PACIFIC CHINA HOLDINGS LTD (IN LIQUIDIATION) v. GRAND PACIFIC HOLDINGS LTD

FAMV No. 18 of 2012

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

MISCELLANEOUS PROCEEDINGS NO. 18 OF 2012 (CIVIL)

(ON APPLICATION FOR LEAVE TO APPEAL FROM

CACV NO. 136 OF 2011)

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DETERMINATION

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Chief Justice Ma:

1.  We dismissed this application for leave to appeal with costs, with reasons to be given later.  These are our reasons.

2.  The respondent (“GPH”) commenced an arbitration in Hong Kong against the applicant (“PCH”) to recover a debt of US$40 million plus interest under a loan agreement.  After numerous interlocutory applications and rulings, the arbitral tribunal made its final award in favour of GPH on 24 August 2009, ordering PCH to pay US$55,176,170.48 with interest at 5% pa from 1 June 2009.

3.  On 8 March 2010, PCH applied to the Court of First Instance to set aside that award.  The application succeeded before Saunders J[1] but the Court of Appeal allowed GPH’s appeal and restored the award.[2]  By the present application, PCH sought leave to appeal from the Court of Appeal’s judgment.

4.  PCH applied to set aside the award invoking Article 34(2)(a)(ii) and (iv) of the UNCITRAL Model Law which is given the force of law by the Arbitration Ordinance.[3] Relevantly, the provisions relied on state as follows:

“(2) An arbitral award may be set aside ... only if:

(a) the party making the application furnishes proof that:

(ii) the party making the application was not given proper notice of ... the arbitral proceedings or was otherwise unable to present his case; or

(iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties ...”

5.  In our view, the Court of Appeal was entirely correct to hold that the complaints advanced by PCH do not constitute viable grounds for setting aside the award under the aforesaid provisions.  The rulings complained of were made by the tribunal in the proper exercise of its procedural and case management discretions, reflecting its assessment of the requirements of procedural fairness as appropriate to the circumstances.  There is no basis for interference by the Court.  No reasonably arguable basis has been disclosed for granting leave to appeal.

6.  Notwithstanding the way in which the six questions set out in the Notice of Motion are framed, none of them in the context of the present case constitute questions of great general or public importance.  The first four involve at best considerations of a jurisdiction which an arbitral tribunal undoubtedly possesses (powers of case management).  In reality, raising these questions constitutes an attempt by the plaintiff to argue for the third time fact sensitive matters.  The fifth question either does not arise for determination or is also an attempt to re-argue the facts.  The sixth question does not arise and is academic.  We express no view on it.  We also prefer to refrain from expressing any views about the Court of Appeal’s obiter discussion (which it acknowledged to be academic) concerning a possible discretion to refuse to set aside an award notwithstanding proof of a recognized ground for such setting aside.[4] Neither of these matters affects our agreement with its judgment on the fundamental issues affecting leave to appeal.

7.  The only possible reservation that we have about the Court of Appeal’s judgment involves its discussion of the substantive merits when it stated its views as to the applicability of the doctrine of ratification.[5] That is, however, of no assistance to the applicant.

8.  The applicant also seeks to suggest that leave is as of right.  That suggestion must be rejected.  The proceedings instituted by PCH in the courts below have involved no claim for any liquidated sum.  The subject-matter of the proposed appeal equally involves no such claim.  The question sought to be raised is whether the tribunal’s procedural rulings constitute viable grounds under Article 34 for setting aside its award.  That is not an appeal that comes within section 22(1)(a) of the Court’s statute.