Hong Kong Court Dismisses Challenge To Arbitral Award Alleging Arbitrator's Sleeping And Hostility

In the recent decision ofCNG v G & Ors[2025] HKCFI 3598, the Hong Kong Court of First Instance upheld an arbitral award, dismissing an unusual application to set it aside. The applicant alleged that the arbitrator breached natural justice by repeatedly sleeping during hearings and exhibiting a hostile and biased demeanour.

This decision provides reinforcement of Hong Kong's pro-arbitration stance, clarifying the exceptionally high burden required to prove arbitrator misconduct and demonstrating the Court's reluctance to interfere with procedural matters.

Background: The high bar for judicial intervention

The application was brought under Section 81 of the Arbitration Ordinance (Cap. 609), which allows a party to apply to set aside anaward if, inter alia, the arbitral procedure was not in accordance with the agreement, or if the applicant was otherwise unable to present its case (a breach of natural justice).

The Hong Kong Court has consistently established that the burden of proof rests on the applicant. Courts do not act as courts of appeal for arbitration awards; they only intervene if the alleged misconduct amounts to a fundamental denial of the applicant's right to a fair hearing. This standard requires more than mere procedural dissatisfaction or minor errors.

In this case, the applicant applied to set aside the final award, citing several grounds, the most significant of which were:

1. Arbitrator sleeping:It was alleged that the arbitrator repeatedly fell asleep, particularly during critical witness cross-examination and submissions, thereby failing to appreciate the applicant's case.

2. Hostility and bias:The arbitrator was accused of displaying open hostility towards the applicant's counsel and witnesses, interrupting cross-examination, and generally creating an atmosphere of bias.

3. Refusal to consider submissions:The applicant alleged that the arbitrator rushed the proceedings and refused to consider key factual submissions.

Court's decision and reasoning

The Court dismissed the applicant's challenge to the arbitrator and upheld the arbitral awards. The Court's decision rested on multiple layers of analysis, beginning with procedural waiver, then applying the "apparent bias" test, and ultimately finding that applicant failed to meet the strict legal standard required for removal of an arbitrator:

1. Procedural waiver:Before analysing the merits of applicant's allegations, the Court first addressed whether applicant had waived its right to challenge the arbitrator's conduct by failing to raise objections promptly. The applicant's own admissions showed that allegations of hostility dated back to April 2023. The alleged hostile conduct persisted through hearings in April and May 2024. The applicant did not file its Notice of Challenge until 10 July 2024 – nearly one month after the 25 June 2024 hearing. This fell well outside the 15-days' window required under Article 11.7 of the HKIAC Rules

2. Applying the "apparent bias" test under Article 12 of the Model Law:The Court established that under Article 12(2) of the UNCITRAL Model Law (given effect by section 25 of the Arbitration Ordinance Cap 609), an arbitrator may be challenged "only if" circumstances exist that give rise to "justifiable doubts as to his impartiality or independence". The test is whether "an objective fair-minded and informed observer, having considered the relevant facts, would conclude that there was a real possibility that the tribunal was biased". The Court found that there was no apparent bias for the arbitrator sleeping for a short interval during the hearing (15 minutes in 2-days' hearing)

3. Distinguishing hostility from misconduct:The Court acknowledged that while an arbitrator's demeanour might sometimes appear robust or even stern, this does not, in itself, constitute a breach of natural justice. The focus remains on whether the arbitrator maintained procedural fairness and delivered a reasoned decision based on the evidence presented – which the Court found they did.

Takeaways

After considering all relevant circumstances, the Hong Kong court rejected the applicant's contention that there were justifiable doubts about the arbitrator's impartiality. Key takeaways from the decision are as follows.

1. The requirement for concrete, objective evidence:The Court emphasised that allegations of bias must be supported by strong and objective proof. Vague assertions, anecdotal accounts, or evidence that is only raised after an unfavourable award has been issued are highlyunlikelyto succeed. The preferred and most persuasive evidence comes from contemporaneous sources, such as hearing transcripts or formal letters of objection written at the time the incident occurred.

2. The importance of timely action:The Court strictly applied the procedural timeline under the HKIAC Rules. A party must challenge an arbitrator within 15 days of discovering the facts that allegedly give rise to doubts about impartiality. The Court found that CNG's challenge, filed on 10 July 2024, meant it had waived its right to complain about any events that took place before 25 June 2024. Delaying a challenge can be fatal to the application.

3. Legal test for challenging an arbitrator:Under Article 12(2) of the Model Law, an arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts about their impartiality orindependence. The applicable test is the test for apparent bias – whether "an objective fair-minded and informed observer, having considered the relevant facts, would conclude that there was a real possibility that the tribunal was biased".

4. The characteristics of the "fair-minded and informed observer":The Court described this hypothetical observer as a reasonable person with a basic understanding of the law and the contextofthe situation. This observer does not make hasty judgments based on isolated incidents but considers the full picture. They are balanced – neither overly suspicious nor naively complacent. Importantly, in an arbitration context, the observer is entitled to consider an arbitrator's professional standing and experience. A well-regarded arbitrator with a strong reputation for integrity and extensive experience may be afforded a greater degree of confidence, making it harder to sustain allegationsof bias against them.

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