Reed Smith Client Alerts

Key takeaways

  • In A v. B and Others [2024] HKCFI 751, the Hong Kong Court of First Instance refused to enforce an arbitral award for lack of reasoning.
  • The Court is generally reluctant to grant challenges to awards on this basis, in view of the principle of minimal curial intervention. However, in this case, the Court found that failure on the part of the arbitrator to give sufficient reasons rendered enforcement of the award contrary to public policy.
  • Here, the arbitrator failed to deal with key and material issues raised for determination or give explanations which were reasonably sufficient to show the issues had been considered at all, and if considered, why the issues were determined against the applicant.

Background

The case concerned a dispute between A, the Maryland-based franchisor of a course provider, B, the Hong Kong licensee operating A’s learning centres, and C and D as, respectively, the shareholders of B and the Hong Kong operators of learning centres under licence from A. Following B’s closure of all of A’s learning centres in Hong Kong, C and D commenced operation of another education centre through a separate company at the same locations.

In the arbitration proceedings commenced at the International Center for Dispute Resolution under the Rules for International Commercial Arbitration of the American Arbitration Association, A sought inter alia the payment of royalty fees due under the relevant licence agreements (the “Agreements”) and an injunction to restrain B, C and D from operating learning centres in Hong Kong for a period of two years.