15 September 2020
In SC v OE1 & Anor, HCCT 48/2019 and OE1 & Anor v SC, HCCT 66/2019, the Court had to consider whether the arbitral Tribunal could make corrections to an arbitration award under Article 33(1)(a) of the Model Law (adopted in section 69 of the Arbitration Ordinance, Cap 609) because the award had failed to address two types of relief which had been claimed. The Court held that the corrections could not be made under Article 33(1)(a) because that was reserved for correcting clerical errors such as mathematical and typographical errors. However, the Court held that the corrections could be made by the Tribunal making an additional award under Article 33(3) of the Model Law.
Background
SC and OE had entered into an Agreement containing an arbitration clause which provided for their disputes to be settled by arbitration in Hong Kong at the HKIAC in accordance with the UNCITRAL Arbitration Rules. Disputes arose as to SC’s alleged breach of the Agreement and OE commenced arbitration proceedings in Hong Kong. The arbitral Tribunal issued a final award on liability (Award), by which it made findings on SC’s breaches of several sections of the Agreement. In its “Dispositive Order”, the Tribunal declared that SC was in breach of its obligations under those sections of the Agreement and also ordered it to pay the costs of the arbitration, and that “all other claims and reliefs sought by the Parties are rejected”.
OE applied to the Tribunal to correct the Award on the basis that it failed to address OE’s requests for a perpetual licence under the Agreement and for injunctions, pursuant to their claims for relief. OE requested the Tribunal to correct the Award under Article 33(1)(a) of the Model Law, or to make an additional award under Article 33(3).
The Tribunal acceded to OE’s application and issued an Addendum to the Award. The Tribunal explained that it had already made its findings and conclusions of SC’s breaches of the Agreement, and should have repeated a summary of its findings by providing a declaration in the Dispositive Order. The Tribunal clarified in the Addendum, that it was “a mistaken omission” for the Tribunal not to have set out the declaration in relation to the licence and not to have included the injunctive relief in the Dispositive Order.
Did the Tribunal have power under Article 33(1)(a) to make the corrections?
OE applied to enforce the arbitration award, as corrected by the Addendum, while SC applied to set aside parts of the Addendum, arguing that the Tribunal did not have power under Article 33(1)(a) of the Model Law to make the corrections to the Award.
Article 33(1)(a) provides that “Within 30 days of receipt of the award, unless another period of time has been agreed upon by the parties: (a) a party, with notice to the other party, may request the arbitral tribunal to correct in the award any errors in computation, any clerical or typographical errors or any errors of similar nature”.
The Court held that the Tribunal did not have power under Article 33(1)(a) to correct the Award because:
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Article 33(1)(a) is confined to “errors in computation”, “clerical or typographical errors” or “any errors of similar nature”. There is no general power to correct errors, and the only errors which can be amended must “stem from a mental lapse or a slip of the pen, not from an error of judgment”.
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The errors affected by Article 33(1)(a) are “mainly flagrant mathematical errors or typing errors, which would otherwise complicate the execution of the award”.
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The Tribunal’s omission to declare the grant of the licence and its failure to grant the injunctive relief sought by OE were clearly not errors in computation, which related to mistakes in calculation only. Nor were they typographical errors.
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The correction of a “clerical mistake” is “something almost mechanical”, like the slip of the pen, or an accident affecting the expression of the person’s thought.
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Inadvertently including something, and inadvertently omitting anything intended to be included, could simply mean that something had gone wrong in the thought process, or there was an inadvertent or accidental slip, but it was not a “clerical” error.
The Court said there are strong policy reasons against alterations of an award after it has been made. The arbitral process is intended to be a speedy and final resolution of the parties’ disputes, without the costs and delays of litigation. Awards should be final and free from continuing dispute about their correctness, completeness or meaning. Circumstances in which corrections or interpretations can be made should be narrowly circumscribed.
Could the Tribunal make the corrections under Article 33(3)?
The Court held that under Article 33(3) of the Model Law, parties were entitled to request, and the Tribunal had power to make, an additional award as to claims presented in the arbitral proceedings but omitted from the Award. OE’s claims for the licence and injunctions were included in their Notice of Arbitration, Statement of Case and submissions presented in the arbitration, and SC had been given notice of them. These claims for relief, the Court said, were clearly issues which had been presented to the Tribunal in the arbitration and were included in the list of issues for determination by the Tribunal and SC had been given a full opportunity to address the Tribunal on OE’s entitlement to the relief claimed.
SC argued that the issues of OE’s entitlement to relief had all been dealt with, and determined by the Tribunal in the Dispositive Order, when it rejected all claims and relief sought by the parties, apart from the declaration made in the Award and award of costs. The Court said that in determining whether the Tribunal had “dealt with” OE’s claims in the arbitration for the relief relating to the licence and injunctions, the Award must be read in its context.
Reading the Award in its proper context, the Court said, the objective intent of the Award was not the dismissal or rejection of OE’s claims for the licence and injunctions as relief – these claims of OE had not been dealt with by the Tribunal. The Tribunal was accordingly entitled under Article 33(3) to make an additional award in order to deal with such claims. The Court said that how the Tribunal dealt with the claims, whether its manner of disposal (as set out in the Addendum) was right or wrong in law or on the facts, and whether the claims had been properly analysed and reasoned, were not open to review by the Court. Considered as a whole, the corrections and additional orders made by the Tribunal did not create any inconsistencies in the Award, and this was not a case of the arbitrators having second thoughts, or evaluating the evidence differently. The Court therefore concluded that the Tribunal had the power to make the corrections and the additional award
As for policy reasons that arbitral awards should be final and not revisited, there are equally good policy reasons, the Court said, for the Court to facilitate the arbitration process. The Court’s powers under the Arbitration Ordinance are to be exercised to support and assist the Tribunal and to further the parties’ choice of arbitration, so long as there is due process.
Accordingly, SC’s setting aside application was dismissed and OE’s enforcement application allowed.
This case highlights the limited circumstances in which an arbitral award can be corrected under Article 33(1)(a) of the Model Law and the circumstances in which a Tribunal may make an additional award under Article 33(3), where there are omissions in the original award. It also once against emphasises the Court’s “hands off” approach, one of the objectives of the Arbitration Ordinance being to limit the rights of parties to an arbitration agreement to resort to the courts.
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