This article discusses the approach taken by Hong Kong courts to award indemnity costs against applicants who were unsuccessful in resisting enforcement of New York Convention awards. Under general principles, an indemnity costs order is penal in nature and is usually awarded in exceptional circumstances. In the case of A v. R, the High Court of Hong Kong held that the unsuccessful application to resist enforcement of an award warranted the indemnity costs order. This approach was justified on the basis of Hong Kong’s Civil Justice Reform (CJR) and its implications, and was given endorsement by Hong Kong’s Court of Appeal in a subsequent decision. Meanwhile, the Court of Appeal of the Supreme Court of Victoria, Australia, had considered, but rejected, the Hong Kong approach of awarding indemnity costs. This article questions whether applications in respect of Convention awards belong to a special class, compared to other civil applications to court, so that an indemnity costs order against the unsuccessful applicant should be the norm. It is argued that whilst the awarding of indemnity costs in such circumstances is controversial, it can nonetheless be justified based on the court’s ‘pro-enforcement’ bias in relation to Convention awards.
Journal of International Arbitration