COX ADRIAN JOHN v. GROUP EMPLOYMENT MANAGEMENT LTD

cacv 125/2004

in the high court of the

hong kong special administrative region

court of appeal

civil appeal no. 125 of 2004

(on appeal from HCA NO. 3283 of 2003)

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REASONS FOR JUDGMENT

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Hon Rogers VP:

1.  This is an appeal from a decision of Reyes J given on 26 March 2004 whereby the judge dismissed the defendant’s application that all further proceedings in the action be stayed on the ground that there is an agreement to refer the matters in dispute in the action to arbitration.  At the conclusion of the hearing of this appeal this court dismissed the appeal with reasons to be given in writing which we now do.

2.  The plaintiff was employed in October 2001.  The terms of his contract of employment included an arbitration clause which covered all disputes arising out of the contract of employment.  In August 2002 the plaintiff made a claim in the Labour Tribunal.  The basis of the claim was that there had been constructive dismissal.  On 11 November 2002, the defendant responded to the plaintiff’s allegations in detail by filing a “Statement of Defendant” which was accompanied by a further document entitled “Defendant Responses to Alleged Breaches by Claimant.”  On 11 July 2003 the Presiding Officer of the Labour Tribunal exercised his powers under section 10 of the Labour Tribunal Ordinance, Cap. 25 (“the Ordinance”) and made orders declining jurisdiction and ordering the transfer of the proceedings to the Court of First Instance.  For convenience subsections 10(1) and (2) of the Ordinance are set out:

“	(1)	The tribunal may, at any stage of proceedings, if it is of the opinion that for any reason the claim should not be heard and determined by it, decline jurisdiction.
	(2)	The tribunal may, when it declines jurisdiction under subsection (1), transfer the claim to the Court of First Instance, the District Court or the Small Claims Tribunal, in such manner as may be prescribed.	”

3.  In my view those provisions of the Ordinance are there to enable a simple transfer of existing proceedings.  The word “may” as used in the opening words of subsection 10(2) appears to me to entail a mandatory requirement on the Labour Tribunal when it declines jurisdiction to transfer the case in respect of which it declines jurisdiction to one of the three other courts.  On the making of such an order, the provisions of Order 79 of the Rules of the High Court come into effect.  These provide that the master may make such directions as he sees fit for the further conduct of the proceedings.  This procedure is in contrast to that under Order 5 of the Rules of the High Court which concern the various ways in which proceedings can be begun.

4.  The argument on behalf of the defendant on this appeal relies upon subsection 6(2) of the Arbitration Ordinance, Cap. 341.  Section 6 of the Arbitration Ordinance reads as follows:

“	(1)	Subject to subsections (2) and (3), article 8 of the UNCITRAL Model Law (Arbitration agreement and substantive claim before court) applies to a matter that is the subject of a domestic arbitration agreement in the same way as it applies to a matter that is the subject of an international arbitration agreement.
	(2)	Subject to subsection (3), if a party to an arbitration agreement that provides for the arbitration of a dispute involving a claim or other matter this is within the jurisdiction of the Labour Tribunal or a person claiming through or under such a party, commences legal proceedings in any court against any other party to the agreement or any person claiming through or under that other party, in respect of any matter agreed to be referred, and any party to those legal proceedings applies to that court after appearance and before delivering any pleadings or taking any other step in the proceedings, to stay the proceedings, the court or a judge of that court may make an order staying the proceedings, if satisfied that-
		(a)	there is no sufficient reason why the matter should not be referred in accordance with the agreement; and
		(b)	the applicant was ready and willing at the time the proceedings were commenced to do all things necessary for the proper conduct of the arbitration, and remains so.
	(3)	Subsections (1) and (2) have effect subject to section 15 of the Control of Exemption Clauses Ordinance (Cap 71).		”

5.  The Labour Tribunal is a court, as the judge held in paragraph 7 of his judgment, and Mr Ismail did not seek to argue strenuously otherwise.  He suggested that it was not a court within the meaning of the Arbitration Ordinance, but I can see no justification for such a strained construction.  In my view subsection 6(2) applies to the Labour Tribunal as well as to any other court.  There seems to me to be compelling reason why that should be so.  If it were not so, proceedings in the Labour Tribunal would be subject to a mandatory stay in respect of claims relating to a contract where there was an arbitration clause and where no steps had been taken in the Labour Tribunal, whereas in respect of claims made in other courts any stay would be a matter of discretion.

6.  I would add that if an application for stay in favour of arbitration were to be made to the Labour Tribunal in respect of a claim which comes within the jurisdiction of the Tribunal and which is also covered by an arbitration clause in the relevant contract of employment, the Labour Tribunal would probably be slow to exercise its powers of stay in favour of arbitration.  The intent of the Ordinance is that there should be a relatively simple and efficient mechanism for resolving employment disputes.  Indeed the closing words of subsection 6(2) would appear to me to be directed towards a very cautious approach to the grant of such a stay.

7.  In my view the position in this case is clear.  There is one set of proceedings.  They were commenced in the Labour Tribunal.  When the proceedings were transferred to the High Court it was the same proceedings that were transferred and carried on in the High Court.  There was no commencement of proceedings in the High Court, there was simply a continuation of the existing proceedings.   The defendant clearly has taken steps in the proceedings by filing the documents referred to above if not by taking a number of other steps as well. 

8.  It is not possible in my view to read the word “commences” in subsection 6(2) of the Arbitration Ordinance as if it were “transfers”.  The two concepts are quite different.  It may be that subsection 6(2) is unsatisfactory to the extent that a party may ultimately be compelled to litigate in the High Court whereas he had bargained for arbitration but was content with the relatively simple and cheap procedure of the Labour Tribunal.  Nevertheless, it is not open to this Court to redraft the Ordinance to say something that it does not.

Hon Tang JA:

9.  I agree and have nothing to add.