Global Development

Section 69 of the Arbitration Ordinance (Cap. 609 of the Laws of Hong Kong) incorporates Article 33 of the UNCITRAL Model Law which enables the tribunal to correct any errors or to make an additional award reflecting the actual decisions of the arbitral tribunal. The arbitral tribunal may correct ‘any errors in computation, any clerical or typographical errors or any errors of similar nature’ either upon application of a party or on its own motion.¹ On the other hand, the tribunal may, upon request by a party, ‘make an additional award as to claims presented in the arbitral proceedings but omitted from the award’.²

Brief facts of the case³

Disputes arose between SC and OE1 and OE2 (collectively referred to as ‘OE’) under an Original Equipment Manufacturer (‘OEM’) Supply Agreement (‘Agreement’). OE commenced arbitration in Hong Kong alleging SC’s breach of the Agreement. In the award issued, the arbitral tribunal (the ‘Tribunal’) declared in the dispositive section that SC was in breach of its obligations under sections 4.01 (on reverse engineering), 9.01 (on development of intellectual property rights) and 12.01 (on confidential information) of the Agreement. It further ordered SC to pay the costs of the arbitration, and that ‘all other claims and reliefs sought by the Parties are rejected’.

OE applied to the Tribunal to correct the award or to make an additional award pursuant to s.69 of the Arbitration Ordinance on the basis of the Tribunal’s failure to address OE’s requests for a perpetual licence under the Agreement and for injunctions pursuant to their claims for relief. The Tribunal acceded to OE’s application and issued an addendum to the award. In the addendum, the Tribunal confirmed that it had made a ‘mistaken omission’ in a previous ‘dispositive order’ for failing to repeat an earlier finding to grant the perpetual license to OE. The Tribunal then rectified this error in the form of a new order.

Summary of the Court's approach

After the addendum was issued by the Tribunal, SC applied to the Court to set aside parts of the addendum, which relate to the addition of the injunctive relief and the declaration of the perpetual licence, on the ground that the arbitral procedure was not in accordance with the parties’ agreement.

The Court drew a distinction between a correction by an arbitrator of errors in analysis or having second thoughts, neither of which would be permissible, and the correction of an award to give effect to first thoughts or intentions, which is permissible. With reference to English authorities, the Court explained that inadvertently including something, and inadvertently omitting anything intended to be included, could simply mean that something had gone wrong in the thought process, but it is not a ‘clerical’ error that can be corrected.

It was held that the Tribunal’s omission to declare its grant of the perpetual licence and its failure to grant the injunctive relief sought by OE were clearly not errors in computation, which relate to mistakes in calculation only. Nor are the errors and omissions referred to by the Tribunal typographical errors. It was decided that the errors or omissions sought to be corrected by the Tribunal in the addendum were not ‘any errors in computation, any clerical or typographical errors or any errors of similar nature’ within the scope of Article 33(1)(a).

The Court found that, reading the award in its proper context, the objective intent of the award was not the dismissal or rejection of OE’s claims for the perpetual licence and injunctions as relief, and that these claims of OE had not been dealt with by the Tribunal. According to the Court, the Tribunal had concluded that SC’s acts and filing of the designs complained of constituted breaches of sections 4.01, 9.01 and 12.01 of the Agreement. It follows from section 9.01 that the perpetual licence as claimed by OE in the arbitration should result as a consequence and by operation of the clause itself. It was held that the Tribunal was accordingly entitled under Article 33(3) to make an additional award in order to deal with such claims.

The Court explained that one of the objectives of the Arbitration Ordinance is to limit the rights of parties to arbitration agreement to resort to the courts, and to ensure greater autonomy for their chosen tribunal. The powers of the Court under the Ordinance are to be exercised to support and assist the tribunal and to further the parties’ choice of arbitration, so long as there is due process.

Major takeaways

The major takeaways of the decision for avoiding potential pitfalls under Article 33 of the UNCITRAL Model Law are as follows:

1. Parties should set out clearly all of their claims and reliefs sought in the pleadings as well as counsel submissions presented in the arbitrations to make sure that the tribunal is well aware of all the claims and reliefs to be dealt with in the award.
2. Having said that, mistakes are possible and it is incumbent upon the parties to review promptly the award and to make an application for the correction or an additional award within the statutory time limits under s.69 of the Arbitration Ordinance. Within 30 days of receipt of the award, a party may request the arbitral tribunal to correct any applicable errors. Unless otherwise agreed by the parties, a party, with notice to the other party, may request, within 30 days of receipt of the award, the arbitral tribunal to make an additional award. If the arbitral tribunal considers the request to be justified, it shall make the additional award within 60 days.
3. However, the tribunal cannot correct an award by way of an addendum if mistakes concerned the thought process. At paragraph 27 of the Judgment, the Court referred to the case of Mutual Shipping Corp v Bayshore Shipping Co of Monrovia, The Montan,⁴ where Donaldson MR held that a distinction should be made between an arbitrator having second thoughts, which is not permissible, and the correction of an award to give effect to first thoughts or intentions, which is permissible under the slip rule.
4. Parties may apply to the tribunal to make an additional award for an omitted relief sought. The main practical suggestion for arbitral tribunals dealing with such applications for additional awards is that they should ascertain whether the claims referred to in the application were (i) presented during arbitral proceedings and (ii) omitted from the arbitral awards. Only if an application passes this test can the arbitral tribunal decide on the merits thereof.⁵ When considering whether or not the tribunal has dealt with all the reliefs sought, the court will read the award as a whole in its proper context to ascertain the tribunal’s true intent. The Court further explained in paragraph 40 of the Judgment by referring to English cases which decided on ‘claims’ presented to the tribunal and whether such claims have been ‘dealt with’. In particular, the Court referred to Cadogan v Turner where the English court considered the question of whether a claim has been ‘dealt with’ in an award.⁶ Hamblen J stated:

A claim is ‘dealt with’ in an award if it has been finally determined by it. Although the dispositive part of the award is likely to be the most important part of the award for the purposes of considering that issue, where, as is almost invariably the case, the written reasons form part of the award, the whole of the award needs to be considered, and the dispositive part of the award considered in the context of the written reasons.

Relevance to ICC Arbitration

The 2017 ICC Arbitration Rules did not contain any provision on the possible issuance of an additional award when the tribunal fails to decide on a claim. The reason expressed for excluding such a provision from the ICC Arbitration Rules is that the scrutiny process makes such a provision unnecessary.⁷ It was also suggested that ‘such a provision may encourage improper requests (i.e. appeals on the merits)’. ⁸

The new 2021 version of the ICC Arbitration Rules which came into effect in January 2021 now provides by Article 36(3):

Any application of a party for an additional award as to claims made in the arbitral proceedings which the arbitral tribunal has omitted to decide must be made to the Secretariat within 30 days from receipt of the award by such party.

Given its similarity in the wording of the provision with Article 33(3) of the Model Law, it is believed that the principles discussed in the Hong Kong case of SC v OE1 and OE2 may provide some useful pointers for the application of this new provision of the ICC Arbitration Rules.

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