AGROSIN PTE LTD v. HAITAI INTERNATIONAL INC

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE

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JUDGMENT

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1. I have before me an originating summons by which the plaintiff seeks the appointment of an arbitrator for the defendant under an arbitration clause contained in a Sales Contract between the parties dated 2 May 1996. The plaintiff suggests that Mr Robin Peard be appointed. Mr Skrine, for reasons that I will mention shortly, does not consent to the making of this order, but he does not oppose it. I am satisfied that the order should be made. I appoint Mr Robin Peard as arbitrator for the defendant.

2. The only real issue between the parties is one of costs.

3. Mr Cross argues that the defendant has been guilty of unreasonable behaviour in seeking to obstruct the arbitration process. In these circumstances, in international arbitrations such as this one, Mr Cross says the courts adopt a strict policy and will usually order costs against the defaulting party on an indemnity basis. This is undoubtedly right, but Mr Skrine says that the defendant has not been guilty of such unreasonable behaviour. He says, and Mr Cross does not challenge this, that the defendant has made in clear from the outset that its case is that it did not enter into the contract, and, therefore, there is no valid arbitration agreement between the parties. The defendant says that it did not submit to arbitration, and that is why the defendant has not appointed an arbitrator. That is also the reason why the defendant does not consent to such an appointment.

4. Whether or not there is a valid contract between the parties, and, therefore, whether or not there is a valid submission to arbitration by the defendant are issues that will be determined by the arbitral tribunal. If the tribunal were to decide that there was no such submission, then the defendant had no contractual obligation to appoint of an arbitrator, and it may be that its refusal to do so cannot be said to be unreasonable.

5. It seems to me that I cannot decide this issue of costs until I know the decision of the arbitral tribunal on the question of whether or not the defendant submitted to arbitration. Accordingly, I reserve the matter of the costs until then. The parties may then bring the matter back before me, with such additional evidence and argument as they see fit.