Enforcing an arbitral award in Hong Kong

Under the domestic legal framework, Hong Kong SAR courts have continually demonstrated their support for arbitration and emphasised in judgments that they will only interfere in limited circumstances. The pro-arbitration approach of the Hong Kong SAR courts has underpinned Hong Kong SAR’s position as a popular destination for dispute resolution and will give companies comfort that arbitral awards in their favour can be enforced in Hong Kong SAR.

Awards in jurisdictions which are parties to the New York Convention (see below) need to be enforced using a two-stage process. Given the pro-arbitration approach adopted by the Hong Kong SAR courts, the award will be recognised unless one of the grounds provided under the Arbitration Ordinance applies.

Meanwhile, the process to enforce awards made in mainland China and the Macao SAR is generally more straightforward given the special arrangements that exist with the Hong Kong SAR and can usually be enforced without difficulty. When companies are negotiating the dispute resolution clause in their contracts, they should consider the benefits of Hong Kong SAR in terms of it being a recognised forum to resolve disputes and also the ability to enforce (with ease) against a party in mainland China or Macao SAR.

Enforceable arbitral awards in Hong Kong SAR

Once the court has granted permission to enforce an arbitral award, it may be enforced in the same manner as a court judgment regardless of whether it was made in or outside of Hong Kong SAR.

The award should be in writing and be signed by the arbitral tribunal. If the award has not yet become binding on the parties or has been set aside or suspended by a competent authority, the award cannot be enforced.

An award must result from an agreement to arbitrate and must represent the final decision of the arbitral tribunal on a substantive issue. An award includes an interim award and an award on costs of the arbitration. However, a decision resolving a procedural issue is generally not considered as an award.

Arbitral awards that can be enforced in Hong Kong SAR include Convention awards, mainland awards, Macao SAR awards, and other awards which include awards made in Hong Kong SAR:

• A Convention award means an arbitral award made in a state or the territory of a state which is a party to the Convention on the Recognition and Enforcement of Foreign Awards, also known as the New York Convention. This does not include the People's Republic China (PRC) or any part of the PRC.
• For mainland and Macao SAR awards, arbitral awards made in mainland China by a recognised mainland arbitral authority in accordance with the Arbitration Law of the PRC or made in Macao SAR are enforceable in Hong Kong SAR pursuant to special arrangements in place.

Enforcement of an arbitral award in Hong Kong SAR

There are two stages in the enforcement of an arbitral award in Hong Kong SAR:

• Recognition stage – an award is converted into a Hong Kong SAR judgment;
• Execution stage – the judgment can be enforced using an acceptable method of enforcement.

At the recognition stage, the court has to decide whether to grant permission to enforce the award. An application to the High Court for leave to enforce an award may be made ex-parte by affidavit. The applicant must make full and frank disclosure of relevant information to the court in support of the application. If the award is in order and the court grants permission, it will give judgment “in terms of” the award. A party may then enforce the arbitral award by pursuing the same enforcement methods for court judgments, such as statutory demand, charging order or writ of execution. 

Refusal of enforcement of an arbitral award

The grounds for the court to refuse to enforce an arbitral award are almost identical for all categories of awards. They are exclusively procedural as there is no right to appeal an award on a question of law.

For Convention awards, mainland awards and Macao SAR awards, the reasons are exhaustive. The court cannot refuse to enforce these awards for other reasons.

The court may refuse to enforce these awards if:

• a party to the arbitration agreement was under some incapacity;
• the arbitration agreement was not valid under the law applicable to the contract;
• the person was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was unable to present their case;
• the award deals with a difference not contemplated by or not falling within the terms of submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration;
• the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties; or
• the award has not yet become binding on the parties or has been set aside or suspended by a competent authority.

The court may also refuse to enforce an award if the subject matter of the award is a matter which is not capable of settlement by arbitration under the law of Hong Kong SAR; or if it would be contrary to public policy to enforce the award.

If an award is not a Convention award, a mainland award or a Macao SAR award, the court can refuse to enforce an award if the applicant can prove one of the grounds for refusal of enforcement as discussed above. The court also in this case has the discretion to refuse enforcing an arbitral award for any other reason if the court considers it “just to do so”.

Cost to enforce an arbitral award

An enforcing party generally pays for its own costs of the enforcement application, unless otherwise ordered by the court. When enforcement is unsuccessfully challenged, the court will normally award costs against the challenging party on an indemnity basis, which means the recovery rate will be higher than on a standard basis.

Co-written by Cynthia Chan and Jane Ng of Pinsent Masons.