S v. G

HCMP 1154/2019

[2020] HKCFI 2201

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 1154 OF 2019

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D E C I S I O N

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1.  There are two applications before the court. By an Originating Summons issued on 7 August 2019 (“OS”), the Plaintiff seeks 3 declarations, namely :

(1)     Hong Kong courts have exclusive jurisdiction over all disputes arising out of the agreement between the Plaintiff and the Defendant entitled “X Cooperation Agreement” dated 20 July 2017 (“2017 Agreement”);

(2)     Hong Kong courts have exclusive jurisdiction over all disputes arising out of 6 purchase orders (“6 POs”) issued pursuant to the 2017 Agreement; and

(3)     the Defendant breached the 2017 Agreement by commencing arbitration proceedings in respect of claims arising out of the same and the 6 POs against the Plaintiff by way of a request for arbitration dated 17 April 2019 (“D’s Arbitration”).

2.  In addition, the Plaintiff seeks the legal costs incurred by it as a result of D’s Arbitration.

3.  By a Summons filed on 22 January 2020 (“Summons”), the Defendant seeks to strike out the OS and have the Plaintiff’s Action dismissed on the usual 3 grounds that the OS: (a) discloses no reasonable cause of action; and/or (b) is scandalous, frivolous or vexatious; and/or (c) is otherwise an abuse of process of the court.

Background

4.  The relevant background facts are either undisputed or indisputable.  In summary, the present dispute concerns 2 exclusive distribution agreements between the Plaintiff and Defendant, namely the 2017 Agreement[1] and a later agreement entered into by the parties and commenced on 1 October 2018 (“2018 Agreement”).

5.  Under the 2017 Agreement, which was written in both Chinese and English, the Defendant was granted exclusive distribution rights in respect of the Plaintiff’s line of products under the “X” brand name “through the online omnichannel in China” for the period from 1 July 2017 to 30 June 2020.

6.  The 2017 Agreement was governed by Hong Kong law.  The Chinese and English versions of its “dispute settlement and jurisdiction” clause (Cl. 14.1) (“2017 Clause”) were inconsistent in that the Chinese version provided that any dispute should be submitted to China International Economic and Trade Arbitration Commission (“CIETAC”) Hong Kong, whereas the English version provided that any dispute should be submitted to the Hong Kong courts :

“本协议受香港特别行政区法律管辖并依其进行解释。因订立或执行本协议而产生的任何争议，协议双方应首先通过协商解决。若协商不能解决，应提交中国国际经济贸易仲裁委员会香港仲裁中心进行仲裁。仲裁费用、律师费等由败诉一方承担。

All rights and obligations established here under shall be exclusively governed by the laws of Hong Kong.

In the event any dispute arises between the Parties out of or in relation to this Agreement, including any dispute regarding its breach, termination or validity, the Parties shall attempt in the first instance to resolve such dispute through friendly consultations.

If in the event there is no settlement of the dispute, the dispute shall be settled by the courts of law in Hong Kong.

The arbitration fee, the legal fee etc. shall be borne by the losing party.”

7.  Clause 15.3 provided that both the Chinese and English versions were binding on the parties.  If a discrepancy arose between them, the latter should prevail.

8.  Subsequently, the scope of cooperation between the parties was expanded and they entered into a new cooperation agreement (the 2018 Agreement), whereby :

(1)     The exclusive distributorship was extended to cover two lines of products, the “X” line and another line of products under the “X By Y” brand name;

(2)     The territorial scope of the exclusive distributorship was extended: (a) in respect of the X line, to cover “online and offline omnichannel … in China (including Hong Kong, Macau markets), South Korea, Japan” and (b) in respect of the X By Y line, to cover “worldwide online and offline” channels;

(3)     The period of exclusive distributorship was extended to cover the period from 1 October 2018 to 31 December 2023.

9.  The 2018 Agreement was governed by PRC law, and under cl. 14 (“2018 Clause”) any dispute arising out of and in relation of the agreement shall be submitted to CIETAC Zhejiang Sub-Commission (Arbitration Centre) (“CIETAC Zhejiang”) for arbitration.

