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9 August 20227 minute read

Hong Kong: disputes over pre-conditions to arbitration go to admissibility not jurisdiction

The Hong Kong Court of Appeal (CA) confirmed in C v D [2022] HKCA 729 that, in line with the generally held view of international tribunals and national courts, non-compliance with contractual preconditions to arbitration is a matter of admissibility of a claim for the arbitral tribunal to decide, rather than an issue going to the substantive jurisdiction of the tribunal to hear a case. This classification is relevant to users of Hong Kong-seated arbitration as parties will not, generally, be able to challenge arbitral awards on grounds of substantive jurisdiction for non-compliance with such provisions. As Hong Kong is a UNCITRAL Model Law jurisdiction, the judgment of the CA has considerable international significance.  


The contract contained a multi-tiered dispute resolution clause which stipulated that, if a dispute arose between the parties, they should “attempt in good faith to resolve any dispute by negotiation” and “by written notice to the other, have such dispute referred to the Chief Executive Officers of the Parties for resolution”. If such dispute could not be resolved amicably within 60 business days “of the date of the Party’s request in writing for such negotiation”, the parties could refer such dispute to arbitration.

A dispute arose, and the parties attempted to resolve the matter amicably, but eventually the discussions did not resolve the dispute. The defendant referred the dispute to arbitration. The plaintiff challenged, among other things, the jurisdiction of the tribunal on the basis that the defendant had not complied with the multi-tiered dispute resolution clause since neither party referred the dispute to their respective CEOs. 
The tribunal issued a partial award in favor of the defendant and ruled that the requirement to refer disputes to CEOs set out in the dispute resolution clause was only optional and the precondition to arbitration had been fulfilled, such that no issue of jurisdiction arose. The Plaintiff applied to the Hong Kong Court of First Instance (CFI) to set aside the tribunal’s award for lack of jurisdiction. 

Court of First Instance’s decision 

On 25 May 2021, the CFI ruled that non-compliance with a precondition to arbitration (for instance, a condition that the parties should engage in good-faith negotiation before arbitration) does not affect the jurisdiction of the tribunal unless expressly provided by the parties. The tribunal may choose to give effect to the contractual precondition by ordering a stay of the arbitral proceedings pending compliance with the clause, impose costs sanctions or dismiss the claim as inadmissible. 

In other words, whether or not pre-arbitration conditions for arbitration have been or should be fulfilled is a question of admissibility rather than the jurisdiction of the tribunal, and the tribunal’s decision is final and the award cannot be set aside under Article 34(2)(a)(iii) of the UNCITRAL Model Law on grounds that the tribunal has ruled on matters beyond the “scope of the submission to arbitration”. 

The plaintiff was subsequently granted permission to appeal the CFI judgment, and on 7 June 2022, CA handed down its judgment dismissing the appeal and upholding the CFI findings. 

Court of Appeal’s decision

In dismissing the appeal, the CA rejected the argument that the distinction between admissibility and jurisdiction should not be adopted as it was not found in the text of Article 34(2)(a)(iii) of the Model Law, and observed that such distinction is a concept rooted in the nature of arbitration itself which is well recognized in case law (and academic writing) in England and Wales, Singapore, Australia and the United States. 

The CA also rejected the distinction between a dispute resolution clause which provides that a reference to arbitration is subject to some conditions precedent and a dispute resolution clause which is intended to stipulate the procedural regulation of the arbitral process only. The CA held that the 1 and proper question to be asked is whether the parties intended that any dispute about the fulfilment of a condition precedent would be determined by the arbitral tribunal and, further relying on the “Fiona Trust presumption” in the English case Fiona Trust & Holding Corp & others v Privalov & others [2007] UKHL 40 that rational business people are likely to have intended any dispute arising out of their relationship to be decided by one and the same tribunal, the CA found that there is no reason why the parties in this case would intend to exclude disputes on the basis of whether the pre-conditions had been complied with from the scope of submission to arbitration.

Position in other jurisdictions

The position in Hong Kong in respect of the appropriate forum for resolving disputes regarding multi-tier dispute resolution clauses is now consistent with English law as set out in the decision of The Republic of Sierra Leone v SL Mining Ltd [2021] EWHC 286 (Comm). The CA found that the alleged prematurity of a request for arbitration, i.e., non-compliance with procedural preconditions to arbitration, was an issue of admissibility rather than one of the tribunal’s jurisdiction. 

More recently, in NWA v NVF [2021] EWHC 2666 (Comm.), the English Commercial Court reiterated that failure to comply with a term of an arbitration agreement to first seek mediation before arbitration does not render the tribunal not having jurisdiction to hear the dispute. Failure to comply with such precondition requirement was an issue of admissibility for the tribunal. The court held that it would not be appropriate in the business commercial sense to deprive one’s right to refer a dispute to arbitration due to the failure to comply with a pre-arbitration procedural requirement.  

The distinction between admissibility and jurisdiction is also recognized in Singapore. In BBA v BAZ [2020] SGCA 53, the Singapore Court of Appeal held that the issues of time bar arising from statutory limitation periods go towards admissibility. The court endorsed the “tribunal versus claim” test for distinguishing between issues of jurisdiction and admissibility. This involves a determination of asking whether the objection is targeted at the tribunal and its power to hear the case or at the claim. The former would go to jurisdiction whilst the latter would go to admissibility of the claim. 

The Model Law has been adopted in all the States of Australia and is applied in New South Wales through the Commercial Arbitration Act 2010. In The Nuance Group (Australia) Pty Ltd v Shape Australia Pty Ltd [2021] NSWSC 1498, the New South Wales Supreme Court adopted the analysis of the distinction between the admissibility and jurisdiction by the Singapore Court of Appeal in BBA v BAZ [2020] SGCA 53 and held that a complaint of time-bar to a claim is not a challenge to jurisdiction. 


The CA decision provides welcome clarity that a failure to comply with contractual preconditions to arbitration goes to the issue of admissibility for the arbitral tribunal to decide as opposed to a decision to be made by national courts on a de novo basis as a consequence of a challenge to an award. If parties to an arbitration agreement wish to make such pre-conditions go to the arbitral tribunal’s jurisdiction, then clear, unambiguous wording should be used in their arbitration clause. 

The decision reflects the pro-arbitration stance of the CA, which observed that the question of whether a pre-arbitration procedural requirement has been fulfilled is a question intrinsically suitable for determination by the tribunal in order to give effect to the parties’ presumed intention to achieve a quick, efficient and private adjudication of their dispute.