BEST FIELD INC v. TRIANGULAR FORCE CONSTRUCTION ENGINEERING LTD

HCA 913/2021

[2022] HKCFI 1641

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 913 OF 2021

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J U D G M E N T

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1.  On 31 August 2021, Triangular Force Construction Engineering Limited (“the Defendant”) applied by summons so that:

“The action brought by the plaintiff herein be stayed in favour of arbitration pursuant to section 20 of the Arbitration Ordinance (Cap 609) on the ground that all parties have agreed that the dispute forming the subject matter of this action shall be exclusively adjudicated by arbitration, by virtue of an arbitration clause in an agreement dated 2015 (ie the agreement pleaded in paragraph 3 of the Statement of Claim dated 15 June 2021).”

The Plaintiff in these proceedings is Best Field Inc.

2.  On 27 September 2021, Madam Justice Mimmie Chan gave directions for the filing of evidence and for the matter to be adjourned before a Judge for substantive argument. This is the hearing before me today.

Pleaded Case/Statement of Claim (“SOC”)

3.  It is pleaded that the Defendant is a company incorporated in Hong Kong and that it is a foundation construction company and a wholly owned subsidiary of Beaver Group (Holding) Company Limited (“the ListCo”). The shares of the ListCo are said to be listed on the Growth Enterprise Market Board (“GEM Board”) of The Stock Exchange of Hong Kong. By paragraph 3 of the SOC, the Plaintiff pleads that:

“By an agreement entered between the plaintiff and the defendant in around 2015/2016 the defendant agreed, amongst other things, to transfer 10% of the total issued shares of the ListCo to the plaintiff at no cost. Following the successful listing of the ListCo on or around 17 October 2017, the plaintiff became the beneficial owner of 10% of the total issued shares of the ListCo. Following a transaction as authorised by the plaintiff, the defendant arranged the selling of approximately 1.333% of the total issued shares beneficially owned by the plaintiff to a third party and the sale proceed was subsequently paid by the then controlling shareholder of the ListCo through the plaintiff’s nominee. As at the time prior to the scheme as set out hereinbelow, the plaintiff was the beneficial owner of approximately 8.667% of the total issued shares of the ListCo (“the shares”).

On or around 17 August 2020, the defendant met with the plaintiff (“the meeting”) and informed the plaintiff that they had arranged to sell all their shares of the ListCo including those beneficially owned by the plaintiff to a third party at a consideration of HKD75 million (for 100% of the total issued shares of ListCo) via the following scheme (“scheme”): (a) by a public announcement dated 10 August 2020, the ListCo proposed to issue by way of rights issue on the basis of one right share for every two existing shares held by qualifying shareholders at a certain price (“first rights issue)”. Although the defendant did not inform the plaintiff at the meeting, the ListCo by another public announcement dated 25 January 2021, proposed to a share consolidation, increase in authorised share capital, rights issue and placing. If the then controlling shareholders of the ListCo prior to the scheme do not take up the rights shares to which they are entitled, their shareholding in the ListCo will be diluted after the scheme.

The defendant did not inform the plaintiff whether or not there would be any further transaction, other than the scheme mentioned above, affecting the shareholding of the defendant and/or the plaintiff. The plaintiff reserved its right to amend this Statement of Claim, if required, should there be further development on this subject.

In order to obtain the plaintiff’s agreement to the scheme and by a further verbal agreement made in or around September 2020 between the plaintiff and the defendant, the defendant agreed to purchase the shares from the plaintiff at a consideration of HKD6,500,250.00. It was further agreed that the defendant shall make the first payment of $3,291,099.18 to the plaintiff or its nominee on or before 30 November 2020 and the remaining sum of HKD3,209,150.82 shall be paid by the defendant to the plaintiff or its nominee on or before 15 January 2021.

Alternatively, the defendant ought to have paid the sum of HKD6,500,250.00 to the plaintiff prior to completion of the first rights issue in or around October 2020.

In breach of the agreement set out above, the defendant failed to pay the said sum or any part thereof to the plaintiff and the plaintiff claims against the defendant for (i) the sum of HKD6,500,250.00 and (ii) simple interest...”

