Case: CCC v. AAC [2025] HKCFI 2987
Court: Hong Kong Court of First Instance
Subject: Enforcement of an online arbitration award; adequacy of notice via SMS.
Key Takeaway: While service of a Notice of Arbitration via an SMS link was technically valid under the chosen institutional rules, the Court issued a gentle reminder that fairness remains a fundamental requirement. To ensure fairness and the enforceability of an award, arbitrators and claimants in online arbitrations should take proactive steps beyond the procedural minimum to verify that a non-participating respondent has actually received notice and is aware of the proceedings.
Summary of Decision
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1. Background
The defendant (“the Customer”) entered into loan agreements with the plaintiff (“the Moneylender”). The agreements contained an asymmetric dispute resolution clause allowing the Moneylender to initiate online arbitration administered by the Hong Kong Arbitration Society (“HKAS”) under its Online Arbitration Rules. The Customer was not provided with a copy of the agreement containing the dispute resolution clause.
Following an alleged default, the Moneylender commenced arbitration. Pursuant to the HKAS Rules, notice was not served directly on the Customer. Instead, HKAS sent an SMS message to the Customer containing a link to the Notice of Arbitration. The Customer did not participate in the arbitration, and an award was rendered in the Moneylender’s favour.
The Customer resisted the enforcement of the award, arguing, inter alia, that they had not been given proper notice of the arbitration. The judge, as a matter of evidence, that the SMS message containing the Notice had been successfully transmitted to the Customer’s phone number. The Customer under the Rules was taken to have accepted this mode of communication. Accordingly, the judge found that the Customer had been given proper notice of arbitration.
2. Judge’s Observation on Best Practice (Obiter Dicta)
Despite the holding, the judge expressed some reservations about the fairness of the procedure and issued a “reminder” for future online arbitrations:
- Inadequacy of Passive Notice: The Court questioned whether simply sending an SMS message containing a link is prudent enough if the respondent does not engage. A party may fail to respond for valid reasons, such as overlooking the message or fearing it is a phishing scam.
- Good Practice to Ensure Participation: The judge stated that the good practice of actively attempting to secure a defaulting party’s participation should apply with equal force to online arbitration.
- Recommended Action: Arbitrators, or the claimants themselves, have a responsibility grounded in fairness to take further reasonable steps if a respondent remains silent. This could include follow-up by email, post, or other means to check whether the respondent has actually received and understood the notice of arbitration.
3. Implications for Practitioners
This judgment signals that while a minimalist approach to electronic service may satisfy the letter of some institutional rules, it is not without risk. An award obtained without ensuring the other party had a fair opportunity to participate is vulnerable to challenge. To produce a robust and easily enforceable award, practitioners should document all efforts to engage a silent respondent, going beyond the procedural floor set by the rules.
The full judgment is available at https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=170794&currpage=T
The article is authored by Mr Adrian Lai.
