SONG LIHUA v. LEE CHEE HON (FORMER NAME: QUE WENBIN)

HCCT 111/2022

[2023] HKCFI 2959

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 111 OF 2022

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D E C I S I O N

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1.  This is an application made for leave to appeal against this Court’s decision of 24 August 2023 (“Decision”), with reasons handed down on 5 October 2023 (“Reasons”), whereby enforcement of an arbitral award was refused.

2.  The nomenclature used in the Reasons are adopted.

3.  The principles for granting leave to appeal against the exercise of the Court’s discretion are not disputed and need not be repeated here.  Song as applicant must show that the Court had taken into account irrelevant matters, or failed to consider relevant matters, or had made an error of law, and was plainly wrong. It is trite, that in an appeal against the court’s exercise of discretion, the fact that the appellate court might have exercised its discretion differently is not a ground to interfere. It has to be shown that the decision was outside the generous ambit within which reasonable disagreement is possible.

4.  In the more recent case of DP World Djibouti FZCO and ors v China Merchants Port Holdings Company Limited [2022] HKCA 84, the Court of Appeal highlighted again the fact that an appellate court adopts a cautious approach in relation to the weight given by the judge to facts taken into account when exercising its discretion. The fact that the appellate court would have given more weight than the judge to one of the many factors to be taken into account in the exercise of the discretion is not a ground for interfering.  At paragraph 22 of the judgment, the Court noted:

“22. The judge’s refusal of a stay of proceedings on forum non conveniens involves an exercise of discretion. The Court of Appeal may only interfere with the exercise of the judge’s discretion in limited circumstances, in accordance with the well-established principles in Hadmor Productions Ltd v Hamilton [1983] 1 AC 191 at 220B to E (SPH v SA at §65). As stated in Bright Shipping Ltd v Changhong Group (HK) Ltd (No 2) [2019] 5 HKLRD 30 at §§5 to 7:

‘5. Hence, the grounds on which an appellate court is entitled to interfere with this exercise of discretion are limited and it cannot interfere merely because it would have reached a different conclusion had it been hearing the application at first instance. It can only interfere in three cases: (1) where the judge has misdirected himself with regard to the principles in accordance with which his discretion had to be exercised; (2) where the judge, in exercising his discretion, has taken into account matters which he ought not to have done or failed to take into account matters which he ought to have done; or (3) where his decision is plainly wrong. See The Abidin Daver [1984] AC 398, 420B–C, per Lord Brandon of Oakbrook, which has been followed in a number of cases in Hong Kong, such as China Construction Bank (Asia) Corp Ltd v Shanghai Pudong Development Bank Co Ltd (CACV 14/2016, [2017] HKEC 171, 3 February 2017) at §7.13.

6. An appellate court should adopt a cautious approach regarding the weight given by the judge to facts taken into account when exercising the discretion. The fact that the appellate court would have given more weight than the judge to one of the many factors to be taken into account in exercising the discretion is not a ground for interfering with the exercise of his discretion, for as stated by Lord Templeman in The Spiliada at 465C, “the factors which the court is entitled to take into account in considering whether one forum is more appropriate are legion” (Berezovsky v Michaels [2000] 1 WLR 1004, 1021E–F, per Lord Hoffmann).

7. Further, as noted in two decisions of the Court of Appeal (China Construction Bank (Asia) Corp Ltd v Shanghai Pudong Development Bank Co Ltd at §7.15, per Cheung JA; and Melvin Waxman v Li Fei Yu (CACV 157/2014, [2016] HKEC 956, 20 April 2016) at §17.2, per Yuen JA), it is appropriate to bear in mind these words of caution of Lord Bingham of Cornhill in Lubbe v Cape Plc [2000] 1 WLR 1545, 1556E–F:

“This is a field in which different conclusions can be reached by different tribunals without either being susceptible to legal challenge. The jurisdiction to stay is liable to be perverted if parties litigate the issue at different levels of the judicial hierarchy in the hope of persuading a higher court to strike a different balance in the factors pointing for and against a foreign forum.”’ ”

5.  Song claims that the Court had taken into account Q’s conduct after the actual conclusion of the hearing, the hearing having concluded approximately 6 minutes after the 2^nd half of the hearing, at 1 hour 42 minutes after its commencement.

6.  I disagree that irrelevant matters had been taken into consideration.

7.  What the Court took into consideration in reaching its Decision was Q’s conduct of the 2^nd Hearing as a whole. The matters identified at paragraphs 40 and 42 of the Reasons represented Q’s conduct, which showed to a reasonable objective observer his lack of attention to and focus on the 2^nd Hearing and what transpired during the hearing. Any matter relating to his conduct after he had left the premises, and was in the vehicle, demonstrated and supported the observation made by the Court, that Q had not in fact heard what had transpired or what was said in the course of the 2^nd Hearing. To an objective observer, he was apparently oblivious to the fact that the hearing had concluded.

