HEALTHY SUN LTD v. KEN FOR WARD ENGINEERING LTD

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NOS.73, 97 AND 108 OF 2000

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DECISION

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          There are four matters before the court:-

1. The plaintiff's summons for a declaration that two arbitrators had no jurisdiction to hear arbitrations that they were currently hearing, dated 17 July 2000.

2. The defendant's summons to strike out the above action, dated 5 September 2000.

          In fact the plaintiff's summons has never been heard because the plaintiff took out, on 1 and 27 September, two originating motions to appeal the same point of the jurisdiction of the arbitrators as was sought in their summons for a declaration (1 above).

3 and 4. The plaintiff's application for leave to appeal this court's decisions on the plaintiff's originating motions for leave to appeal the arbitrators' determination of their own jurisdiction (dated 1 and 27 September above). That hearing was before this court on 27 November 2000 and the decision was handed down on 5 December 2000.

          These four summonses give rise to two separate issues. I will deal with them in reverse order.

1. Leave to appeal

          Mr Hingorani, for the defendant, relies on Article 16(3) of the Model Law which provides that :-

" (3) The arbitral tribunal may rule on a plea referred to in paragraph (2) of this article either as a preliminary question or in an award on the merits. If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within 30 days after having received notice of that ruling, the court specified in article 6 to decide the matter, which decision shall be subject to no appeal; while such a request is pending, the arbitral tribunal may continue the arbitral proceedings and make an award."

          Mr Chain, for the plaintiff, submits that the two arbitrators ruling on jurisdiction was an "award" and that the right of appeal under Article 16(3) is only taken away on "a ruling as a preliminary question ...". I reject this submission. A ruling on jurisdiction, by its very nature, is a preliminary ruling which much precede an award on the merits. The fact that it may be titled an "award" or an "interim award" does not mean it ceases to be a preliminary ruling on jurisdiction, which it plainly was.

          Mr Chain also submits that the basis upon which Article 16(3) has been included in the Hong Kong law, namely by virtue of section 13B of the Arbitration Ordinance, Cap.341 which provides as follows :-

          Article 16 of the UNCITRAL Model Law applies to an arbitral tribunal that is conducting arbitration proceedings under a domestic arbitration agreement in the same way as it applies to an arbitral tribunal that is conducting arbitration proceedings under an international arbitration agreement."

does not alter the provisions in Cap.341 which regulate the parties' right of appeal from arbitration generally, namely section 23 :-

" (7) No appeal shall lie to the Court of Appeal from a decision of the Court on an appeal under this section unless the Court or the Court of Appeal gives leave."

Such leave may only be granted if :-

" (4) ..., having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more of the parties to the arbitration agreement; and the Court may make any leave which it gives conditional upon the applicant complying with such conditions as it considers appropriate."

          Mr Chain's argument is that section 13B only gives statutory recognition that the pre-existing rule in international arbitrations also applies on domestic arbitration and does not affect section 23.

          Again, I do not agree. I find myself unable to turn my back on the clear words of Article 16(3) which is part of the law of Hong Kong. In my judgment, no right of appeal is available to the plaintiff.

          Had there been a right of appeal, the plaintiff would still have had the task of persuading the court to determine that the case falls within the provisions of section 23(4) above. It is by no means certain that it would have succeeded in doing so. However, in view of my finding that no appeal lies, it is unnecessary for me to address that issue.

2. The declaration and strike out summonses

          There is no argument that the plaintiff's declaration summons should be dismissed. It was never pursued. The applications for leave to appeal took its place. The issues before the court would have been precisely the same.

          However, the defendant seeks an order in terms of its strike out summons and costs because, it is submitted, the defendant correctly took the view that the declaration summons was procedurally wrong and should be struck out. It was procedurally wrong because it was taken out before the learned arbitrator had made a determination on the question of jurisdiction. The arbitrator had the right to determine the question of her own jurisdiction and had been invited to do so by the plaintiff (the respondent in the arbitration) in the course of the arbitration. Thus two different tribunals were being asked to determine the same issue which, it is submitted, is an abuse of process.

          Mr Chain makes the point that the return date fixed for the hearing of striking out summons was in October, after the filing of the two motions for leave to appeal and the ruling by the arbitrator was published on 6 September, the day after the striking out summons was filed. It was therefore plain that the matter would proceed on the basis of the applications for leave to appeal and not on the summons for declarations.

          Both counsel referred to a wealth of authority on this matter. I am grateful for their assistance. Nonetheless, I consider the orders I should make, bearing in mind :-

are straightforward. They are as follows :-

          This order is intended to reflect the fact that counsel had to come to court in any event to argue the main issue of leave to appeal. The pre-court costs of the strike out summons will be little more than the cost of service and filing, and the cost of Mr David Chow's affirmation of 4 September 2000.

          Finally, the costs of the two summonses seeking leave to appeal shall also be to the defendant.