SHENZHEN A.C.G. INDUSTRIAL IMP. & EXP. CORP. v. AUTHORITY PROFIT LTD

IN THE HIGH COURT OF HONG KONG

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS

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JUDGMENT

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Background

1. On 16 December 1996, the plaintiff obtained awards against the defendant from an arbitration tribunal under the China International Economic and Trade Arbitration Commission in the People's Republic of China. On 21 April 1997, I granted leave to the plaintiff to enforce the awards in Hong Kong, and, on 20 May 1997, judgment was entered against the defendant in Hong Kong.

2. On 28 May 1997, the defendant issued a summons seeking the setting aside of my order. On 24 June 1997, the defendant issued another summons asking that the hearing to set aside my order be adjourned pending an application to set aside the awards to a court in the People's Republic of China.

The Application to Adjourn

3. Under section 44(5) of the Arbitration Ordinance, Cap 341, where an application has been made to a competent authority for the setting aside of an award, such as the ones before me, I have jurisdiction, if I think fit, to adjourn the proceedings. Mr Pow now accepts that such an application has been made. I have before me a translation of a document issued by the Beijing No. 2 Municipal Intermediate People's Court dated 25 June 1997, just a few days ago. It is addressed to the defendant, and says that the Court has received a claim against the plaintiff. It goes on to say that, after examination, the Court has decided to consider the application.

4. The managing director of the defendant, Mr Wong Kaw Lin, says, in an affirmation dated 24 June 1997, that he was advised by Mr Xu Jia Li, a partner of the L & A Law Firm, "one of the 'Best Ten' lawyers in Beijing", "that the Defendant has good merits on its case for the application to the Chinese Court in Beijing", and he refers to a letter from this firm. The translation of the letter refers to what Mr Beaumont accepts is an irrelevant provision of the Chinese Arbitration Act, which speaks of a situation in which "any party has hidden evidence which might influence a fair judgment". The letter expresses the view that the plaintiff "has hidden the fact and evidence in relation to the cancellation, variation of contract (No. 93SY001) and the formation of new agreement". The letter concludes by saying that "We shall win if the court accepts our opinion".

5. Before obtaining this opinion, the defendant sought other advice. On 18 April 1997, the defendant's solicitors wrote to Mr Hua Lei, a partner in another law firm in Beijing, seeking advice on whether the defendant had a case to appeal or set aside the award in Beijing. The solicitors write about Mr Wong being kidnapped and threatened, and Mr Wong not attending the arbitral hearing because he was afraid that the plaintiff may cause some personal harm to him again. On 6 May 1997, Mr Hua replied. Mr Hua was clearly better informed that the L & A Law Firm. He quotes the correct provision of the relevant Chinese law and concludes "we don't think there is a chance of success to set aside the award".

6. In order to persuade me that I should adjourn the proceedings in order to allow the defendant to seek the setting aside of the award in Beijing, the defendant must show that it has some reasonable prospect of success in that endeavour. It has not done this. I have before me two opinions from Chinese lawyers; one of which is, it is accepted by Mr Beaumont, based on an erroneous view of the applicable Chinese law, and another that addresses the problem with the correct provision in mind. The lawyer who gave advice applying the right law says that he does not think the defendant has a chance of success. That is clearly the advice to be preferred.

7. Accordingly, the defendant has not made out a case for an adjournment, and this is refused.

The Application to Set Aside

8. The defendant's application to set aside my order is based only on the ground mentioned in section 44 of the Arbitration Ordinance, Cap. 341 that-"Enforcement of a Convention Award may be refused if the person against whom it is invoked proves ... that he ... was ... unable to present his case ..."

9. Mr Wong of the defendant says that, although the defendant was legally represented throughout the arbitration proceedings, the defendant did not have a full opportunity to present its case. He says that the defendant's lawyer had clear instructions to put forward documentary evidence relating to an Italian contract and a possible Swiss buyer that would have been relevant to mitigation of damages. This, Mr Wong says, was not done. When Mr Wong enlarges on these complaints, he says that he was unable to establish that the plaintiff intended to sell the goods to an Italian customer and he was unable to explain why the defendant did not collect the goods on due date. Regarding the potential Swiss customer, he says" I have found a potential Swiss customer to take the goods".

10. Mr Wong says he was kidnapped, assaulted, and threatened at the instigation of Mr Feng of the plaintiff in August 1995. He implies that he was threatened again in December 1995. Mr Wong says "by reason of the very serious threatening against my life" he was unable to give oral evidence or be present at the arbitral hearing on 11 June 1996 "to rectify any omission or error made by my China lawyer".

11. When the plaintiff pointed out that the documentary evidence regarding the Italian contract was, in fact, submitted to the arbitral tribunal, he changed his tune. He accepted this, but said "I deny that the same had been fully taken into consideration by the Tribunal in making the Award as alleged". Regarding the Swiss buyer, Mr Wong admits that the defendant made no mention of this customer to the Tribunal. He also seems to admit that the defendant did not specifically mention this customer to the plaintiff. His evidence is very confusing about this. I have no idea what he is trying to say. But it is clear that there is no possible basis for saying that the defendant was in any way prevented from putting forward to the tribunal whatever it wished to say. The defendant's case regarding the Italian customer and its explanation for not taking the goods on due date was put before the Tribunal. The Tribunal did not accept the defendant's case.

12. Mr Wong also makes some very strange allegations about the plaintiff forging a letter from the defendant to the plaintiff dated 25 November 1994. It is admitted that what was produced to the Tribunal was identical in content to the original letter. The plaintiff must have had the original letter; the defendant sent it to the plaintiff. There is absolutely no acceptable evidence that there was a forgery. To me, the copies of the two documents seem to be identical. The defendant makes no attempt whatsoever to suggest any reason why the plaintiff should make an identical copy of a letter in its possession for the purpose of producing this to the Tribunal. This aspect of the defendant's case is little short of bizarre. It is certainly totally irrelevant to the matter before me.

13. I cannot, of course, making any finding on Mr Wong's allegations of kidnapping and threats, but it is perfectly clear to me that, even assuming those allegations to be true, the defendant has not made out any kind of case that it was, at any time, unable to present its case to the Tribunal. The defendant did, in fact, present its case fully.

14. Accordingly, the defendant's application to set aside my order is dismissed.

The Costs

15. The costs must follow the events. I order that the defendant pay the plaintiff's costs.