Serving notice: A Trap for the unwary

A notice of arbitration that is not properly served can be set aside or refused enforcement, which diminishes parties’ confidence in the arbitration process. Unfortunately, parties often underestimate the importance of proper service of a notice because they are unaware of the complications in the process.

Two recent cases in Hong Kong and the US illustrate some of these complications and consequences when a notice is not properly served.

Hong Kong: Three addresses

In Sun Tian Gang v Hong Kong & China Gas (Jilin), decided by Judge Mimmie Chan of the Hong Kong Court of First Instance on 21 September 2016, the parties entered into a share sale agreement (SSA) governed by Hong Kong law, which provided for disputes to be referred to arbitration. Disputes arose, so the claimant commenced arbitration in 2005 and obtained an award in 2007. During this whole time, the respondent was deprived of contact with the outside world because he was under arrest by mainland authorities and thus unaware of the arbitration. After the respondent was released, he found out about the arbitration in May 2015 and applied to set aside the award because the notice, which was served on three addresses, was not properly served on him.

The first address was expressly specified in the SSA. In addition, the SSA provided that a notice is regarded as “formally delivered” if it was sent to the contractual address, and that changes to the contractual address must be notified to the other party. However, the contractual address was non-existent, so the claimant’s server did not attempt service. Mimmie Chan J held that the respondent cannot take advantage of its own wrong in not informing the claimant of a valid address for service, or correcting the non-existent address. But since the server did not attempt service, there was no proper service of the notice.

ANDREW CHIN is an associate in the dispute resolution practice at Baker McKenzie in Hong Kong