Screened for Fairness: A Tale of Two Hong Kong Enforcement Decisions on Remote Hearings26Oct2023
The Hong Kong Court of First Instance (Court) recently decided due process issues arising from the fairness of remote hearings in not one, but two, judgments. In Sky Power Construction Engineering Ltd v Iraero Airlines JSC  HKCFI 1558 (Sky Power), the respondent argued that the tribunal’s decision to order a fully virtual hearing prejudiced its ability to properly assess the testifying witness’s demeanour. The Court rejected the respondent’s arguments. In Song LiHua v Lee Chee Hon  HKCFI 2540 (Song), the Court held that an arbitrator’s “obvious” failure to concentrate during the remote hearing violated due process.
Despite the opposite outcomes (where one award was enforced and the other was not), there are common takeaways from both judgments. These are especially important given remote hearings are here to stay. For example, the Hong Kong International Arbitration Centre (HKIAC) reported in October 2023 that most of its hearings this year (to date) have involved some virtual element.
First, the Court clarified that fully virtual hearings may be procedurally acceptable if a tribunal has appropriately considered the reasons for it. In Sky Power, the Court found the arbitrator had duly considered the “difficulties and delay caused by the global pandemic, the need for a speedy resolution of the Arbitration without further postponements in the face of the changing situation and the evolving health regulations and travel restrictions, when she decided on the timing and format of the hearing”. Neither party had voiced any concerns during the remote hearing as regards any interference or difficulties encountered.
However, it should not be considered a blanket endorsement by the Hong Kong courts for virtual hearings in every case, especially if a party objects. Ultimately, the Court’s decision will turn on specific facts of the case. The shift here was not from a fully in-person to a fully virtual hearing, which might have presented more complex challenges and considerations.
Second, the International Council for Commercial Arbitration’s (ICCA)Task Force 2022 Report on the legal, conceptual and practical implications of remote hearings in international arbitration provides a broader context to the Hong Kong courts’ decisions. Following a survey of 82 New York Convention jurisdictions, the report’s authors conclude that the risk of an award being set aside due only to a remote hearing is minimal. However, any such decision will be fact-specific, dependent on various factors, including the law of the seat of arbitration, the rules chosen by the parties, and the tribunal’s handling of the issue.
The authors observe that based on existing case law, for a challenge to an award to be successful, there needs to be a factor that makes the remote hearing egregiously unfair. These factors could prevent a party from presenting its case or result in unequal treatment. The authors remarked that the courts have generally given little weight to logistical challenges that might arise in remote hearings, such as technological glitches, time zone differences or arguments based on the need to “eyeball” a witness.
Third, Song provides an example of an “egregiously unfair” situation. In a video-recorded excerpt from a remote hearing lasting about two and a half hours, it was observed (among other things) that, during the presentation of legal and evidentiary submissions:
- The arbitrator had “scarcely been stationary for more than 1 minute”, apart from when he was sitting in his car. He moved between rooms, “at times talking to and/or gesturing to others in the room”.
- He disconnected from the hearing at various times, with no or little explanation for his absence.
- It appears that the arbitrator did not use any headphones or earpiece and was instead relying on the speaker of his mobile telephone or other handheld advice. When asked at two points whether he was online or could hear the proceedings, he did not respond verbally or by gesture.
The Court found that these (and other) factors gave rise to a breach of natural justice and the parties’ right to be heard. In these circumstances, an objective observer would have reasonable doubts. First, as to whether the arbitrator had already made up his mind on the dispute before hearing the parties. And second, whether his decision in the case could be supported by the evidence (given he had no properly focused on it). The Court concluded that there was “no apparent justice and fairness, when a member of the decision-making tribunal was not hearing and focused on hearing the parties in the course of the trial”.
The Court refused to enforce the award even though the Respondent’s lawyers had not raised any objections to the arbitrator’s conduct during the hearing (and even affirmed that they had no objection).
Finally, parties should take practical steps to protect their interests if there is a remote hearing:
- Raise contemporaneous procedural objections if you have concerns about the conduct of proceedings, as it may assist if it is necessary to challenge an award later. While parties may not want to raise objections for seemingly minor issues, in some circumstances, an objection will be warranted, even if it leads to a delay in resolving the proceedings. It will be necessary to safeguard the award from potential enforcement challenges.
- Consider how a remote hearing can be conducted as effectively as possible for your client (for example, mitigating the distortions that can arise from remote examination of a witness).
Pamela Mak and Elizabeth Chan
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Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.