4.  As a number of points are made about the SOC, I should say at once that this was not settled by Mr Look-chan Ho who appeared for the Plaintiff today.

5.  Particulars were then sought on the said SOC. I will simply highlight some of the more germane particulars for the purpose of this hearing. Insofar as the agreement referred to at paragraph 3 is concerned (this has been referred in the various skeleton submissions and affidavits as the “Written Agreement” – I will also refer to it in this way), it was confirmed by the Plaintiff that the said agreement was made in writing and that it was made by both parties after a meeting held on 27 November 2015 in preparation for the listing of the Defendant on the GEM Board of The Stock Exchange of Hong Kong.

6.  Insofar as the transaction referred to at paragraph 3 of the SOC is concerned, it was pleaded by the Plaintiff that following the listing of the ListCo, Mr Tang entered into the Written Agreement for the sale and purchase of the 75% of the total issued share capital of the ListCo at a consideration of HKD250 million or 100% of the total issued share capital. The Plaintiff subsequently found out from the Defendant that the agreement was dated 24 July 2018 and pursuant to the agreement, Messrs Tang and Chui Koon-yau would sell and transfer their shares in two stages. As the Plaintiff was the beneficial owner of 10% of the total issued share capital of the ListCo, Mr Tang had to obtain the Plaintiff’s agreement before he could enter into the sale and purchase agreement as mentioned above.

7.  Insofar as paragraph 6 of the SOC is concerned, the further particulars sought and obtained were that the date of the oral agreement was on 1 September 2020 and that it was initiated by Mr Tang for the purpose of explaining to the Plaintiff the latest development regarding the sale of shares of the ListCo.

The Written Agreement

8.  Insofar as the Written Agreement is relevant, I note that it is entitled as a ‘consultancy agreement’ for the listing project. The recitals to the Written Agreement provides that:

“With respect to the intended IPO and listing of the shares of party A and/or party A’s Hong Kong incorporated holding company together with subsidiaries and associated companies on the GEM Board of The Hong Kong Stock Exchange, party A appoint party B as a consultant of the listing group. The scope of service was said to be, on behalf of the listing group, managing, properly arranging the work of all professional units to handle the listing application and to provide consultation and advice to the listing group.”

Under “Payment of service fee”, it was stated at paragraph 2 that:

“At an appropriate time party A will transfer 10% of the shares of the listing group to party B. All relevant expenses shall be borne by party A. The detailed arrangement/timetable will be separately negotiated by both parties. If the listing application is successful, party B will immediately transfer the shares obtained in accordance with this clause back to party A and all the relevant expenses shall be borne by party A.”

The dispute resolution clause is as follows (“the Dispute Resolution Clause”):

“Applicable law, validity, variation and termination of the agreement. This agreement shall be governed and construed in accordance with the Laws of Hong Kong. Any disputes arising from the performance of this agreement or in connection with this agreement shall be resolved through amicable negotiations between the parties within 28 days upon either party’s request in writing. In the event that negotiation between the parties fails, the parties may apply for arbitration to the Hong Kong International Arbitration Centre and proceed with the arbitration in accordance with the arbitration rules of the said centre. Any arbitral award shall be final and binding on both parties.”

Pre-action Correspondence

9.  On 3 May 2021, the solicitors acting for the Plaintiff wrote to the Defendant. In the penultimate paragraph, it was stated as follows:

“Further, in view to save time and costs, we hereby invite you to consider using the Hong Kong Courts instead of arbitration as a platform of any legal proceedings concerning and/or connected to the captioned matters. Please let us have your thought on this matter within the next 14 days, ie on or before 17 May 2021, failing which we shall take that you are agreeable to use the Hong Kong Courts as a platform to resolve the captioned matter. We reserve our client’s rights to produce a copy of the letter to the court at an appropriate opportunity. You ignore this letter at your own perils.”