10.  The Preamble and Cl. 1 of the 2018 Agreement stated as follows (omitting the Chinese version) :

“Whereas:

Party A and Party B signed the [2017 Agreement] … In order to further expand the market in China and Asia, both parties agreed to terminate the [2017 Agreement] and achieved the following protocol:

I, Protocol purpose

1,     This agreement aims to set out the rights and obligations during the term of this agreement that Party A authorizes Party B and the company authorized or nominated by Party B to distribute and sale the X products …”

11.  In the event, disputes arose between the parties regarding various POs placed under both the 2017 Agreement as well as the 2018 Agreement (collectively, “Agreements”).  However, it is clear that the 6 POs, dated from 3 January to 19 June 2018, were issued under the former and before the latter came into existence.

12.  On 8 April 2019, the Plaintiff commenced arbitration (“P’s Arbitration”) against the Defendant in CIETAC Zhejiang (“Tribunal”) seeking, inter alia, termination of the 2018 Agreement; and the outstanding payments under POs of October and November 2018 with interests.

13.  On 17 April 2019, the Defendant commenced D’s Arbitration before the Tribunal under which the Defendant sought, inter alia, an order for specific performance of the 2018 Agreement; termination of any authorisation granted by the Plaintiff to third parties which would conflict with the exclusive distributorship granted to it; and damages for late shipment in respect of 9 POs under the Agreements (including the 6 POs[2]).

14.  On 24 June 2019, the Plaintiff made a jurisdictional challenge (“Jurisdictional Challenge”) in D’s Arbitration to dispute the Tribunal’s jurisdiction to hear any disputes arising from the 2017 Agreement.  The hearing of that Challenge took place on 18 July 2019.

15.  Before the Tribunal made its decision on the Jurisdictional Challenge, the OS was issued by the Plaintiff on 7 August 2019.

16.  By a Decision on Jurisdiction dated 17 October 2019, the Tribunal rejected the Jurisdictional Challenge.

17.  In November 2019, the Plaintiff sought to reopen the issue by submitting an application for remaking of the Jurisdictional Decision by way of 2 documents dated 8 and 12 November 2019.

18.  On 7 January 2020, the 2 sets of Arbitrations were tried together by the Tribunal.  On 3 July 2020, the Tribunal rendered the Final Awards in the Arbitrations, finding in favour of the Defendant on the majority of the issues (the Award in D’s Arbitration is hereafter referred to as “D Award”).

19.  In D Award, the Tribunal affirmed the Jurisdiction Decision and rejected the Plaintiff’s application to reopen the same.

Arguments

20.  Ms Xu, who appeared for the Defendant, submitted that its primary case is that the OS ought to be struck out because :

(1)     the Plaintiff’s claims are barred by res judicata or issue estoppel as a result of the decisions of the Tribunal in D’s Arbitration;

(2)     the Plaintiff’s claims amount to a Henderson abuse of process because they had been fully ventilated before and considered by the Tribunal; and/or

(3)     the Plaintiff is not entitled to the declaratory relief sought because (a) they do not serve any useful purpose and/or (b) they are divorced from the facts.

21.  The Defendant further submits that the Plaintiff’s claims should be dismissed because:

(1)     the 2017 Clause had been replaced by the 2018 Clause; and/or

(2)     on its proper construction, the 2017 Clause was a non-exclusive jurisdiction clause.

22.  On behalf of the Plaintiff, Mr Wong, who appeared with Ms Ng, submitted that :

(1)     there are reasons enjoining the Hong Kong court, despite not being the supervisory court of D’s Arbitration or the court of the place at which the Defendant seeks to enforce D Award, to revisit the Jurisdiction Decision or that Award in so far as it dealt with the Tribunal’s jurisdiction;

(2)     the Defendant’s case based on res judicata (or issue estoppel) and Henderson abuse of process is misconceived;

(3)     the declarations sought clearly serve a useful purpose;

(4)     on a proper interpretation, the 2017 Clause had not been replaced by the 2018 Clause;

(5)     the 2017 Clause was plainly an exclusive jurisdiction clause.

