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On 8 March 2023, the Hon. Mimmie Chan J (Judge) handed down a judgment in Canudilo International Company Limited v. Wu Chi Keung and Others [2023] HKCFI 700, granting an application made out-of-time to set aside an ex parte enforcement order of an arbitral award. In her judgment, the Judge remarked that the case “calls for consideration of whether errors made by the arbitrator on facts and law can be so egregious and cause an outcome which is so unfair and unjust, that the Court cannot ignore the errors as enforcement of the award made would be repugnant”. However, it would appear that the Judge eventually granted the application on the ground that there was serious denial of due process, but not solely on any egregious errors of facts or law.

Background facts

On 10 September 2019, Canudilo International Company Limited (CIC) commenced an arbitration in Hong Kong (Arbitration) under two sale contracts (Contracts) where CIC was the seller and Apennine Holdings Limited (Company) was the buyer. Wu Chi Keung, Wu Chi Fong (collectively, Wu), Ji Guanhua, and Wang Liuxi were guarantors of the Contracts (collectively, Guarantors). CIC claimed that the Company had defaulted in payment of the purchase price for the goods sold under the Contracts. The Company was in breach of its payment obligations and, thus, the Guarantors were liable for the payment of the sums under the Contracts.

An arbitrator was appointed on 10 December 2019 (Arbitrator 1). The Company did not put forward any defence, evidence or submissions in the Arbitration. Wu, on their part, raised a number of defences, including misrepresentation and economic duress affecting the Contracts.

Upon CIC’s application, Arbitrator 1 decided to bifurcate the Arbitration in the following manner:

  1. Arbitrator 1 would first determine the Company’s liability owed to CIC under the Contracts by way of an award on paper. When the award was made, the proceedings between CIC and the Company would be closed.
  2. The proceedings between CIC and the Guarantors would continue in accordance with a previous timetable for the exchange of witness statements, amongst others, with a hearing date to be fixed.