SUN TIAN GANG v. HONG KONG & CHINA GAS (JILIN) LTD

HCCT 64/2023
HCCT 84/2023
(dealt with together)

[2024] HKCFI 1912

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 64 OF 2023

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BETWEEN

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AND

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 84 OF 2023

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BETWEEN

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D E C I S I O N

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1.  On 22 April 2024, this Court dismissed Sun’s application to set aside an arbitral award and for leave to appeal against the award on questions of law, and granted leave to Gas to enforce the award as a judgment of the Court. The Reasons for Decision were handed down on 13 June 2024. The nomenclature used in the Reasons is adopted.

2.  Sun’s application to set aside the Award was not pursued at the hearing, which only dealt with the question of whether the Schedule to the Ordinance applies to the arbitration agreement under which the Arbitration was commenced, for an appeal to be brought under section 5 of the Ordinance. As reflected at paragraph 36 of the Reasons, leave to enforce the Award was granted, because the Court considered that the arbitration agreement between the parties did not provide that the Arbitration is a domestic arbitration, for sections 5 and 6 of the Schedule to apply, and so there is no permissible appeal against the Award.

3.  Sun now seeks to appeal against this Court’s decision, on the basis that he is entitled as of right to appeal against the preliminary and jurisdictional question of whether the Schedule applies. On Sun’s case, there is no decision on the merits of the questions of law raised in the Award, and no decision on whether leave should be granted to Sun under section 6 of the Schedule to appeal against the questions of law raised. Counsel for Sun argued that the Decision is not one which comes within the ambit of section 6(5), to require leave to appeal.

4.  If leave is required, it was contended for Sun that there are reasonable prospects of success in the intended appeal.

5.  On behalf of Gas, Counsel relies on section 6(5) of the Ordinance which expressly provides that the leave of the Court or the Court of Appeal is required “for any appeal from a decision of the Court to grant or refuse leave to appeal from an award”.

6.  Gas also relies on section 14(3) of the High Court Ordinance (“HCO”), which states that, except as provided by the Ordinance, no appeal shall lie from any judgment or order of the Court “under section 5 or section 6 to (the Schedule) on a question of law arising out of an arbitral award” (section 14(3)(ea)(viii)).

7.  Emphasizing that the requirement of leave is a device deliberately included in the Ordinance to restrict appeals and to promote the efficacy and speedy resolution of disputes by arbitration in accordance with the parties’ choice, and that the restriction of the right to appeal has been held by the courts not to violate any party’s right of access to the courts (citing Swire Properties v SJ (2003) 6 HKCFAR 236, and SJ v Cheung Kai Yin [2016] 4 HKLRD 367), Counsel for Gas argued that the Decision is clearly one which falls within section 14(3)(ea)(viii) of HCO, as a judgment or order made under section 6 of the Schedule, and within section 6(5) of the Ordinance, as a decision to refuse leave to appeal against the Award. By the express provisions of the HCO and section 6(5) of the Ordinance, leave is required for such appeal, and there are no reasonable prospects of success in the intended appeal.

8.  On behalf of Sun, it was argued that the Decision is a preliminary decision on whether the Court has jurisdiction to grant leave to appeal, and such decision on jurisdiction was a final determination in a summary way of Sun’s substantive rights. Not being an interlocutory appeal, Counsel argued that no leave to appeal is required.

9.  Guidance as to whether a judgment or order is final, or interlocutory, can be found in Shell Hong Kong Ltd v Yeung Wai Man Kiu Yip Co Ltd (2003) 6 HKCFAR 222, where the Court of Final Appeal held that the “application test” or approach applies. In that case, a defendant sued as guarantor in the action, in respect of sums claimed to be due to the plaintiff under a franchise agreement, applied for a determination under Order 14A RHC on the question of his liability under the guarantee, as to whether the guarantee which was executed for an earlier agreement between the parties had lapsed. The Deputy Judge held that the guarantor was still bound by the guarantee. The guarantor’s appeal was allowed by the Court of Appeal which treated the appeal as an interlocutory appeal, but on appeal to the Court of Final Appeal, it was held that the judgment in question was final. Chan PJ explained the question in the following manner (at paragraphs 34 to 37 of his judgment):

“34. As the plaintiff’s claim on the Franchise Agreement has been abandoned, the issues between the plaintiff and the 2^nd defendant are these: whether the Personal Guarantee executed by the 2^nd defendant in 1991 was still effective and binding at the time of the plaintiff’s claim; and if it was, what was the extent of the 2^nd defendant’s liability as provided under the Personal Guarantee.

