In a rare case, the Hong Kong Court refused to enforce an arbitral award in 

 [2024] HKCFI 751 for lack of reasons in the award.

In this case, the Applicant sought to enforce in Hong Kong an award (“

”) made by the sole arbitrator in an arbitration (“

”) commenced by the Applicant against the Respondents at the International Centre for Dispute Resolution, under the Rules of the American Arbitration Association.

The dispute arose out of several License Agreements (“

”) whereby the Applicant granted licenses to the 1

 Respondent to operate education centres using the Applicant’s system. The Applicant alleged that the 1

 Respondent was in breach of the Non Compete Covenant contained therein, and that the 2

The Respondents claimed that the arbitrator had failed to give any reasons as the Award simply made conclusions in favour of the Applicant, without any analysis of the key issues argued by the parties at all.

In the judgment, Mimmie Chan J reaffirmed the principles that awards were to be read generously, in a reasonable and commercial way without expecting substantial fault, and always bearing in mind the policy of minimal curial intervention as highlighted in 

 [2023] 4 HKC 135. Any inference that a tribunal had failed to consider an important issue was to be made only if it was clear and virtually inescapable.

Notwithstanding this generous approach, the Court agreed with the Respondent, that, objectively read and in the context of the issues raised and submissions made before the tribunal, what the arbitrator did in the Award was to set out the provisions of the Agreements which were applicable, and then simply stating the orders she made. There was no analysis made nor any explanation given, however brief, as to why she accepted the effect of the provisions as held by her, and why the Respondents’ contentions were rejected or irrelevant.

In refusing to enforce the Award, the Court found these failings to have affected the arbitral process’s structural integrity, and were in violation of the rules applicable to the Arbitration. It was also contrary to fundamental concepts of fairness, due process and justice as recognised in Hong Kong, that key and material issues raised for determination should be considered and dealt with fairly. An award should be reasoned, to the extent of being reasonably sufficient and understandable by the parties, as set out in 

 [2012] 5 HKLRD 278. The parties themselves should understand how and why the tribunal reached its conclusion in the Award on a particular issue, in the context of how the relevant issues had been argued before the tribunal.

 instructed by RPC acted for the Respondents.

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