10.  On 28 May 2021, the Plaintiff’s solicitors wrote again to the Defendant, noting that they had as at the date of the letter yet to receive any reply. Again, they stated that:

“Further, we note that you did not object to our proposal to resolve the said matter at Hong Kong Courts. In this regard, unless we receive your formal written reply stating otherwise within the next 7 days, ie on or before 4 June 2021, we shall take that you have no objection to use the Hong Kong Courts instead of arbitration as a platform to resolve the captioned matter. Should you later decide to take out a summons/application at court proposing the same, we shall defend such summons/application strenuously and produce a copy of this letter to the court at an appropriate opportunity. You ignore this letter at your own perils.”

11.  The Writ in the present proceedings was then issued on 15 June 2021. The Defendant’s solicitors wrote to the plaintiff’s solicitors on 23 July 2021. They stated that:

“Without admitting the authenticity of the alleged agreement and without prejudice to our client’s right to challenge the validity and enforceability of the alleged agreement, it is noted that clause 1 on page 2 of the alleged agreement provides that...”

The Dispute Resolution Clause was then copied to the said letter and the Defendant’s solicitors concluded that:

“As such, any dispute arising out of or in relation to the alleged agreement shall be referred to and finally resolved by arbitration...”

Relevance of Factual Evidence

12.  Factual evidence on the merits is not usually a matter of great concern to the Court on an application such as the present. Suffice it to note that the Defendant’s position in its affirmation evidence appears to be that the Plaintiff is not entitled to enforce the Written Agreement as it is void and therefore the Plaintiff has never become the 10% beneficial owner in the ListCo’s shareholding. Insofar as the affirmation evidence goes for the Plaintiff, it would appear to suggest that the Written Agreement was a properly negotiated agreement which had been discussed at some length.

13.  Mr Ho in his skeleton submissions suggested that the two main contentions made by the Plaintiff in resisting the stay were:

(a)  that the disputes under the oral agreement are not subject to any arbitration agreement;

(b)  that in any event the arbitration agreement was merely permissive and therefore the Defendant should no longer be permitted to invoke arbitration in light of its silence in the face of the two letters sent by the Plaintiff’s solicitors.

Applicable Legal Principles

14.  Both Mr Ho and Mr John Hui (who appeared for the Defendant), cited quite a number of cases. I hope I shall be forgiven if I do not recite all of them. I found the following extracts in those authorities to be of particular relevance to the present application.

15.  In Polytec Overseas Ltd v Grand Dragon International Holdings Co Ltd [2017] 3 HKLRD 258, the Court held that: 

“21. The principles applicable to the determination of the application for stay of these proceedings are not disputed.

22. Section 20 of the Arbitration Ordinance (Cap. 609) (Ordinance) incorporates art.8 of the Model Law. Article 8(1) states: A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his 1^st statement of the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.

23. As the court set out in Tommy CP Sze v Li & Fung (Trading) Ltd [2003] 1 HKC 418, the four questions for the court are: (1) Is there an arbitration agreement between the parties? (2) Is the clause in question capable of being performed? (3) Is there in reality a dispute or difference between the parties? (4) Is the dispute or difference between the parties within the ambit of the arbitration agreement.

24. The onus is on LHK and X as the applicants for stay to show that there is a prima facie or plainly arguable case that the parties are bound by an arbitration clause, and unless the point is clear, the court should not resolve the issue, and the matter should be stayed in favour of arbitration for the arbitral tribunal to determine its own jurisdiction (PCCW Global Ltd v Interactive Communications Services Ltd [2007] 1 HKLRD 309).

25. For the stay to apply, the action before the court must be “in the same matter” that is the subject of the arbitration agreement, and not purely “related” to it or “involved” in it (HM Holtzmann & J Neuhaus, A Guide to the UNCITRAL Model Law). In ascertaining the “matter”, the court should consider the substance of the controversy as it appears from the circumstances and evidence, and not just the particular terms in which the claimant has sought to formulate its claim in court (Merkin, Arbitration Law, para.8.20 and the cases cited therein). The focus is on the substance of the dispute, and not the pleadings.”

Paragraphs 45 and 51-53 are also of application here:

“45. It cannot be disputed that a valid arbitration agreement can be expressed in permissive terms (as by use of ‘may’ in the Arbitration Clause), conferring the right on LHK in this case to require the plaintiffs under the Arbitration Clause to submit the dispute to arbitration by an application for stay (see Hermes One v Everbread Holdings [2016] 1 WLR 4098).”