35. If the Personal Guarantee was at the material time no longer effective and binding on the 2^nd defendant, he is not liable to the plaintiff and can drop out of the proceedings altogether. But if he remained liable as a guarantor, he would only be interested to know the extent to which he is liable under the Personal Guarantee and whether and if so, how much the 1^st defendant is liable to the plaintiff under the Franchise Agreement. The latter issue would be a matter between the plaintiff and the 1^st defendant.

36. Hence, as between the plaintiff and the 2^nd defendant, the issue whether the Personal Guarantee is still effective and binding on the 2^nd defendant is clearly a crucial and substantial issue between them. A determination on this issue in favour of the 2^nd defendant would be dispositive of the plaintiff’s claim against the 2^nd defendant. On the other hand, if it is decided in favour of the plaintiff, it would not dispose of the whole action against the 2^nd defendant. However, this would finally dispose of a crucial and substantial issue between them.

37. That being the case, the Deputy Judge’s judgment given on 19 September 2001 should be regarded as a final judgment.”

10.  Adopting such approach, the Decision that sections 5 and 6 of the Schedule do not apply to Sun’s application determined the whole action commenced by Sun for leave to appeal against the Award (since he did not pursue the setting aside of the Award). Even if it does not determine the whole action, the Decision determined the crucial issue which goes to the root of the case, or an issue which is a dominant feature of the case, which is whether section 6 of the Schedule applies, and whether Sun has the right to appeal against the Award on questions of law.

11.  However, irrespective of the final nature of the Decision, section 14(3)(ea)(viii) of HCO expressly provides that no appeal shall lie from “a judgment or order under section 5 or 6 of the Schedule on a question of law arising out of an award”.

12.  Although the Decision was a judgment or order, made under section 6 of the Schedule, that leave to appeal may not be granted as the remedy provided under section 5 did not apply to the arbitration agreement between Sun and Gas, Mr Wong argued for Sun that it was not a decision made under section 5 or 6 “on a question of law arising out of an arbitral award”. There was no decision on the merits of the questions of law raised, as the Court simply found that sections 5 and 6 do not apply.

13.  However, Counsel for Gas argued that Sun’s construction of section 14(3)(ea)(viii) is too narrow, and pointed out that the argument has already been rejected by the Court of Appeal in Haller AG v Vestey International [2023] 1 HKLRD 39. Mr Li submitted that the purpose of the Ordinance should be borne in mind when construing section 6(5) of the Schedule and section 14(3) of the HCO, and that the construction contended by Sun would lead to absurd results.

14.  In Haller, the pertinent part of the proceedings relates to the decision of the first instance judge refusing to stay the action to arbitration under section 20 of the Ordinance. She refused leave to appeal against her decision, and the defendant applied to the Court of Appeal for leave to appeal. Section 14(3)(ea)(ii) of HCO provides that no appeal shall lie from any judgment or order of the court under section 20(1) of the Ordinance refusing to refer the parties to arbitration, and the issue before the Court of Appeal was whether the Court had jurisdiction to entertain the application for leave to appeal.

15.  As highlighted by Counsel for Gas in this case, the argument made for the defendant in Haller was that where the court finds that the case does not come within section 20(1) which adopts Article 8(1) of the Model Law at all on the reading of the provision, then the court’s refusal to refer the parties to arbitration is not made under section 20 or Article 8(1), in which case section 14(3)(ea)(ii) HCO and the exclusion of appeal does not apply. In rejecting the argument, G Lam JA explained (at paragraphs 74 to 79 of his judgment):

“74. ... He prays in aid the Chinese version of s.20(9) (‘凡法院根據 - (a) 藉第(1)款而具有效力的《貿法委示範法》第8條 … 決定拒絕將各方轉介仲裁，則須獲該法院許可，方可針對該決定提出上訴。’) and submits that the phrase ‘根據’ confirms that s.20(9) only applies where the court’s refusal to grant a stay is based on art.8. Since in this case the Judge found that no arbitration agreement existed at all, art.8 was not engaged, and the Judge did not refuse to refer the parties to arbitration under art.8.