Issues

23.  The main issues raised in these applications are: (a) whether the OS should be struck out based on res judicata (or issue estoppel) or Henderson abuse of process; (b) whether the declarations sought in the OS will serve any useful purpose or are divorced from the facts; (c) if (b) can be answered in the affirmative, whether, on a proper interpretation, the 2017 Clause had been replaced by the 2018 Clause; and (d) subject to the same pre-condition, whether the 2017 Clause was an exclusive jurisdiction clause.

Applicable legal principles

Strike out

24.  The principles on strike out are trite.  The burden is on the applicant to demonstrate that it is plain and obvious that the action can be summarily dismissed.  The claim must be obviously unsustainable, the pleadings unarguably bad and it must be impossible for the claim to succeed before the court will strike it out: Hong Kong Civil Procedure 2020 (“HKCP”), [18/19/4].

25.  Plain is not the same as simple and obvious is not the same as short.  Where the court comes to the conclusion after full argument that the case is plainly and obviously one for striking out, it should not decline to do so on the ground that the issues are difficult or complicated: HKCP, [18/19/4].

Res judicata / issue estoppel

26.  To give rise to an estoppel, the earlier decision relied upon must satisfy the following requirements:

(1)     it must be judicial in the relevant sense;

(2)     it was in fact pronounced;

(3)     the tribunal had jurisdiction over the parties and the subject matter;

(4)     the decision was (a) final and (b) on the merits;

(5)     it determined a question raised in the later litigation; and

(6)     the parties are the same or their privies or the earlier decision is in rem.

See: Capital Wealth Finance Co Ltd v Lai Yueh-Hsing, unrep, HCA 686/2012, 31 July 2015, §21

27.  For the purpose of determining whether a tribunal is “judicial”, it is immaterial whether the tribunal is a court of record or not, or whether it is domestic or foreign.  An arbitral tribunal invested with authority to hear and determine a dispute by consent of the parties is a “judicial tribunal” for present purposes, and its awards and decisions conclusive unless set aside: Spencer Bower & Handley: Res Judicata, 5^th edn, [2.01], [2.02] & [2.05].

28.  A decision “on the merits” is a decision which establishes certain facts as proved or not in dispute; states what are the relevant principles of law applicable to such facts; and expresses a conclusion with regard to the effect of applying those principles to the factual situation concerned: The Sennar (No.2) [1985] 1 WLR 490, at 499E-H (in that case, the English House of Lords found that the decision by the Dutch Court of Appeal to the effect that a Dutch court had no jurisdiction to entertain and adjudicate on the plaintiffs’ claim was a decision “on the merits”).

Henderson abuse of process

29.  The type of abuse known Henderson abuse, or res judicata in the wider sense, was summarised in Ko Hon Yue v Chiu Pik Yuk (2012) 15 HKCFAR 72 at §§82-83.  The essence of the doctrine is that a party ought generally not to be permitted to raise in subsequent proceedings claims or issues which that party could and should have raised in earlier proceedings.  The abuse will usually take the form of the other party being “vexed” or “oppressed” by the subsequent set of proceedings. The decision on this type of cases requires the court to assess a number of factors and to balance competing interests, including not just those of the litigants before it, but also taking into account the other interests involved in the administration of justice: see also, Power Securities Co Ltd v Sin Kwok Lam [2019] HKCFI 2920, Coleman J, at §62.

30.  There is an underlying public interest in finality in litigation, reinforced by the emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole: Power Securities, §63.

31.  A collateral attack on a final decision of the court is an abuse of process and a scandal to the administration of justice if the same question, having been disposed of by one case, is litigated again by a party merely changing the form of the proceedings: Power Securities, §64.

32.  In assessing whether or not there has been such an abuse, the court is engaged in a broad, merits-based judgment which takes account of the public and private interests involved, and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before: Power Securities, §65.

Declaratory Relief

33.  It is trite that the grant of declaratory relief involves a discretionary power of the court.  There is a wealthy body of case law in which principles were developed to circumscribe the exercise of such power: see HKCP, [15/16/2]-[15/16/3]. 