“51. As illustrated in the case of Sargeant v ASL Developments Ltd (1997) 131 CLR 634, 646, for the doctrine of election as between two inconsistent legal rights to apply, the words or conduct ordinarily required to constitute an election must be unequivocal, in the sense that it is consistent only with the exercise of one of the two sets of rights and inconsistent with the exercise of the other. Even in the case of The Thor Scan [1999] 2 HKLRD 136 relied upon by the plaintiffs, the Court emphasised that for waiver to operate, the party in question must have, by conduct, clearly and unequivocally abandoned his right or indicated that he was not exercising such right.

52. In The Thor Scan, Chan CJHC (as His Lordship then was) referred to the case of The Kanchenjunga [1990] 1 Lloyd’s Rep 391, where Lord Goff explained the principle of waiver, and in the particular relevant context, waiver in the sense of abandonment of a right which arises by virtue of a party making an election. Chan CJHC summarised the position and explained that for the principle of waiver to operate, it must be shown that: (1) a party has a right under a contract or by operation of law; (2) he knows of the existence of the right or the facts giving rise to such right; and (3) he has, “by conduct, clearly and unequivocally abandoned his right or indicated that he is not exercising such a right”.

53. Ultimately, each case must of course be considered in context and on its own facts. In The Thor Scan itself, the appellant had commenced proceedings in the Netherlands, and pursued it to judgment or a decision being handed down by the Dutch court in the Netherlands, finding that it was not competent to deal with the claim as the principal place of business of the appellant was the Antilles. Such conduct of commencing, and pursuing, the Dutch proceedings was held by the court to be clear and unequivocal abandonment of the appellant’s right to arbitrate, or a clear and unequivocal indication that the appellant was not exercising the right to arbitrate.”

16.  Madam Justice Mimmie Chan in Kinli Civil Engineering Limited v Geotech Engineering Limited [2021] 6 HKC 524 explained at paragraph 23 of her judgment that:

“23. As the courts have explained, an arbitration agreement can be held to exist so long as the intention to arbitrate is sufficiently clear (China State Construction; Continental Corporation (No 2) v Vincenzo Fedele [1964] HKLRD 213; Hobbs Padgett v JC Kirkland [1969] 2 Lloyd’s Rep 547). The modern approach to the construction of arbitration agreements is the presumption in favour of arbitrability and the ‘one-stop’ adjudication approach (Fiji Shipping Co Ltd and others v Premium Nafta Products Ltd [2007] BUS LR 1719), at least as a useful starting point. In Fili Shipping, Lord Hoffmann referred to the construction of an arbitration clause as ‘starting from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship in which they have entered or purported to enter to be decided by the same tribunal’. There are of course reminders from the courts that the presumptions may be rebutted and would not be applicable in particular cases, eg where the parties have entered into different interlinked agreements, relating to different aspects of an overall and often complex commercial transaction, and where they are differently expressed choices of jurisdiction and/or law in different agreements providing for different manner of resolution of disputes.”

17.  Kaplan J in China State Construction Engineering v Madiford Limited [1992] 1 HKC 320 at page 325F to H noted that:

“It seems clear to me that the parties in the case before me had agreed on arbitration as opposed to litigation in the courts in any particular country. The fact that the permissive word ‘may’ was used does not in the end detract from this agreement. It seems to me once one party or the other has opted for arbitration (as by taking out this application for a stay) the other party is obliged to honour the agreement to arbitrate. It follows, of course, that if both parties agreed not to arbitrate but to litigate, they would be perfectly free to do so but I do not think the word ‘may’ in the context of this clause entitles the plaintiffs to negate the defendants’ wish to arbitrate by the issue of court proceedings. At the end of the day, it seems to me that this is one of those cases where the word ‘may’ in effect means ‘shall’. I do not think that the defendants are prevented from insisting upon arbitration merely because the plaintiffs issued their proceedings before any steps could be taken by the defendants to commence the arbitration.”

