RE ANDREW WHITE QC

HCMP1509/2005

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1509 of 2005

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REASONS FOR JUDGMENT

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1. By a Notice of Motion dated 22 July 2005, the Applicant sought admission under section 27(4) of the Legal Practitioners Ordinance, Cap.159 (“the Ordinance”) to represent Stelux Holdings Ltd (“Stelux”) at the hearing of an appeal from a final arbitration award of Ms Gladys Li SC dated 1 December 2004 (“the Award”).  Leave to appeal was given by Reyes J on 16 March 2005 under section 23(3) of the Arbitration Ordinance, Cap.341.  The appeal is to be heard by the same judge on 17 September 2005.

2. After hearing submissions from Mr Peter Graham (for the Applicant), Mr Valentine Yim (for the Hong Kong Bar Association) and Mr Richard Fawls (for the Secretary for Justice), an order was made in terms of the Notice of Motion.  I also indicated that the reasons for the judgment would be handed down at a later stage.

3. The Award arises out of construction arbitration proceedings instituted by Leighton Contractors (Asia) Ltd (“Leighton”) against Stelux in relation to the construction of Stelux House in San Po Kong.  It is unnecessary to go into the details of this dispute except to note that this was in many ways a normal construction dispute in which claims were met by counterclaims.  It appears that on the 11th day of the arbitration (the arbitration hearing lasted some 6 weeks), Stelux consented to an award in Leighton’s favour of some $24.67 million on a part of Leighton’s claims.  The arbitration then continued to determine the rest of Leighton’s claims and Stelux’s counterclaim.  Stelux eventually prevailed overall and, in an interim award, the Arbitrator awarded Stelux a total of $73.05 million on its counterclaim.  This gave a net award in favour of Stelux of some $48.4 million.  On 1 December 2004, following written submissions that had been exchanged, the Arbitrator made a final award (the Award) in which Leighton was ordered to pay the whole of Stelux’s costs for the arbitration (claim and counterclaim included).  The Award also dealt with the question of interest.

4. By a Notice of Motion dated 22 December 2004, Leighton sought leave to appeal against the Award under section 23(3) of the Arbitration Ordinance in relation to both costs and interest.  On 16 March 2005, Reyes J granted leave to appeal.  Stelux has since served a Respondent’s Notice dated 4 May 2005.  Earlier, Leighton had sought leave to appeal against the interim award but this was refused by Reyes J on 10 September 2004.

5. Mr Graham submitted that the appeal is one of unusual difficulty or complexity, albeit that it was only in relation to the question of interest and costs.  Unusual difficulty and complexity in a case is a recognized factor relevant to the court’s decision whether or not to admit overseas counsel.  I have had the opportunity of briefly perusing the court file in relation to the appeal and can see that there are a number of affidavits that have been filed relating to the nature and breakdown of Leighton’s claim and Stelux’s counterclaim, and also as to what occurred in the arbitration proceedings.  These matters are said to be highly relevant to the incidence of costs.  Mr Graham made the point that the Applicant was the same counsel who had appeared for Stelux in the arbitration proceedings, although, as I have observed, the Award on interests and costs was made after written submissions only.

6. In the Certificate of Counsel in support of the Applicant’s submissions, counsel (Mr John Scott SC) says this : -

“	15.	It is apparent from his decision of 16th March 2005 (granting leave to appeal) that Mr. Justice Reyes expressed some difficulty in understanding precisely what had gone before and given I had not myself been instructed in the arbitration I was unable to assist the Judge with that detail to the extent that I would have wished.
	16.	As indicated it is likely that the Court would benefit from being able to hear argument from Counsel involved in the arbitration itself and this thereby avoids any misunderstanding of the procedure, submissions and evidence involved in the arbitration reference.
	17.	It is settled law in Hong Kong that the courts will be slow to overturn arbitral awards, particularly those that deal with a ‘one-off’ case.  It was accepted this was a one off case and furthermore related to a challenge to exercise of a discretion.  In those circumstances I suggest that a party to arbitration proceedings should, absent good reasons to the contrary, be entitled to present to the court all the details necessary to inform the court of the relevant circumstances of the arbitration which would have influenced the learned Arbitrator in the exercise of her discretion.  That is best achieved (and in this case really only possible) by the appearance of Counsel who had conduct of the arbitration itself and who was thus familiar with all the relevant facts.”