34.  The principle in focus in these proceedings concerns whether the declaration sought would serve any useful purpose.  It is useful to start from the case of Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438.  The case was cited by Ms Xu for the proposition that court’s discretion to grant declaratory relief is a very wide power and should be exercised with utmost caution: at 445 per Viscount Finlay.   

35.  However, the case deserves closer examination. In that case, the mortgagor sough a declaration against the mortgagee that the loan was repayable in roubles rather than sterling.  It succeeded in the Court of Appeal.  However, the mortgagor had not brought any redemption action. There was disagreement between the members of the House as to whether the action ought to have been dismissed as irregular. 

36.  Together with Lord Wrenbury, Viscount Finlay was in the dissenting minority.  His Lordship took the view that the action should be dismissed.  The rule[3] was never intended to enable the mortgagor to pick out a point on which it might be convenient for him to know before applying to redeem and ask the court to decide it for him in a summary way by declaration.  There ought to be a suit for redemption.  Further, the matter was not one which concerned the parties merely; it concerned also the administration of justice: pp 445-446. 

37.  Lord Wrenbury gave a strong dissenting judgment.  His Lordship held that the first instance judge should have refused to entertain the action unless the mortgagor amended his pleading by adding an offer to redeem.  By not taking that course, he was depriving the mortgagee of his right to have in that action sale or foreclosure if the mortgagor failed to redeem.  The relief sought by the mortgagor was ancillary to a redemption action.  It was wrong to entertain an action for declaration without relief in the case: pp 461-462.

38.  Lord Dunedin suggested a more liberal approach. His Lordship referred to the rules applied by the Scottish Courts: “The question must be a real and not a theoretical question; the person raising it must have a real interest to raise it; he must be able to secure a proper contradictor, that is to say, some one presently existing who has a true interest in opposing the declaration sought”.  His Lordship took the view that the rules were satisfied in that case.  However, Lord Dunedin pointed out that his remarks should be taken as obiter dicta and to be considered on their merits when the occasion next arose.  His Lordship then held that, taking the matter as one of pure discretion, there was no ground to interfere with exercise of discretion by the Court of Appeal: pp 448 & 450.

39.  Lord Sumner, despite being in the majority, actually expressed disagreement with the grant of declaratory relief: “… I think that, as a matter of discretion, it would have been better if no declaration of right had been made.” (p 453); “The declaration in effect was sought to enable the [mortgagor] to ascertain whether, by a mere tender of roubles, they could save costs in the redemption action, and I am sorry that they got any assistance in the matter.” (p 454).  However, his Lordship said that the option open to the House was clogged by errors which occurred below.  Given that the court had jurisdiction to grant the relief sought, and that the mortgagee had participated in the proceedings, no useful purpose would be served by setting aside all proceedings (his Lordship agreed with the decision of the Court of Appeal that the loan was repayable in roubles) (p 456).

40.  Finally, Lord Parmoor also decided the case on pure discretion.  His Lordship took the view that there was no reason to say that the discretion had been improperly exercised: p. 457.

41.  Two points arose from the above analysis of Russian Commercial.  Firstly, although the majority of the House declined to dismiss the action on ground of irregularity, there was a majority (Viscount Finlay, Lord Wrenbury and Lord Sumner) against the grant of declaratory relief. 

42.  Secondly, the principle to be derived from the speeches of that majority is that the discretionary power of the court should not be exercised to answer an ancillary question which does not lead to any relief.  This may be seen as an illustration of the general principle that a declaration which serves no useful purpose would not be entertained by the court.  It may be added that the court has to consider the wider impact on the administration of justice.   

43.  In曾婉玲 v 兆隆苑業主立案法團, unrep, LDBM 199/2001, 18 September 2001, the applicant challenged the adequacy of notice in respect of a general meeting of owners, and she sought a declaration that the meeting was null and void.  After seeking legal advice, the respondent convened another meeting at which the resolutions voted on at the “defective” meeting were passed.  Whilst not contesting the allegation, the respondent resisted the declaratory relief on the ground that it had no practical value or utility.  HH Judge Lam (as he then was) agreed that the relief did not serve any useful purpose and exercised his discretion to refuse to grant any: at §§22 and 39.