18.  More recently, Madam Justice Mimmie Chan in Giorgio Armani SPA v Elan Clothes Company (No 2) [2020] 1 HKLRD 354 held at paragraph 18 of her judgment that:

“18. Of particular importance in the construction of contracts including arbitration clauses, are the commercial considerations highlighted by Lord Hoffmann in Fiona Trust & Holding Corp v Privalov [2007] 4 All ER 951. The assumption is that as rational businessmen, parties are likely to have intended any dispute arising out of the relationship in which they had entered or purported to enter to be decided by the same tribunal. An arbitration clause should be construed in accordance with this presumption unless the language makes it clear that certain questions were intended to be excluded from the arbitrator’s jurisdiction. The courts have emphasised that if any businessman did want to exclude disputes about the validity of the contract, or disputes of a particular type, it would be comparatively easy for them to say so expressly. Otherwise, having gone to the trouble of agreeing that their disputes would be heard in the courts of a particular country or by a tribunal of their choice, they could not rationally have expected that time and expense would be taken in lengthy argument about the nature of particular causes of action, and whether any particular cause of action comes within the meaning of a particular phrase they have chosen in the arbitration clause.”

19.  In PCCW Global v Interaction Communications Service Limited [2007] 1 HKLRD 309, the Court of Appeal pointed out there is no provision in Hong Kong which is similar to Order 73, rule 6(2) of the Rules of the Supreme Court in England, which provides that:

“Where a question arises as to whether an arbitration agreement has been concluded or as to whether the dispute which is the subject matter of the proceedings falls within the terms of such agreement, the court may determine that question or give directions of its determination, in which case it may order the proceedings to be stayed pending the determination of that question.”

At paragraphs 59 to 61 of his judgment, Tang VP (as Tang NPJ then was) held as follows:

“59. Since we are of the view that cl.11.3 provided for enforceable though permissive arbitration, the only remaining question is whether a billing dispute falls within the ambit or scope of cl.11.3.

60. It is important for the court not to usurp the function of the arbitrators, and unless the point is clear, the matter should be stayed for arbitration. In that respect, the absence of provisions similar to O.73, rule 6(2) is significant. In Hong Kong, we do not believe the court should attempt to resolve that issue, even though under art.16(3) of the Model Law, the court has power to decide the question of jurisdiction after determination of the question by the arbitral tribunal as a preliminary question.

61. Only if it is clear that cl.11.3 does not cover billing disputes, should the court refuse a stay.”

20.  In the context of multiple related agreements and how the existence of dispute resolution clauses interact with one another, I found the decision of Mr Justice Jacobs in Etihad Airways PJSC v Flöther [2020] QB 793 (upheld by the Court of Appeal, [2022] QB 303) to be of assistance. His Lordship held that:

“58. The general approach to construing jurisdiction clauses under English law is that a broad, purposive and commercially minded approach is to be followed: see, for example, Rifiuti [2020]1 All ER 762, para 68(2), per Hamblen J.

59. The present clause is extremely wide. It applies to ‘any dispute arising out of or in connection with the Agreement’; words which have been described by Males LJ in Airbus (para 70) as an ‘all-encompassing expression’. It also extends to ‘a dispute relating to non-contractual obligations arising from or in connection with this Agreement’. Just as in Airbus, where similar words appeared, the natural meaning of the clause is that it is intended to be comprehensive.

60. In the well-known decision in Fiona Trust [2007] Bus LR 1719, the House of Lords held that when construing an arbitration clause, the court ‘should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal’: Fiona Trust, para 13, per Lord Hoffmann. The same starting point applies to a jurisdiction clause. The parties’ submissions disagreed, however, as to whether this starting point or assumption has any relevance to the present case, where the issue is whether the jurisdiction clause in the Facility Agreement extends to disputes arising in connection with a separate document (and which Air Berlin would characterise as a separate agreement), namely the Comfort Letter.

61. I consider that the same starting point should apply, although (for reasons explained below) I would reach the same conclusion on the basis of the agreements and documents even if that starting point were not adopted.

