In recent years, technology advancement has introduced new methods for contract formation. In particular, the rise of blockchain technology has led to the emergence of “smart contracts”, which are digital contracts which automatically execute transactions when pre-determined conditions are met. This article provides a brief explanation as to what smart contracts are, and examines some of the potential issues that could arise under Hong Kong law when arbitration is used to resolve smart contract disputes.

In Beijing Songxianghu Architectural Decoration Engineering Co., Ltd v Kitty Kam [2024] HKCFI 1657 (date of reasons for decision: 19 June 2024), the Hong Kong Court of First Instance (“the Court”) dismissed an application for a confidentiality order – made on the basis of confidentiality protected in the arbitration under the Arbitration Ordinance (Cap 609) – to effectively render the Court proceedings and all information relating to a set of related arbitration proceedings confidential (“Confidentiality Application”). The Court rejected the Defendant’s argument that arbitral confidentiality was being undermined by the Plaintiff’s decision to commence both an arbitration and allegedly “parallel proceedings” in Court, which “effectively left open a loophole that allow the Plaintiff to breach its confidentiality obligations … through the backdoor at its wishes”. This case highlights that arbitral confidentiality is not absolute, and must be balanced with the fundamental principle of open administration of justice when a party discloses information in protecting or pursuing a legal right or interest in legal proceedings.

In SYL v GIF [2024] HKCFI 1324 (date of judgment: 20 May 2024), the Hong Kong Court of First Instance (“the Court”) set aside an Interim Award made by the arbitral tribunal (“Tribunal”) in an HKIAC-administered arbitration. The award related to an unsuccessful jurisdictional challenge made before the Tribunal. A single arbitration was commenced in relation to three separate but related contracts. The Court was required to analyse the meaning and effect of “mutatis mutandis” in a Loan Agreement context / relationship, where two related Security Deeds provided that the dispute resolution provision in the Loan Agreement applied “mutatis mutandis”. The Court agreed with the plaintiff on both of what had been labelled by the parties as (i) the “Compatibility Ground” (that the arbitration agreements in the three contracts are incompatible with one another), and (ii) the “Agreement Ground” (that the composition of the Tribunal was defective because the appointment had not been done in accordance with the parties’ agreement under the three contracts). The Court therefore set aside the Interim Award made by the Tribunal. Following on from our earlier article on AAA, BBB, CCC v DDD [2024] HKCFI 513 (which covered the situation where there is a group of related contracts and two or more of those contracts have different dispute resolution clauses), this case of SYL v GIF addresses the opposite situation where the same dispute resolution provision applies “mutatis mutandis” to separate but related contracts (i.e. purports to have the same dispute resolution clauses but “with all necessary changes having been made”). The case of SYL v GIF demonstrates neatly that the “mutatis mutandis” drafting “shortcut” might not result in disputes in all related contracts being able to be brought in a single arbitration.

In CMBICDHAW Investments Limited v CDH Fund V Limited Partnership & others [2024] HKCA 516 (judgment date: 10 July 2024), the Hong Kong Court of Appeal (CA) addressed an appeal regarding the Court of First Instance’s (CFI) decision to set aside parts of an arbitral award due to the absence of a relevant dispute. The disputed portions included a declaration of non-liability and additional comments made by the arbitrator. The CA determined that no relevant dispute existed to establish the arbitrator’s jurisdiction and that there was an abuse of process.

In the case of A v B & ors [2024] HKCFI 751 (date of reasons for decision: 13 March 2024) the Hong Kong court set aside an order granted to enforce an arbitral award dated 25 August 2022 made by the sole arbitrator in an arbitration at the International Center for Dispute Resolution, under the Rules for International Commercial Arbitration of the American Arbitration Association (“Arbitration”), on the grounds that the Arbitrator had failed to give reasons for her decisions on key issues.

On 1 June 2024, the latest update to the HKIAC’s administered rules, the 2024 Administered Arbitration Rules (“2024 Rules”) of the Hong Kong International Arbitration Centre (“HKIAC”) came into effect. The 2024 Rules introduce a number of amendments to the 2018 Administered Arbitration Rules (“2018 Rules”), with the overall aim to improve time and cost efficiency of HKIAC administered arbitrations. The HKIAC has emphasised that the 2024 Rules are not a complete rework of the 2018 Rules, but rather a “refinement” of the 2018 Rules, given that the 2018 Rules have been well-received by users.

In AAA, BBB, CCC v DDD (HCCT 39/2023) [2024] HKCFI 513 (date of decision: 16 February 2024), the Hong Kong Court of First Instance (“the Court”) provides much welcomed guidance on the situation where there is a group of related contracts and two or more of those contracts have different dispute resolution clauses – a situation which the Court recognised as “not infrequently arises in commercial disputes today”. The Court overruled an HKIAC Tribunal’s decision that the arbitration clause in a Loan Agreement did confer jurisdiction on the Tribunal formed under it to determine related disputes arising out of a Promissory Note – a related but separate contract which has its own arbitration agreement. In his judgment, Deputy High Court Judge Reyes SC explained the proper approach to conflicting dispute resolution clause situations, through discussion of three “paradigm situations”, namely (1) the “Fiona Trust principle” (presumption of one-stop adjudication) and the “basic paradigm” under Fiona Trust & Holding Corporation v Privalov [2007] UKHK 40, (2) the “extended Fiona Trust principle” and the “intermediate paradigm” under Terre Neuve SARL & Others v Yewdale Limited & others [2020] EWHC 772 (Comm), and (3) the “centre of gravity” and the “generalised paradigm” under AmTrust Europe Ltd v Trust Risk Group SpA [2015] EWCA 437.

In CNG v G & G (HCCT 29/2023) [2024] HKCFI 575 (date of reasons for decision: 27 February 2024), the Hong Kong Court of First Instance (“the Court”) dismissed an application to set aside an arbitration award, reiterating important principles regarding challenges to arbitration awards and/or enforcement of arbitration awards. The judgment began with the remark that: “[t]his is a typical example of a party which has agreed to submit its contractual disputes to the final and binding determination of an arbitral tribunal, but being aggrieved when the tribunal makes an award against it, makes all attempts to find loopholes and problems in the award”. The Court gave a timely reminder to legal professionals – that the Court can only look to and trust legal professionals to carry out their duties to the Court, and to act responsibly when advising their clients on whether an award can be “properly challenged”, and that “lengthy but at the root unmeritorious applications” take up precious judicial time and public resources in the process.