Edward Mayers v. Brian Dlugash

THE JUDGE HAS AUTHORIZED PUBLICATION OF THIS JUDGMENT

M.P. No. 342 of 1994

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

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Coram: The Hon. Mr. Justice Kaplan in Chambers

Date of Hearing: 16^th May, 1994

Date of Handing Down Judgment: 10^th June, 1994

HEADNOTE

Arbitration – whether reference to arbitrator or to an expert for determination – differences between arbitration and expert determination.

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JUDGMENT

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1. This application raises, I believe for the first time in Hong Kong, the difference between arbitration and expert determination. By the Plaintiff’s Originating Summons, he seeks the removal of the arbitrator, Mr. Dickson, for misconduct pursuant to the provisions of s.25(1) of the Arbitration Ordinance. Both parties have agreed that I should first decide the issue whether Mr. Dickson was in fact appointed as arbitrator or as an expert. If the latter, then it is common ground that the Arbitration Ordinance can have no relevance to this matter. If that is my conclusion, then doubtless the Defendant will pursue his application for summary judgment based on Mr. Dickson’s determination. If Mr. Dickson was appointed arbitrator, then on a future occasion I will have to rule on the question of misconduct.

2.Arbitration is a tried and tested method of dispute resolution where the parties do not wish to litigate their differences before state courts. Expert determination, although having been used for centuries, is perhaps not so widely known. The classic features of expert determination are:

(a)  The expert makes a final and binding decision.

(b)  The decision can only be challenged in the most exceptional circumstances such as where the expert answers the wrong question (see Jones v. Sherwood Computer Services Inc. (1992) 1 WLR 277; Campbell v. Edwards (1976) 1 WLR 403 and Nikko Hotel (UK) Limited v. NEPC (1991) 28 EG 86).

(c)  The expert can be sued for negligence in the absence of an agreed immunity (Arenson v. Casson Beckman Rutley (1975) 3 WLR 815).

(d)  The expert’s determination cannot be enforced as an arbitral award.

3. Expert determination has been used for years in rent review cases and share valuation cases. In Belchier v. Reynolds (1754) 3 Keny 87 at p.91, Sir John Strange M.R. said:

“Whatever be the real value is not now to be considered for the parties made Harris their judge in that point : they thought proper to confide in his judgment, and must abide by it, unless they could have made it plainly appear that he had been guilty of some gross fraud and partiality."

4. Sir John Romilly M.R. In Collier v. Mason 25 Beav 200 at p.204 said:

”This court upon the principle laid down by Lord Eldon, must act on that valuation, unless there be proof of some mistake, or some improper motive ….”

5. In more recent times, in Campbell v. Edwards (supra), Lord Denning M.R. said:

“It is simply the law of contract. If two persons agree that the price of the property should be fixed by a valuer on whom they agree, and he gives that valuation honestly and in good faith, they are bound by it. Even if he has made a mistake, they are still bound by it. The reason is that they have agreed to be bound by it. If there were fraud or collusion, of course, it would be very different, fraud or collusion unravels everything.”

[All the relevant cases on expert determination are most usefully collected together in “Dispute Resolution” by John Kendall published by Longman.]

6. To decide whether Mr. Dickson was appointed as arbitrator or expert involves me construing the 2 agreements entered into between the parties and ascertaining the parties’ intention therefrom. A classic expert determination clause may state:

“In stating the fair price the auditors shall be considered to be acting as experts and not as arbitrator and their decisions shall be final and binding on the parties.”

7. Unfortunately in the present case such explicit language was not used and hence this dispute.

The basic facts

8. Far East Diversify Investments Limited (FEDI) is a Hong Kong Company.

9. Imcor Limited is also a Hong Kong Company with an authorized capital of $300,000 divided into 3,000 shares of $100 each of which 1,530 had been issued and are registered in the names of FEDI and Common Seal Limited in equal proportions.

10. Mr. Edward Mayers, the Plaintiff, is the sole beneficial owner of FEDI and Mr. Brian Dlugash, the Defendant, is the beneficial owner of the shares of Imcor registered in the name of Common Seal Limited.

