Ruling in Hong Kong SAR confirms arbitral interim measures not subject to appeal

In a recent case between an employer and contractor, the Hong Kong Court of First Instance dismissed the employer’s application to appeal against an arbitrator’s award for interim measures. The interim measures prevented the employer from making any demand for payment under an on-demand bond until the arbitral proceedings had been concluded. The arbitrator’s interim measures decision was made based on sections 35 and 36 of the Arbitration Ordinance (Cap. 609), which give effect to Articles 17 and 17A of the UNCITRAL Model Law on International Commercial Arbitration and aim to maintain the ‘status quo’ by preventing a demand for payment under the bond.

The Court confirmed that such an arbitral decision was not an ‘award’ within the meaning of the Ordinance, which does allow for appeals against arbitral awards – based on a question of law – under section 6 of Schedule 2 of to the Ordinance.

The Court made clear from the outset that a decision must be considered an award before the Court can consider any leave to appeal. This echoes a previous decision in G v N which found that an arbitrator’s interim order expressed as an “interim order on discontinuance of proceedings” was not an award, and that the grounds for setting aside an arbitral award under section 81 of the Ordinance - which gives effect to Article 34 of the Model Law - were not applicable.

Recognising that the term ‘award’ is not defined in the Ordinance, the Court explained that, “…In principle, it is a ‘final determination’ of the claim or particular issue in the arbitration… in that it determines all the issues, or all the outstanding issues in the arbitration, in the sense of being a complete decision without leaving matters to be dealt with subsequently, or by a third party.”.

The Court’s reasons for deciding interim measures are not subject to appeal

The Court decided that the arbitrator’s award for interim measures is not an ‘award’ within the meaning of the Ordinance for the following reasons:

• the injunction granted by the arbitrator is interim in nature, awaiting the determination of the main issues in the underlying arbitration;
• the arbitrator’s award can be varied, and is subject to any other or further order which can be made by the arbitrator;
• the arbitrator’s award is not final in relation to the matters considered and the arbitrator did not decide any of the parties’ rights or liabilities under the relevant contract; and
• enforcement of interim measures and awards are governed by separate parts of the Ordinance – specifically, part 5, section 61 of the Ordinance governs enforcement of interim measures, whereas enforcement of awards is governed by part 9, sections 84, 87 and 92.

In addition, the fact that the arbitrator had recorded his decision in the form of an award, after considering the possibility of an appeal based on the merits of his decision, was not a determinative factor as to whether the decision was an interim order or an award.

Ultimately, the Court’s decision confirmed that tribunal-ordered interim measures are not subject to appeal in Hong Kong SAR courts, whether in the form of a set aside application, or an appeal on a question of law.

As highlighted by the Court, such a position is in line with international judicial treatment – as seen in recent cases in the UK, Australia and Singapore - and the objective of section 3 of the Ordinance, which is to facilitate the fair and speedy resolution of disputes by arbitration, without unnecessary expenses and delay caused by challenges to interim decisions.

Co-written by Jane Ng and YC Lung of Pinsent Masons.

Dr. Dean Lewis and Hinson Cheung of Pinsent Masons, assisted by YC Lung and Jane Ng, represented the contractor in the above proceedings.