Hong Kong / 03 February 1998 / Hong Kong, Court of First Instance, In the High Court of the Hong Kong Special Administrative Region / Westco Airconditioning Ltd v. Sui Chong Construction & Engineering Co Ltd / 1997, No. A12848
Country | Hong Kong |
Court | Hong Kong, Court of First Instance, In the High Court of the Hong Kong Special Administrative Region |
Date | 03 February 1998 |
Parties | Westco Airconditioning Ltd v. Sui Chong Construction & Engineering Co Ltd |
Case number | 1997, No. A12848 |
Source |
[1998] 1 HKC 254; online http://www.judiciary.gov.hk (website of the Judiciary of the Hong Kong Special Administrative Region of the People’s Republic of China) |
Languages | English |
Summary | The plaintiff (“Westco”) entered into a construction sub-contract with the defendant (“Sui Chong”), which provided for arbitration. The arbitration clause in the contract provided that any dispute would first be referred to an architect and, if either party were unsatisfied with the architect’s decision, or the architect failed to reach a decision, the dispute would be referred to arbitration. A dispute arose and Westco seised the High Court of Hong Kong. Sui Chong argued that the High Court should stay the judicial proceedings in favour of arbitration as that was – according to Sui Chong – what the parties had agreed to in their contract. In making this argument, Sui Chong relied on Section 6 of the Hong Kong Arbitration Ordinance 2000 (Cap. 341) (the “Ordinance”) (incorporating in modified language Article II(3) NYC). Westco responded that the arbitration clause was “inoperative” as it required that an architect rule on the dispute, which had not happened in this case. Consequently, Westco contended, the requirement that the court proceeding be stayed in favour of arbitration was inapplicable. The High Court ordered that the action be stayed in favour of arbitration, rejecting Westco’s argument that the arbitration agreement was inoperative because a preliminary step had not been taken. Findlay J held that reading the arbitration agreement as inoperative would allow arbitration to be by-passed altogether in many similar clauses which provide for preliminary determinations by experts. The learned judge disagreed with the obiter views of Lord Mustill in Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334, where – considering the situation under the NYC – Lord Mustill had remarked that it would make no sense for a court to refer the dispute to arbitration when a preliminary step was required to be taken first. Finally, Findlay J held that he had no discretion in deciding whether the matter should be referred to arbitration: once it was shown that the matter fell within the scope of the arbitration agreement, a court had no option but to stay the proceeding before it. |
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