11. Imcor carries on the business of sourcing, manufacturing, exporting and sale of bags and other similar items in Europe, USA and elsewhere.

12. In 1992 FEDI and Mr. Dlugash agreed in principle that the business activities, assets and liabilities of Imcor should be distributed between them in a manner equitable to both parties but differences have arisen or were anticipated to arise in relation to the manner of such distribution.

13. In order to resolve such differences and avoid any further differences, the parties agreed to appoint and independent third party to resolve any differences and to determine the manner in which such distribution should take place.

14. In order to achieve these aims the Plaintiff, Defendant and FEDI entered into a Deed of Submission dated 30^th March 1992 referring all these matters to the final determination of Mr. Charles Dickson of Horwath & Co.

15. As it is the proper construction of this Deed which I have to consider and as each party has referred to various indicia which they say can be found from the Deed which support their case, I feel it necessary to refer to the complete document. Rather than setting it out verbatim in the ensuing pages of this judgment, I suppose to annex it to this judgment although it will form part of this judgment. The parties also entered into an Agreement dated 26^th June 1992 which I do not propose to set out in this judgment nor annex. If necessary, I will refer to and quote relevant parts of this agreement. However, it is basically the Deed of Submission which I have to construe.

16. It is common ground between the parties that the presence or absence of words like “Arbitrator” or “Expert” is not decisive.

17. Mr. Paul Shieh who appeared for the Defendant relied upon the following four factors in support of his submission that Mr. Dickson was appointed as an expert and not as an arbitrator:

1)    There was no formulated dispute;

2)    there was no stipulated procedure and no requirement for Mr. Dickson to adopt a judicial approach;

3)    The fact that Mr. Dickson was an accountant, it being suggested that his appointment is consistent with an intention that he should rely on his own expertise in accounting to effect the split between the parties. This it is submitted accords more with the role of expert valuer that of arbitrator.

4)    There was an exclusion of liability contained in the Deed.

No Formulated Dispute

18. Mr. Shieh submitted that a procedure is not an arbitration unless there is a formulated dispute in existence at the time when the arbitrator is appointed and unless the arbitrator is called upon to determine such formulated dispute.

19. In Collins v. Collins (1858) 26 BEAV.306, Sir John Romilly, Master of The Rolls, had before him a case where parties entered into a contract to purchase a brewery and plant at a price to be fixed by arbitrators, who were to choose an umpire before entering upon the valuation. The arbitrators could not agree on an umpire. It was held that the court had no authority under the Common Law Procedure Act 1845 to appoint and umpire for such a purpose. At page 312. Sir John Romilly asked himself what an arbitration is. He continued:

“Now I fully concur in the observation, that fixing the price of a property may be “arbitration”. But I do not think that in this particular case, the fixing of the price of the property is an arbitration, in the proper sense of the term. An arbitration is a reference to the decision of one or more persons, either with or without an umpire, of some matter or matters in difference between the parties. It is very true that in one sense it must be implied that although there is no existing difference, still that a difference may arise between the parties; yet I think the distinction between an existing difference and one which may arise is a material one, and one which has been properly relied upon in the case. …”

20. Collins v. Collins was followed in Bos v. Helsham (1866) L.R. 2 Ex. 72. In that case particulars of sale provided that if there was any mistake in a description of any property offered for sale such mistake would not annul the sale but compensation should be given to be settled by two referees, one to be appointed by either party to the sale or an umpire. One party applied to the court for an appointment of an arbitrator under the Common Law Procedure Act 1854 but the court held that the reference indicated in the condition being one of the quantum of compensation only, was not a reference to arbitration of an exiting or future difference within the meaning of the 1854 Act.

