Parties sometimes prefer litigation to arbitration because court proceedings offer summary judgment, which can dispose of unmeritorious claims or defences at an early stage. In response, arbitral institutions such as SIAC, HKIAC and (most recently), the ICC have introduced procedures for early or summary determination. Broadly speaking, these procedures allow a party to seek the determination of issues of fact or law at an early stage where a claim or defence is manifestly without merit, which can avoid unnecessary time and costs from pursuing a full arbitration.
Given the relative novelty of these procedures, there is limited guidance on how they operate in practice and the extent to which awards rendered under them will withstand challenge. It is therefore timely that the Hong Kong Court of First Instance has recently considered these issues in the context of an application to set aside an award made under the HKIAC’s Early Determination Procedure (EDP). In A v B1 and B2 [2026] HKCFI 2444, the Court held that the arbitral tribunal had properly applied the EDP and that there had been no procedural unfairness or breach of natural justice. In delivering judgment, the Court also helpfully summarized the principles relevant to set-aside applications.
Factual Background
The dispute arose from a series of agreements relating to the sale of corporate vehicles holding real estate assets. The agreements contained provisions for “holdback amounts” withheld from the purchase price, payable to the Plaintiff (P) upon satisfaction or waiver of certain conditions by specified deadlines (fixed at 18 January 2023). When P requested an extension of time, the Defendants (Ds) refused. As of the deadline, several holdback amount conditions remained unsatisfied, leading Ds to withhold the holdback amounts.
P commenced a HKIAC arbitration claiming Ds had unreasonably refused to grant the extension of time, and that the agreements did not entitle Ds to retain the holdback amounts. Ds responded by invoking the EDP, seeking summary dismissal of P’s claims. After receiving written and oral submissions, the arbitral tribunal granted the EDP application and dismissed P’s claims in a Partial Award, followed by a Costs Award ordering P to pay Ds’ costs.
Subsequently, P applied to the Court to set aside both awards. In relation to the Partial Award, P argued that the arbitral tribunal failed to comply with the agreed procedures set out in Article 43 of the HKIAC Rules because no point of law or fact had ever been identified throughout the arbitral tribunal’s handling of the EDP application. As a result, P did not have a fair opportunity to present its case.
P also argued that the arbitral tribunal exceeded its jurisdiction, since Ds only requested determination of some points of construction at the hearing, with no point of fact submitted for determination under the EDP. P also complained that the award conflicts with HK public policy due to procedural defects and internal inconsistencies.
As for the Costs Award, P argued that it was deprived of a fair and reasonable opportunity to respond to Ds’ claim for their lawyers’ professional fees, since the arbitral tribunal refused to accede to P’s request for a breakdown of the claimed fees. Finally, P argued that the Costs Award was rendered in breach of the arbitral tribunal’s mandate and/or the agreed procedure which only permits the arbitral tribunal to allow reasonable costs.
The Court’s Findings
The Court dismissed P’s setting aside applications and granted Ds’ application to enforce the Costs Award against P, awarding the usual indemnity costs for challenges to an award.
First, the relevant points of law and fact were sufficiently identified in the EDP application and supporting documents. Article 43 of the HKIAC Rules does not specify the level of precision to which the point of law or fact should be articulated, and the degree of precision is clearly a matter of case management which is within the discretion of the arbitral tribunal. Any technical breaches (such as not proposing a form for the EDP) were minor and did not amount to a serious violation. In any event, P had waived such technical breaches as it did not complain contemporaneously and fully participated in the EDP.
Second, P had multiple fair and reasonable opportunities to set out its arguments in response to the EDP application. The parties were also given the opportunity to file written submissions and make oral submissions at a hearing.
Third, the arbitral tribunal’s decisions were within the scope of the arbitration (which is the relevant standard for a setting aside application under Hong Kong law, rather than the scope of the EDP application).
Finally, upon a proper review of the Partial Award, there is no merit in P’s submission that the Partial Award is manifestly incoherent. It had also dealt with the unreasonable refusal issue sufficiently.
As for the Costs Award, the arbitral tribunal had discretion to assess costs using a broad-brush approach (relying on its experience in international arbitration) and was not required to follow court practices or provide a detailed breakdown of hours. P was able to make submissions on costs and raise criticisms, but these were matters of merit rather than grounds for setting aside the award.
Takeaways
This judgment gives reassurance to parties and arbitral tribunals that an award can be made and upheld pursuant to an early or summary determination procedure. It also helpfully summarises the relevant principles under Hong Kong law when setting aside an award on the basis of a denial of due process.
This judgment makes clear that the EDP should be properly invoked by identifying the points of law or fact suitable for early determination. During the EDP, procedural fairness must be maintained by giving parties a fair opportunity to address the identified points. Minor technical defects will generally not be fatal if the issues are sufficiently clear.
This judgment also reinforces Hong Kong’s pro-arbitration attitude and reluctance to set aside arbitral awards, save for exceptional circumstances.
