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Appeals on questions of law pursuant to the statutory "opt-in" regime are not necessarily restricted to questions of Hong Kong law and are also possible in the case of some (but not all) questions of foreign law, according to a recent decision of the Hong Kong Court of First Instance (CFI) (CI v. IU [2025] HKCFI 4397).
The decision provides welcome judicial guidance (albeit arguably obiter) on a previously untested point, although the ability to appeal on a question of foreign law in a specific case would (on the approach set out by the court) depend on the nature of the issue in question and the approach of the foreign legal system.
If followed in other cases, the decision would further extend
the difference in approach to appeals on questions of law between
Hong Kong and England (which adopts an "opt-out" rather
than an "opt-in" regime, and where appeals are expressly
limited to questions of English law).
Explainer on the Hong Kong opt-in regime
Arbitral awards cannot generally be appealed on the merits in Hong Kong, and errors of law do not typically provide valid grounds to set aside or refuse enforcement of an award.
It is nevertheless possible for the parties to "opt in" to appeals on questions of law by providing in their arbitration agreement that sections 5-7 of Schedule 2 to the Hong Kong Arbitration Ordinance (Cap. 609) will apply. This regime also applies automatically to arbitration agreements concluded before 1 June 2017 which provide for "domestic arbitration", as well as to certain construction subcontracts (see our earlier blog post for details). Although not typically a feature of general commercial arbitrations between international parties, the opt-in regime tends to be of interest to parties in specific industry sectors such as construction and shipping.
The ability to appeal on questions of law under the regime is not guaranteed, and a party wishing to do so must first seek and obtain either the agreement of the other parties (which is generally unlikely to be forthcoming) or the leave of the CFI (section 6(1) of Schedule 2).
Leave will only be granted if (amongst other requirements) the tribunal's decision on the relevant question is "obviously wrong" or the question is one of general importance and the tribunal's decision is "at least open to serious doubt" (section 6(4)(c) of Schedule 2) (the merits threshold, discussed previously in our blog on the decision in Employer v. Contractor [2023] HKCFI 2911).
Background
The parties concluded a voyage charterparty for the carriage of phosphate rock from Egypt to the PRC, which provided for "ARBITRATION, IF ANY, IN HONG KONG AND ENGLISH LAW TO APPLY".
A dispute arose and was resolved by a two-member tribunal pursuant to the Hong Kong Maritime Arbitration Group Terms (2021), which provide by default that the parties opt in to appeals on questions of law (Article 26).
The tribunal rendered an award in favour of the owner and the charterer applied for leave to appeal on a question of law pursuant to section 6 of Schedule 2 of the Arbitration Ordinance.
Decision
Deputy High Court Judge Jonathan Wong dismissed the charterer's application for leave on the primary basis that the appeal grounds did not meet the merits threshold (i.e. the question was not one of general importance and the tribunal's decision was not obviously wrong), which he stated was dispositive of the application for leave.
The judge also addressed and rejected a jurisdictional argument by the owner that no appeal could lie to the court under Schedule 2 because a question of foreign (in this case, English) law was not a question of law within the meaning of sections 5 and 6 of Schedule 2.
The essence of the owner's position was that (i) foreign law is always a question of fact, (ii) a Hong Kong court can only rule on foreign law on the basis of the evidence advanced, and (iii) it could not have been the legislative intent for the court to have to consider and assess competing expert evidence on foreign law before it could determine whether a tribunal's decision applying foreign law was "obviously wrong".
The court rejected those arguments, opining that "[T]he governing law of an arbitration is not determinative" and there would instead be a "range of situations", in some of which appeal would lie on a point of foreign law, and in some of which it would not.
At one extreme, the governing law might be "truly exotic", such that it could only be proved by expert evidence, and therefore truly a question of fact (although even in such a case the judge suggested that a question of law might still arise in the case of an "Edwards v Bairstow error" where an arbitrator made a factual finding without any evidence to support it which no reasonable arbitrator could have made).
At the other end of the spectrum was a case (such as the present one) involving maritime contracts governed by English law, with which the arbitrators would all be conversant, which would to all intents and purposes be the same as Hong Kong law, and in respect of which the arbitrators would not need expert evidence. In such a case, the court appeared to consider (citing the English case of Beard v. Revenue and Customs Commissioners [2025] EWCA Civ 385) that the scope for an error which could properly be characterised as an error of law was inherent in the application by the tribunal of its own skill and experience in a legal system that applied a similar approach to Hong Kong law.
The court also noted that the term "question of law" as used in the Hong Kong Arbitration Ordinance was "without any restriction or limitation". This was in contrast to the English Arbitration Act 1996, section 82(1)(a) of which expressly defined "question of law" as "a question of the law of England and Wales".
The court concluded that "the fact that the governing law of an arbitration is not Hong Kong law does not automatically preclude the court from entertaining an appeal (or an application for leave to appeal)" on a question of law pursuant to sections 5 or 6 (as appropriate) of Schedule 2. Whether the court could do so would necessarily depend on the nature of the complaint and whether it would constitute a question of law in the eyes of the Hong Kong court.
The court noted that it would therefore have held against the owner's jurisdictional challenge, had it been necessary for it to do so.
Comment
The decision provides the first judicial indication that an appeal under the Schedule 2 regime may (though not "will") be possible even where the contract is governed by a non-Hong Kong law (although the court referred to the "governing law of an arbitration", it is apparent that this term was being used as shorthand for the substantive governing law of the contract as opposed to the law governing the arbitral proceedings themselves, commonly known as the lex arbitri).
If followed in other cases, it would represent another significant difference between the approach to appeals on questions of law adopted in Hong Kong and that in England. The two jurisdictions already adopt contrasting approaches to appeals on questions of law, with Hong Kong adopting the "opt-in" approach described above, while England adopts an "opt-out" approach pursuant to which appeals on questions of law are possible by default pursuant to section 69 of the Arbitration Act 1996 (although the provision is non-mandatory and is frequently contracted out of in the arbitration agreement or the applicable institutional rules). In contrast, the Singapore International Arbitration Act 1994 does not currently provide for appeals on points of law, although the Ministry of Justice held a public consultation earlier this year on the question (amongst other things) of whether such a right should be introduced on an "opt-in" basis.
Nevertheless, even on the approach set out in the decision, the ability of the court to consider an appeal (or application for leave to appeal) on a question of foreign law in a given case would depend on the identity of the foreign jurisdiction, the nature of the issue in question and the approach of the relevant legal system. Accordingly, the ability of a dissatisfied award debtor to seek leave to appeal (and to appeal) on a particular point of foreign law in a given case could not necessarily be assumed (although the guidance provided in the decision could be helpful in predicting the possible approach of the courts).
Moreover, the court's opinion on the possibility of appeal on questions of foreign law was arguably (and the judge appears to have considered it to be) obiter, because the court had already determined that the merits threshold had not been fulfilled (although, on the other hand, the point was framed as an issue going to the court's jurisdiction and might therefore be said to be logically prior to the issue of whether the merits threshold had been satisfied).
It therefore remains to be seen what impact this decision may have on the willingness or otherwise of parties (including in the maritime context) to select English law or another non-Hong Kong governing law whilst "opting in" to appeals on questions of law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
