There were a number of court decisions in Hong Kong this year which continue to demonstrate the court's non-interventionist pro-arbitration approach.

Gong Ben Hai v HKIAC [2014] HKCU 1038

The High Court dismissed proceedings challenging the two arbitrators appointed by the Hong Kong International Arbitration Centre (HKIAC) on the grounds of impartiality and lack of independence.

The challenge was first made to the HKIAC, which rejected the application for lack of substantive evidence. The applicant then commenced court proceedings against the HKIAC seeking several orders including an order setting aside the HKIAC's decision.

The Court held that the HKIAC enjoyed immunity over its appointment of the arbitral tribunal under Section 105 of the Arbitration Ordinance.

Shanghai Fusheng Soya-Food Co Ltd v Pulmuone Holdings Co Ltd [2014] HKCFI 894

Shanghai Fusheng (defendant in an International Chamber of Commerce (ICC) arbitration held in Hong Kong) applied to the Hong Kong Court seeking to set aside the arbitral award on the ground of public policy.

Pulmuone commenced Shanghai Court proceedings against Shanghai Fusheng to recover funds allegedly misappropriated in relation to an agreement to form a joint venture company in China, and two months later, commenced the arbitral proceedings in Hong Kong against Shanghai Fusheng for repudiatory breach of the agreement and sought dissolution of the joint venture company.

The Shanghai Court held largely in favour of Shanghai Fusheng, who sought to bring the Court's decision to the arbitral tribunal's attention. The information was rejected by the arbitral tribunal on the ground that the arbitration had closed. The arbitral tribunal then decided that Shanghai Fusheng was in repudiatory breach, and Shanghai Fusheng applied to the Hong Kong High Court to set aside the arbitral award on the ground (amongst others) that the tribunal had failed or refused to take note of the Court's judgment, and that the judgment binds the parties and re-litigation (by way of the arbitration) was contrary to the public policy.

The Hong Kong Court held that the Shanghai Court's judgment had no material impact on the arbitral award as the proceedings did not cover the same issues, and dismissed Shanghai Fusheng's application. There had been no prejudice and the award was not in conflict with public policy.

The decision further demonstrates that Hong Kong courts will generally not set aside an arbitral award on the public policy ground unless there were circumstances which amounted to 'an affront to the administration of justice' or which 'violates the most basic notions of morality and justice'.

Arima Photovoltaic & Optical Corporation v Flextronics Computing Sales and Marketing (L) Ltd [2014] HKCU 1394

Arima (seller) commenced arbitration proceedings against Flextronics (buyer) for the outstanding balance of the purchase price of an IT business, and Flextronics counterclaimed for breach of warranties under the sale and purchase agreement.

The tribunal decided in favour of Flextronics, and Arima applied to set aside the decision in relation to the counterclaim on the ground that the award did not constitute a reasoned award, as the award did not explain how the arbitral tribunal quantified the counterclaim.

The Court dismissed the application, and held that in deciding whether a ruling was sufficiently reasoned, consideration should be given to the circumstances of the arbitration and the manner in which it was conducted. The Court would not easily set aside an award if the reasoning or elaboration could be obtained from the parties' pleadings.