7. Mr Yim resisted the application for admission.  Mr Fawls maintained a neutral position although he made various submissions that, like Mr Graham and Mr Yim’s, have very much assisted me.

8. I do not accept that the question of interest and costs in the present case does involve matters of unusual difficulty or complexity.  The word “unusual” should be stressed : - see Re Porten QC, unreported, HCMP466/2005, 8 April 2005 at pages 5-6 (paragraph 4(1)).  These are not issues that normally require the input of specialist counsel from overseas and the present case is no different.

9. Nor do I accept the submission that as the Applicant conducted the relevant arbitration, he is able to assist the court as to what happened at the hearing and on other relevant facts.  Where any fact should be taken into account by the court, it is expected that evidence will be adduced in the proper way and not by way of counsel’s submissions.  This is all the more so if there is likely to be any substantial dispute.  I therefore do not regard this submission as justifying the admission of overseas counsel.

10. That said, however, it must be borne in mind that the present appeal in the Court of First Instance arises from arbitration proceedings.  The relevance of this lies in the fact that in such proceedings, parties are free to instruct counsel of their choice, while in court proceedings, unless overseas counsel has been admitted by the court under section 27(4) of the Ordinance, parties are confined to counsel who have been admitted generally to practice in Hong Kong.  Section 2F of the Arbitration Ordinance effectively permits parties to appoint even non-lawyers to represent them in arbitration proceedings; a fortiori, it enables overseas counsel to be instructed in such proceedings (this was exactly the position in the present case).  That section provides as follows : -

“2F.   Representation and preparation work
For the avoidance of doubt, it is hereby declared that sections 44, 45 and 47 of the Legal Practitioners Ordinance (Cap. 159) do not apply to -
(a)	arbitration proceedings;
(b)	the giving of advice and the preparation of documents for the purpose of arbitration proceedings;
(c)	any other thing done in relation to arbitration proceedings except where it is done in connection with court proceedings arising out of an arbitration agreement or arising in the course of, or resulting from, arbitration proceedings.”

Sections 44-46 of the Ordinance prohibit and make it an offence for an unqualified person to act as a barrister or solicitor.

11. In my view, in the context of arbitration, where overseas counsel applies to be admitted under section 27(4) of the Ordinance, it is a relevant factor to be considered by the court that the counsel in question has appeared in the arbitration proceedings from which the relevant court proceedings are derived.  True it is that section 2F(c) of the Arbitration Ordinance makes clear the distinction between court proceedings and arbitration proceedings (out of which the court proceedings have arisen), but I think the fact that counsel has appeared in the relevant arbitration proceedings is a factor of some weight to be taken into account by the court on a section 27(4) admission.

12. This factor (which I shall for convenience call the arbitration factor) is independent of any other factor that may exist (such as the case involving an important principle of law or is one of unusual difficulty or complexity).  It recognizes the fact that the counsel who has conducted the relevant arbitration proceedings or who has otherwise had a substantial involvement therein, should in most cases be permitted to continue to act for a client even though proceedings have reached the court stage.  In my view, this makes practical sense and is in the public interest.  It is a factor that recognizes the uniqueness of arbitration proceedings.  It appears to me distinctly odd that counsel who has conducted the proceedings in the tribunal below (as it were) should not be permitted to continue to appear for the same client in any appeal on a substantial matter.  The nature and forum of the proceedings may be different (court rather than arbitration) but it is afterall the same case.