8.  As for Song’s claim that Q’s misconduct had no material impact on the arbitral process or the unanimous decision of the tribunal, and that there is no evidence to suggest that Q had not properly reviewed the evidence, submissions and transcript of the 2^nd Hearing, this fails to take into account the nature of the misconduct and irregularity as found, and the reason why enforcement of the Award was refused.

9.  This case does not concern the content or substance of the unanimous decision made in the Award. At paragraph 43 of the Reasons, the Court already pointed out that Q may claim, and it may even be the case, that he had in fact heard the entirety of the proceedings of the 2^nd Hearing throughout. Q may claim, as Song now does, that he had reviewed the submissions and was aware of and alert to the arguments made, and the evidence presented at the 2^nd Hearing. However, what the Reasons sought to explain and highlight is that it is a basic and important principle of natural justice that not only must there be justice and fairness in the process of a trial or hearing, but it is essential that justice and fairness must be seen to have been present, and that it must be apparent to an objective and reasonable third-party observer that Lee had been given a fair and proper trial, and been given the opportunity to be heard by an independent arbitrator who had not prejudged his case.

10.  It should be clear from the Reasons, and paragraph 51 in particular, that by reason of Q’s conduct, there are reasonable and legitimate doubts in the eyes of the reasonable objective observer that a fundamental and basic principle of natural justice as recognized in Hong Kong has been breached in this case, and that Lee has been deprived of the aforesaid basic and fundamental right to be heard in a fair process.

11.  On behalf of Song, it was argued that the Court had failed to take into account, or was wrong in not giving heed to recognized concepts of deference, comity and finality.  Essentially, it was argued that the supervisory court had refused to set aside the Award in this case on the basis of Q’s conduct, and it would require a very strong policy consideration before the enforcement court should refuse enforcement, as public policy favors the finality of awards and due deference should be given to the supervisory court and its decision to uphold the award.

12.  Finality of awards and concepts of comity and due deference have always been in the consideration of the Court.  However, the application to resist enforcement and the Decision to refuse enforcement in this case was based on the ground of public policy. It is indisputable, that public policy means the relevant public policy of Hong Kong, where enforcement of the Award is sought. It is trite, and the Reasons make it clear that enforcement was refused on the ground that it offends the basic notions of morality and justice of the Hong Kong forum (paragraphs 53, 57 and 61 of the Reasons). The Court of Final Appeal in Hebei Import & Export Corp v Polytek Engineering Co Ltd (1999) 2 HKCFAR 111 made it clear that it would be inconsistent with the principles of the New York Convention to hold that the refusal by a court of supervisory jurisdiction to set aside an award should debar an unsuccessful applicant from resisting enforcement of the award in the courts of enforcement, and particularly in a case where enforcement is resisted on the ground of the domestic public policy of the forum of enforcement. This is not inconsistent with comity or finality.

13.  According to Song, this Court must give due weight to the decision of the Mainland Court which had rejected Lee’s complaint regarding Q’s conduct. Whilst the Mainland supervisory court decided to uphold the Award, public policy was not raised, and if raised or considered, it was the public policy of the Mainland, and not the public policy of Hong Kong - which is the relevant policy for consideration by this Court for purposes of enforcement of this Award in this jurisdiction. This has been made patently clear in Hebei.

14.  In Grand Pacific Holdings Ltd v Pacific China Holdings Ltd (in liq) (No 1) [2012] 4 HKLRD 1, Tang VP observed (in the context of inability to present one’s case) that where the conduct complained of is so serious or egregious, to the extent that one could say that a party has been denied due process, an award would be set aside even though the results could not have been different. By reason of what I have found, I cannot see how it can be said that Lee has suffered no prejudice or injustice when his fundamental right to a fair hearing and to be properly heard has been deprived. The fact that Song was not at fault does not mean that there is no injustice to Lee.

15.  With regret, this is one such case in which I have found that the conduct of the arbitrator in the course of the hearing is so egregious, that Lee has been denied due process and deprived of his right to a fair hearing. Even if there had been any waiver by his lawyer of the irregularity, to enforce the Award was (as reflected in the Reasons) shocking to the conscience of the Court and contrary to the basic notions of justice in Hong Kong.

16.  Where there has been substantial injustice arising out of an award and enforcement would be shocking to the court’s conscience, to render enforcement of such award repugnant, it would be difficult and in practice extremely rare for the Court to exercise its residual discretion to permit enforcement (see Hebei, Sir Anthony Mason NPJ’s judgment at page 138E).

17.  For all the above reasons, I consider that there are no reasonable prospects of success on the intended appeal. Leave is refused, with costs to be paid by Song to Lee on indemnity basis, with certificate for Counsel.