A LTD. v. B

1998, No. CT80

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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JUDGMENT

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1. This is an application by the plaintiff to remove the defendant as arbitrator in an arbitration between the plaintiff and another party. The plaintiff asks the court to exercise the power under section 15(3) of the Arbitration Ordinance (Cap. 341). This reads -

"(3) The Court may, on the application of any party to a reference, remove an arbitrator or umpire who fails to use all reasonable dispatch in entering on and proceeding with the reference and making an award, and an arbitrator or umpire who is removed by the Court under this subsection shall not be entitled to receive any remuneration in respect of his services."

2. The originating summons commencing these proceedings was issued on 8 August 1998. The plaintiff's solicitors wrote to the arbitrator on the same day asking him not to publish his award. After the defendant had received this summons and the letter, the arbitrator wrote to the plaintiff's solicitors saying that "As I have not yet been removed I consider it my duty to continue to act until the outcome of this action taken by the claimant.". The solicitors for the other party wrote to the arbitrator on 14 August 1998 saying "it would be more sensible if you do not publish any award until the final outcome in the claimant's action". In spite of this, the arbitrator wrote to the parties' solicitors on 14 August 1998, referring to the statement for the solicitors for the other party, and saying ". . . whether it is sensible to publish my award, this is for the claimant to decide." In this letter, he also said that his full and final award "is now ready for publication.". In his affidavit filed in these proceedings, the defendant now says that the sentiment expressed by the other party's solicitors "came too late, as the award had been published on 12 August 1998.". This fact was not stated by the defendant in correspondence until his letter of 18 August 1998.

3. It is on the basis that the defendant made his award on 12 August 1998 that Mr Peard argues that, from that date, the defendant no longer held the office of arbitrator, and, therefore, he cannot be removed from it. In essence, Mr Peard says that, although the case may fall within section 15(3), I am not able to remove the arbitrator because he is no longer the arbitrator.

4. I believe this point is not a good one. Generally, when a court is judging a case, it looks to the rights and wrongs of the matter as at the date of the commencement of the proceedings. There are, of course, exceptions to this, but none that I think are relevant here. If a plaintiff sues for breach of contract, but the breach did not occur until after the issue of the writ, the plaintiff is out of court. In this case, if there was no failure "to use all reasonable dispatch" at the time of the issue of the originating summons, but only after, the power under section 15(3) could not be exercised. If the arbitrator is to be removed, he is to be removed as from the date of the issue of the summons because that is when his failure occurred. The question of whether or not the arbitrator is to be removed is to be resolved with regard to the time the plaintiff makes its application, not at the time I make my order. If it were otherwise, any arbitrator could unilaterally deprive the court of its power under section 15(3) by simply making his award, willy-nilly, good or bad, properly considered or not properly considered, before the order is made. As Mr Coleman said, the defendant could make his award today, as I sit in chambers considering this matter, and, if Mr Peard is right, that would an end to the matter, other than in respect of costs. Although I might already have found that the case fell within section 15(3), I could not make any order by the will of the defendant. That cannot be what the legislature contemplated in enacting section 15(3). The legislature cannot have intended that the purpose of section 15(3) was only to provide an application of the spurs to invite the arbitrator over the last jump, and, if he took the opportunity, he was free and clear. That approach would also encourage, contrary to the interests of the parties, an arbitrator to make a hasty, ill-considered award. Accordingly, I intend to consider this matter as at 8 August 1998 when the arbitrator was still holding his office.

5. The situation on 8 August 1998 was that the defendant had been in a position to consider and deal with this arbitration since 10 March 1997. At that time, the defendant said that he would make his award in April 1997. After April 1997, there is a sorry tale of delay, urgings by the plaintiff to proceed, broken undertakings and excuses for failure to render the award. There is, on the defendant's own case, a period of eight months during which the defendant did nothing to advance his work. The reasons he gives for this are mostly other commitments, but also occasional ill-health. Having to devote time to other commitments is not, of course, an adequate explanation. The simple fact is that, if the defendant was unable to devote time properly to this arbitration, he should not have accepted his appointment, and, if he accepted his appointment being able to discharge his duties properly, he should not have undertaken other commitments that rendered him unable to do his job properly in respect of this arbitration. And, if the worse came to the worse, and he found himself, for reasons beyond his control, unable to do his job properly, he should have confessed this to the parties and sought his release from them or the court. It must be borne in mind that one of the prime reasons why businessmen choose arbitration over litigation in the courts is because they wish to obtain a speedy resolution of their disputes. If I, as a judge not having control of other matters placed before me for decision, had delayed making a decision as this arbitrator did, I would be thoroughly ashamed and deserving of being roundly criticised. All the more this should be so in the case of an arbitrator, who has much more control of his workload and way of working.

6. Mr Peard accepts that the defendant has been guilty of undue and unreasonable delay, but he says that, as a matter of the exercise of my discretion, I should not order the arbitrator's removal. I cannot myself see any mitigation in the arbitrator's conduct that would justify me not exercising my discretion against him. Unwisely, the defendant was not legally represented for the purpose of preparing his affidavit. Wise counsel would have advised acceptance, as Mr Peard has now done, of fault, whereas the defendant's attitude is, as Mr Coleman said, unattractive, and consists of a litany of self-justifications not, as a whole, amounting to an adequate explanation. I am also unhappy with the arbitrator's conduct when faced with the application on 8 August 1998. I get the impression of an undignified scramble by him to get the award out quickly to avoid the consequences of section 15(3) in spite of the clear request by the plaintiff not to do so and the expression of opinion by the other party that it would be sensible not to publish the award. I know that now the arbitrator says that this expression of opinion was too late, but this is not what he said contemporaneously in his letter of 14 August 1998. Then he did not say "I signed and dated my award on 12 August, so it is too late for your to express your view." What he did say was that this was a matter for the plaintiff to decide. And on 11 August 1998, the arbitrator said that he would be in a position "to publish my award in the course of the next few days" and that "the printing and copying of the award, the reasons for the award and the attachments to the award are currently in hand, which will be followed by binding and final preparation. . . . the parties will be informed when and where my award will be ready for collection." In the light of this, and the failure to say in the letter of 14 August 1998 that the award had been signed two days before, I am unhappy with the arbitrator's stated reasons for proceeding to make the award.

7. In the result, appreciating the seriousness of this, but seeing no adequate reason for refusing to do so, I make an order removing the arbitrator with effect from 8 August 1998.

8. The matter of costs has not been argued, but there seems no obvious reason why they should not follow the event. I make an order nisi that the defendant pay the plaintiff's costs.