Skip to main content

  • AddRemove
  • Build a Report 
Legal Update

Challenging Arbitration Awards: The Pacific China Case

5 October 2012
Mayer Brown JSM Legal Update


The circumstances in which an arbitration award may be challenged in court have recently been the subject of an important decision by the Hong Kong Court of Appeal1.

The decision confirms Hong Kong as an "arbitration-friendly" jurisdiction, with a strong policy of judicial support for the enforcement of arbitration awards.


In general, no appeal can be brought to overturn the award of a Hong Kong arbitration tribunal, the only exception being under the Arbitration Ordinance's "opt-in" provisions. The absence of an appeal to the court preserves the autonomy of arbitration, as well as avoiding the time and costs which are involved in an appeal process.

This is not to say that an arbitration tribunal has carte blanche to conduct the arbitration proceedings in any way it chooses. The court still retains a supervisory role to ensure that due process is followed: an aggrieved party may apply to set aside an award on the grounds set out in article 34 of the UNCITRAL Model Law. The grounds concern the procedural aspects of the tribunal's management of the case, as opposed to a review of the award on the merits.

The Pacific China case

Whilst there are judicial checks and balances on the arbitration process, it is rare for the courts to interfere with an award. The Pacific China case was unusual in that the Court of First Instance was persuaded to set aside the award under article 34(2) of the Model Law on grounds that (1) the applicant had been unable to present its case, and (2) the arbitral procedure was not in line with the agreement of the parties.

However, the Court of Appeal allowed the appeal, and reinstated the tribunal's award. The court emphasised that article 34 is concerned with "the structural integrity of the arbitration proceedings". The remedy of setting aside was not an appeal, so the court would not analyse the substantive merits of the dispute, or the correctness of the award in terms of fact or law.

Procedural violations

In arguing that it had been unfairly denied an opportunity to present its case, the applicant alleged that the tribunal had violated its rights in three respects:

  1. the tribunal had departed from an agreed procedural timetable which required the parties to exchange submissions. By instead permitting sequential filing of submissions, the other side was given the advantage of seeing the applicant's submissions before preparing its own;
  2. the tribunal refused to consider additional legal authorities on foreign law; and
  3. the applicant was denied an opportunity to respond by way of additional post-hearing submissions. (This was described by the court as being, in essence, a complaint by the applicant that it had been denied the right to have the last word.)

Having scrutinised in detail the various steps which had been taken in the arbitration proceedings, as well as the tribunal's procedural rulings, the Court of Appeal concluded that there was no basis for disagreeing with the decisions of the tribunal. The tribunal had a wide discretion over the procedures to be adopted in the case, so as to avoid unnecessary delay or expense, and to provide a fair means for resolving the dispute. Therefore the court should not interfere with case management decisions which were fully within the tribunal's discretion.

The complaint that a party had been denied the opportunity to present its case should be considered with article 18 of the Model Law which requires equal treatment of the parties. The court held that, in order to justify the setting aside of an award, the tribunal's conduct must have been sufficiently serious or egregious so as to deny due process to a party. A full opportunity to be heard does not mean that a party is entitled to present any case it pleases, any time it pleases, no matter how long the presentation should take:

"Except in the most egregious cases, the wide discretion of arbitrators and the flexibility of the arbitral process have been confirmed by national courts which quite regularly reject the procedural arguments of disappointed parties."2

Only a sufficiently serious error which had undermined due process could be regarded as a violation of articles 18 or 34. A party that had been given a reasonable opportunity to present its case would rarely be able to establish that it had been denied due process. Furthermore, the court could refuse to set aside the award if it were satisfied that the tribunal would not have reached a different conclusion.


The Court of Appeal's decision in Pacific China3recognises that, where parties have agreed to have their disputes resolved by Hong Kong arbitration, they have similarly agreed that case management is a matter for the tribunal, and that the tribunal's award will be final. The parties want their disputes to be resolved swiftly and cost-effectively.

If a disappointed party launches a challenge under article 34, the Hong Kong courts will only set aside the award where there have been serious violations by the tribunal which may have had a significant effect on the outcome of the arbitration.

For inquiries related to this Legal Update, please contact Bill Amos or your usual contacts with our firm.

1Grand Pacific Holdings Ltd v. Pacific China Holdings Ltd. [2012] 4 HKLRD 1
2Quoted by the Court from Craig, Park and Paulsson in ICC Arbitration (3rd ed., 2000)
3The applicant has applied to the Court of Final Appeal for leave to appeal. Further judicial guidance (and a further Legal Update) may therefore follow.

The Build a Report feature requires the use of cookies to function properly.  Cookies are small text files that are placed on your computer by websites that you visit. They are widely used in order to make websites work, or work more efficiently.  If you do not accept cookies, this function will not work.  For more information please see our Privacy Policy

You have no pages selected. Please select pages to email then resubmit.