75. The argument is ingenious but we do not accept it. It seems to us that the language of s.20(9) and s.14(3)(ea)(ii) is apt to apply to the Judge’s order in this case.The 2^nd defendant applied for an order to refer the parties to arbitration and for a mandatory stay of the action (as against the 1^st plaintiff) specifically and solely pursuant to s.20 and art.8. The Judge refused to do so. That seems to us to be ‘a decision to refuse to refer the parties to arbitration under article 8’ within the meaning of s.20(9), and an ‘order of the Court of First Instance under section 20(1) … refusing to refer the parties to arbitration’ within the meaning of s.14(3)(ea)(ii).

76. As Mr Sussex points out, s.20(9) is one of several similar provisions in the Arbitration Ordinance that curtail the possibility of appeal: see ss.15(5), 60(10), 81(4) and 84(3), in addition to a number of provisions which exclude appeal altogether. It was observed by this Court in China International Fund Ltd v Dennis Lau & Ng Chun Man Architects & Engineers (HK)Ltd[2015] 4 HKLRD 609 at [27] that in general, the role of the Court of Appeal under the scheme of the Arbitration Ordinance is more limited than in usual proceedings in the High Court and that even in instances where an appeal to the Court of Appeal is possible, it has to be brought with the leave of the Court of First Instance.

77. The statute provides in s.20(8) that a decision to refer the parties to arbitration under art.8 is not subject to appeal, and provides in s.20(9) for a restricted avenue for appeal in the obverse situation - where the court has refused to refer the parties to arbitration under art.8. It seems to us unlikely to be the legislative intention that there is yet a third category of outcome in an application for a reference and stay under s.20, falling within neither sub-s.(8) nor sub-s.(9), where leave to appeal may be obtained under the general provisions of s.14AA of the High Court Ordinance.

78. Mr Chang is unable to identify any purpose for a distinction to be made, in the context of leave to appeal, between cases where the court refuses to refer the parties to arbitration because it finds that the agreement is null and void, inoperative or incapable of being performed, and cases where the court refuses to refer because of reasons concerned with the existence or applicability of the arbitration agreement. No reason has been shown why leave to appeal should be restricted if the lower court has found that the arbitration agreement is null and void because, for example, of a fundamental common mistake, but not restricted where the court has found that the dispute lies outside the scope of the arbitration agreement. In both cases it may be said that there was no true consent to arbitration which calls into play the respect for parties’ autonomy. It may be noted that under s.81, a decision by the Court of First Instance to set aside an arbitral award on the ground that it deals with a dispute not falling within the arbitration agreement can only be appealed with the leave of that court.

79. It is true that the sentence structure in the Chinese version of s.20(9) is different from the English version. But the phrase ‘根據’ (which is also used in the Chinese version of s.14(3)(ea)(ii)) seems to us to have been used there simply to mean ‘under’’, without any necessary connotation that the court must first have found that art.8 applies. In so far as necessary, if a comparison of the two versions discloses a difference of meaning, we prefer the meaning discussed above which in our view best reconciles the texts, having regard to the object and purposes of the Ordinance: s.10B(3) of the Interpretation and General Clauses Ordinance (Cap.1).”

16.  The judgment of G Lam JA shows that there is no justification or reason at all to construe section 14(3)(ea) narrowly, and as Mr Li has highlighted, this is all in accordance with and reflects the purpose and object set out in section 3 of the Ordinance.

17.  Mr Wong sought to distinguish Haller on the basis that the judge did decide the question of whether there should be a stay, but decided against it, whereas in the present case, there was no decision on the question of law and whether leave to appeal should be granted on those questions.

18.  There may be a reasonably arguable case, that although the Decision is one refusing leave to appeal under section 6 of the Schedule, it is not a judgment or order “under section 5 or 6 of the Schedule on a question of law arising out of an arbitral award”, within the meaning of section 14(3)(ea)(viii) HCO. This is because the question of law arising of the Award had not been considered or determined, applying the guidelines set out in section 6(4) of the Schedule. Haller and the finding on section 14(3)(ea)(ii) may be distinguishable. This is because section 14(3)(ea)(ii) refers to a judgment or order “under section 20(1) or (2) of (the Ordinance) refusing to refer the parties to arbitration”. The decision of the first instance judge in Haller was indeed a refusal to refer the parties to arbitration, whatever the reasons as argued or distinguished by Counsel in the case. In the present case, the Decision or order of this Court was a refusal of leave to appeal made under section 6 of the Schedule, but technically, it is different in terms of language to that used in section 14(3)(ea)(viii): a judgment or order “on a question of law arising out of an arbitral award”.