21. In re Carus-Wilson v. Greene (1886) 18 QBD 7, one of the conditions of sale in a sale of land was that the purchaser should pay for timber on the land at a valuation, and it was provided each party should appoint a valuer and they should value, If they disagreed, they should appoint an umpire who should make a valuation. The two valuers appointed being unable to agree, the umpire made the valuation. The Court of Appeal affirmed the judgment of the High Court that such valuation was not in the nature of an award on an arbitration, and therefore an application to set it aside was refused. Lord Esher, M.R. at page 9 said this:

“The question here is, whether the umpire was merely a valuer substituted for the valuers originally appointed by the parties in a certain event, or an arbitrator. If it appears from the terms of the agreement by which a matter is submitted to a person’s decision, that the intention of the parties was that he should hold an inquiry in the nature of a judicial inquiry, and hear the respective cases of the parties, and decide upon evidence laid before him, then the case is one of an arbitration. The intention in such cases is that there shall be a judicial inquiry worked out in a judicial manner. On the other hand, there are case in which a person is appointed to ascertain some matter for the purpose of preventing differences from arising, not of settling them when they have arisen, and where the case is not one of arbitration but of a mere valuation. There may be cases of an intermediate kind, where, though a person is appointed to settle disputes that have arisen, still it is not intended that he shall be bound to hear evidence or arguments. In such cases it may be often difficult to say whether he is intended to be an arbitrator or to exercise some function other than that of an arbitrator. Such cases must be determined each according to its particular circumstances. I think that this case was clearly not one of arbitration, under that it falls within the class of cases where a person is appointed to determine a certain matter, such as the price of goods, not for the purpose of settling a dispute which has arisen, but of preventing any dispute.”

22. Similar observations fell from Lindley and the Lopes, L.JJ.

23. In Sutcliffe v. Thackrah (1974) AC 727 the House of Lord held that in issuing interim certificates, an architect did not, apart from specific agreement, act as an arbitrator between the parties, and he was under a duty to act fairly in making his valuation and was liable to an action in negligence at the suit of the building owner. At p. 735 Lord Reid dealt with the very point in issue in this case:

“The reason must, I think, be derived at least in part from the peculiar nature of duties of a judicial character. In this country judicial duties do not involve investigation. They do not arise until there is a dispute. The parties to a dispute agree to submit the dispute for decision. Each party to it submits his evidence and contention in one form or another. It is then the function of the arbitrator to form a judgment and reach a decision.

In other forms of professional activity the professional man is generally left to make his own investigation. In the end he must make a decision but it is a different kind of decision. He is not determining a dispute: he is deciding what to do in all the circumstances. He may go wrong because he has at some stage failed to take due care and that may not be difficult to prove. But coming to a wrong but honest decision on material submitted for adjudication is rarely due to negligence or lack of care, and it is seldom due to such gross failure to exercise professional skill as would amount to negligence. It is in the vast majority of cases due to error of judgment and there is so much room for differences of opinion in reaching a decision of a judicial character that even the most skilled and experienced arbitrator or other person acting in a judicial capacity may not infrequently reach a decision which others think is plainly wrong.”

24. At p. 745 Lord Morris again concentrated on the differences between arbitrators and experts where he said:

“One of the features of and arbitration is that there is a dispute between two or more persons who agree that they will refer their dispute to the adjudication of some selected person whose decision upon the matter they agree to accept. As an example, the dispute may involve an issue as to what a particular article is worth or as to the value of work that has been done. It follows that the task of an arbitrator may in some cases be the task of arriving at a valuation. In some circumstances, therefore, someone might be regarded both as a valuer and an arbitrator. But it by no means follows that everyone who has a duty of valuing, a duty which obviously must be fairly and honestly discharged, is an arbitrator. A valuer may not be exercising any judicial function.”

