HONG KONG SAR, CHINA Law and Practice Contributed by: Frederick Hui and Samuel Li, Zhong Lun Law Firm
the unsuccessful party is typically ordered to pay a substantial portion of the successful party’s costs, although tribunals retain discretion to depart from this if appropriate. Agreements made before a dispute arises which require each party to bear its own legal costs are gen - erally not binding on the arbitral tribunal, but parties may agree on cost allocation after a dispute has arisen (Sections 74 (8) and 74 (9) of the AO). In Hong Kong, parties generally cannot appeal an arbitral award on its merits (for example, to challenge the tribunal’s findings of fact). The main remedy is to apply to the Court of First Instance to set aside the award on limited grounds under the AO, which reflect the Model Law. These grounds include, for example, an invalid arbitration agreement, serious procedural unfairness, the tribunal exceeding its authority, non- arbitrability or public policy. A set-aside application must usually be made within three months of receiving the award (or any correction or interpretation deci - sion), and this deadline is strictly applied. Even if no set-aside application is made, a party may still resist enforcement of the award in Hong Kong on similar limited grounds when the other side seeks to enforce it. 11. Review of an Award 11.1 Grounds for Appeal A limited appeal route exists only if Schedule 2 of the AO applies (for example, if the parties have expressly opted in). In that situation, a party may apply for leave to appeal on a question of law or challenge the award for serious procedural irregularity. There are strict con - ditions to be satisfied, that the issue must have been put to the tribunal, must materially affect the parties’ rights, and must either be obviously wrong or involve a question of general importance that is open to seri - ous doubt. The court will normally decide any legal question based on the facts as found by the tribunal. Possible outcomes include confirming, varying, remit - ting or setting aside the award.
Overall, unless Schedule 2 applies, Hong Kong law strongly favours finality of arbitral awards, with only limited court intervention. 11.2 Excluding/Expanding the Scope of Appeal Parties cannot contract out of the court’s mandatory supervisory role under the AO. The statutory grounds for setting aside an arbitral award (Section 81 of the AO, based on the Model Law) and the grounds for resisting enforcement (based on the New York Con - vention) are fixed by law. Parties cannot exclude these grounds, add new ones, or extend the three- month time limit for applying to set aside an award. A clause stating that there will be “no challenge” does not remove the court’s jurisdiction, although it may be taken into account on costs. Likewise, parties cannot agree to broader appeals on the merits than those permitted by the AO. However, parties do have some flexibility through Schedule 2 of the AO. By express agreement (under Section 99), they can opt in to additional, limited routes of recourse: (1) appeals on a question of law and/or (2) challenges for “serious irregularity”. These routes are subject to strict permission requirements and do not allow a re-hearing of the facts found by the tribunal. 11.3 Standard of Judicial Review The standard of court supervision is highly deferential. Hong Kong courts do not conduct a full re-hearing or reconsider the merits of an arbitral award. Their role under the AO is supervisory only. When dealing with set-aside applications or enforcement challenges, the court will intervene only on limited statutory grounds (such as lack of jurisdiction, breach of due process, non-arbitrability or public policy). Unless Schedule 2 of AO is applicable, errors of fact or law by the tribu - nal, even if they appear obvious, are not enough on their own to justify interference. Any consideration of the merits is incidental to these limited grounds, not a fresh review.
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