Apex Tech Investment Ltd v. Chuang's Development (China) Ltd
Read the full judgment text of CACV 231/1995 on BabelCite. This Court of Appeal judgment was delivered on 15 March 1996.
2. For my part I am content to take the facts from the judgment.
Cited by 2 cases · Cites 1 case
----------------- Coram: Mortimer and Mayo JJA and Wong J Date of Judgment: 15 March 1996 ----------------- JUDGMENT ----------------- Mortimer JA: On 24 May 1995 the plaintiff obtained an ex parte order from Leonard J to enforce in Hong Kong an arbitration award in its favour in the People's Republic of China The award was made by the China International Economic and Trade Arbitration Commission ('CIETAC'). On 8 September 1995 the judge dismissed the defendant's application to set aside his ex parte order. The defendant now appeals against that order to prevent the plaintiff from enforcing the award in Hong Kong. Thefacts 2. For my part I am content to take the facts from the judgment. 3. On 1 May 1992 the plaintiff agreed to buy and the defendant to sell a block of flats in Dan Shui, Hui Yan County in the People's Republic of China for HK$30,357,300. Payment was to be by instalments. Two were paid but the plaintiff refused to pay the third instalment with the consequence that the defendant forfeited the earlier two. 4. On 30 April 1993 the plaintiff applied for arbitration in accordance with an arbitration clause in the agreement for sale. On 4 September 1993 there was a hearing. The parties attended and presented their cases. That hearing was completed on 5 November and on 10 December 1994 the arbitral tribunal made an award in the plaintiff's favour. 5. The question in the arbitration was whether the agreement was valid. It was a condition precedent that the plaintiff should have the right to sell the flats which it had purchased on to Hong Kong purchasers. This in turn depended upon whether the defendant had acquired the right to build 'commodity real properties destined to be sold abroad'. Those words are not terms of art. 6. In fact the defendant had a 'Certificate for the Use of State-owned Land' issued by the Hui Yan Country State-owned Land Bureau on 1 June 1989. The use permitted was 'industrial estate by foreign investors solely'. The Certificate stated that it had been prepared under the supervision of Land Administration Bureau of the State. The question was - did the Certificate for the Use of Land confer the right to sell abroad? The tribunal answered this in the negative, adding that if change of use was required, consents had to be obtained. That was the basis of the award made in the plaintiff's favour. The right to enforce the award in Hong Kong 7. The award is a convention award within the meaning of s.2 of the Arbitration Ordinance, Cap. 341 and the enforcement of such awards is dealt with in s.44, the relevant parts of which read: "44 Refusal of enforcement
This provision follows precisely the words of the New York Convention. The decision below 8. The arbitral tribunal had the right under its articles to make its own inquiries and to collect its own evidence. After hearing the parties present their cases on the issue, the tribunal was minded to make its own inquiries. The relevant passage dealing with those inquiries is as follows:
9. The defendant contends that there was a procedural irregularity. It ought to have been given notice of the result of the inquiries made by the arbitral tribunal and then ought to have been given the opportunity to make further submissions and, if necessary, call further evidence. On that the judge agreed. So, the judge found that s.44(2)(c) applied. In other words. that in these circumstances the defendant had been unable to present its case. 10. However, it is clear that the judge has a discretion in s.44(2): "(2) Enforcement of a Convention award may be refused..." (emphasis provided) He exercised his discretion to order enforcement in spite of his finding of a procedural irregularity. 11. Having examined the material put forward by the defendant which it submitted would have been available to put before the tribunal, he came to the conclusion that the result of the arbitration could not have been different even if the opportunity to be heard had been granted. 12. The judge relied upon Paklito Investment Limited v Klockner East Asia Limited [1993] 2 HKLR 39 and the principles referred to in Professor Van den Berg's paper-'The New York Arbitration Convention 1958 - Towards a Uniform Judicial Interpretation'. In that paper the professor - following a Court of Appeal decision in Hamburg - says:
13. There is no challenge in this Court to either the judge's decision that there was a procedural irregularity which prevented the defendant from presenting his case before the tribunal, or of the principle upon which the judge acted in exercising his discretion to nevertheless order enforcement. The issue on appeal 14. The issue on this appeal is therefore very limited. Mr Tang QC for the defendant and Mr Huggins QC for the plaintiff agree that the only issue is whether the judge was wrong when he decided that it was clear that if an opportunity to be heard further had been given to the defendant it could have had no effect upon the tribunal's award. The approach of this Court 15. In considering this matter on appeal - as it was at first instance - it is important that the court should meticulously avoid any consideration of the merits of the award. This the judge made clear in his reasoning and in his finding when he said:
16. The word 'could', in my judgment, is of some importance. The word 'could' rather than 'would', to my mind, properly indicates the way in which the court must keep out of the merits. Of course, this is particularly so when the court is considering an award under a foreign system of law. Was the judge's decision correct? 17. The judge rightly concentrated upon the matters which the defendant would have brought to the attention of the tribunal had it been given the opportunity to do so. He considered the relevant part of the award; the letter of 4 January 1995 which the defendant sent to the State-owned Land Department of Guangdong the reply of 5 January and finally the letter from the Hui Yang City Bureau of 11 February 1995. He decided that the stance taken by the State-owned Land Department of Guangdong in its reply to the tribunal and in its letters to the defendant were consistent. With this, for my part, I agree. However, this consistency also demonstrates without question that there is considerable uncertainty about the meaning of the words in the Certificate of Use. After initially giving a clear interpretation of the words in this certificate, the tribunal went on to say:
18. One adds to that, the letter of 5 January which says:
This letter, it seems to me, further muddies the waters. It confirms that the result of the further inquiries made by the tribunal were far from conclusive. 19. On 11 February 1995, there was a further letter from the Hui Yan City Bureau which said:
Mr Tang relied upon that letter also. It tends to suggest that the defendant had the rights it contends for. 20. Finally, I would refer to the letter from the same authority-referred to by my brother Wong J in the course of argument-dated 28 February 1992. That letter reads:
What the exact effect of that letter was, I simply do not know, but it would appear also to show that this whole issue was far from certain. 21. In spite of Mr Huggins' admirably succinct and forceful submissions in support, it is with considerable reluctance that I find myself unable to agree with the judge's findings set out in his admirably clear and well-reasoned judgment. Conclusion 22. Having regard to the uncertainty on the meaning of the permission granted to the defendant demonstrated by the award itself and the letters which both preceded and followed it, I am unable to say that if the defendant had been given the opportunity to make further representations to the arbitral tribunal after it had made its own inquiries, that it could not have affected the outcome of the award. As we were rightly reminded by Mr Tang in the course of his submissions this is particularly so when the applicable law is that of the People's Republic of China. 23. The final matter is this. The award relates not simply to the main issue canvassed, but also to the issue lying behind it, which is the validity under Chinese law of the contract between the parties. 24. In those circumstances, for my part, I would allow this appeal and refuse to order that the award be enforced. In reaching that decision I particularly thank counsel for their assistance. Mayo JA: I agree entirely and have nothing to add. Wong J: I also agree that the appeal should be allowed and have nothing to add.
Representation: Mr Robert Tang QC and Mr Horace Wong (M/s Deacons Graham & James) for Appellant/Defendant Mr Adrian Huggins QC and Mr Alfred Chan (M/s Ho, Tse, Wai & Partners) for Respondent/Plaintiff |
Cases cited in this judgment