In Song Lihua (宋丽华) v Lee Chee Hon [2023] HKCFI 1954, the Hong Kong Court held that arbitrators should be entitled to the same immunity available to judges in respect of their decision-making in the process of arbitration, absent fraud or bad faith. Accordingly, the arbitrator in this case, could not be compelled to give evidence on a challenge to his award.
Background
The court had granted the Applicant leave to enforce in Hong Kong an arbitral award of the Chengdu Arbitration Commission (Commission), under which the Respondent was to pay the Applicant RMB337 million. The Respondent applied to set aside the Enforcement Order on the ground that the arbitration agreement relied upon by the Applicant was not valid, the Respondent was unable to present his case in the Mainland arbitration (Arbitration), the composition of the tribunal or arbitral procedure was not in accordance with the parties’ agreement, and/or it would be contrary to public policy to enforce the Award (Setting Aside Application).
Setting Aside application
The Respondent claimed that materials obtained from the Commission in relation to the arbitral proceedings, including a video recording of the 2nd hearing in the Arbitration, were highly relevant and important to the Setting Aside Application, in that they showed one of the arbitrators (QF) was not physically present at the 2nd Hearing and had been attending the hearing remotely, but was seen moving from place to place throughout the proceedings, in public, and using only his mobile telephone without any earphones and that it would be contrary to public policy to enforce the Award, when the proceedings were conducted in such a manner.
Letter of Request
The Respondent separately applied under the Arrangement on Mutual Taking of Evidence in Civil and Commercial Matters between the Courts of the Mainland and the HKSAR (Arrangement), for a Letter of Request to be issued to the Mainland judicial authority (Request), for the Mainland Court to obtain statements from QF, and the secretary to the tribunal (Y), as to QF’s location and movements at the time of the 2nd Hearing, the duration of his stay at each location, the electronic equipment or facility utilized by QF (including video and audio equipment/facility) in his participation at the hearing, and how he participated in the hearing to ensure compliance with the principles of confidentiality and to ensure the integrity of the Arbitration (Summons). It also sought a statement from Y as to the location of QF at the time he was electronically linked with the tribunal, the identities of the people around QF, whether QF had participated in the questioning and examination at the hearing; the entity or tribunal approving the manner of QF’s participation in the hearing; the communication facilities utilized by QF at the time when he was electronically linked, and whether any security measures had been put in place in respect of the communication facilities at the time when he was linked to the hearing.
The following is the court’s judgment in relation to the Summons. The Setting Aside application was yet to be heard when the judgment was handed down.
Can an arbitrator be compelled to give evidence on a challenge to an arbitral award?
In considering the Summons, an issue before the Court was whether an arbitrator can be compelled to give evidence on a challenge to the award (Question). The Question was directed to be answered by the parties, since the effect of the Request was to compel QF, the arbitrator, to give evidence for use in the Setting Aside Application when his Award was challenged as being irregular and against public policy
The Court dismissed the Summons, holding:
(1) The evidence sought to be obtained under the Request was to be used in and for the purpose of the Setting Aside Application. This was an application made to the Hong Kong Court to refuse enforcement of the Mainland Award on the grounds set out in s.95 of the Arbitration Ordinance (Ordinance). The Setting Aside Application was to be determined, at the enforcement stage, by the Hong Kong Court, under Hong Kong law. The evidence sought under the Request and matters relied upon as to the conduct of QF were relevant as to whether the procedures of the Arbitration were in accordance with the parties’ arbitration agreement, or in accordance with the procedural law governing the Arbitration, and whether it would be contrary to the public policy of Hong Kong to enforce the Award by reason of any serious irregularity or lack of due process in the conduct of the Arbitration. The parties’ underlying contract was governed by PRC law, which may also govern the parties’ arbitration agreement and procedure of the Arbitration itself. However, the hearing of the Setting Aside Application was governed by Hong Kong law, so far as it related to procedure and the admissibility of evidence. The Ordinance and public policy of Hong Kong were other determining matters affecting the consideration of the Setting Aside Application.
