Background
The case, CCC v. AAC [2025] HKCFI 2987, concerned a dispute between a moneylender (Applicant) and a borrower (Respondent) arising from two loan agreements and two supplemental loan agreements. The supplemental agreements contained an asymmetric dispute resolution clause, granting the lender the option to refer disputes to arbitration administered by the Hong Kong Arbitration Society (HKAS) under its Online Arbitration Rules, or to court proceedings. Following the Respondent’s alleged default, the Applicant commenced online arbitration. A link to the Notice of Arbitration was sent to the Respondent via SMS. The Respondent did not participate in the arbitration, and an award was rendered in favour of the Applicant. The Applicant then obtained an ex parte order to enforce the award as a judgment. The Respondent applied to set aside the enforcement order, raising issues of fraud, lack of proper notice, and procedural unfairness.
Court’s decision
The court rejected the Respondent’s challenge on all grounds.
Fraud
The Respondent’s case was that the Applicant had acted fraudulently in fabricating the page in the supplemental loan agreements that contained the arbitration clause, with the signature on the page that contained the arbitration clause not being the Respondent’s own signature. Based on the evidence submitted by the Respondent, the court found no clear evidence to support the allegation that the arbitration clause had been fraudulently inserted or that the agreements were manipulated.
Proper notice of arbitral proceedings
The Respondent also alleged that he did not receive the SMS message containing the link to the Notice of Arbitration. However, the court accepted evidence from the HKAS software developer that the SMS notice was delivered to the Respondent’s registered number and that the Respondent had received subsequent related messages. The SMS notice was displayed as “delivered” on the platform, and there had never been any complaint since the platform’s commencement in 2019 that a user was unable to receive an SMS message when it was displayed as “delivered”. Further, the court held that, under the HKAS Online Arbitration Rules, SMS was a valid method of service and that “proper notice” does not require actual knowledge but must be likely to bring the proceedings to the recipient’s attention. Based on the above, the court concluded that the SMS message constituted proper notice of the arbitral proceedings.
Insufficient time to react or defend
The Respondent took issue with the “abnormal lightning speed” from the commencement of arbitration to the grant of the arbitral award (a period of approximately three weeks) and argued that he was deprived of an opportunity to present his case. The court dismissed this argument, finding that the HKAS Online Arbitration Rules were designed for speed and efficiency and that the Respondent’s non-participation was not due to any procedural unfairness. However, the court was critical of the Applicant’s failure to provide the Respondent with the supplemental agreements (which contained the arbitration clause) when requested, describing this as a “serious omission”. As a result, the court ordered costs on a party-to-party basis rather than the usual indemnity basis.
Conclusion
This decision reinforces the Hong Kong courts’ pro-arbitration stance and the high threshold for setting aside enforcement of arbitral awards. While the court accepted that electronic service by SMS can constitute proper notice under institutional rules, it also highlighted the need for claimants and arbitrators to take active steps to ensure respondents are genuinely aware of proceedings. Procedural omissions, such as failing to provide key contractual documents, may not invalidate enforcement but could have cost implications. The case serves as a reminder of the importance of both procedural rigour and fairness in the conduct of online arbitrations.
Client Alert 2025-216