25. Similar observations can be found in the speeches of Viscount Dilhorne and Lord Salmon.

26. In Arenson v. Casson Beckman Rutley & Co. (1977) AC 405, auditors ascertained a fair value of shares in a company. They were sued for negligence and pleaded that they were immune from suit. The House of Lords held that the immunity of the judge and arbitrator was exceptional to the general rule of liability for negligence; that there was no reason of public policy making it necessary to treat a “mutual” valuer as an exception to that rule; and that therefore the plaintiff’s statement of claim disclosed a cause of action. Lord Simon gave the leading speech and referred to the various observations in Sutcliffe v. Thackrah (supra). At p.424 he dealt with the formulated dispute point and said:

“There may well be other indicia that a valuer is acting in a judicial role, such as the reception of rival contentions or of evidence, or the giving of a reasoned judgment. But in my view the essential pre-requisite for him to claim immunity as an arbitrator is that, by the time the matter is submitted to him for decision, there should be a formulated dispute between at least two parties which his decision is required to resolve. It is not enough that parties who may be affected by the decision have opposed interests – still less that the decision is on a matter which is not agreed between them.”

27. As Lord Wheatley made clear at p. 427, each case has to be decided on its own facts and it was not possible to find an all-embracing formula to decide every case. He then said:

“What can be done is to set out certain indicia which can serve as guide-lines in deciding whether a person is so clothed. The indicia which follow are in my view the most important, though not necessarily exhaustive. They are culled from the speeches in Sutcliffe v. Thackrah cited by my noble and learned friend Lord Simon of Glaisdale and from several other passages therein.”

28. At p. 428, he set out the following indicia:

“(a) There is a dispute or a difference between the parties which has been formulated in some way or another;

(b) the dispute or difference has been remitted by the parties to the person to resolve in such a manner that he is called upon to exercise a judicial function;

(c) where appropriate, the parties must have been provided with an opportunity to present evidence and / or submissions in support of their respective claims in the dispute; and

(d) the parties have agreed to accept his decision.”

29. At p. 442 Lord Fraser agreed with Lord Salmon that the functions of arbitrators and valuers are in many ways very similar because both are giving decisions which will bind parties with conflicting interests and both have a duty to act impartially. Both can reach their decision by using skill and judgment without hearing evidence, and without immunity, both are liable to be sued from opposite sides. He then added this:

“The main difference between them is that the arbitrator, like the judge, has to decide a dispute that has already arisen, and he usually has rival contentions before him, while the mutual valuer is called upon before a dispute has arisen, in order to avoid it. He may be employed by parties who have little or no idea of the value of the property to be valued and who rely entirely on his skill and judgment as an expert. In that respect he differs from some arbitrators. But many arbitrators are chosen for their expert knowledge of the subject of the arbitration, any many others are chosen from the legal profession for their expert knowledge of the law or perhaps because they are credited with an expertise in holding the balance fairly between parties. It does not seem possible, therefore, to distinguish between mutual valuers and arbitrators on the ground that the former are experts and the latter are not.”

30. Mr. Shieh submits that no formulated dispute was referred to Mr. Dickson for determination because he was appointed to determine the manner of distribution so as to avoid disputes. In support of this contention he relies upon paragraphs 4 and 5 of the preamble to the Deed and to paragraph 1 of the Deed itself. He submits that the fact that differences had arisen between the parties does not necessarily mean that the reference is an arbitration because such differences have not been formulated or referred to Mr. Dickson for determination.

31. Mr. Reyes submits that at the time of Mr. Dickson’s appointment, the parties were already in dispute. They carried on business together through Imcor and differences had arisen between them. They had decided to break up but were unable to agree on how Imcor’s assets were to be distributed between them. They therefore appointed Mr. Dickson under the Deed to resolve their differences. He submits that the issue was how to split the businesses between them and that it is necessary to look at the Deed as a whole. He submitted that Mr. Dickson was either wholly arbitrator or wholly valuer under the Deed and it would be commercially impractical for the court to hold that when discharging certain functions under certain clauses of the Deed Mr. Dickson was acting as arbitrator but when discharging other functions, under other clauses, he was only acting as valuer or expert.