(2) The fact that the Arrangement does not set out the circumstances when the Hong Kong Court may request assistance from the Mainland Court does not mean that the Hong Kong Court can or should make the request for assistance in any case, without consideration of the relevance or admissibility of the evidence. It was against common sense, and a waste of costs and resources, for the court to issue a request to obtain evidence, simply because the request could be made or was within the terms of the Arrangement, if the evidence was not admissible in the Setting Aside Application to be determined by the Hong Kong Court.
(3) The Respondent’s application to the Mainland Court for the Commission to provide the video recording of the entire arbitral proceedings and other materials relating to the 2nd Hearing had now been dismissed, as had his application to the Mainland Court to refuse enforcement of the Award, on the ground of QF’s conduct. The decisions of the Mainland Court may be relevant to the Court’s consideration of the Setting Aside Application. However, whether evidence was relevant to and admissible for the Setting Aside Application was a matter for determination by the Hong Kong Court, and the mere fact that the Mainland Court had declined the admission of evidence for the proceedings before the Mainland Court did not by itself mean that the Respondent was not entitled to refer to or admit such evidence in the Hong Kong proceedings.
(4) The competence of an arbitrator to give evidence did not mean that he could be compelled to give evidence. The older authorities suggest that an arbitrator may give evidence and be called as a witness on certain matters. Since those decisions, there had in the last three decades been a rapid and substantial growth in the popularity of arbitration and in parties’ choice of arbitration as an option for dispute resolution. Arbitrations are now a common form of resolution of disputes, and internationally, courts have generally adopted a pro-arbitration approach and policy in the context of recognition and enforcement of both arbitration agreements and arbitral awards as judgments of the court.
(5) Arbitrators appointed under the parties’ agreement are appointed to decide on their formulated dispute in lieu of having the matter litigated before the courts. Arbitrators decide the parties’ dispute on facts and on law, on the evidence presented to them and after hearing submissions and arguments made by and for the parties. The arbitration is conducted in accordance with rules of procedure agreed to by the parties, and arbitrators have the duty to act impartially and fairly. Their awards have to be reasoned to enable the parties to understand why the award was made against them. The parties agreed that such an award would be final and binding. It was accordingly widely recognized that arbitrators perform and exercise a judicial or quasi-judicial function, and that arbitrators’ decision‑making and judgments are comparable in nature and process to those of judges, such that there is a need to protect the course of their independent judgment from threats of suit as well as from collateral attacks.
(6) The court’s policy of encouraging and aiding arbitrations, and of upholding parties’ choice of arbitration as the manner of final resolution of their disputes is reflected in the Ordinance, which refers to the facilitation of the fair and speedy resolution of disputes by arbitration without unnecessary expense, and to the court’s non‑interference in arbitrations, save as expressly provided for in the Ordinance.
(7) In this overall context, arbitrators should be entitled to the same immunity available to judges in respect of their decision-making in the process of arbitration, absent fraud or bad faith. The purpose and rationale for such immunity is the protection of the discretionary and independent decision-making process of the arbitrator who performs a judicial function. It is also in line with the public policy and the court’s interest in encouraging private dispute arbitration and to protect the autonomy of the arbitral process. Such arbitral immunity and autonomy will be illusory if the court is to compel, or enable the parties to compel, an arbitrator to give evidence as to his decision-making, which includes the arbitrator’s exercise of his powers and discretion in the arbitral process, or to explain and justify the manner of exercise of such powers and discretion.
(8) It is not conducive to the policy of arbitral autonomy, and contrary to the objectives of procedural and costs economy, to define areas or matters on which an arbitrator can be compelled to give evidence, such as on the matters which had been included in the submission to arbitration, for the purpose of deciding on the jurisdiction of the tribunal, or as to what had taken place before the arbitrator (the vagueness of such a generalization being an invitation to satellite litigation). These are matters which can be ascertained from the documents served in the arbitration, and from the award itself, and it will be totally unnecessary to call evidence from the arbitrator. This is particularly so in terms of how arbitrations are conducted in the modern age.
