1. Types of remedies

1. Types of remedies 

Arbitral tribunals in Hong Kong possess extensive authority to grant remedies, primarily founded on section 70 of the Arbitration Ordinance (Cap. 609). This mandatory provision allows an arbitral tribunal, when deciding a dispute, to grant any remedy or relief that the Court of First Instance could have ordered if the same dispute had been brought before the court. While parties generally cannot limit this broad power, they may do so in the specific context of intellectual property rights disputes. 

(i) Monetary awards and damages 

The most common remedy in arbitration is an award of money. A tribunal may order one party to pay a sum of money to another party, either as a debt or as damages for breach of contract or another legal wrong. 

Damages are usually assessed according to the principle of putting the injured party, so far as money can do so, in the position it would have been in if the breach had not occurred. 

A tribunal may also award money in an appropriate currency. In many cases, the currency used will be the currency in which the relevant contractual obligation or loss was expressed. 

(ii) Specific performance 

A tribunal may order specific performance, which means requiring a party to carry out a particular obligation rather than merely paying damages. For example, a tribunal may order a party to deliver goods or perform a contractual act. 

However, there is an important limitation. Unless the parties expressly agree otherwise, a tribunal cannot order specific performance of a contract relating to land or an interest in land. 

Such orders should specify clear time frames for compliance and may include alternative monetary relief if performance is not achieved. 

(iii) Injunctions 

An arbitral tribunal may grant perpetual injunctions (mandatory or prohibitory) to require or restrain specific actions, provided they only bind the parties to the arbitration. 

However, unlike a court, an arbitral tribunal does not have contempt powers. If a party fails to comply with an injunctive order made by a tribunal, the other party may need to seek assistance from the court to enforce the order or the resulting award. 

(iv) Declaratory relief 

A tribunal may grant declaratory relief. This means that the tribunal may make an award declaring the parties’ legal rights and obligations. For example, a tribunal may declare the proper interpretation of a contract clause, whether a party has breached an agreement, or whether a party is entitled to rely on a particular contractual right. 

(v) Indemnity 

A tribunal may order one party to indemnify another. An indemnity generally requires one party to reimburse the other for a loss, liability, cost or expense that has been incurred. 

This type of relief may arise where the contract contains an indemnity clause, or where the applicable law otherwise supports such a remedy. 

(vi) Rectification 

A tribunal may also order rectification of a contractual document. Rectification is an equitable remedy used to correct a written document so that it accurately reflects the parties’ true agreement. 

This remedy may be available, for example, where both parties made a mutual mistake and the written contract does not properly record what they had actually agreed. The tribunal may then order the document to be corrected to reflect the parties’ true intention. 

(vii) Costs and interest 

The Arbitration Ordinance gives arbitral tribunals wide powers in relation to costs and interest. 

The costs of arbitration may include the costs of the award, such as the tribunal’s fees and expenses, and the costs of the reference, such as legal fees, expert fees, witness expenses and other costs incurred in presenting the case. 

A tribunal has broad discretion to decide who should pay the costs and how they should be paid. Many tribunals apply the general principle that “costs follow the event”, meaning that the unsuccessful party pays the successful party’s costs. However, the tribunal may depart from that approach where the circumstances justify it. Relevant factors may include the parties’ conduct in the arbitration and any written settlement offers, such as Calderbank offers. 

There are restrictions on agreements about costs. Under sections 74(8) and 74(9), a pre-dispute agreement requiring each party to bear its own costs is generally void as a matter of public policy. Such an agreement is only valid if it is made after the dispute has arisen. In addition, under section 57, unless otherwise agreed by the parties, a tribunal may, on its own initiative or by application, cap the amount of recoverable costs in advance to promote proportionality and prevent a wealthier party from using costs as an intimidatory tactic. 

The tribunal must normally assess and settle the amount of costs itself, unless the parties agree that costs should be taxed by the court. If taxed by the court, costs are assessed on a “party and party” basis under the Rules of the High Court (Cap. 4A). 

The tribunal also has extensive power under section 79 to award interest. It may award simple or compound interest at such rates as it considers appropriate. Interest may be awarded on money claimed but paid before the award, on the amount awarded, and on costs. 

Unless the award provides otherwise, post-award interest is automatically payable at the judgment rate (fixed by the Chief Justice) from the date of the award. 

Under section 69(3), the tribunal may review an award of costs within 30 days of the award date if it was unaware of material information, such as a settlement offer, when the award was made.