32. These rival contentions are, of course, at the very heart of the distinction between the role of an arbitrator on the one hand and the role of the expert on the other. Having considered the rival contentions and having taken careful note of the guidance given by the authorities and, of course, construing the Deed and the Agreement as a whole, I find it impossible to conclude that there was such a formulated dispute between these parties so as to indicate that they intended Mr. Dickson to act as arbitrator as opposed to an expert. One has, of course, to be wary of looking at individual words or phrase or clauses in the Deed but must be careful to construe the Deed as a whole. I do not think that it is a sufficiently formulated dispute to say that the dispute was on what terms should the parties bring to an end their commercial relationship. The powers given to Mr. Dickson were inquisitorial powers not normally given to an arbitrator. He was empowered to make a thorough investigation of the business. He was given power to determine, compromise or release all claims. He had the power to realise assets and discharge liablilities of the company, and he had the general power to determine any matters whatsoever concerning the business of the company or any matter in difference as either party should have given notice to him not less than 14 days after being so requested. The matters that were specifically referred to him for his final determination were not formulated disputes of a class normally referred to arbitrators. For instance, clause 6.1 refers to Mr. Dickson for his final determination, the issue “whether any party should be at liberty to engage in business activities identical or similar to that of the company and if so, on what terms.” That appears to me to be an invitation to Mr. Dickson to impose contractual obligations upon the parties which were not previously there, He was not being asked to rule whether a restrictive covenant was to be enforced, rather he was asked to decide whether a restrictive covenant of some of sort should be imposed upon the parties and if so, upon whom and upon what terms. I find it difficult to characterise that sort of power as deciding a formulated dispute in the sense that that phrase has been used and understood in all the authorities to which I have made reference. The same observations apply to Mr. Dickson’s determination as to whether either party should be allowed to solicit past or present customers and, if so, on what terms. Clause 6.4 of the Deed entitles him to decide whether either party should be at liberty to engage any former or present employees of the company and if so, on what terms.

33. It also appears that the crucial task to be carried out by Mr. Dickson is that stated in clause 3 of the Deed, namely, to undertake a full valuation of the assets and liabilities of Imcor because the various determinations that he is asked to make have to be made within 30 days from the delivery of such valuation. A valuation of the assets of a company is of course a common task undertaken by accountants and it would not be possible to characterise that function as being one of an arbitrator.

34. At this point it may be helpful to refer to the Agreement entered into the parties on 26^th June 1992. The recitals set out the background. Recitals 5, 6 and 7 state as follows: -

“5. EM and BD having agreed that the Business of Imcor and WP be restructured to the effect that both EM and BD shall carry out on the Business separate and apart from one another through separate corporate entities the parties did by a Deed of Submission dated the 30th day of March, 1992 appoint Mr. Charles Dickson of Messrs. Horwath & Company, to determine various issues in connection with such restructuring.

6. By a Determination of even date hereof and a copy of which is annexed hereto and marked “A”, Mr. Dickson directed the manner in which the said restructuring would be effected and directed inter alia that the beneficial interest in Imcor of BD be transferred to EM and that the beneficial interest of EM in WP be transferred to BD.

7.      This Agreement sets out the method by which the parties have agreed to implement such transfer and all other directives of Mr. Dickson contained in the said Determination.”

35. Insofar as it is permissible to have regard to the terms of this Agreement in construing the Deed of Submission I am satisfied that the terms of this Agreement are strongly supportive of the conclusion that Mr. Dickson was appointed as expert and not as arbitrator. It is not the function of arbitrators to restructure companies. It is their function to determine properly formulated disputes submitted to them.

36. Having taken full regard of all the points made by Mr. Reyes in his written and oral submissions nevertheless I am quite satisfied that Mr. Shieh is correct when he states that there is no sufficiently formulated dispute referred to Mr. Dickson. I do not think that Mr. Dickson was asked to determine a dispute. Rather, in the words of Lord Reid, he was deciding what to do in all the circumstances. The fact that they had opposing interests and were not agreed as to what to do does not in itself mean that they submitted a formulated dispute to Mr. Dickson. I am satisfied that that is an essential pre-requisite of a submission to arbitration and that the absence of such formulated dispute is determinative or virtually determinative of the issue which I have to decide. However, it is essential for me to go on to consider the other relevant factors put forward by Mr. Shieh which he submits should confirm that by this Deed the parties referred these various matters to Mr. Dickson as an expert for his final and binding determination.