19.  Notwithstanding the above, section 14(3)(ea) states that it applies “except as provided by the Arbitration Ordinance”. The provisions of the Ordinance on appeals prevail, and the Decision to the effect that sections 5 and 6 of the Schedule are not engaged at all to give to Sun any right to appeal is, without doubt, in substance a “decision to refuse leave to appeal”, which comes within section 6(5) of the Schedule. Under section 6 (5), the leave of the Court, or the Court of Appeal, is required for any appeal from the Decision.

20.  I agree with Mr Li, that to adopt the construction advocated for Sun would lead to absurdity: a party who has a right to apply for leave to appeal from an arbitral award on a question of law, in a case which falls within the Schedule because the relevant agreement has provided for domestic arbitration, but is refused leave (for example because the Court does not consider that the decision will substantially affect the rights of the parties as required under section 6(4)(a) of the Schedule), would have to apply for leave to appeal against the refusal; but a party who has no right at all to apply for leave to appeal from an award because the case is outside the Schedule would have an automatic right of appeal against the refusal of leave. It cannot be the intended meaning of section 14(3)(ea) of HCO or section 6(5) of the Ordinance.

21.  My conclusion therefore is that leave to appeal against the Decision is required.

22.  For the intended appeal, Sun argued that this Court failed to deal with his arguments on the parties’ intention to have a domestic intention. However, as Counsel for Gas rightly pointed out, the Decision sought to explain that that was no longer the proper or relevant test by virtue of section 100 of the Ordinance (see for example paragraph 34 of the Decision). The other grounds of the intended appeal are simply repetition of the matters already argued on 22 April 2024, and rejected. For the Reasons set out on 13 June 2024, I do not accept that the intended appeal has reasonable prospects of success.

23.  The application for leave to appeal in HCCT 64/2023 is accordingly dismissed, with costs.

24.  The application for leave to appeal against the order granting leave to enforce the Award is premised entirely on leave being granted to appeal in HCCT 64/2023. Having dismissed the application in HCCT 64/2023, leave to appeal in HCCT 84/2023 is refused, with costs.

25.  The application for stay of execution pending appeal is dismissed, with costs.

26.  Certificate for Counsel is granted for all the applications.

Mr Stewart Wong SC, Mr Frederick HF Chan, and Mr Dexter Leung, instructed by Tanner De Witt, for the plaintiff in HCCT 64/2023 & for the respondent in HCCT 84/2023

Mr Laurence Li SC, Mr Martin Ho, and Mr Sik Chee Ching, instructed by Mayer Brown, for the defendant in HCCT 64/2023 & for the applicant in HCCT 84/2023

HCCT 64/2023
HCCT 84/2023
(dealt with together)

[2024] HKCFI 1597

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 64 OF 2023

____________________

____________________

____________________

AND

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 84 OF 2023

____________________

____________________

____________________

________________________

REASONS FOR DECISION

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Background

1.  There are two sets of proceedings relating to a Partial Final Award on merits dated 8 August 2023 (“Award”) made in an arbitration commenced by Mr Sun (“Sun”) in Hong Kong against the Hong Kong & China Gas (Jilin) Limited (“Gas”) on 29 June 2017 (“Arbitration”). HCCT 64/2023 is Sun’s application to, firstly, set aside the Award on the ground that the tribunal had exceeded its jurisdiction in awarding an equitable set-off invoked by Gas in the Arbitration, and secondly, for leave to appeal against the Award on questions of law pursuant to sections 5 and 6 of Schedule 2 (“Schedule”) to the Arbitration Ordinance (“Ordinance”). HCCT 84/2023 is Gas’ application for leave to enforce the Award as a judgment of the Court.

2.  Under section 6 of the Schedule, an appeal under section 5 may not be brought except with the leave of the Court, and further, an application for leave to appeal must be determined without a hearing, unless it appears to the Court that a hearing is required.

3.  Before the joint substantive hearing of the originating summonses, the Court gave directions that the hearing will be confined to the consideration of: (1) whether leave to enforce the Award should be granted; (2) the setting aside application; and (3) for the application for leave to appeal, the issue only of whether the Schedule applies to the arbitration agreement under which the Arbitration was commenced.

4.  In the skeleton submissions filed for Counsel for Sun prior to the hearing, it was indicated that Sun will not pursue the setting aside application.

