, in any event, having been filed more than 30 days after the HKIAC's decision on Gong's challenge, in breach of the limitation period in Art. 13(3) of the Model Law.
• Moreover, arbitral institutions such as the HKIAC are immune to claims arising from the honest performance of their administrative functions, by virtue of s105 of Hong Kong's Arbitration Ordinance.

The Court also confirmed various matters regarding challenges to the independence and impartiality of an arbitrator in an HKIAC administered arbitration:

• pursuant to Art. 13(3) of the Model Law, an arbitration should continue pending a Court's decision on a challenge to an arbitrator - there is no reason to stay proceedings;
• errors of law or fact, or, in this case, an alleged error in relation to a procedural order for disclosure of evidence, do not provide a proper ground for challenging an arbitrator;
• pursuant to the HKIAC Challenge Rules, the HKIAC was not obliged to provide reasons for its decision;
• parties cannot seek to set aside the fee payable under the HKIAC's Challenge Rules.

The decision demonstrates that Hong Kong Courts will be slow to interfere in the administrative decisions of arbitral institutions and quick to dismiss proceedings which seek to undermine the administration of arbitrations in Hong Kong.

The decision also highlights that, where parties desire Court intervention on a challenge to an arbitrator, they must comply strictly with the time limits set out in Art. 13(3) of the Model Law.

For more information, please contact Simon Chapman, Partner or Briana Young, Professional Support Lawyer or your usual Herbert Smith Freehills contact.