XCHRX DOWNER & CO. LTD. AND ANOTHER v. THE AIRPORT AUTHORITY

1998, No. CT 69

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

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JUDGMENT

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1. The parties are in dispute regarding a construction contract. In terms of that contract, the disputes have been referred to a panel of experts for resolution. The decisions of the panel are "final and binding except and to the extent that [they] shall have been revised by agreement or an arbitral award.". Arbitration is underway, but an award is not imminent.

2. On 19 June 1998, the plaintiffs issued an originating summons by which they seek orders to enforce what they say are decisions of the panel.

3. On 28 July 1998, the defendant issued a summons by which it seeks an order pursuant to section 6 of the Arbitration Ordinance ( Cap. 341), or the court's inherent jurisdiction, to stay the plaintiffs' action. This summons has been fixed for hearing on 17 December 1998.

4. Both summonses are before me for directions. The plaintiffs wish both summons to be considered at the same hearing. The defendant argues that the summons for the stay should be disposed of first.

5. Section 6 and Article 8 of the Model Law provide that "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 . . . refer the parties to arbitration . . ."

6. The contract provides that any dispute referred to the panel in respect of which the panel has given a decision, or the time for the decision has expired, may be referred to arbitration. Clearly, the contract envisages that the decisions of the panel resolving the disputes referred to them may be enforced pending an arbitration. Those decisions themselves are not subject to arbitration. It is the original dispute that is referred to arbitration, not the decision of the panel.

7. Mr Lewis says that the arguments that will be advanced in support of both applications will be identical or very similar. If this is so, that is a good reason why the summonses should be heard together, if only because costs will be saved. Mr Clayton says that the decisions of the panel are unenforceable, and the defendant told the plaintiffs this at the time. The panel, Mr Clayton says decided some individual issues, but not the disputes referred to them.

8. It seems to me that the issue, or, at least, one of the issues, that will be decided in both applications is whether the plaintiffs' "action is brought in a matter which is the subject of an arbitration agreement". If the action is brought to decide disputes between the parties under the contract, the plaintiffs must fail. If the matter in respect of which the action is brought are the enforceable decisions of the panel, the plaintiffs may enforce them pending the arbitration, and their application may succeed. And, in that event, the defendant's application must fail because those decisions are not in matters which are the subject of an arbitration agreement. It may be, of course, that both applications will fail; the plaintiffs' application because the decisions are not enforceable, and the defendant's application because, good or bad, those decisions are the subject matter of the action, not the disputes. Or it may be that, if the plaintiffs' action fails, there is nothing to stay. So, in my judgment, there is a strong possibility that, both applications may be resolved at the one hearing.

9. For these reasons, I believe that both summonses should be heard together. I so direct, and direct that they be heard on 17 and 18 December 1998. The opposing parties' evidence is to be filed and served within 28 days, and replying evidence within 28 days thereafter. Costs are reserved.