(9) The extension of judicial immunity to arbitrators means that an arbitrator is likewise immune from being compelled to testify in relation to how he or she exercised his/her functions in the arbitration. Such immunity is an essential foundation for judicial and arbitral integrity and independence, to ensure that arbitrators and judges can make their decisions on the right result without fear or distractions as to whether they could be made liable for claims of any party.
(10) In the present case, it was within the power and discretion of the tribunal, which included QF, to decide whether to allow the 2nd Hearing to take place remotely, with QF participating by video and audio link, and how the 2nd Hearing should be conducted. It was part of the tribunal’s decision-making process and its control of the proceedings before it. If the Respondent contended that the manner in which QF had participated in the 2nd Hearing was unfair or had affected due process, or was in breach of the agreed arbitral procedure, it was open to him to make the proper objection to the tribunal at the relevant time. It was also open to the Respondent to challenge the Award on the grounds set out in s.95 of the Ordinance, as he had now done, but it was not open to him to compel QF as the arbitrator to justify or explain or to give evidence generally on his conduct of the process of the 2nd Hearing, or of how and why he exercised his power and discretion to proceed with the 2nd Hearing in the manner in which it was held. The arbitrator’s discretionary powers have to be exercised judicially, and in making the decision and exercising his power in conducting the 2nd Hearing in the way he did, QF was performing his function as an arbitrator. As such, he was entitled to immunity and could not be compelled to give evidence on these matters.
(11) Accordingly, a Request for evidence to be obtained from QF would not be issued. In any event, the evidence as to QF’s conduct and manner of his participation in the Hearing was already apparent from the materials inspected by the Respondent’s Mainland lawyers and now in the Respondent’s possession. He should be able to establish his case on the information and materials available to him, even without the testimony sought from QF.
(12) As against Y, before the court issued the Request on the Respondent’s application, the court should be satisfied as to the relevance, necessity and probative value of the evidence sought. Otherwise, it will be a total or disproportionate waste of time and costs, which is neither conducive to the underlying objectives of the Civil Justice Reform nor consistent with the principles and object set out in s.3 of the Ordinance.
(13) The Respondent had not disclosed whether he had ascertained if Y is or was at any relevant time in possession of the information sought from her and whether she or the Commission would consent to releasing any of the particulars sought by the Respondent. Applying common sense, Y would only be able to give evidence as to QF’s location and the persons around him by viewing the video of the hearing which showed QF’s participation. This could just as effectively be done by the Respondent himself, by those advising or assisting him, and if necessary by the court at the hearing of the Setting Aside Application (since screen captures of the video had been produced by the Respondent). The Respondent and his advisers who had attended the 2nd Hearing had information as to whether QF had asked questions or voiced opinions at the hearing, without Y’s further evidence. They also had information and knowledge as to whether there were disruptions in the communication at the hearing.
(14) It would be totally disproportionate to issue the Request for the limited evidence which Y may provide. The interests of justice would not be defeated by declining the application for the issue of the Request.
Comments
The refusal of the judge to issue the letter of request is unsurprising. However, the grounds on which the Respondent sought to set aside the award are interesting. Nowadays, it is common for arbitration hearings to be conducted by video conferencing. The judgment in the Setting Aside Application may provide useful guidance on the limits on how an arbitrator may conduct a remote hearing e.g. whether he can do so when moving from place to place, in public, and using only a mobile phone without any earphones.
The hearing for the Setting Aside application was scheduled to take place on 24 August 2023 and the judgment is yet to be published.
For further information, please contact:
Justin Yuen, Partner, Deacons
justin.yuen@deacons.com
