Service of arbitration documents on foreign parties

It is a basic requirement of due process to give parties proper notice of arbitration proceedings so that the parties may have a reasonable opportunity to present their case. If such a basic requirement is not fulfilled, the award may become the subject of a successful challenge, and may not be recognized and enforced by a foreign court when the claimant seeks to enforce it in a foreign jurisdiction.

Therefore, when the tribunal has to proceed ex parte and render a default award, both the arbitration institution, if any, and the tribunal should exercise extra care; albeit it is normally the claimant’s responsibility to provide the respondent’s address and to properly serve arbitration documents on the respondent.

Before rendering a default award, the tribunal should explain in the award why it is of the view that the defaulting party: (1) has been given proper notice of the arbitration proceedings, and thus is fully aware that the arbitration is going on; (2) has been given a reasonable opportunity to present its case (for example, the period between the date of the respondent’s receipt of the Notice of Hearing and the hearing date set out in the notice meets the minimum requirement provided in the applicable arbitration rules); and (3) has deliberately made a decision not to take part in the arbitration, instead of being circumscribed from participating in the proceedings owing to justifiable causes such as force majeure.

In most cases, mainland China awards have been recognized and enforced in Hong Kong and Taiwan. In order to illustrate the importance of proper service on foreign parties, two precedents (one from Hong Kong and the other from Taiwan jurisprudence), in which enforcement of the awards were refused owing to failure to properly serve arbitration documents on the respondents are analyzed below.

(1) Case relating to an application for enforcement in Hong Kong

In the case of 楼外楼房地产咨询有限公司对何志兰(Ms Ho) ([2015] HKCFI 664; HCMP 3202/2013), the Guangzhou Arbitration Commission tried to serve the arbitration documents on the respondent in Hong Kong by express mail under its arbitration rules. For the first mail, which included the Notice of Arbitration, the respondent had acknowledged its receipt of the documents by signing. Later, when the arbitration institution mailed the Notice of Hearing to the same address, there was a signature in the column of the “signature of the recipient” on the express courier information sheet delivered, but there was also a seal with the wording “rejected, return to the place of mailer”.

The Notice of Hearing was actually returned to Guangzhou Arbitration Commission. The arbitral tribunal held that the Notice of Hearing was deemed duly served on the respondent under the applicable arbitration rules, as the first Notice of Arbitration had been successfully served on the same address in Hong Kong. Accordingly, the arbitral tribunal heard the case ex parte, in the absence of the respondent, and rendered a default award.

Later, when the claimant sought enforcement of the award in a Hong Kong court, Ms Ho, the respondent, objected on the grounds of improper service. Ms Ho admitted to receiving the first mail, namely the Notice of Arbitration, but claimed that “the address was not her place of residence” and she “happened to be present at the time, at the address, for supervision of the renovation work being done there”, when the Notice of Arbitration was mailed to the address, on 10 May 2013.

Having heard arguments from both parties, the High Court of Hong Kong held that the counsel to the applicant failed to provide any evidence showing a deemed-as-properly-served Notice of Hearing that under applicable arbitration rules can be regarded as a proper notice of the arbitration proceedings for the purpose of article 95(2) of the Hong Kong Arbitration Ordnance. Therefore, the High Court of Hong Kong refused to enforce the award on the grounds that the respondent was not given proper notice of the arbitral proceedings, or was otherwise unable to present its case.