Song Lihua v Lee Chee Hon: The Right to be Heard Requires an Arbitrator’s Full Attention (Don’t Drive While Arbitrating)

The “right to be heard” is often associated with a litigant’s access to the courts, but in Song Lihua v Lee Chee Hon (Former Name Que Wenbin) (“Song”),[1] Hong Kong’s Court of First Instance confirmed that it also requires a court – or an arbitral panel for that matter – to actually hear the parties.

Song suggests that this right requires arbitrators attending by video-conference to provide their undivided attention to a hearing, particularly while parties are adducing and challenging evidence, making submissions, or responding to questions from the tribunal. Below, we review certain key considerations for Canadian arbitration practitioners.

Background

In Song, two individuals were in a contract dispute in mainland China with respect to a share purchase agreement, which dispute was referred to arbitration. At an arbitral hearing, one member of the tribunal (referred to in the Court’s decision as “Q”) participated by video-conference, as a result of which the hearing was recorded.

Song was successful in the arbitration, and subsequently sought (and was granted) an order by a court in Mainland China – the Chengdu Intermediate People’s Court (the “Mainland Court”) – to enforce the award. In that proceeding, the Mainland Court dismissed Lee’s application to set aside the award on the basis of the manner in which the arbitration was conducted, finding that although Q’s conduct in the hearing amounted to a procedural defect, it did not have any impact on the hearing.

The Court’s Decision

After the issuance of the enforcement order, however, Lee applied to set aside the enforcement order in Hong Kong on a number of grounds, including (1) that he was unable to present his case in the Arbitration, (2) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the parties’ agreement, and/or (3) that it would be contrary to public policy to enforce the Award in Hong Kong. For the purpose of this article, the most relevant of these grounds was based on the allegation that Q’s conduct had deprived Lee of the opportunity to present his case, and of the right to a fair hearing, which was contrary to public policy.

As part of the Hong Kong Court of First Instance’s review, the Court reviewed the video recording of the hearing. After reviewing the footage, the Court found that Q was “not properly focused” [2] on the hearing, as follows (the details are worth repeating in the Court’s own words):

For at least the second half of the hearing, Q was moving from one location to another, indoors and outdoors, and had eventually left his premises, and traveled in a car, without giving his undivided attention to the hearing. He was off-line for periods of time from the second half, and obviously could not hear what was being said by the parties’ lawyers or by the other members of the tribunal.

[…]

[I]t is quite obvious that essentially for the second half of the hearing…Q had scarcely been stationary for more than 1 minute (apart from the last part of the Video when he was inside a car). The Video clearly showed the background of Q’s various locations, and it could be observed that he had moved from one room of the premises to another, at times talking to and/or gesturing to others in the room. Q could also be seen to be looking into the distance frequently, instead of watching the screen and the video of the proceedings.

[…]

Approximately 6 minutes from the commencement of the Excerpt of the Video, Q could be seen walking out of the main door of the premises into an open public area. He remained standing there for a short period of time, and then went off-line at around 7:50 minutes after the commencement of the Excerpt. Q went online again at approximately 8:20 minutes, before going off-line again at around 8:28, and again at 9:14. When Q appeared online again at 9:56 minutes, he was seen inside a vehicle which appeared to be a private car as he was sitting in the front seat and adjusting his seatbelt. The video image froze again at 10:35 minutes of the Excerpt, and when Q appeared online at 10:58, the chairman of the tribunal could be heard asking if Q could hear him but there was no response whatsoever from Q for some time. At 11:25 minutes of the Excerpt, Q spoke for the first time to state that he had no reception as he was on or proceeding to the high-speed railway.[3]

The Court concluded, perhaps not surprisingly, that, the “manner of Q’s attendance…, by going outdoors where reception was poor, was obviously disruptive of the proceedings, to say the least.”[4] Importantly, the Court also noted that on at least two occasions, Q was addressed by other members of the tribunal or the secretary of the tribunal, and “made no answer at all, nor… made any indication or gesture” that he heard them.[5] This led the Court to conclude that Q did not appear to have heard the case.

In the Court’s view, this raised several issues touching on fundamental principles of adversarial proceedings.

For one, it jeopardized the appearance of impartiality: “an objective observer would have reasonable doubts as to firstly, whether Q had already made up his mind as to the dispute before or without hearing the parties, and was not interested in what the parties had to say on the evidence or on the law.”[6] In that regard, it need hardly be said that impartiality – including the appearance of impartiality – is a bedrock principle of essentially any adjudication proceeding, including arbitration.

For another, this impinged the right to be heard, which is “an important procedural right under the rules of natural justice going directly to the question of fairness”.[7] While that right is generally associated with access to the courts, the Court here provided an important reminder that this principle applies with equal force in the context of arbitration.

