No results.

InsightsCase Highlights

Arbitration Hearings Conducted Virtually NOT a Ground to Challenge Award Enforcement

19 Jun 2023

In Sky Power Construction Engineering Ltd v Iraero Airlines JSC [2023] HKCFI 1558, Madam Justice Mimmie Chan refused to grant extension of time to the respondent to challenge an enforcement order of an LCIA arbitration award out of time.  The learned Judge held that there was no merit in the respondent’s purported challenge to the propriety of the award on the grounds that a “fully virtual” hearing was conducted against the respondent’s wishes.  The learned Judge highlighted that remote hearings are commonplace in court and arbitrations especially after the pandemic.  In the present case, the arbitrator had the wide discretion and powers to consider and decide on the proper procedure of the arbitration, and the respondent could not challenge the award’s enforcement based on the tribunal’s decision on the form of the hearing.

The facts are simple.  An arbitration hearing was initially set down to be heard in December 2021 but it had to be rescheduled due to the arbitrator’s infection with COVID-19.  The parties initially agreed on a procedural order (“procedural order”) which set out that the evidentiary hearing would be held in February 2022 on a “semi-virtual” basis, where the tribunal would sit in London with the parties and their witnesses convening in Moscow.  However, in January 2022 the applicant indicated that its witness was unavailable to travel to Moscow and attend the hearing, and asked the tribunal to give directions on a “fully virtual” hearing instead (where parties participate from their respective home jurisdictions).  The respondent disagreed and asked for further adjournment of the hearing so that the applicant’s witness can attend in person.

The arbitrator took into account the uncertainty of travel restrictions and her duty to adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined (under section 33 of the Arbitration Act 1996 and Article 14 of the LCIA Rules, or “Article 14”), and decided that the hearing will proceed on a “fully virtual” basis on the dates in February 2022.

The respondent argued that it was wrong for the arbitrator to rely on Article 14 to conduct the hearing, as Article 14 is “subject to the mandatory provisions of the applicable law”, and section 34(1) of the Arbitration Act 1996 provides that it shall be for the tribunal to decide “all procedural and evidential matters, subject to the rights of the parties to agree any matter”.  The respondent relied on the procedural order and argued that the tribunal had no power to alter it, and any hearing conducted in accordance with a procedure different to that agreed in the procedural order would not be a procedure conducted in accordance with the parties’ agreement.

Mimmie Chan J rejected this argument, given that the parties no longer had an agreement over the mode of the hearing since January 2022.  Hence, it was up to the arbitrator to decide on the procedure and indeed her duty to do so, pursuant to sections 33 and 34 of the 1996 Act and Article 14. Whether it is appropriate in any particular case to permit the factual witnesses to give evidence at the hearing remotely, whether the effectiveness of cross-examination might be undermined, whether appropriate measures were required to ensure the security of the process, are all matters for the consideration and final decision of the arbitral tribunal. “The arbitrator in this case had duly considered the difficulties and delay caused by the global pandemic, the need for a speedy resolution of the Arbitration without further postponements in the face of the changing situation and the evolving health regulations and travel restrictions, when she decided on the timing and format of the hearing.” (at §39)   There was no real injustice or prejudice to the respondent arising from the hearing being conducted on a fully virtual basis.  Insofar as there were disadvantages in a virtual hearing, such disadvantages were suffered by both parties.  In any event, the arbitrator rendered the award on the basis of the contractual and contemporaneous documents, the construction of the documents, and the legal issues raised.

Accordingly, the application for extension of time to set aside the enforcement order of the award was dismissed, on the basis that there was no merit in the proposed setting aside application.

Vincent Chiu represented the applicant.