5.  The essential question for determination in Sun’s challenge to the Award is, accordingly, whether the arbitration agreement in the underlying contract between the parties (“Contract”), entered into before the commencement of the Ordinance, is one which “provides that arbitration under the agreement is a domestic arbitration”, for the Schedule to apply by virtue of section 100 of the Ordinance. If the Schedule does not apply, then Sun has no right to appeal against the Award.

6.  At the conclusion of the hearing on 22 April 2024, I dismissed the application to set aside and for leave to appeal against the Award, and gave leave for the Award to be enforced. The following sets out the reasons for my decision.

The arbitration agreement

7.  The arbitration clause in question provides for Hong Kong law to apply to the resolution of disputes, and for all disputes arising out of the performance or interpretation of the Contract or relating to the Contract to be resolved by HKIAC arbitration in Hong Kong, in accordance with the current UNCITRAL Arbitration Rules.

8.  There is no dispute, that there is no express provision in the relevant arbitration clause that the arbitration is domestic, and no mention or reference made in the clause at all to domestic arbitration.

9.  On behalf of Sun, it was argued that if Sun and Gas had arbitrated their dispute before the commencement of the Ordinance on 1 June 2011, it would have been a domestic arbitration, because:

(1)  Sun held a Hong Kong identity card, and had provided a Hong Kong business address in the Contract for correspondence; and Gas (despite being a BVI company) had a telephone and fax number in Hong Kong, had a legal representative who had an office and a team of assistants in Hong Kong, had provided in the Contract a correspondence address of Gas’s parent company in Hong Kong, and was managed and controlled by its parent company with headquarters in Hong Kong; such that both Sun and Gas had places of business in Hong Kong;

(2)  the place of arbitration would be Hong Kong;

(3)  Hong Kong was where a substantial part of the obligations of the commercial relationship was performed, or the place with which the subject matter of the dispute was most closely connected, since the Contract for the sale and purchase of shares in a BVI company was signed by the parties in Hong Kong, and the transaction was to be completed in Hong Kong;

(4)  the parties did not expressly agree that the subject matter of the arbitration agreement related to more than one country;

(5)  the parties did not expressly agree that their arbitration agreement was to be treated as an international arbitration agreement, or that their dispute was to be arbitrated as an international arbitration.

10.  Mr Wong, Counsel for Sun, argued that at the time when the parties entered into the arbitration agreement, they had agreed and intended that there would be a right to apply for leave to appeal on questions of law arising out of the Award, as they had not at the time of the Contract chosen the arbitration to be international, and had not choosen to opt out of Part II of the repealed Ordinance providing for international arbitrations under the Model Law.

11.  On the above basis as to the contractual bargain at the time of the Contract, and before the enactment of the Ordinance, it was argued for Sun that the parties had intended, and their arbitration agreement had impliedly provided, that the arbitration would be a domestic one.

12.  What Mr Wong for Sun sought to do, therefore, was to revert to making submissions and raising arguments on matters which had to be debated before the Ordinance came into effect - when the very aim of the Ordinance was to dispense with the need to make such arguments by dispensing with the distinction between domestic and international arbitrations. The Ordinance introduced a unitary regime as from 1 June 2011, and all provisions of the Ordinance are applicable to arbitrations in Hong Kong, whether they were formerly regarded as international, or domestic. The provisions in the Schedule only apply if parties choose to make them applicable, as section 99 of the Ordinance states:

“An arbitration agreement may provide expressly that any or all of the following provisions are to apply -

(a) section 1 of Schedule 2;

(b) section 2 of Schedule 2;

(c) section 3 of Schedule 2;

(d) sections 4 and 7 of Schedule 2;

(e) sections 5, 6 and 7 of Schedule 2.”

13.  In turn, section 100 of the Ordinance provides for an automatic opt-in of the Schedule:

“All the provisions in Schedule 2 apply, subject to section 102, to -

(a) an arbitration agreement entered into before the commencement of this Ordinance which has provided that arbitration under the agreement is a domestic arbitration; or

(b) an arbitration agreement entered into at any time within a period of 6 years after the commencement of this Ordinance which provides that arbitration under the agreement is a domestic arbitration.”