44.  The court may not regard a declaration as of sufficient utility if it may not finally settle the dispute between the parties: The Declaratory Judgment, Zamir & Woolf, 4^th edn, [4-121] to [4-122].  The learned authors cited the following from the judgment in Lewis v Green at [4-121]:

“[T]he Court may, after considerable litigation, involving an argument in a Court of first instance, an argument in the Court of Appeal, and possibly an argument in the House of Lords, come ultimately to the decision that on the question of construction raised by this summons the applicant is right. Well, what then? No relief can be given on that. There are other points which have to be decided. They can only be decided by bringing an action, and in that action it may turn out that, notwithstanding the applicant is right on the questions of construction, he is ultimately found to be wrong. The respondent will have had to pay all the expense of the litigation on the question of construction, which will be utterly useless. It seems to me that where one finds circumstances such as I find here, the procedure under Order 54A is improper. It is only intended to enable the Court to decide questions of construction where the decision of those questions, whichever way it may go, will settle the litigation between the parties.”

45.  The court is concerned with whether the declaration sought will serve a useful purpose in Hong Kong.  A declaration which is sought solely for the benefit of foreign courts will rarely be justified: Fujifilm Kyowa Kirin Biologics Co., Ltd v AbbVie Biotechnology Ltd (No.4) [2018] RPC 1, at §377.

46.  It is important that the declaration sought be directed at specific facts.  The court may refuse to grant declaratory relief where the dispute is divorced from the facts.  The courts are not “general advice centres” and there are dangers in the court generally enunciating “propositions of principle without full appreciation of the implications that these will have in practice”: The Declaratory Judgment, at [4-71] to [4-72]; R (Burke) v General Medical Council [2006] QB 273, CA, §21.

Analysis

47.  In analysing the issues in this case, it must be borne in mind that the Jurisdiction Decision and D Award were rendered by the Tribunal after the issuance but before the determination of the OS. Unfortunate it may be for the Plaintiff, the OS may be seen to have been overtaken by events.  This court is bound to consider the OS in the proper factual context.

Res judicata / issue estoppel

48.  The issue here is one of law as to whether the Jurisdiction Decision and D Award regarding jurisdiction are final for the purpose of grounding an estoppel.  Mr Wong referred this court to Commercial Injunctions, Gee QC, 6^th edn, [14-069]:

“Unless there has been an agreement that the arbitral tribunal has jurisdiction to decide finally whether it has jurisdiction, the question of jurisdiction cannot be finally determined by that tribunal, and is a matter for the court.”

49.  The authority of Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs of the Government of Pakistan [2011] 1 AC 763 was cited by the learned author in support.  Dallah was applied in Hong Kong in S Co v B Co [2014] 6 HKC 421, §§30-35. The position was explained by the English Court of Appeal, per Moore-Bick LJ at 785, §55 :

“It was common ground, quite rightly, that under article 6(2) of the ICC Rules the tribunal had jurisdiction to determine its own jurisdiction. Moreover, its decision on this point was final, in the sense that it could not be reopened by the arbitrators themselves, who on publication of their award become functus officio in relation to that issue. It was not final in every sense, however, because it was subject to review by the French court exercising its supervisory jurisdiction and by enforcing courts under article V of the Convention. Accordingly, whether the tribunal represented a court of competent jurisdiction in the sense necessary to create an issue estoppel depends on whether the parties to the award had agreed to confer jurisdiction upon it, since the arbitrators’ jurisdiction was derived from the consent of the parties.”

50.  Similar dicta can be found in the judgment of the Supreme Court, per Lord Mance JSC at 810, §§23-26 :

“23 … the argument based on issue estoppel was always doomed to fail. A person who denies being party to any relevant arbitration agreement has no obligation to participate in the arbitration or to take any steps in the country of the seat of what he maintains to be an invalid arbitration leading to an invalid award against him. The party initiating the arbitration must try to enforce the award where it can. Only then and there is it incumbent on the defendant denying the existence of any valid award to resist enforcement.