62. The general principles applicable to the construction of jurisdiction clauses, both in cases where there is a single agreement and where the parties’ arrangements are set out in multiple related agreements, are summarised in the judgment of Thomas LJ in Sebastian Holdings [2010] EWCA Civ 998; [2011] Bus LR D 139…”

In so far as construing such clauses are concerned, Jacobs J continued to recite the following principles:

“39. It is clear that in construing a jurisdiction clause, a broad and purposive construction must be followed: Donohue v Armco Inc [2002] 1 All ER 749 and Fiona Trust and Holding Corpn v Privalov [2007] Bus LR 686, affirmed by the House of Lords [2007] Bus LR 1719 where Lord Hoffmann observed at para 7: ‘If, as appears to be generally accepted, there is no rational basis upon which businessmen would be likely to wish to have questions of the validity or enforceability of the contract decided by one tribunal and questions about its performance decided by another, one would need to find very clear language before deciding they must have had such an intention.’

40. The Supreme Court emphasised in In re Sigma Finance Corpn [2010] 1 All ER 571 the need, when looking at a complex series of agreements, to construe an agreement which was part of a series of agreements by taking into account the overall scheme of the agreements and reading sentences and phrases in the context of that overall scheme.

41. It is generally to be assumed on these principles that just as parties to a single agreement do not intend as rational businessmen that disputes under the same agreement be determined by different tribunals, parties to an arrangement between them set out in multiple related agreements do not generally intend a dispute to be litigated in two different tribunals.

42. However, where there are multiple related agreements, the task of the court in determining whether a dispute falls within the jurisdiction clauses of one or more related agreements, depends upon the intention of the parties as revealed by the agreements against these general principles.”

Jacobs J then pointed out that:

“44. However, support for the potential applicability of the Fiona Trust assumption in the context of multiple agreements can be found in the judgment of the Court of Appeal in AmTrust Europe v Trust Risk Group SPA [2016] 1 All ER (Comm) 325. Having quoted from Fiona Trust, Beatson LJ said:

45. That case concerned the scope of a single arbitration clause. This case concerns an overall agreement package which contains two express choice of law and jurisdiction clauses, one of English law and jurisdiction, the other of Italian law and arbitration. Mr Samek submitted that, although the present case is not about the scope of a single arbitration clause, the Fiona Trust ‘one-stop/‘one jurisdiction’ presumption remains a useful starting point. In principle, and subject to the qualification in the next paragraph, I agree. As Lord Collins stated in UBS AG v HSH Nordbank AG [2010] 1 All ER (Comm) 727, para 84, where the agreements are all connected and part of one package, ‘sensible businesspeople would not have intended that a dispute of this kind would have been within the scope of two inconsistent jurisdiction agreements’.

46. Where the overall contractual arrangements contain two or more differently expressed choices of jurisdiction and/or law in respect of different agreements, however, the position differs in that one does not approach the construction of those arrangements with a presumption. So, the 14^th edition of Dicey, Morris & Collins on the Conflict of Laws, para 12-094 stated: ‘the decision in Fiona Trust has limited application to the questions which arise where parties are bound by several contracts which contain jurisdiction agreements for different countries. There is no presumption that a jurisdiction (or arbitration) agreement in contract A, even if expressed in wide language, was intended to capture disputes in contract B; the question is entirely one of construction…”

Jacobs J concluded the topic at paragraph 65 in this way:

“65. Accordingly, the Fiona Trust starting point will potentially apply for the reasons given by Beatson LJ – where there is an ‘overall agreement package’, but not if the arrangements contain two or more differently expressed choices of jurisdiction and/or law in respect of different agreements. The potential importance of considering whether related contracts are part of one package is discussed by Beatson LJ at para 49. Where the contracts are not part of one package, it may be easier to conclude that the parties chose to have different jurisdictions to deal with different aspects of the relationship.”

Analysis

Preliminary Point

21.  As a preliminary point, Mr Ho suggested that on the basis of the wording of the Dispute Resolution Clause, it was not clear whether it could properly be said that it was an arbitration clause in the sense conventionally understood. In this regard, the clause provided that:

“In the event that the negotiation between the parties fails, the parties may apply for arbitration to the HKIAC and proceed with the arbitration in accordance with the arbitration rules of the said centre.”

