XCHRX CHINA INTERNATIONAL WATER & ELECTRIC CORPORATION v. DEPARTMENT OF JUSTICE

HCCT64/2000

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS
NO.64 OF 2000

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J U D G M E N T

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1. This is an application pursuant to section 23 of the Arbitration Ordinance for leave to appeal from the arbitration award made by the arbitrator Philip Nunn on 31 May 2000.

2. The building contract is between the employer (the respondent in this case), the government of the Hong Kong Special Administrative Region and the claimant (China International Water & Electric Corporation). There was a time stated for completion and there was a provision for liquidated damages, in excess of $100,000 per day, for every day beyond the stipulated time.

3. The contractor claimant had given out three sub-contracts to specialist sub-contractors approved by the government and on the government's list of approved sub-contractors. The specialist sub-contractors so employed for fire services, electrical installation and air-conditioning was, in each case, Kenworth Engineering Limited ("Kenworth"). In its turn, Kenworth employed separate sub-sub-contractors.

4. The progress of the work done under the contract was so unsatisfactory leading eventually to the contractor terminating its three sub-contracts with Kenworth. It took a little bit more than a month for new specialist sub-contractors to be re-appointed with the approval of the government.

5. The claimant asked for extension of time in order to reduce the payment of large sums of liquidated damages. I understand that the sum involved in the claim is something like $5 million. There was refusal by the architect to grant the extension and the matter then went to arbitration. An experienced arbitrator, legally qualified, Mr Philip Nunn, was appointed. By his first award dated 9 December 1998, the arbitrator refused to grant the declaration sought by the claimant for extension of time. The matter was remitted by me under my judgment of 15 February 2000 to the arbitrator. By the second award of the arbitrator, in May 2000, he refused to grant the extensions or the declarations sought by the claimant d held against the claimant on both the special circumstances point and the impossibility point. The application is now made before me for leave to appeal against the second award.

6. It has been long established that only in exceptional cases would leave to appeal be granted. This derives from the nature of the statutory provisions and the statutory intention that there should be finality with arbitration. From this premise that there should be finality to arbitration, there is the wisdom that judges should not normally give reasons for the grant or refusal of leave, and they should adopt the practice, where leave to appeal to the Final Court, e.g. in England, of not giving reasons. This wisdom can be found in Antaios Compania Naviera S.A. v. Salen Rederierna A.B. [1985] 1 AC 191, at 205-207.

7. Out of courtesy to the elaborate argument that had been addressed to me, I will briefly deliver this judgment.

8. The governing principle in leave to appeal from an arbitrator's award is laid down by the Court of Appeal in Hong Kong in the case of In re P.T. Dover Chemical Company v. Lee Chang Yung Chemical Industry Corporation [1990] 2 HKLR 257 where the Court of Appeal finds that there is a strong presumption of finality and against the granting of leave, and that the presumption of finality of arbitration and against granting of leave is a sliding scale. At the top end of this, where the presumption is strongest, is the one-off event. The presumption is said to be the weakest where the standard form contract turns upon the construction of the standard contract in the context of the events which are common place or likely to recur. In the one-off cases, the test of whether leave should be granted is said to be "so obviously wrong as to preclude the possibility that he might be right".

9. I have no doubt that this is a case of a one-off event and, therefore, is either at the top or nearly at the top of the scale of presumption of finality. Although the contract in question here may be of common usage by the government, the event which has occurred is peculiar to this case, and as the parties seemed to admit, are not likely to recur. I am certain that the building industry does not have a present or future interest in the result of this case. There is no guidance which the court can give to the construction industry which would be of great benefit to the industry. As Hunters JA said in In re Dover (supra) case at 265E :

".... In Lord Diplock's sense no question of clarifying any particular area of the law arises at all. The case may give rise to a nice question of general law upon which there is a dearth of authority in both England and Hong Kong, but I can give no weight to that. ..."

I, therefore, accept the submission of Mr Scott, SC, for the respondent, that this is a one-off case.

10. The issue on that basis then is simply whether this very highly experienced and legally qualified arbitrator can be seen to be plainly wrong. In my judgment, notwithstanding the prolix references in his second award of May 2000 to the case of Percy Bilton Limited v. Greater London Council [1982] 1 WLR 794, the arbitrator, in my view, was most probably right rather than clearly wrong.

11. The claim for extension of time under clause 51(b)(xi) based on special circumstances is put on two basis, one is that it is the Asian economic crisis that brought about the termination of the three sub-contracts, the other is the impossibility of performance under clause 15. So far as the first situation of economic crisis is concerned, it seems to me that there is plenty of material for the arbitrator to come to the view, which he did, that the economic crisis, which is admitted, did not have any causative effect on the termination of the three sub-contracts, or on the delay and, therefore, the economic crisis, as a heading, had constituted special circumstances. It seems to me plain that there was more than scope for him to come to his decision. It follows that I am not satisfied that he was plainly wrong on the special circumstances issue.

12. In relation to the impossibility point, the submissions of Mr Scott, with all the written material, clearly demonstrate that it was within the province of the arbitrator to come to such a finding. I cannot possibly say that he was plainly wrong and therefore a case for leave to appeal under that heading also has not been made out.

13. It follows, therefore, that in my view leave to appeal should not be given and the application must be dismissed with costs to the respondent.