On the latter point, the Court relied on the English Court of Appeal decision in Stansbury v Datapulse plc & Anor,[8] which involved a “more extreme case of…improper conduct” by a member of an employment tribunal who fell asleep during a hearing.[9] In that case, the Court of Appeal concluded that it is “axiomatic” that a tribunal must hear all the evidence,[10] and that a hearing may be found to be unfair if an arbitrator does not appear to be alert as to what is being said, or seems unable to give their full attention to the hearing.[11]

Because “there is 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 in Song found as a matter of public policy that enforcement of the award would “violate the most basic notions of justice”.[12]

Notably, the Court also held that counsel for the party that lost the arbitration need not have raised an objection during the hearing itself, because the Court has jurisdiction to raise and rely on public policy grounds irrespective of the parties. The Court also noted that counsel could not be expected to notice when an arbitrator on-screen is distracted, given that counsel may be focused on present the client’s case, and challenging the opponent’s case.

Analysis

While the result in Song is perhaps unsurprising, it nevertheless provides a welcome reminder that key principles of natural justice apply with equal force in arbitration just as they do in court. This is precisely why, as readers will appreciate, these principles are enshrined in virtually all arbitral rules, as well as governing legislation.[13] Conversely, the fact that the arbitral award was upheld in Mainland China suggests that different jurisdictions’ respective public policies may result in differing conclusions, particularly depending on whether parties advance the same or different arguments in set-aside proceedings.

In that regard, the Court notably observed – by reference to the decision of the Appellate Committee of the House of Lords in Lawal v Northern Spirit Ltd – that “[w]hat the public was content to accept many years ago is not necessarily acceptable in the world of today. The indispensable requirement of public confidence in the administration of justice requires higher standards today than was the case even a decade or two ago”.[14] Quite rightly, the standard for these principles continues to be raised over time.

Accordingly, although Song is a Hong Kong case, it may nevertheless be useful in the Canadian context as well.

In any event, it may seem self-evident that an arbitrator cannot hop in a car in the middle of a hearing to head to the train station. Even so, Song articulates how exactly this offends the rules of justice and fairness: it jeopardizes the appearance of impartiality, and it impugns the right to be heard. Song effectively confirms that those principles – at least in of Hong Kong – include the right to have the full attention of the decision-maker, rather than simply the right to appear before them.

However, Song also provides a potentially important insight – or at least raises an interesting question – regarding the distinction between a right afforded to the parties and a principle that transcends the parties’ rights. In that regard, it is notable that the Court concluded that counsel’s failure to raise the issue during the hearing – and indeed, his express confirmation at the end of hearing that he had no objection to the procedure of the arbitration – was not sufficient to bar this ground of set-aside.

As readers will appreciate, virtually all institutional rules and arbitration legislation provide parties with the right to challenge the appointment of an arbitrator, and will establish a time limit within which such a challenge must be brought. If such a challenge is not raised in a timely manner, it is barred,  and furthermore, the issue cannot be raised or relied upon by a tribunal or supervisory court. In other words, if a party fails to raise the issue, such failure is fatal to its position.

By contrast, the Court in Song suggests that the right to be heard, and the tribunal’s impartiality, transcend this limitation, which may create a logical tension insofar as a lack of partiality is itself a basis for to challenge an arbitrator’s appointment. Accordingly, it would be interesting to consider whether a party could avoid a time bar associated with an arbitrator challenge by relying on the public policy exception.

Ultimately, it has yet to be seen when the reasoning in Song will be adopted elsewhere—but of course, that may require circumstances similar to those in Song, which would seem to be rare.

[1] Song Lihua v Lee Chee Hon (Former Name Que Wenbin), [2023] HKCFI 2540.

[2] Song Lihua v Lee Chee Hon (Former Name Que Wenbin), [2023] HKCFI 2540 at para 51.

[3] Song Lihua v Lee Chee Hon (Former Name Que Wenbin), [2023] HKCFI 2540 at paras 38, 40, 42.

[4] Song Lihua v Lee Chee Hon (Former Name Que Wenbin), [2023] HKCFI 2540 at para 42.

[5] Song Lihua v Lee Chee Hon (Former Name Que Wenbin), [2023] HKCFI 2540 at para 43.

[6] Song Lihua v Lee Chee Hon (Former Name Que Wenbin), [2023] HKCFI 2540 at para 51.

[7] Song Lihua v Lee Chee Hon (Former Name Que Wenbin), [2023] HKCFI 2540 at para 45.

[8] Stansbury v Datapulse plc & Anor, [2003] EWCA Civ 1951.

[9] Song Lihua v Lee Chee Hon (Former Name Que Wenbin), [2023] HKCFI 2540 at para 46. Parenthetically, it is worth noting that, if Song had been an entirely in-person hearing, the Court would not have been required to consider the matter at issue.

[10] Stansbury v Datapulse plc & Anor, [2003] EWCA Civ 1951 at para 27, citing Whitehart v Raymond Thomson Ltd, an unreported decision of the Employment Appeal Tribunal from September 11, 1984.

[11] Song Lihua v Lee Chee Hon (Former Name Que Wenbin), [2023] HKCFI 2540 at para 46

[12] Song Lihua v Lee Chee Hon (Former Name Que Wenbin), [2023] HKCFI 2540 at paras 52, 56.

[13] See s 46(3)(b) of Hong Kong’s Arbitration Ordinance, Cap 609, as of December 16, 2022; see also, Ontario’s Arbitration Act, 1991, SO 1991, c 17, s 19(2).

[14] Lawal v Northern Spirit Ltd, [2003] ICR 856 (HL).

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