The reference to ‘both parties’ could be interpreted as meaning that unless both parties agree and consent to arbitration, no arbitration would be mandated. I agree that whether a dispute resolution clause can properly be construed and interpreted as a binding arbitration clause must depend on the construction of the relevant clause.

22.  Mr Ho referred to such an instance in The Incorporated Owners of Wing Fai Building, Shui Wo Street v Golden Rise (HK) Project Co Ltd, unreported, DCCJ 225/2016, 23 June 2016, a judgment by the Deputy District Judge Winnie Tsui (as she then was).

23.  The relevant clause there was set out paragraph 9 of her Honour’s judgment:

“9. Clause 4.1.36 has a heading entitled “Arbitration”（「仲裁」） and comprises 2 sub-clauses – (a) and (b). Sub-clause (a) reads:

「無論在本合約執行期間、或在本合約完成、或被放棄之後，僱主與承建商（無論因違約或其他原因）就本合約或與其相關之任何事項發生爭執或分歧時，任何一方可以書面通知對方，而有關之爭執或分歧可轉呈由雙方同意委任之仲裁人，根據仲裁條例或當時有效之修訂條文之規定進行仲裁，無論裁決結果如何，對雙方均為決定性或具約束力。除非仲裁的問題關於僱主的指示是否得本合約授權、或關於證書的發出是否有不恰當的抑制、或除非僱主與承建商一致的書面同意，否則不能在本合約完成或以為完成之前、或承建商僱用終止或以為終止之前、或放棄本合約之前進行仲裁。雖然提交仲裁決定，承建商仍須遵從及繼續遵從任何與受仲裁問題有關的僱主指示或決定，直至仲裁人有裁決為止。根據仲裁人裁決而需負責的一方承擔全部仲裁費用。」 (emphasis added)

Sub‑clause (b) reads:

「雙方確認及同意仲裁只是解決爭執或分歧的途徑之一，在未經對方書面同意下，任何一方不得單方面展開仲裁程序。」”

24.  The learned Judge’s conclusion at paragraph 34 was as follows:

“34. First, the two sub-clauses are to be read together. While sub-clause (a) does provide in some detail in what circumstances a party ‘may’ refer a dispute to arbitration, as submitted by the plaintiff, sub-clause (b) expressly provides that arbitration is one of the means to resolve disputes and, most importantly, arbitration cannot be commenced by one party without the written consent of the other. The latter party may give its consent or it may withhold its consent. In other words, it has a choice and it cannot be compelled to submit to arbitration.”

25.  In Kinli Civil Engineering Limited (supra), Madam Justice Mimmie Chan noted some of the more peculiar features of the clause in Golden Rise (supra). Her Ladyship noted at paragraph 17:

“17. …The arbitration clause in IO v Golden Rise includes the express provision and the parties’ express acknowledgement that ‘arbitration was only one of the options for the resolution of disputes’, and that neither party may unilaterally commence arbitration without the written consent of the other. With such a contractual provision, it is not surprising that the court found that there was no agreement that arbitration was the exclusive course for the resolution of disputes and that the defendant’s unilateral application to stay the proceedings should be refused.”

(my emphasis)

26.  In fairness to Mr Ho, he did not forcefully rely on this point, which I cannot accept. Instead, he contended that the other two points, which I shall deal with below, were more substantial.

The Construction/Incorporation Point

27.  The crux of the dispute, which has to be seen through the prism of how the parties have advanced their claim/potential defence, and particularly in the SOC, is as follows. On the one hand, for the purpose of this application at least, the Plaintiff highlights the fact that its cause of action is said to arise from the oral agreement which was made in or around September 2020. On the other hand, the Defendant understandably highlights the fact that the oral agreement pleaded at paragraph 6 of the SOC must logically be premised on the foundation of the Plaintiff being a shareholder. According to the Defendant, that foundation arises by reason of paragraph 3 of the SOC, which in turn relies on the Written agreement entered in around 2015/2016, where the Defendant had agreed, amongst other things, to transfer 10% of the total issued shares in the ListCo to the Plaintiff. It was pleaded that following the successful listing of the ListCo on or around 17 October 2017, the Plaintiff became the beneficial owner.

