LY v. HW

HCCT 96/2021

[2022] HKCFI 3016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 96 OF 2021

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D E C I S I O N

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1.  On 26 July 2022, this Court handed down a Decision, refusing to set aside an arbitral Award made on 21 October 2021. The Plaintiff is now seeking leave to appeal against the Decision. The abbreviations and definitions used in the Decision are adopted herein and below.

2.  Under section 81 of the Ordinance, the Court exercises a discretionary power to set aside an arbitral award, upon the applicant furnishing proof that one or more of the grounds set out in Article 34 (2) of the Model Law applies. Article 34 states that an award “may” be set aside only if the party making the application furnishes proof of the grounds set out.

3.  The decision whether to set aside the award is not interlocutory, but final. If the grounds set out in Article 34 (2) are not proved to the satisfaction of the Court, there is no discretion to set aside. Even if a ground is established, the Court has made it clear that it has a residual discretion to enforce the award (Pacific China Holdings Ltd (In Liquidation) v Grand Pacific Holdings Ltd CACV 136/2011, 9May 2012).

4.  As Counsel for HW maintained, the intended appeal is against the exercise of the Court’s discretion. For such an appeal to succeed, it must be shown that the judge had misdirected himself or herself with regard to the principles in accordance with which his/her discretion had to be exercised, or had misunderstood the law or the evidence, had taken into account matters which ought not to have considered, or failed to take into account matters which the judge ought to have done; or where the decision is plainly wrong.

5.  Whilst I do not accept the submissions made by LY that the intended appeal is on law, it has sought to argue that the Court had failed to apply the correct law - which, if right, is a ground for appealing against an exercise of discretion. LY contends that the Court had erred in law in failing to apply the correct legal principles in deciding whether the Tribunal had failed to deal with key issues put before it, and whether the Tribunal had given sufficient reasons for its conclusions. It was argued that the intended appeal has reasonable prospects of success, alternatively are of great general public importance to warrant appellate guidance.

6.  In Trust Risk Group SpA v AmTrust Europe Ltd [2015] EWCA Civ 437, the English Court of Appeal analyzed and explained the circumspection in the approach of an appellate court when hearing appeals, pointing out that there is a spectrum of appropriate respect to the decision of the lower court, depending on the nature of the decision of the lower court. At paragraph 36 of the Judgment, Lord Justice Beatson referred to the observations made by May LJ in El Dupont De Nemours and Co v ST Dupont (CA) [2003] EWCA Civ 1368 (“Dupont”) and highlighted the following:

“At one end of the spectrum are decisions of primary fact reached after an evaluation of oral evidence and purely discretionary decisions. What May LJ described as ‘multifactorial decisions often dependent on inferences and analysis of documentary material’ are further along the spectrum. May LJ observed that CPR 52.11 (4) expressly empowers the appeal court to draw any inference of fact which it considers justified on the evidence. Questions of law lie at the other in of the spectrum.”

At paragraph 40, His Lordship also referred to Aldi Stores Ltd v WSP Group Plc [2007] EWCA Civ 1260, which concerned an appeal from a decision by a trial judge striking out a claim for abuse of process, where the Court stated that the decision was one “involving the assessment of a large number of factors to which there can, in such a case, only be one correct answer”, but that nonetheless, an appellate court will be reluctant to interfere with the decision of the judge. It will generally only do so in such a case where the judge has taken into account immaterial factors, omitted to take account of material matters, erred in principle, or come to a conclusion that was impermissible or not open to him.

7.  In the present case, the Decision involved the Court carefully considering and analyzing the Award made by the Tribunal, taking into account the pleadings filed and the submissions made by the parties in the Arbitration, the evidence adduced before and considered by the Tribunal and as referred to in the Award, before reaching a conclusion on the issues raised in the Arbitration and put to the Tribunal, and how they were decided by the Tribunal. This was an exercise of interpretation of the Award, to find what the issues for determination were, and whether and how they were resolved and explained in the Award. The decision whether to set aside or to enforce the Award was made upon evaluation of a variety of matters, such as whether there was serious prejudice, and policy considerations concerning the structural integrity of the arbitral process, the need for finality as well as the need to uphold the agreed arbitral mechanism.

8.  LY seeks to argue on appeal that the Court had erred in law, in finding that the Tribunal had not failed to consider an important issue raised in the Arbitration, and that the reasons expressed in the Award were sufficient.

9.  I would consider that whilst the usual circumspection would be exercised by the appellate court in its approach to the intended appeal, it might be right to say that the present case and the questions of law or of mixed fact and law involved would lie at the end of the spectrum of appropriate respect or non-intervention, as considered by May LJ in Dupont, when decisions on primary facts or purely discretionary decisions are at the other end. This is relevant in the context of considering whether the intended appeal has reasonable prospects of success, such that leave to appeal should be granted.

10.  I am not persuaded that that the Decision was made without reference to the principles set out in Petrochemical Industries Company (KSC) v The Dow Chemical Company [2012] EWHC 2739 (Comm), or Buyuk Camlica Shipping Trading and Industry Co Inc v Progress Bulk Carriers Ltd [2010] EWHC 442 (Comm), nor that the Decision was made solely by application of the test set out in AKN & Another v ALC & Others [2015] 3 SLR 488. The Decision has to be read as a whole, and at the end of the day, applying the applicable legal principles, the Court is to read the Award in a commercial and sensible manner, in the context of the submissions made and evidence adduced in the Tribunal, to find what the Tribunal decided and how the disputed and key issues were dealt with.

11.  However, in arguing that the Court had misconstrued the Award and the Tribunal’s conclusion on the issues to be dealt with expressly, it cannot be said that the intended appeal has no reasonable prospect of success, which is “not a very high threshold”, as Lam VP (as His Lordship then was) observed in China International Fund Limited v Dennis Lau & Ng Chun Man Architects & Engineers (HK) Limited [2015] 4 HKLRD 609. The prospects of the intended appeal do not have to be probable, and in this case they can be said to be more than fanciful (SMSE v KL [2009] 4 HKLRD 125).

12.  I would accordingly grant leave to appeal against the Decision, with costs in the cause of the appeal.