24. … Arbitration of the kind with which this appeal is concerned is consensual – the manifestation of parties’ choice to submit present or future issues between them to arbitration. Arbitrators (like many other decision-making bodies) may from time to time find themselves faced with challenges to their role or powers, and have in that event to consider the existence and extent of their authority to decide particular issues involving particular persons. But absent specific authority to do this, they cannot by their own decision on such matters create or extend the authority conferred upon them. Of course, it is possible for parties to agree to submit to arbitrators (as it is possible for them to agree to submit to a court) the very question of arbitrability – that is a question arising as to whether they had previously agreed to submit to arbitration (before a different or even the same arbitrators) a substantive issue arising between them. But such an agreement is not simply rare, it involves specific agreement … and absent any agreement to submit the question of arbitrability itself to arbitration, “the court should decide that question just as it would decide any other question that the parties did not submit to arbitration, namely, independently” …

…

26. An arbitral tribunal’s decision as to the existence of its own jurisdiction cannot therefore bind a party who has not submitted the question of arbitrability to the tribunal. …”

51.  There is no contention that the parties here had agreed to the determination of arbitrability by the Tribunal.  The principles which govern international arbitration have very much been standardised. According to the PRC law evidence adduced by the Defendant[4], after the publication of D Award, it is open to the Plaintiff to apply to the PRC court to re-consider afresh the issue of the Tribunal’s jurisdiction and to set aside the Award.  Alternatively, the Plaintiff may apply to the same court not to enforce the Award. 

52.  The case of The Joanna V [2003] EWHC 1655 (Comm) does not assist the Defendant due to different factual circumstances. Mr Justice Thomas affirmed the view that an arbitral tribunal cannot be the final arbitrator of the question of jurisdiction.  For the protection of the party objecting to the jurisdiction of the tribunal, he has an unfettered right to apply to the court.  However, in that case, the right to challenge the tribunal’s jurisdiction decision had expired.  Consequently, that decision could not be impugned, and the principles of issue estopple and res judicata operated: see §§25, 48 and 59.

53.  According to the law, the Plaintiff has 2 avenues by which to challenge the jurisdiction determinations of the Tribunal – to bring an action in the PRC court to set aside D Award or to resist enforcement of it (likely to be in a court in Spain where the Plaintiff, and probably its assets, are located).

54.  Whilst these rights may be exercised by the Plaintiff, the principles of res judicata or issue estoppel do not come into play.

Henderson abuse

55.  Ms Xu argued that the Henderson principle is board and merits based.  She said that, despite its jurisdictional challenge, the Plaintiff had fully participated in D’s Arbitration and resisted the Defendant’s claims by relying on the provisions of the 2017 Agreement. Having ran its case and lost on merits, it is an abuse of process to challenge again the jurisdiction of the Tribunal. 

56.  It appears to me that, at least arguably, the Defendant is seeking to extend the application of the Henderson principle. With respect, if the Plaintiff has a right to challenge the jurisdiction decisions of the Tribunal (see above), it is not easy to see why such right should be taken away by operation of another principle of law.

57.  The gravamen that the Plaintiff had fully participated in D’s Arbitration can be answered by the Defendant’s contention that such participation amounted to a waiver or gave rise to an estoppel which would bar the Plaintiff from challenging the jurisdiction of the Tribunal again (see further below).

58.  In the premises, I do not agree with the application of the principle of Henderson in this case.

Declaratory relief

59.  Mr Wong submitted that the declarations sought will serve 2 purposes.  Firstly, it was said that they may assist the Spanish court in any dispute over the enforcement of D Award.  Secondly, the Defendant was in breach of the 2017 Agreement by bringing D’s Arbitration and the Plaintiff is entitled to the consequential relief in terms of the costs of participating in D’s Arbitration.

60.  In respect of the former, there is no evidence at all on how a judgment from this court may or may not assist the Spanish court if enforcement proceedings are brought there.  The Plaintiff was in no position to assist the court in this regard. 

61.  It is unlikely that the declarations, if granted, will bind the enforcement court.  The value of the declarations, if any, will therefore be confined to the opinion of this court on the issues. The resources of this court should not be used for advisory purpose (see para 46 and the last sentence of para 42 above). 