Procedure

37. Mr. Shieh submits that a stipulated court-like procedure involving the opportunity to present evidence and arguments is a pointer, albeit not a decisive one, towards someone acting as arbitrator.

38. Mr. Shieh derives this proposition from page 48 of Mustill & Boyd Commercial Arbitration, 2^nd edition where, under the heading of other relevant factors, they deal with evidence and contentions in the following manner:

“There is high authority for the view that a procedure is not an arbitration unless it is intended that the arbitrator shall perform a judicial function; and this has been explained as meaning that he must hear evidence and contentions brought forward by the parties, or at least give them the opportunity of bringing them forward. There are, however, serious difficulties in the way of accepting this as a requirement, as distinct from a relevant factor: for a large majority of procedures which are beyond question arbitrations are conducted without any ‘contentions’ being addressed to the tribunal, in the sense of a formal reasoned argument.”

39. The learned authors then go on to refer to many quality disputes where and expert merely inspects the goods and forms his opinion which becomes and arbitral award. In those circumstances, there is no question of the parties bringing forward their own experts to try to persuade him that his taste or feel or smell is wrong.

40. In Sutcliffe v. Thackrah (supra), Lord Salmon page 763 dealt with this point briefly as follows:

“In In re Hopper Cockburn C.J., with whom Blackburn and Lush JJ. agreed, was in effect saying that the question as to whether anyone was to be treated as an arbitrator depended upon whether the role which he performed was invested with the characteristic attributes of the judicial role. If an expert were employed to certify, make a valuation or appraisal or settle compensation as between opposing interests, this did not, or itself, put him in the position of an arbitrator. He might, e.g., do no more than examine goods or work or accounts and make a decision accordingly. On the other hand, he might, as in In re Hopper, hear the evidence and submissions of the parties, in which case he would clearly be regarded as an arbitrator. Everything would depend upon the facts of the particular case. I entirely agree with this view of the law.”

41. There are similar statement in Arenson (Supra).

42. Mr. Shieh submitted that the Deed did not provide for such similar procedures. Rather, he submits, the Deed gave Mr. Dickson wide discretionary and investigatory powers which do not appear to be “judicial”. He relies on paragraphs 2,3,4,5 and 6 of the Deed.

43. Mr. Reyes submitted that the Deed contemplated that Mr. Dickson would receive evidence and contentions, or, at the very least, give the parties the opportunity of putting them forward, and he referred, by way of example, to clause 8. I fail to see how clause 8 assists Mr. Reyes’ arguments.

44. He further submits that the words used in the Deed and the Agreement are consistent with the view that it was intended that Mr. Dickson should act as arbitrator and he supports this submission by reference to the use of the words “determine” “determination”, “final determination”, “award”, “direct”, “proceed ex-parte” and “adjudicate”.

45. I did not find it helpful to refer to individual words used in the Deed and the Agreement. It is clear that the parties have not made their intention plain by stating either that Mr. Dickson was appointed as arbitrator or that the matter was referred to him to decide as an expert and not as an arbitrator. I have to look at the Deed and the Agreement to ascertain which of those intentions the parties had when they entered into this Deed and I have to do so by reference to all of the language which was used in the document. It could be argued that the use of the word “determination” is some indication that Mr. Dickson was to be an expert. Mr. Reyes relies upon the use of the word “award” but I am not satisfied that the way that word is used in paragraphs 5.4 and 5.5 are helpful in ascertaining the parties true intention as to the precise nature of Mr. Dickson’s appointment. Mr. Reyes relies upon Mr. Dickson’s power to obtain legal opinion as an indication that Mr. Dickson was intended to be an arbitrator. I do not find that particularly helpful, bearing in mind that one of the powers given to Mr. Dickson was to determine, compromise or release all claims and counter-claims the parties may have against one or other because in carrying out such function it might well be appropriate for a non-lawyer to take legal advice about the strength and weaknesses of such claims and counter-claims. Merely because he is able to take legal advice does not seem to me to determinative either way. I accept that an arbitrator is entitled to take legal advice in order to carry out his functions but merely because Mr. Dickson is given such a right in this rather complicated matter, does not seem to me to be there a strong indication one way or the other.

