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Hong Kong Court dismisses action against the HKIAC

Terence Wong

22 May 2014
In a rare case, the Hong Kong International Arbitration Centre (HKIAC) has been sued by one of its users, Mr Gong Benghai.  Mr Gong applied for an order compelling the HKIAC to suspend on-going HKIAC arbitration proceedings, and to replace certain members of an arbitral tribunal, together with costs.  However, the Hong Kong Court of First Instance was quick to dismiss the application.

Background

In the course of the arbitration proceedings, upon an application by Mr Gong (the Claimant in those proceedings), the Tribunal ordered the Respondent to disclose a breakdown of funds to be repaid.  However, the Tribunal also decided to allow the Respondent not to disclose certain confidential information (such as personal information belonging to employees or other personnel, as well as confidential financial information) prior to the full hearing.

Mr Gong was dissatisfied with the Tribunal's decision.  In August 2013, relying on the HKIAC Challenge Rules, Mr Gong challenged the impartiality of two of the arbitrators.

The HKIAC accordingly appointed a sub-committee to investigate the challenge, which rejected it in December 2013.

In February 2014, Gong issued an originating summons in the Hong Kong Court of First Instance whereby the HKIAC was named as the sole defendant, claiming the following orders:

  1. requiring the withdrawal and replacement of the two arbitrators, and requiring them to refrain from rendering any arbitral award;
  2. requiring the HKIAC to re-adjudicate the challenge;
  3. requiring the HKIAC to immediately suspend the arbitration proceedings and to replace the two arbitrators who had been challenged.
  4. an order that the HKIAC was to pay Mr Gong's costs.

The Decision of the Hong Kong Court of First Instance

The Court rejected Mr Gong's application on both procedural and substantive grounds.

Procedurally, the Court held that Mr Gong should have made the application within 30 days of being notified of the result of the challenge (pursuant to Article 13(3) of the Model Law, which is applicable under the Hong Kong Arbitration Ordinance Cap 609).  Given that Mr Gong did not comply with the deadline, the Court found that it did not have power to intervene.  The Court also held that the proper parties to Mr Gong's application should have been the Respondent and the Tribunal, and that Mr Gong had no cause of action against the HKIAC.

As for the merits of the application, the Court held that in order for a challenge to be successful, Mr Gong would have had to demonstrate justifiable doubts as to the arbitrators' impartiality or independence, or that the arbitrators did not possess qualifications agreed by the parties.  However, the Court found that Mr Gong had failed to present any relevant facts to support his challenge, and Mr Gong did not give any indication as to why the Tribunal's decision was unfair or lacked independence.  Accordingly, the Court found the merits of Mr Gong's application to be untenable.

 

Terence Wong

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