Hong Kong Court Upholds SMS-Based Notice of Arbitration Under HKAS Online Arbitration Rules

In CCC v AAC [2025] HKCFI 2987 (“Judgment”), the Hong Kong Court of First Instance (Sir William Blair) ("Court") held that service of a Notice of Arbitration was validly issued via a link contained in an SMS message under the Hong Kong Arbitration Society (“HKAS”) Online Arbitration Rules (“Online Rules”).  In so doing, the Court upheld the enforcement of an online arbitration award made under the Online Rules, while emphasizing that fairness remains a fundamental requirement to protect the integrity of arbitration proceedings notwithstanding the speed at which they are conducted.

Leave to appeal the Judgment has since been granted (CCC v AAC [2025] HKCFI 5023) on the ground that this case raises novel questions not previously considered by courts in Hong Kong (or elsewhere) as to balancing the benefits of online arbitration against risks that may be inherent in the use of this medium, particularly in sending a notice of arbitration by SMS.  This article analyses the Court’s decision and examines its practical implications.

Background

These proceedings arose out of a series of loan agreements between the Applicant, a moneylender, and the Respondent, an individual borrower.  In particular, the supplemental loan agreements contained a dispute resolution clause, providing the Applicant the option of either referring any dispute regarding the agreements to arbitration administered by the HKAS in accordance with the Online Rules, or resolving them via Hong Kong courts.  As noted in the Judgment at [34], an identical clause has been held to be a valid clause by another Hong Kong court in G v P [2023] 4 HKLRD 563 at [9]-[13].

Following an alleged default of the loan agreements between the parties, the Applicant commenced arbitration proceedings by submitting a Notice of Arbitration to the HKAS.  On the same day, the HKAS sent the Respondent an SMS message in Chinese on the mobile phone number the Respondent had provided when applying for the loans.  The message contained a user name and password for him to access the Notice of Arbitration.  However, the Respondent maintained that he did not receive this SMS.

Subsequently, the HKAS sent the Respondent an SMS message notifying him of the appointment of an arbitrator, and another SMS message notifying him that the arbitral award had been handed down ex parte.  These facts were not disputed by the Respondent, though he did not respond to any of these messages.

The arbitration proceeded under the Online Rules, but without the Respondent’s participation. In due course, an award was issued in the Applicant’s favor and the Applicant sought to enforce it in Hong Kong. The Respondent applied to set aside the ex parte order giving leave to enforce this award.  In particular, the Respondent argued that he had not been given proper notice of the arbitral proceedings.

Analysis

Like Article 36 of the UNCITRAL Model Law on International Commercial Arbitration, Section 86(1) of the Hong Kong Arbitration Ordinance (“Ordinance”) provides that the recognition of an award may be refused if the award-debtor proves that it was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings, or was otherwise unable to present its case.  This provision has previously been considered by the Hong Kong courts, where emphasis was placed on the need to provide “due and fair notice” of proceedings to the parties (Judgment, [31] referring to Sun Tian Gang v Hong Kong & China Gas (Jilin) Ltd (2016) 5 HKLRD 221).  The Court at [32] noted the distinction between “actual” and “proper” notice as set out in OUE Lippo Healthcare Ltd v David Lin Kao Kun [2019] HKCFI 1630, where Coleman J stated that “[p]roper notice is usually concerned with assessment of whether the notice is likely to bring the relevant information to the attention of the person notified.”

The Court concluded at [39] that, on the evidence presented by the parties, the Respondent had actually received the SMS message from the HKAS.  While the Respondent argued that the SMS message was not a suitable method for issuing a Notice of Arbitration, the Court held that, by agreeing to arbitration under the Online Rules, he had accepted this form of notification.  Therefore, the Respondent was held to have received proper notice of the arbitration proceedings.

