One of arbitration’s defining features is procedural flexibility. To ensure that flexibility does not descend into procedural uncertainty, parties often agree on undisputed facts at the outset of proceedings. These “Agreed Facts” narrow the issues in dispute & focus the arbitration on the real points of disagreement.
But does advancing a different legal interpretation of those agreed facts amount to abandoning them? The Hong Kong CFI recently considered this question in AT & Another v QC & Another [2026] HKCFI 1437.
The dispute arose from a cross-border share acquisition. Pending regulatory approval, the investors paid the purchase price in RMB. However, Overseas Direct Investment (ODI) approval was never obtained, the transaction was never completed, & the anticipated IPO never materialised. The investors exercised their contractual exit rights & sought repayment. The vendors refused, leading to arbitration.
Before the tribunal, the vendors argued that their obligation to repurchase the shares never arose because two preconditions had not been satisfied. ODI approval had not been obtained, & the purchase price had not been paid in U.S. dollars. The tribunal disagreed, holding that, read as a whole, neither requirement was a condition precedent to the vendors’ redemption obligation.
The vendors subsequently applied to set aside the awards.
Their central argument was not that the tribunal had misunderstood the evidence, but that it had decided the dispute on an argument never pleaded. According to the vendors, the investors abandoned the Agreed Facts during closing submissions by treating the RMB payment as the effective purchase price and arguing that the repayment obligation could arise even though the transaction never formally completed.
The Court rejected that characterisation. In its view, the vendors had conflated facts with legal arguments. The investors never disputed the agreed factual position. It was common ground that ODI approval had not been obtained and that completion never occurred. What changed was not the facts but the legal significance attributed to them. The investors had advanced a different interpretation of the agreements based on the same agreed factual record.
That distinction proved decisive. A party may develop or refine its legal submissions throughout an arbitration, provided it does not introduce an entirely new factual case. Since the tribunal’s reasoning remained anchored in the Agreed Facts, there was no surprise or denial of the vendors’ right to be heard.
The Court also dismissed the public policy challenge. It found that the vendors were asking the Court to revisit the tribunal’s interpretation of the agreements through the lens of PRC foreign exchange regulations. That was not the function of a setting aside application. Unless an award offends Hong Kong’s fundamental notions of morality or justice, the courts will not interfere simply because a party disagrees with the tribunal’s legal analysis.
What makes the decision particularly significant is the Court’s careful distinction between introducing new facts and advancing a new legal characterisation of agreed facts. The former may give rise to procedural unfairness where it deprives the opposing party of an opportunity to respond. The latter is often a legitimate part of advocacy. The judgment therefore clarifies that Agreed Facts define the evidential boundaries of a dispute, but they do not prevent parties from advancing different legal arguments based on those same facts.