46. I am quite satisfied that the procedure agreed upon by the parties is far more consistent with an intention to appoint Mr. Dickson as an expert rather than as an arbitrator.

Identify of Tribunal

47. Mr. Shieh relies upon the fact that Mr. Dickson is an accountant and his appointment is consistent with the intention that he should rely on his own expertise in accounting to effect the “split” between the parties. This accords more with the role of an expert valuer rather than that of an arbitrator. Mr. Shieh relies upon a short passage between pages 49 and 50 of Mustill & Boyd where they state:-

“The identify of the tribunal named in the agreement, or the method prescribed for choosing the tribunal, may indicate the type of proceedings which are contemplated. A reference to a tribunal chosen from the arbitral panel of a trade association points in one direction; a reference to a firm of estate agents or accountants may point in the other. The choice of a lawyer as the tribunal suggests that a more formal procedure is looked for, and that accordingly an arbitration is intended.”

48. I agree with Mr. Shieh’s submission that the appointment of an accountant to carry out the functions specified in the Deed is some indication, but by no means a conclusive one, that the parties intended this to be an expert determination rather than an arbitration.

Exclusion of Liability

49. Both Mr. Reyes and Mr. Shieh pointed to paragraph 12 of the Deed which confers immunity upon Mr. Dickson. Mr. Shieh submits that the better view now is that an arbitrator is immune from judicial proceedings for negligence and that such view can be ascertained from both Sutcliffe v. Thackrah and Arenson. Mr. Shieh submitted that as the Deed was drafted by solicitors it would have been completely unnecessary to specifically confer an immunity on Mr. Dickson and thus paragraph 12 of the Deed would have been otiose.

50. Mr. Reyes, on the other hand, suggests that the immunity conferred upon Mr. Dickson points to the fact that he was intended to perform the quasi-judicial role of an arbitrator.

51. When pressed by me both counsel agreed that the immunity point did not really take the matter much further and my view is that it is a factor pointing toward Mr. Dickson having been appointed as an expert and, although not a sufficient point on its own, when added to the other points to which I have made reference, it has some minor significance. I accept that the better view is that an arbitrator is immune from judicial proceedings for negligence whereas it is perfectly plain that an expert is not and thus the conferring of immunity is a pointer in the direction of expert determination. It is interesting to note in passing that the draft new Arbitration Bill recently put out by the Department of Trade and Industry in England provides for a statutory immunity for arbitrators on the basis that the intention behind the Bill was to give statutory effect to well settled principles of English Arbitration Law. In this regard, it is interesting to note that a draft arbitration Bill put forward in 1884 by Lord Bramwell, which never became law due to a change of government, also provided in clause 71 for statutory immunity for arbitrators on the basis that this represented the Common Law position. [On this subject see the interesting article by V.V. Veeder, Q.C. and Brian Dye in Arbitration International 1992, Vol. 8 no. 4].

Conclusion

52. Having considered all the very helpful submissions from both counsel and in the light of my conclusions on the various indicia, I am quite satisfied that the parties intention, as derived from the language used in the Deed, was to appoint Mr. Dickson as an expert and not as an arbitrator.

53. I therefore decide the preliminary issue in favour of the Defendant. On this basis I propose to dismiss the Originating Summons seeking Mr. Dickson’s removal as an arbitrator and I further propose to make a costs order nisi in relation to these proceedings in favour of the Defendant.

Mr. A. Reyes instructed by Haldanes for the Plaintiff.

Mr. Paul Shieh instructed by Stevenson, Wong & Co. for Defendant.