14.  It is recognized that the purpose of section 100 was to address the concern which had been raised by the construction industry, because main construction contracts in Hong Kong use standard form agreements which include a reference to “domestic arbitration”, and it was recognized that users of these standard form contracts may continue to employ the term “domestic arbitration” in these contracts for some time after the commencement of the Ordinance. If they so do, then by virtue of section 100, the Schedule automatically applies since the term “domestic arbitration” is so used.

15.  In A v D [2017] 1 HKLRD 779, this Court considered sections 99 and 100 of the Ordinance, and held that section 100(1) refers to an arbitration agreement “which has provided that” arbitration is a domestic arbitration, and that the Schedule only applies in those circumstances. The fact that the parties to the arbitration agreement are Hong Kong residents, or have a place of business in Hong Kong, such that the arbitration would have been domestic under the repealed Ordinance, cannot per se mean that they have “provided” for a domestic arbitration, and that the Schedule should apply. This is contrary to the intention of and purpose for the Ordinance, to do away with the distinction between domestic and international arbitrations, and to provide for a unitary regime. It cannot be the intention of the legislature for section 100 to be used as an avenue, after 2011, for the parties once again to delay the enforcement of awards by making the distinction in legal proceedings by reference to the characteristics of the parties and the manner of performance of the underlying contract, when the very purpose for introducing a unitary regime is to facilitate the speedy resolution of disputes by arbitration, and to cut out unnecessary expenses and delay.

16.  At paragraph 23 of the decision in A v D, it was observed:

“If the intention behind the transitional provisions contained in Part 11, and in particular section 100 of the Ordinance, is that Schedule 2 is to apply to domestic arbitrations, or domestic arbitration agreements within the meaning of the repealed Cap 341, section 100 could simply have provided for Schedule 2 to apply to “domestic arbitrations”, or to “domestic arbitration agreements”. As presently drafted, section 100(a) and (b) refer, not only to an arbitration agreement, but also to provision having been made in the agreement, that the arbitration is a domestic one.” (Emphases added)

17.  In Employer v Consultant[2022] HKCFI 887, this Court held on the particular facts of the case that since the arbitration agreement in question expressly provided for the 1993 Domestic Rules (for domestic arbitration) to apply to the arbitration, there was implied provision for the arbitration to be a domestic arbitration, and section 100 applies. At paragraph 36 of the Decision, this Court made it clear that it was not a case of the Employer simply relying on the arbitration agreement being domestic by operation of the law at the time of the agreement, under the repealed Ordinance, to claim that the parties had “provided” for a domestic arbitration – as is the case here.

18.  There is nothing in the arbitration clause agreed between Sun and Gas, from which this Court can find that there is any implied provision for the arbitration to be domestic.

19.  Mr Wong referred to the fact that when the Consultation Paper on the Reform of the Law of Arbitration was issued by the Department of Justice in 2007, the language proposed for the intended section 100 was: “where an arbitration agreement entered into before, or at any time within a period of 6 years after, the commencement of the new Ordinance stipulates that an arbitration under the arbitration agreement shall be a domestic arbitration, then the Schedule shall automatically apply…” When enacted, section 100 was changed to “an arbitration agreement… which has provided…”.

20.  Mr Wong pointed out that there is a difference between the words “stipulate” and “provide”, and that the latter is wider, as “stipulate” suggests something said expressly. The argument therefore is that the present language of section 100 does not require any express provision for the arbitration to be a domestic one.

21.  “Provide” is defined in the Oxford Dictionary to mean “stipulate”, so I am not persuaded that there is any material or real distinction between “provide” and “stipulate”. Even if there was any distinction, I do not accept that any such distinction can take this case further. Properly construed, the arbitration clause in the Contract cannot be read to provide, either expressly or by implication, that the arbitration under the clause would be a domestic arbitration.

Principle of legality

22.  Nor am I not persuaded by Counsel for Sun in this case, that I should depart from the findings and analyses made in A v D and Employer v Contractor, to conclude that the Schedule applies to the Arbitration in this case by invoking the principle of legality, or on the basis that the Court should uphold the contractual bargain between the parties in this case.

23.  Counsel argued that the right to access to the Court is a fundamental right entrenched under Article 35 of the Basic Law, and that section 100 (a), read together with section 81 (2)(c) and (3) of the Ordinance, has the effect of abrogating the fundamental right of access of parties to agreements made before 1 June 2011, where the conditions set out for the application of the Schedule are not satisfied. Applying the common law principle of legality, Counsel argued that the conditions set out in section 100 (a) of the Ordinance should be construed in such a way so as not to abrogate the right of access to the courts, as the rule requires that any abrogation or restriction of fundamental rights by statute should be done clearly and unmistakably. Quoting from the judgment of the Court of Final Appeal in A v Commissioner of Independent Commission Against Corruption [2015] 15 HKCFAR 362, reliance is placed on the following observation:

“By virtue of the principle of legality, human rights and fundamental principles of law, even where derogable, cannot be overridden except by express words or necessary implication.”

