Whether an arbitral tribunal’s decision constitutes an “award” is an important question. It determines, for example, whether the decision is subject to review by the supervisory court, the available recourse against it, and its enforceability. As there is no universally accepted definition of “award”, its meaning depends on the jurisdiction in question.
The Court of First Instance considered in two recent cases whether the arbitrator’s decision amounted to an award:
- In G v N [2024] HKCFI 721, the arbitrator issued an “Interim Order on Discontinuance of the Proceedings”, granting an anti-suit injunction. N obtained leave of the Court to enforce the decision in Hong Kong. G applied to set aside the enforcement order, relying, among others, on grounds under section 81 of the Arbitration Ordinance (Cap. 609) (“AO“) for the setting aside of an “award”.
- In W v Contractor [2024] HKCFI 1452, the arbitrator issued an “Award and Reasons In Respect of Applications for Interim Measures”. The parties had expressly agreed to apply sections 5 and 6 of Schedule 2 AO, allowing them to appeal to the Court against an award on a question of law, but only with the leave of the Court.[1] W applied for leave to appeal against the arbitrator’s decision. In considering the application, the Court had to determine first whether the arbitrator’s decision amounted to an “award” for which leave to appeal can be sought.
Both cases concerned interim measures and were decided by The Honourable Madam Justice Mimmie Chan, the judge in charge of arbitration-related court proceedings. Chan J found in each case that the arbitrator’s decision did not amount to an award.
These decisions provide helpful guidance in the context of interim measures because the AO does not define the term “award”. They are relevant internationally as Hong Kong is an UNCITRAL Model Law jurisdiction.
Factual Background
G v N
In March 2021, G commenced HKIAC arbitration proceedings against N under a Hong Kong law governed Securities Purchase Agreement for a private investment in public equity placement (for a more detailed background, see our blog post on G v N [2023] HKCFI 3366). In December 2021, G commenced court proceedings in Mainland China against N and N’s subsidiaries. N challenged the Mainland Court’s jurisdiction on the grounds that the dispute fell under the arbitration clause in the SPA and that G was seeking the same relief in the arbitration. The Mainland Court dismissed the proceedings against N, but not against N’s subsidiaries.
N sought urgent anti-suit injunctions from the arbitrator. In July 2023, the arbitrator issued an “Interim Order on Discontinuance of the Proceedings”, restraining G from pursuing proceedings in Mainland China in breach of an arbitration agreement, and ordering G to take all necessary steps to dismiss the Mainland proceedings between G and N’s subsidiaries.
In August 2023, N obtained leave of the Court to enforce the arbitrator’s “Interim Order” in Hong Kong. N’s application was made under section 61 AO, which provides for enforcement of an “order or direction” made by a tribunal. G applied to the Court to set aside the enforcement order. G relied, among others, on grounds under section 81 AO for the setting aside of an “award”.
W v Contractor
The main contractor (C) commenced an arbitration against the employer (W) under a construction contract. The dispute concerned claims of amounts due for work done under the contract and whether there had been breaches of the contract.
Pursuant to the contract, C’s bank issued an on-demand bond, entitling W to demand payment upon W’s certification that there had been a breach of the contract and of the amount of damages in consequence of such breach. The bond neither required W to prove the breach, nor the amount demanded.
After the arbitration commenced, W made two demands to the bank for payment under the bond. The bank rejected the first demand. C applied to the arbitrator for an order that W should withdraw the second demand and be restrained from making any further application, demand or call on the bank for payment. C’s application was made under section 37 AO, which adopts Article 17B of the Model Law. It provides that a party may make a request to the tribunal for an “interim measure” together with an application for a “preliminary order” directing a party not to frustrate the purpose of the measure.
The arbitrator acceded to C’s application and issued an “Award and Reasons In Respect of Applications for Interim Measures” in November 2023. The arbitrator granted the injunction under Article 17 of the Model Law (adopted under sections 35 and 36 AO), which sets out the tribunal’s power to order an “interim measure”.
W applied to the Court for leave to appeal against the arbitrator’s “Award” on three questions of law under sections 5 and 6 of Schedule 2 AO.
The Court’s decisions
Chan J noted in both cases that “award” is not defined in the AO and that according to Russell on Arbitration (24th Ed, at ¶6-002), an award is in principle a “final determination” of a claim or a particular issue in the arbitration.
Reliance was therefore placed in both cases on the English decision in ZCCM Investments Holdings[2] where Cockerill J summarized at ¶40 the relevant factors for classifying an order as either an award or an interim order:
- The court will certainly give real weight to the question of substance and not merely to form. One factor in favour of concluding that a decision is an award is if the decision is final in the sense that it disposes of the matters submitted to arbitration so as to render the tribunal functus officio, either entirely or in relation to an issue or claim.
- The nature of the issues with which the decision deals is significant: the substantive rights and liabilities of parties are likely to be dealt with in the form of an award, whereas a decision relating purely to procedural issues is more likely not to be an award.
- There is a role for form: the tribunal’s own description of the decision is relevant, but it is not conclusive in determining its status.
- It may also be relevant to consider how a reasonable recipient of the tribunal’s decision would have viewed it: a reasonable recipient is likely to consider the objective attributes of the decision relevant, including its description by the tribunal, the formality of the language used, and the level of detail in which the tribunal has expressed its reasoning. A reasonable recipient would also consider such matters as whether the decision complies with the formal requirements for an award under any applicable rules. The background or context in the proceedings is also likely to be relevant. This may include whether the tribunal intended to make an award.
