Arbitral award – setting aside – application to set aside under Sch. 2 s. 4 on ground of serious irregularity – where no express in agreement that Sch. 2 would apply, court had no jurisdiction – where non-compliance with O. 73 r. 5(4), abuse of process to argue application as if made under s. 81
P1–3 and D, equity partners of a firm under an agreement dated 11 May 2007 (the “Agreement”), submitted a dispute over the amounts allegedly due from D as well as his entitlement to drawings and profits share under the Agreement to arbitration (the “Arbitration”) pursuant to an arbitration clause, expressly agreeing that the Arbitration Ordinance (Cap. 609) applied. However, the Agreement did not provide that Sch.2 to the Ordinance was applicable or that the Arbitration was a domestic arbitration. Ps’ application to strike out D’s counterclaim was dismissed by the Arbitrator (the “Decision”) with costs to D (the “Costs Order”). Ps applied by originating summons to set aside the Decision and the Costs Order pursuant to O. 73 r. 5 of the Rules of the High Court (Cap. 4A, Sub. Leg.) and s. 4 of Sch. 2 to the Ordinance on the ground of serious irregularity (the “OS”). The Ordinance came into force on 1 June 2011 and under s. 100: “All the provisions in Sch. 2 apply, … to – (a) an arbitration agreement entered into before the commencement of this Ordinance which has provided that arbitration under the agreement is a domestic arbitration …”.
Held, dismissing the application, that:
- The Court had no jurisdiction to deal with the OS. The provisions of Sch.2 of the Ordinance applied only if the parties opted for its application. Since the Agreement made no such express provision, there was no basis for Ps to apply to this Court to set aside the Decision and the Costs Order on the ground of serious irregularity under s. 4 of Sch. 2. Under s. 3(3) of the Ordinance, the court should interfere in the arbitration of the dispute only as expressly provided for in the Ordinance. Section 100 did not provide for Sch. 2 to apply to “domestic” arbitrations or agreements, but to an arbitration agreement which provides that the arbitration under the agreement was a domestic one. Further, an arbitration agreement could not by implication provide for domestic arbitration simply because the parties were Hong Kong residents and have a local place of business.
- In addition, it would be an abuse of process to permit Ps, as they had sought, to argue the application as if it were made under s. 81 of the Ordinance since the OS did not, as required by O. 73 r. 5(4) of the RHC, state any ground to set aside the Decision and Costs Order under s. 81.
- Even if the finding that s. 4 of Sch.2 did not apply was wrong, Ps’ application lacked merit. There was no irregularity, either in the arbitral procedure or in the Arbitrator’s exercise of his powers.