24.  Mr Wong argued that there is nothing to suggest that the Ordinance intended to abrogate or reduce in scope the right of access to the court for leave to appeal on questions of law in domestic arbitrations, which existed before the enactment of the Ordinance. He contended that section 100 confirms that the right should continue, if the agreement has provided that the arbitration is a domestic one.

25.  I cannot agree with these arguments, that Part 11 of the Ordinance was intended to generally retain the right of appeal for parties to arbitration agreements. The whole scheme under the Ordinance is to exclude the distinguishing features of domestic arbitrations and to provide that particular features and provisions which only applied to domestic arbitrations under the repealed Ordinance could continue to apply only where parties expressly and clearly choose to adopt the provisions of the Schedule. The provisions in the Schedule only apply automatically, where section 100(a) or (b) is satisfied.

26.  In China International Fund Limited v Dennis Lau & Ng Chun Man Architects & Engineers (HK) Limited HCMP 2472/2014, the Court of Appeal considered the scheme of the Ordinance, and the constitutionality of the limitation on the rights of appeal (albeit the right of appeal under section 81(4) in particular) of the Ordinance. Hon Lam VP (as he then was) was satisfied that the limitation on the rights of appeal under the Ordinance is consistent with the philosophy underpinning arbitration, and that the limitation is proportionate, ie not more than what was necessary to achieve the legitimate aims, and falls within the reasonable range of options for achieving same. In arriving at such conclusion, His Lordship noted that although the right of appeal under the scheme of the Ordinance is more limited than in usual proceedings before the High Court, parties are able under section 99 to opt for some, or all, of the provisions in the Schedule to apply to their arbitration agreement. Whether the Court of Appeal may play a greater role than the one under the primary scheme of the Ordinance is entirely a matter of the parties’ choice.

27.  In the light of the analysis undertaken by the Court of Appeal, and also in view of what I regard to be the clear and express language used in section 100(a) of the Ordinance, I do not consider that it is justifiable to read down or limit the scope of section 100(a), by adopting a construction which is contrary to the plain meaning of the subsection and the entire legislative intent of the Ordinance: to limit the role and intervention of the courts in arbitrations (as stated in section 3 and in particular section 3(2)(b) of the Ordinance). As Mr Li contended for Gas, fundamental rights can be abrogated by statute, and section 100 is clear and unambiguous in the exclusion of the right of appeal provided for in the Schedule. Where the parties have chosen arbitration as the agreed manner of resolution of their disputes, their right of access to the courts is understood and accepted to be limited. There is nothing unfair or unjust to hold these parties to their agreement. This is also part of the contractual bargain, on which Mr Wong placed much emphasis in his submissions.

28.  Mr Li also draws support from the observations made by the Court of Appeal in Maeda Kensetsu Kogyo Kabushiki Kaisha v Bauer Hong Kong, HCMP 1342 of 2017, 4 September 2017 (at paragraph 13):

“Mr Pennicott rightly reminded us that the application is made in the context of an intended appeal against an arbitration award and in line with the underlying rationale for arbitration, there should be a presumption of finality for arbitration. We wholeheartedly endorse arbitration as an alternative dispute resolution process and there are regimes in the Arbitration Ordinance substantially limiting the rights of the parties coming to court to challenge an arbitration award. Such regimes have been held repeatedly by this Court to be proportionate and constitutionally sound ...” (emphases added)

29.  I do not consider the English case of Shell Egypt West Manzala GmbH v Dana Gas Egypt Ltd [2010] 2 All ER (Comm) 442, to be helpful in supporting Sun’s argument, that his right of appeal should not be excluded. Shell Egypt holds that the parties’ agreement to the arbitration award being final, conclusive and binding, and the provision in the UNCITRAL Arbitration Rules (which refer to an award being final and binding, and under which the Arbitration was conducted in this case) should not be construed as excluding a right of appeal against the award. The provisions on appeal under the UK Arbitration Act are different to those under the Ordinance. Under the UK Arbitration Act, the parties have the right to appeal on a question of law, unless otherwise agreed. In contrast, the right of appeal is excluded under the Ordinance, unless the parties have opted for the Schedule to apply or the Schedule applies by virtue of section 100. The issue in this case is whether or not the parties to the arbitration agreement have opted for the Schedule to apply, under the Ordinance.

