Hong Kong Court clarifies adequacy of notice via SMS in arbitrations

In CCC v AAC [2025] HKCFI 2987, the dispute arose from loan agreements between a moneylender and the borrower. The agreements signed by the two contained an asymmetric dispute resolution clause allowing the moneylender to initiate online arbitration administered by the Hong Kong Arbitration Society (HKAS) under its online arbitration rules or to litigate in the Hong Kong courts.

After the borrower defaulted, the moneylender commenced an online arbitration to recover the debt. The HKAS’s rules state that notices can be validly served via methods of electronic services, including SMS.  

HKAS sent the borrower an SMS in Chinese containing a link to the notice of arbitration. The borrower did not respond or participate in the arbitration, and an award was issued in the moneylender’s favour. The borrower challenged the enforcement of the award on various grounds, including that proper notice of arbitration had not been given under section 86(1) of the Arbitration Ordinance (Cap. 609).

Decision

The court rejected the borrower’s challenge application because, with a valid arbitration agreement in place, the parties agreed to be bound by the rules that recognised SMS as a valid method to notify a party of an arbitration. The court was satisfied that proper notice was given to the borrower, based on evidence that the SMS containing the link to the notice of arbitration was sent to and received by the borrower.

Court’s observations

In its decision, the court reiterated the importance of differentiating between ‘proper notice’ of arbitration and ‘actual notice’. ‘Proper notice’ is given if the method used is “likely to bring the relevant information to the attention” of the notified party, accounting for any contractual provisions, agreed dispute resolution mechanisms and relevant institutional rules.

Evidence of delivery is a key component. In this case, technical logs from the HKAS platform showed that the SMS was successfully delivered to the borrower’s mobile number, with no bounce-back or error. This, combined with subsequent SMS communications acknowledged by the borrower, allowed the court to conclude that the SMS was received.

The court, however, expressed caution over the potential shortcomings of using SMS. SMS can be overlooked, perceived as spam or attempted fraud, or blocked. The court specifically observed that a party may miss an SMS for good reasons and may understandably hesitate to click on unfamiliar links. 

The court reminded arbitrators and claimants to take active steps to ensure that any non-participation by the respondent is not simply due to overlooked or distrust of SMS messages giving notice of arbitration. It is also important to update the non-participating respondent at each step of the ongoing arbitration.

Takeaways

While SMS is recognised as a valid method for delivering arbitral notices, this case serves as a reminder that timely and clear documentation of all notification attempts is essential, not only to meet procedural rules, but to demonstrate actual efforts to ensure procedural fairness.  

Practitioners, parties and arbitral institutions should exercise caution when using electronic transmission methods and take proactive steps to mitigate associated risks. An award obtained without ensuring the other party had a fair opportunity to participate remains vulnerable to challenge.

Ultimately, the goal of proper notice is not simply to deliver notice, but to ensure every respondent has a meaningful opportunity to participate in the arbitration.