The Respondent also argued that the “abnormal lightning speed” of the commencement of arbitration to the publication of the award meant that he had insufficient time to react or to present his case.  The Court examined the Online Rules and noted that the purpose of the HKAS online arbitration service is to provide a speedy process which can be completed by an unrepresented party online.  While underscoring that speed must not compromise the need for the arbitration to comply with due process, the Court held that, in this case, the Respondent did have sufficient and/or a fair opportunity to present his case; he simply refused to participate in the proceedings.  The Court further noted that the conduct at issue must be “sufficiently serious or egregious” for a party to have been denied due process and therefore to justify the refusal to enforce an award under Section 86(1)(c)(ii) of the Ordinance.

Nonetheless, the Court stated that while the Online Rules allow a Notice of Arbitration to be issued by SMS message, the tribunal should attempt to obtain the defaulting party’s participation to protect the integrity of the arbitration, and check that the Notice has actually been received.  In so holding, the Court referred to Gary Born’s treatise, International Commercial Arbitration, 3^rd ed., which states at § 15.08 [DD] that: 

If a party defaults, the tribunal should proceed with the arbitration on an ex parte basis, first attempting to obtain the defaulting party’s participation and thereafter ensuring at every step that the defaulting party receives notice of the ongoing proceedings.

This is in line with good practice, especially in an online arbitration of this kind.  Ultimately, what should be done will depend on the circumstances, including what contact information is available, and the good judgment of the tribunal.

Commentary

This decision highlights the importance of procedural fairness in arbitration, especially in online arbitrations, as well as the relatively high threshold for a Hong Kong court to refuse the enforcement of an award.

This case ultimately raises the question: how should one strike an appropriate balance between the benefits and inherent risks of online arbitration? On one hand, online arbitration offers clear benefits in enabling access to justice, as it is relatively low-cost, efficient, and convenient. Parties can resolve disputes without incurring the significant expenses typically associated with traditional dispute resolution procedures, such as litigation or arbitration, and can do so in a speedy fashion. The use of streamlined procedures, such as serving notices via SMS, further enhances the accessibility of the process. This is particularly useful in consumer finance and other consumer contexts, where the costs and complexity of conventional dispute resolution mechanisms may be disproportionate to the value of the claim, especially where the claimant is an individual.

On the other hand, these benefits come with inherent risks. Compared to traditional service methods, SMS lacks a reliable audit trail and may be inadvertently overlooked, blocked, or dismissed as spam. Certain messaging platforms may also automatically delete messages after a set period, further complicating proof of service. Moreover, there is a real risk that individuals with limited access to technology or low digital literacy may be disadvantaged by the use of SMS as a notification method, which could result in their being unaware of proceedings or unable to effectively participate, thereby undermining the fairness of the arbitral process.

Currently, only the Online Rules, and the Shenzhen Court of International Arbitration (“SCIA”) Rules (Article 6(2)), explicitly provide for the service of documents via SMS.  Recently, the Singapore High Court upheld the validity of the use of SMS as a valid method for serving arbitration notices in Wang Bin v Zhong Sihui [2024] SGHC 189.  Other institutional rules, such as the ICC 2021 Rules (Article 3.1) and SIAC 2025 Rules (Article 4.1), only permit service through other electronic means that ensure a verifiable record of transmission.  Similarly, the HKIAC 2024 Rules (Article 3.1(f)) allow for communication by alternative electronic methods, provided such methods are agreed upon by the parties and approved by the HKIAC and the arbitral tribunal (once constituted).

Therefore, while issuing a Notice of Arbitration by SMS message is expressly provided for by the Online Rules, the issuing party should make very serious efforts to ensure that both actual and “proper” notice of the arbitration proceedings has been given. That can include using other means in addition to SMS messages, where available, including online means such as email or messaging apps that permit an audit trail, such as WhatsApp and iMessage.  Doing so would help protect arbitral awards from being challenged on the basis that the other party has not given proper notice of the appointment of the arbitrator or of the arbitral proceedings, or has otherwise been deprived of their opportunity to present their case.  Where a respondent remains silent, the tribunal and the other parties should take active steps to engage and notify it of the proceedings in line with good practice.