28.  It would be fair to observe that the SOC is perhaps not as entirely clear as it could have been, and that the only basis upon which it appears to suggest that the Plaintiff held the beneficial interest in the ListCo shares was by virtue of the Written Agreement. Although I accept that conceptually there could have been other reasons why someone in the position of the Plaintiff might have become so entitled, no other reason has been pleaded. Further, whilst conceptually one could look at the question of the oral agreement in a vacuum, the reality is that based on the SOC as pleaded, such oral agreement must fail if the contention that there is an entitlement to the share (which arises by virtue of the Written Agreement) fails.

29.  I recognise that by relying on a separate agreement (here the oral agreement) rather than the Written Agreement itself, the presumption which is often relied upon in Fiona Trust would apply in a slightly different fashion. In turn, one has to consider the actual factual matrix as it applies here. There is no suggestion that there was a separate dispute resolution agreement insofar as the oral agreement was concerned. It is not a case where one is faced with two different agreements with two different dispute resolution clauses, so one then has to construe both the Written Agreement and the oral agreement as pleaded. Having regard to the wide language used in the Written Agreement, that “any disputes arising from the performance of this agreement or in connection with this agreement”, it seems to me that this would cover matters which form the complaint of the breach by reason of the oral agreement. The complaint, after all, was the monetisation of the shares which themselves were effectively recompense for the consulting services it had provided. In other words, from the word ‘go’, what the Plaintiff was looking for was for a fair reward for the services which it says it had provided to the Defendant, and what happened as a result of the alleged oral agreement was in effect monetisation of the said recompense.

30.  Applying the principles set out above, it seems to me that the matters/complaint arising from the oral agreement could be fairly said to fall within the wide scope of the arbitration clause as set out in the Written Agreement.

Waiver/Election/Consent

31.  Although Mr Hui in his skeleton submission had argued the case on the assumption that the Plaintiff was relying on arguments based on waiver, by the time of the hearing at least, it was clear that what Mr Ho was relying on was this: as the clause was in fact a ‘permissive clause’ and because of the two letters which have been sent and unresponded to by the Defendant, that silence would have constituted acceptance of using the courts as a means to resolve the dispute.

32.  Mr Ho prayed in aid paragraph 53 of the decision of the Singaporean Court of Appeal in R1 International Property Ltd v Lonstroff AG [2014] SGCA 56, where Sundaresh Menon CJ, giving the reasons for the court, held as follows:

“53. Third, although silence by one party may not by itself constitute acceptance of the terms sent by the other party, it does not follow from this that silence is fatal to a finding that the terms sent have been accepted. The effect of silence is context-dependent. In many cases, while there may not be actual communication of acceptance, the parties’ positive, negative or even neutral conduct can still evince acceptance: Midlink Development Property v The Stansfield Group Property [2004] 4 SLR 258 at paragraphs 50 to 52.”

33.  I accept that in certain cases, silence in the face of a request like other forms of conduct, can in principle provide an evidential basis upon which one could infer acceptance. It is, as the Singapore Chief Justice points out, context-dependent.

34.  Having considered the context and background in which the two letters were sent and what the Plaintiff would consider to be the deafening silence in this case, I am not able to conclude that on the facts of the case this would amount to evincing such an intention, such that one should infer that the terms have been accepted by the Defendant to agree to refer to the courts as a means to resolve the dispute.

35.  This is not to say that there is nothing in the Plaintiff feeling justifiably frustrated at the non-response to its request. Reading perhaps between the lines, it may well have been the case that the Plaintiff would have considered going for arbitration if the Defendant had at an earlier stage indicated that it was prepared to do so. Presumably someone in the position of the Plaintiff simply wants to get on with the case and identify the appropriate forum, whatever that forum is, to resolve its disputes as quickly, efficiently and cheaply as possible.

36.  As I have indicated to Mr Hui in the course of argument, even if the ‘non-response’ to the letters does not necessarily amount to either waiver, estoppel, variation or acceptance by the Defendant of the mode of dispute resolution as a matter of law, these are matters which must be relevant to the discretionary mix in terms of the overall costs position and I will now turn to costs.

(Submissions on costs and determination on costs)

37.  It remains for me to thank the parties’ counsel for their assistance.