30.  The arbitration agreement between Sun and Gas must be determined by the governing law at the date when the dispute is decided and the agreement construed, namely the Ordinance and the regime now provided by the Ordinance. Section 100(a) only makes exception for agreements made before the commencement of the Ordinance, but only if such an agreement has provided that arbitration under the agreement is a domestic arbitration. In my judgment, the arbitration agreement in the Contract makes no such provision.

The contractual bargain?

31.  The submission made by Counsel, that the Court should respect and uphold the contractual bargain between Sun and Gas as to the nature and manner of their arbitration, begs the question of what their alleged bargain is. Whilst Sun argued that at the time when the Contract and arbitration agreement was made, the parties had intended the arbitration to be domestic because of the matters on which he now relies, this is not unequivocal. Gas is a company incorporated in the BVI, and its registered address is a PO Box in the BVI. Its representative had a telephone and fax number in Hong Kong only. The Hong Kong address given for Gas is one for service of notice and communication, pursuant to clause 10 of the Contract. It is still arguable whether Gas itself had or has a place of business in Hong Kong. The Contract is for the sale and purchase of shares of a BVI company, and although completion of the sale and purchase was to take place in Hong Kong, any shares sold and bought have to be registered in the register of the BVI company. There may be other relevant factors, such as Sun’s place of residence, which have to be taken into consideration, in an exercise of determining where the respective places of business of the parties were, where a substantial part of the obligations of the parties was to be performed, or where the subject matter of the dispute was most closely related.

32.  These are matters which would have been the subject of debate under the repealed Ordinance, to decide whether the Arbitration is domestic, or international, and are far from being beyond dispute. It is therefore not clear, as Sun would suggest, that if the dispute was to be arbitrated before 1 June 2011, it would have been a domestic arbitration as the parties had intended, and that he would have had the right to seek leave to appeal on questions of law.

33.  According to Counsel for Sun, for parties to agreements made before the commencement of the Ordinance, the Court should not look at whether they had expressly provided for their arbitration to be domestic - as such a provision was unnecessary under the repealed Ordinance, but should instead ascertain the parties’ intention by looking at whether the domestic parties had agreed to make their arbitration international, and if they had not, their intention must have been to have a domestic one.

34.  In my judgment, the approach advocated by Mr Wong is against the express language of section 100 and is inappropriate, bearing in mind the scheme introduced by and the legislative intent and purpose for the amendments made under the enactment of the Ordinance.

35.  I accept the submissions made by Mr Li, that if the legislative intent for the enactment of the Ordinance was to recognize that, for agreements made before the commencement of the Ordinance, parties who had not opted for international arbitration in their agreements should somehow be presumed to have agreed to domestic arbitration, section 100 would have provided for this, and would not be in the present terms. In its present form, section 100(a) does not state that the Schedule applies to an arbitration agreement entered into before the commencement of the Ordinance “which has not provided that arbitration under the agreement is an international arbitration”. Nor does it state that the Schedule applies to an arbitration agreement made between domestic parties before the commencement of the Ordinance.

Disposition

36.  Having considered all the submissions made by Counsel, I am not persuaded that the arbitration agreement between Sun and Gas has provided that their Arbitration is a domestic arbitration, for sections 5 and 6 of the Schedule to apply. There is no permissible appeal against the Award, and the application for leave to appeal made in the Originating Summons must be dismissed.

37.  The setting aside application was not pursued, and no valid ground was shown that enforcement of the Award should be refused. It follows that leave should be granted to enforce the Award.

38.  The costs of the Originating Summonses (including any costs reserved) were ordered to be borne by Sun, to be paid to Gas on indemnity basis.

Mr Stewart Wong SC, Mr Frederick HF Chan, and Mr Dexter Leung, instructed by Tanner De Witt, for the plaintiff in HCCT 64/2023 & for the respondent in HCCT 84/2023

Mr Laurence Li SC, Mr Martin Ho, and Mr Sik Chee Ching, instructed by Mayer Brown, for the defendant in HCCT 64/2023 & for the applicant in HCCT 84/2023