As both cases concerned injunctions, Chan J discussed the regime under the AO applicable to interim orders.
Divisions 1 to 3 (sections 35 to 42) under Part 6 have adopted the regime on interim measures and preliminary orders under Articles 17 to 17G of the Model Law,[3] whereas the regime for recognition and enforcement under Articles 17H and 17I has not been adopted.[4] Instead, enforcement of interim measures in Hong Kong falls under the enforcement regime in section 61 AO (Part 8) for a tribunal’s orders and directions, whether made in or outside Hong Kong. Unlike Article 17I, section 61 does not set out specific grounds for refusing recognition or enforcement.
This regime is separate and different from the other parts of the AO which relate to the making of an award under Part 8, to recourse against an award under Part 9, and to recognition and enforcement of awards under Part 10.
G v N
Chan J dismissed G’s set aside application on 11 December 2023. She gave the reasons for her decisions on 11 March 2024.
Applying the factors in ZCCM Investments Holdings, Chan J noted that the arbitrator’s “Interim Order” was in substance an injunction based on a strong prima facie case of N’s entitlement to the injunction. It was expressly described as an “interim measure”, granted to protect the arbitral process, in the interim of the ongoing arbitration. While the order was of course binding on the parties, it was clear that there was no final determination of the issues considered in the application for the “Interim Order”, whether as to the merits of the claims in the arbitration or in the Mainland proceedings.
Chan J accepted N’s submission that anti-suit injunctions have been treated and granted by the Hong Kong courts as an interim measure in relation to and in aid of arbitral proceedings.[5] Considering the substance, form, and nature of the issues decided in the “Interim Order”, Chan J concluded that it was not a final award but an interim order, granted as an interim measure under Article 17 of the Model Law, during the interim and prior to the issuance of the final award.
Therefore, the setting aside grounds for an award under section 81 AO did not apply to the “Interim Order”. Enforcement of the order was governed by section 61 AO which does not set out grounds for refusing enforcement.
W v Contractor
Chan J dismissed W’s application for leave on 28 May 2024. Chan J was not satisfied that the arbitrator’s “Award and Reasons In Respect of Applications for Interim Measures” amounted to an award for the purpose of granting leave to appeal. Chan J’s findings were based on the same essential reasons as set out in her decision in G v N:
- The arbitrator’s own view of the nature of the order ultimately made and the effect of such an order cannot be final or conclusive. The fact that the arbitrator may order interim measures “in the form of an award or in another form” only extends or refers to the form of the order which can be made. It is still necessary to properly consider whether in substance, the form can constitute an “award” to be enforced or challenged as an “award” under the AO.
- The nature of the issues dealt with by the arbitrator and the background and context of the proceedings are important. C’s application was for an interim measure, sought to maintain or restore the status quo between the parties pending the arbitrator’s determination of the substantive dispute or until further orders.
- The issue or matter dealt with in the “Award” was the grant of an interim measure, pending the determination of the substantive issues in the arbitration. Such an order can be varied, is subject to any other or further order made by the arbitrator and is not final in relation to the matters considered and decided in the order. Clearly and obviously, the arbitrator did not in substance decide any of the parties’ rights or liabilities under the contract and the arbitrator was not rendered functus officio.
- Objectively considered, the interim injunction granted by the arbitrator, pending the determination of the issues on the contract, and based on a reasonable possibility that C would succeed on the merits, did not constitute a final award on the merits of the issues for decision in the arbitration. This finding was consistent with decisions in Singapore[6] and Australia.[7]
Takeaways
- Whether a tribunal’s decision amounts to an award or an interim order will depend in particular on its substance. How the decision is labelled is relevant, but not determinative. It will be more important to consider its contents and whether the tribunal has finally disposed of a matter in relation to a particular issue or claim.
- The distinction is critical for determining whether and how a decision can be recognised and enforced, how a party can resist enforcement, and what recourse a party may have against a Court’s decision to enforce the tribunal’s decision.
- In Hong Kong, enforcement of interim orders and awards is governed by separate regimes under the AO which are subject to significantly different rules. Enforcement of any award in Hong Kong is subject to specific narrow grounds of refusal (e.g., no valid arbitration agreement), whereas interim orders are merely subject to the Court granting leave. Decisions granting or refusing enforcement of awards are subject to appeal (with the leave of the Court), whereas there is no appeal against decisions granting or refusing leave to enforce an interim order.
[1] This is one of several opt-in provisions under Schedule 2 which parties can adopt by expressly providing in their arbitration agreement that these provisions shall apply: section 99 AO. Other examples are that the Court shall decide any question of law arising in the course of the arbitration proceedings or that a party may challenge an award on the ground of serious irregularity. While the opt-in provisions are popular in the domestic construction industry, they are rarely adopted by parties in international arbitrations.
[2] ZCCM Investments Holdings PLC v Kansanshi Holdings plc [2020] 1 All ER (Comm 132).
[3] Pursuant to Article 17, an interim measure includes any temporary measure by which, at any time prior to the issuance of the award by which the dispute is finally decided, the tribunal orders a party to maintain or restore the status quo pending determination of the dispute, or to take action which would prevent or is likely to cause imminent harm or prejudice to the arbitral process itself.
[4] For completeness, Article 17J on court-ordered interim measures has been replaced by section 45 AO.
[5] See Giorgio Armani SpA v Elan Clothes Co Ltd [2019] 2 HKLRD 313 and GM1 v KC [2020] 1 HKLRD 132.
[6] See CXG v CXH [2023] SGHC 244.
[7] See Resort Condominiums International Inc v Bolwell (1993) ALR 655.
