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Apparent Bias in Arbitration: Hong Kong Court Clarifies Removal Threshold in P v D
Introduction
In the case of P v D [2024] HKCFI 1123, a significant judgment was rendered on April 30, 2024, regarding the removal of arbitrators from an ongoing arbitration case. This article delves into the details of this case, the parties involved, the grounds for the removal application, and the court's decision.
Background
The case involves a dispute between the Plaintiff (P) and the Defendant (D) under an Annual Sales Contract dated September 15, 2017. The contract contained an arbitration agreement stipulating that any disputes arising would be settled through arbitration at the Hong Kong International Arbitration Centre (HKIAC) under the UNCITRAL Arbitration Rules.
On November 15, 2018, D initiated arbitration proceedings against P, alleging a breach of payment obligations and seeking substantial monetary compensation. P, in response, raised a defence of fraud, asserting that the contract was part of a fraudulent scheme.
Arbitration Proceedings
The arbitration tribunal initially comprised three arbitrators: DL, YZ, and MC. Following procedural disagreements and challenges, DL resigned on October 12, 2022, aiming to avoid further disputes. Despite his resignation, P continued to challenge the tribunal, focusing on the remaining arbitrators, YZ and MC, collectively referred to as the "Impugned Arbitrators."
P's main contention was the apparent bias of the Impugned Arbitrators. An earlier challenge had been dismissed by the HKIAC's Proceedings Committee on May 4, 2023, which found no justifiable doubts about the tribunal's impartiality or independence. Nonetheless, P persisted with an amended summons on August 1, 2023, seeking their removal under section 26 of the Arbitration Ordinance (Cap 609).
Court Proceedings
The hearing took place on January 31, 2024, before Deputy High Court Judge Jonathan Wong. P, represented by Mr. David Fong, presented additional grounds for the removal of the Impugned Arbitrators, beyond those raised in the earlier challenge.
Key events leading up to the court's decision included:
- Notice of Challenge: Filed by P on August 18, 2022, against the entire arbitral tribunal.
- DL's Resignation: This occurred on October 12, 2022, with P continuing the challenge.
- Procedural Decisions: Various procedural orders and decisions by the tribunal regarding jurisdictional challenges, evidence collection, and the substantive hearing.
Grounds for Removal
P argued that the Impugned Arbitrators should be removed due to apparent bias, citing their involvement in procedural decisions unfavourable to P, including the handling of jurisdictional challenges and evidence requests. P's counsel, Mr. Fong, highlighted additional grounds, asserting that these arbitrators' actions indicated a lack of impartiality.
Court's Decision
Deputy High Court Judge Jonathan Wong, in his judgment, concluded that P was not entitled to rely on the additional grounds for removal, particularly because these new allegations were not previously addressed by the Defendant and the Impugned Arbitrators, nor dealt with by the HKIAC Panel.
The judgment emphasized that the proper procedure for challenging arbitrators had been followed, and the grounds previously dismissed by the HKIAC did not substantiate claims of bias. As a result, the court rejected P's application for the removal of the Impugned Arbitrators.
Conclusion
The case P v D [2024] HKCFI 1123 underscores the complexities involved in arbitration proceedings, particularly regarding the impartiality of arbitrators. It highlights the rigorous scrutiny required for claims of bias and the procedural adherence necessary to maintain the integrity of arbitration as a dispute resolution mechanism. This judgment reinforces the principle that challenges to arbitrators must be substantiated by clear evidence, ensuring fair and unbiased arbitration processes.
- Hong Kong court dismissed an application to remove arbitrators in the case of P v D [2024] HKCFI 1123.
- The plaintiff (P) alleged apparent bias of the remaining arbitrators following the resignation of one arbitrator.
- The court ruled that the new grounds for removal were not admissible as they were not raised in earlier challenges.
