COX ADRIAN JOHN v. GROUP EMPLOYMENT MANAGEMENT LTD

HCA 3283/2003

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 3283 OF 2003

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J U D G M E N T

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1. In October 2001 the Defendant agreed to employ the Plaintiff as Assistant General Manager in Acceptor Professional Directors Limited (an associated company of the Defendant's group) from 1 October 2001 for a total monthly remuneration of $40,000. The employment contract signed by both parties included the following written term ("the Term"):-

"This Agreement shall be governed by and construed in accordance with Hong Kong law and the parties hereto agree that all disputes arising under this agreement shall only be settled by the use of a single arbitrator to hear the dispute and decide the award under UNCITRAL rules, such arbitrator to be appointed by the Secretary General of the Hong Kong International Arbitration Centre in Hong Kong or his nominee."

2. In August 2002 the Plaintiff filed a claim in the Labour Tribunal against the Defendant seeking compensation of $1,080,000 for constructive dismissal from his employment. On 11 November 2002 the Defendant filed a Statement of Defence denying that the Plaintiff was constructively dismissed and denying that the Defendant's conduct caused the Plaintiff any loss. The Defendant responded in detail in writing to the Plaintiff's allegations.

3. There were a number of hearings before the Labour Tribunal between August 2002 and July 2003. On 11 July 2003 Mr Andrew Chan, the Presiding Officer of the Labour Tribunal, ordered that the Plaintiff's claim be transferred for determination in the High Court. On 16 July 2003 the Defendant applied for a review of the transfer order. On 12 August 2003, following a review, Mr Andrew Chan confirmed his order.

4. By Notice dated 4 September 2003 the Registrar of the High Court directed that the parties attend before the Master on 10 October 2003 to consider what directions should be given for the future conduct of the proceedings. By letter dated 9 September 2003 to the Registrar, the Defendant requested that the matter be referred to arbitration pursuant to the Term. By Summons ("the Summons") dated 7 October 2003 the Defendant sought a stay of the High Court proceedings in favour of arbitration. On 21 November 2003 Master Woolley granted an interim stay pending determination of the Summons.

5. The Term constitutes a domestic arbitration agreement. Mr Ismail (appearing for the Defendant) submits as a principal contention that the Court must stay these proceedings by reason of Arbitration Ordinance (Cap. 341) ("AO") s. 6(1) and Article 8 ("Article 8") of the UNCITRAL Model Law. AO s. 6(1) provides:-

"Subject to subsections (2) and (3), article 8 of the UNCITRAL Model Law (Arbitration agreement and substantive claim before court) applies to a matter that is the subject of a domestic arbitration agreement in the same way as it applies to a matter that is the subject of an international arbitration agreement."

Article 8 (insofar as material) provides:-

"(1) A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, refer the parties to an arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed."

6. Mr Ismail says that it is not too late for the Defendant to apply for a mandatory stay under Article 8, because the Labour Tribunal is not a court. Mr Ismail accepts that the Labour Tribunal is a court of record (see Labour Tribunal Ordinance (Cap. 25) ("LTO") s. 3(1)). But he says that it is not a court within the meaning, intent and purpose of Article 8. He draws this conclusions from the fact that in the Labour Tribunal:-

(1) pleadings are not "delivered" but are "filed";

(2) appearances are not required to be entered by a defendant; and,

(3) proceedings are heard by a "presiding officer" or "deputy presiding officer" instead of a judge.

Further, citing Bokhary JA in Camacho and another v. Chung Yee Fong Helen [1997] 1 HKC 400 (at 404G-H), Mr Ismail points out that, in distinction to (say) the District and High Courts, the Labour Tribunal is an informal and inexpensive forum in which there is a strong inquisitorial element and conciliation is an important objective.

7. I am not persuaded by Mr Ismail's argument. I do not think that I can ignore the express wording and import of LTO s. 3(1). The Labour Tribunal is plainly a court within the meaning of Article 8. The procedural distinctions drawn by Mr Ismail between the Labour Tribunal and the High Court strike me as more semantic than substantial. Nor do I think that Bokhary JA's observations as to the nature of proceedings in the Labour Tribunal affect the construction of the AO. Consequently, if Article 8 is relevant, no stay for arbitration having been sought before the Defendant delivered its substantial defence against the Plaintiff's claim in the Labour Tribunal, the mandatory stay stipulated by Article 8 does not apply here. The Summons comes too late for that.

8. By way of a fallback position, Mr Ismail seeks a stay as a matter of the Court's discretion pursuant to AO s. 6(2). That provides:-

"Subject to subsection (3), if a party to an arbitration agreement that provides for the arbitration of a dispute involving a claim or other matter that is within the jurisdiction of the Labour Tribunal ..., commences legal proceedings in any court against any other party to the agreement..., in respect of any matter agreed to be referred, and any party to those legal proceedings applies to that court after appearance and before delivering any pleadings or taking any other step in the proceedings, to stay the proceedings, the court or judge of that court may make an order staying the proceedings, if satisfied that:-

(a) there is no sufficient reason why the matter should not be referred in accordance with the agreement; and

(b) the applicant was ready and willing at the time the proceedings were commenced to do all things necessary for the proper conduct of the arbitration, and remains so."

9. Mr Ismail suggests that the references to "court" and "proceedings" in AO s. 6(2) are not necessarily limited to the first forum seized of a dispute involving a claim within the Labour Tribunal's jurisdiction or to proceedings in such Court. Thus, the fact that no stay was sought in the Labour Tribunal before delivery of a defence, does not preclude the Defendant from now seeking a discretionary stay of the present High Court proceedings. This must particularly be the case (Mr Ismail says) where no Defence has been filed in the High Court.

10. I disagree. I think that the references to "court" in AO s. 6(2) refer to the Court in which a party such as the Plaintiff first brings ("commences") proceedings in relation to a dispute within the Labour Tribunal's jurisdiction. Accordingly, where as here, a party rightly commences proceedings in the Labour Tribunal, that forum has the discretion to stay the proceedings to arbitration if the conditions stipulated in AO s. 6(2) are met. Here no application for stay was sought before delivery of a defence by the Defendant. Thus, the conditions for the grant of a stay required by AO s. 6(2) have not been met and AO s. 6(2) is inapplicable. The fact that the Labour Tribunal transferred proceedings to the High Court does not give the Defendant a second chance now to apply for a stay before filing a Defence in the High Court.

11. In light of my conclusion, it is unnecessary for me to consider how I would exercise a discretion to stay proceedings under AO s. 6(2). The time for any exercise of discretion under AO s. 6(2) is long past.

12. Finally, I wish to stress that, although I have dealt with AO ss. 6(1) and (2) separately, in actuality the sub-sections must be read together. AO s. 6(1) is expressly subject to s. 6(2). I believe that the strict legal position is that, where a dispute subject to a domestic arbitration agreement falls within the competence of the Labour Tribunal, the AO does not provide for a mandatory stay. If there is a domestic agreement to refer the employment dispute to arbitration, the Labour Tribunal or (if for some reason proceedings are rightly or wrongly commenced in some other forum) the Court seized has a discretion to stay the matter to arbitration. It may do so, but it is not required to.

13. For the foregoing reasons, I dismiss the Summons and lift the interim stay imposed by Master Woolley. I shall now hear the parties on the costs of the Summons and directions for the future conduct of these proceedings.