K&C ASIA PACIFIC LTD v. G AND ANOTHER

HCCT 7/2021

[2021] HKCFI 865

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 7 OF 2021

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D E C I S I O N

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1.  On 19 January 2021, this Court made an order (“Enforcement Order”) granting leave to the Plaintiff to enforce an arbitral award dated 4 September 2020 (“Award”) made by the Korean Commercial Arbitration Board (“Board”) in an arbitration between the Plaintiff as 2^nd Claimant and the Defendants as Respondents (“Arbitration”). This was on the application made by the Plaintiff on 15 January 2021.

2.  On 17 February 2021, the Defendants issued a summons to set aside the Enforcement Order (“Summons”), on the ground that they had not been given proper notice of the appointment of the arbitrator and of the arbitral proceedings, were unable to present their case and that it would be contrary to public policy to enforce the Award.

3.  Order 73 rule 10 (6A) RHC requires an application to set aside an order granting leave to enforce an arbitral award to be made by summons supported by affidavit, and for such affidavit to be filed at the same time as the summons.  Notwithstanding this, no affidavit was filed when the Summons was issued on 17 February 2021.

4.  The objective of the Arbitration Ordinance (“Ordinance”) and of Order 73 which applies to proceedings made under the Ordinance is to facilitate the fair and speedy resolution of disputes by arbitration without unnecessary expense, and enforcement of arbitral awards on applications made under the Ordinance should be as mechanistic as possible (as the Courts have held).

5.  Under Section 86 of the Ordinance, enforcement of an award may be refused by the Court only if the person against whom the award is invoked proves the grounds set out in section 86.  In compliance with Order 73 rule 10 (6A), the applicant should clearly set out in the Summons and in the affidavit filed in support the grounds and evidence relied upon to set aside the Enforcement Order.  The Court and the party entitled to enforcement of an arbitral award made in its favour should be given clear notice of such grounds and evidence, from the time when the Summons is issued, so as not be in any state of uncertainty as to the status of the award sought to be enforced.

6.  The Defendants only filed an affirmation to support the Summons on 18 February 2021, albeit only one day late.  In the affirmation of the 2^nd Defendant made on behalf of both herself and the 1^st Defendant, the Defendants simply claimed that they had not received notice of the Arbitration before they were served with the Enforcement Order on 3 February 2021.  They claimed that it was only when they received the letter of that date from the Plaintiff’s solicitors, enclosing the Enforcement Order, that they were notified that the Plaintiff had commenced the Arbitration in 2019, and had obtained the Award against the Defendants in September 2020.

7.  Even if this Court were to consider the late affirmation of the Defendants filed after the issue of the Summons, it discloses no reasonably arguable grounds for setting aside the Enforcement Order.

8.  According to the Plaintiff, the Request for Arbitration dated 1 February 2019 was served by the Board on the 1^st and 2^nd Defendants, by letter dated 8 February 2019.  The letter was sent by DHL courier to the addresses of the 1^st and 2^nd Defendants as specified in the Share Subscription Agreement (“Agreement”), under which the disputes arose and in relation to which the Arbitration was commenced.  The address of the 1^st Defendant specified in the Agreement was its registered office address in Hong Kong.  The delivery was acknowledged by both Defendants, as evidenced by the delivery receipts signed on behalf of the 1^st Defendant and by the 2^nd Defendant, which receipts were produced by DHL and the Plaintiff.

9.  Other notices for the appointment of arbitrators, of the constitution of the tribunal, and of the 1^st procedural conference were sent by email to the parties including the Defendants, to the email address of the Defendants specified in the notice provisions of the Agreement.  The notice of constitution of the tribunal dated 21 June 2019 had also been sent by courier to the registered office address of the 1^st Defendant, and to the address of the 2^nd Defendant specified in the Agreement, as evidenced by the DHL courier receipts.

10.  Although there was a change of registered office address of the 1^st Defendant, that was only reflected in the annual return filed by the 1^st Defendant at the Companies Registry on 29 April 2020.  When the Plaintiff was first made aware of the 1^st Defendant’s new address in September 2019, the matter was brought to the attention of the Board, and the Board had resent to the 1^st Defendant at its new address the emails which had been sent by the Board in June, July, and August 2019 in relation to the 1^st procedural conference.

11.  Further, the tribunal recorded in the Award that on the evidence available in the Arbitration, the Defendants had in fact participated in discussions with the Plaintiff in April and May 2019 in relation to the Arbitration, which led to its conclusion that the Defendants must have been aware of the proceedings.

12.  In the light of all the available evidence, the Defendants’ bare assertion, made in their affirmation in support of the Summons, of their lack of notice of the commencement of the Arbitration and of the appointment and constitution of the tribunal, is not believable.  They had failed to explain their acknowledgment of receipt of the letter dated 8 February 2019 from the Board (enclosing the Notice of Arbitration) which was delivered by DHL to them on 11 February 2019.  The service of the Notice of Arbitration and the other documents including the notice of appointment of arbitrators at the registered office address of the 1^st Defendant is good service under Hong Kong law.  The service of the Notice of Arbitration and other documents relating to the Arbitration to the addresses of the Defendants specified in the Agreement is valid and proper service, and there is no credible evidence from the Defendants to disprove such service.

13.  Having been given proper notice of the Arbitration, but failing to take part and to defend the claims made, it is not open to the Defendants to argue that it was unable to present its case in the Arbitration, or that it would be contrary to public policy to enforce the Award made in default of its appearance to defend.

14.  For these reasons, I consider that there are simply no arguable grounds disclosed to set aside the Enforcement Order and to refuse enforcement of the Award.  There is no good justification to adjourn the Summons, either for the Defendants to file further evidence which should have been filed when the application to set aside was made, or for further argument.  The Summons is accordingly dismissed, with costs on indemnity basis to be paid by the Defendants to the Plaintiff, and to be summarily assessed.