OTIS ELEVATOR CO (HK) LTD v. CHUN WO BUILDING CONSTRUCTION LTD

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DECISION

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1. This is an application by the defence for a stay of proceedings in favour of arbitration dated 28 February 2001. The plaintiff filed a later summons, date 8 March 2001, seeking summary judgment pursuant to Order 14. The stay application must be heard first. The test for a stay in favour of arbitration is different from an Order 14 test. If a stay is granted, the Order 14 summons would automatically fall away. If the stay is refused on the basis that there is no dispute between the a parties, in normal circumstances summary judgment would follow the event.

2. The law on a stay application is clear. Section 6(1) of the Arbitration Ordinance in Hong Kong and Article 8 of the UNCITRAL model law provide for a mandatory stay where the agreement contains a valid arbitration clause. If there is a dispute it must be arbitrated. A dispute exists unless the defence have admitted liability and quantum. In this case, Mr Liu, for the plaintiff concedes that he cannot submit that the defendant has made such admissions. There is no unequivocal admission of liability and quantum, thus there is a dispute and the defendant relies on the arbitration clause. The plaintiff does not contend either that the arbitration clause is null and void, inoperative or incapable of being performed. The court has no discretion in these circumstances.

3. For these reasons, I grant the defendant's application for a stay and dismiss the plaintiff's application for summary judgment.

4. The defendant has asked for indemnity costs. I do not consider the plaintiff's stance in this matter to be have been vexatious or scandalous or malicious or an affront, which would be grounds for awarding indemnity costs. Neither do I think there are other reasons for awarding indemnity costs. However, I think the costs order in this case should reflect the fact that the law on this issue was clear and the result was as close to inevitable as one can get. The plaintiff was put on notice of the defence's intention to seek such a costs order by letter. I am persuaded therefore that in such circumstances it is appropriate to award costs on a slightly higher level than the normal costs order. The defence shall have its costs on the common fund basis to be taxed if not agreed.