13. Mr Fawls made the point, relying on Re Badenoch QC [1999] 2 HKLRD 209, at 214A-E that normally, familiarity with the facts of a case does not confer any advantage in seeking admission.  Mr Graham accepts this.  That is certainly true where admission is sought of an overseas counsel who has merely been instructed early in a case and who has therefore had the opportunity to gain familiarity before an application for his admission is sought.  The same point does not apply where the overseas counsel has already appeared in the proceedings from which an appeal (the relevant proceedings for which his admission is sought) is derived.  Here, his familiarity with the case and in particular the fact that he has acted for the same client in the tribunal below, are factors very much in favour of admission.  Mr Fawls did submit here that, conceptually, there was no difference between the two situations: just as any counsel can be instructed in arbitration proceedings under section 2F of the Arbitration Ordinance, so there is no bar to overseas counsel being instructed in court proceedings to advise or settle papers.  Why, it could be asked rhetorically, would counsel’s familiarity be a relevant factor in one scenario but not the other?  There is a superficial and logical attraction to this argument but I think it is wrong.  The fundamental difference lies in the fact that in the arbitration context, the overseas counsel has already appeared (and is entitled to appear) in proceedings whereas in the other scenario, counsel has neither appeared nor (until admission is allowed by the court) is he entitled to appear in proceedings.

14. However, it must be recognized that there are limits to the operation of the arbitration factor.  While I do not wish to set out exhaustively all relevant principles in this regard, the following points ought to be noted : -

(1)	The arbitration factor applies only to overseas counsel who conducted (or otherwise had substantial involvement in) the relevant arbitration proceedings out of which the court proceedings arise or from which they derive.  By “relevant arbitration proceedings”, I refer to the relevant arbitration hearing that has led to the court proceedings for which counsel is sought to be admitted.  For example, the relevant arbitration proceedings in the present application comprise the hearing that led to the Award.  Even though there was no actual hearing leading to the Award, the Applicant, I understand, drafted the written submissions and of course, he was the counsel who conducted the main arbitration hearing.
(2)	Where a different overseas counsel applies to be admitted under section 27(4) of the Ordinance (that is, counsel other than as identified in sub-paragraph (1) above), the arbitration factor ceases to be a factor in itself.  As stated above, section 2F(c) draws a clear distinction between arbitration proceedings and court proceedings which derive from arbitration proceedings.  Where a different counsel is sought to be instructed, he is in no better a position than any other counsel in that he shares none of the advantages of the original counsel and, as far as the relevant client is concerned, there is no continuity of representation.
(3)	The arbitration factor applies on the whole only to leading counsel.  As was emphasized in Re Flesch QC & Another [1999] 1 HKLRD 506, at 516D-F (paragraphs (7) and (8)), in order to gain admission, counsel must be of sufficiently high quality and standing and it would be rare for counsel who is not a Queen’s Counsel (or equivalent) to be admitted.  While the arbitration factor is a substantial factor, it is equally important to bear in mind that admission is being sought for proceedings in court.
(4)	The matter for which counsel seeks to be admitted (even where the arbitration factor exists) must be a substantial one.  Where, for example, counsel is only sought to be admitted for minor hearings (such as for directions), it is unlikely that the court would allow the application for admission even if that counsel had appeared in the arbitration proceedings below.
(5)	The principles established by cases like Re Flesch QC do not cease to have effect even where the arbitration factor exists, save perhaps for one aspect.  That aspect is the obligation on solicitors to provide details of local counsel who have been approached and of their availability.  Where the arbitration factor exists, by definition, other leading counsel (whether from Hong Kong or elsewhere) will not have represented the client in the relevant arbitration proceedings and therefore not have his advantages in this respect.

15. In Re Naughton QC, unreported, HCMP 1512/2002, 28 May 2002, notwithstanding the fact that the applicant there sought admission in relation to court proceedings that emanated from arbitration proceedings in which he appeared, Leong CJHC refused the application.  However, it does not appear from the judgment that any submissions were made regarding the uniqueness of arbitration proceedings nor on section 2F of the Arbitration Ordinance.  For my part, I regard those factors as crucial in my decision.

16. As was stated in Re Flesch QC and repeated subsequently, the court must adopt a flexible and sensible approach in dealing with applications for admission : - see 515I-J (paragraph (4)).  In Re McGregor QC [2003] 3 HKLRD 585, at 591J-592A, the court said that this approach was the right one since it was required to consider as the paramount interest, the public interest.  For these reasons, I believe that a recognition of the arbitration factor reflects this approach.

17. On the facts of the present case, as stated above, the Applicant appeared for Stelux in the arbitration proceedings.  The arbitration factor is therefore applicable.  In my judgment, this is decisive in the present application and while the appeal itself does not involve matters which can be said to be of unusual difficulty or complexity, it is far from a simple matter; indeed it is a substantial one.