62.  Further, potential assistance to foreign enforcement court is not a legitimate purpose to support the OS: see para 45 above. 

63.  As regards the costs claim, to begin with, it must be considered in the proper context.  When the OS was brought in August 2019, it was undoubtedly an attempt to advance the Plaintiff’s challenge of the jurisdiction of the Tribunal over D’s Arbitration.  The costs claim was ancillary to that challenge.  This is fortified by the conduct of the Plaintiff in D’s Arbitration. 

64.  This court was taken by Ms Xu to D Award where it was stated that there was originally a counterclaim by the Plaintiff in respect of the costs of the arbitration but it was subsequently withdrawn by the Plaintiff and formed part of the claim in P’s Arbitration[5].

65.  As matters stand now, the Tribunal had made its decision on the Jurisdictional Challenge and rendered D Award.  The proper avenues to challenge that decision and the Award are, as identified above, an action before the PRC court to set aside the same or to resist the enforcement of the Award.  I do not believe that the ancillary costs claim can be used to justify the OS.  It would be a case of the tail wagging the dog.  There is no reason to believe that a claim for the wasted costs of D’s Arbitration cannot be made in a PRC action to set aside D Award.   

66.  In my view, the Plaintiff should recognise the fact that the OS has been overtaken by events, and focus its resources on the proper challenge of the Jurisdiction Decision and D Award.

67.  Further, the Defendant says that the Plaintiff had fully participated in D’s Arbitration, and had thereby waived any objection to jurisdiction.  Alternatively, the Plaintiff is estopped from denying the jurisdiction of the Tribunal.  Such arguments are permissible as a matter of law: see S Co, §37.  In support of the Defendant’s arguments, the court was referred to various parts of D Award which demonstrated that the Plaintiff had asked for consolidation of the two Arbitrations[6], and extensive arguments and evidence were deployed to defend D’s Arbitration, including reliance on the provisions of the 2017 Agreement and the Supplemental Agreements.

68.  The Defendant says that it would not be appropriate to determine the costs claim without regard to its case on waiver and estoppel.  However, the declarations, narrowly formulated, would not admit any dispute based on waiver and estoppel. 

69.  There is much parallel between this case and Russian Commercial and Industrial Bank.  In this case, the determination of the declarations will not resolve the Defendant’s case of waiver and estoppel, and the declarations, if granted, will not give rise to any relief.  The dicta of Viscount Finlay, Lord Wrenbury and Lord Sumner set out in paras 36, 37 and 39 above are applicable to this case (see also para 42). 

70.  Furthermore, if the court were to entertain the OS, it will not settle the dispute between the parties (see para 44 above).  If the declarations were granted, it will still be open to the Defendant to argue its case on waiver and estoppel.  If the declarations were refused (ie, the court disagrees that Hong Kong courts have exclusive jurisdiction over the matters), it would not put an end to any argument whether the parties had agreed to D’s Arbitration.

71.  Finally, the originating summons procedure is not designed to determine disputes which involve extensive factual issues.  The resolution of the Defendant’s case of waiver and estoppel will likely involve such a dispute.  In my view, the costs claim cannot be fairly determined without regard to the Defendant’s case on waiver and estoppel.  For that determination, a writ action will be required.

72.  For these reasons, I am of the view that it would not be appropriate to exercise the court’s discretion to entertain the OS.

73.  It follows that issues (c) and (d) as identified in para 23 above need not be dealt with. 

Disposition

74.  The OS is dismissed.  At the time when the Summons was issued, D Award had not been published.  In any case, issue (a) was decided against the Defendant.  I do not believe that issue (b), held in favour of the Defendant, called for a strike out.  It was a matter of exercise of discretion by the court.  I make no order on the Summons. 

75.  As for costs, I make an order nisi that the costs of the OS, including the costs of the hearing, be to the Defendant. Same as aforesaid, I do not make any costs order in respect of the Summons after taking an overall view of these matters.

76.  Last but not least, I am grateful to counsel for their assistance.