ANNEXURE

THIS DEED OF SUBMISSION is made the 30^th day of March One Thousand Nine Hundred and Ninety Two

BETWEEN

1. FAR EAST DIVERSIFIED INVESTMENTS LIMITED having it’s registered office at 19^th Floor, 9 Queen’s Road, Hong Kong (“FEDI”) of the one part;

2. ED MAYERS c/o Horwath & Company, 6^th Floor, Bank of America Tower, 12 Harcourt Road, Hong Kong (“EM”) of the second part;

3. BRIAN DLUGASH of 2^nd Floor, 108 Tin Hau Temple Road, Hong Kong (“BD”) of the third part.

WHEREAS :-

1. Imcor Limited (the “Company”) is a Hong Kong registered corporation having an authorized capital of HK$300,000 divided into 3,000 shares of HK$100 each of which 1,530 have been issued and are registered in the name of FEDI and a Hong Kong registered corporation COMMON SEAL LIMITED (“Common Seal”) in equal proportions.

2. EM is the sole beneficial owner of FEDI and BD is the beneficial owner of the shares of the Company registered in the name of Common Seal.

3. The Company carries on the business of sourcing, manufacturing, exporting and sale of bags and other similar items in Europe, the U.S.A. and elsewhere (the “Business”).

4. FEDI and BD have agreed in principle that the business activities assets and liabilities of the Company shall be distributed between them in a manner equitable to both parties but differences have arisen or are anticipated to arise in relation to the manner of such distribution.

5. The Parties wish to resolve all such differences and avoid any further differences by the appointment of an independent third party to resolve any differences and to determine the manner in which such distribution shall take place.

6. This Deed of Submission sets out the method of such appointment and the powers and duties of such third party and the rights and obligations inter se of the parties hereto arising from such appointment.

NOW THIS DEED WITNESSETH as follows : -

1. All matters concerning the Business whether or not in difference between the parties together with the manner in which the Business, the assets and the liabilities of the Company shall be dealt with and all accounts and affairs relating to the dealings of the Company shall be referred to the final determination of Mr. Charles Dickson of Horwath & Company, 6^th Floor, Bank of America Tower, 12 Harcourt Road, Central, Hong Kong (“Mr. Dickson”).

2. Mr. Dickson shall be at liberty should he so think fit to investigate the whole of the accounts, dealings and transactions of Imcor Limited and any other affiliated or subsidiary corporations from the date of first carrying on of the Business to determine the true sate of the accounts and financial status of the Company.

3. Mr. Dickson shall be at liberty to employ Messrs. Horwath & Company to whose examination he may submit such accounts as are connected with the affairs of the Company as he should think fit and shall be at liberty to undertake a full valuation of the assets and liabilities of Imcor Limited.

4. Mr. Dickson shall be at liberty at any stage to obtain the opinion of legal counsel upon any questions of law arising in the course of his appointment and may act upon the opinion so taken.

5. In particular but without limiting his general powers expressed or implied herein it is hereby declared that Mr. Dickson shall have the following powers that is to say: -

5.1 The Power to determine the precise business activities of the Company in particular with reference to the Company’s existing customers and the manner or by whom such customers were originally brought within the Business together with the identity of the manufacturing sources of the Company and the manner in which such were originally secured.

5.2 The power to determine, compromise or release all claims and counter-claims the parties hereto may have against one another or the Company.

5.3 The power to direct the purchase of the interests of either party hereto by the other party.

5.4 The power to award that the Company be wound up and to name the date on which the resolution to such effect shall take effect.

5.5 The power to realize the assets and discharge the liabilities of the Company either by awarding that the same be carried out by one of the parties hereto or by a receiver to be named by Mr. Dickson.

5.6 The power to determine any matters whatsoever concerning the Business of the Company or any matter in difference as either party shall have given notice to Mr. Dickson not less than 14 days after being so requested.

6. In particular the following matters shall be referred to Mr. Dickson for final determination : -

6.1 Whether any party shall be at liberty to engage in business activities identical or similar to that of the Company and if so, on what terms.

6.2 Whether either party should be allowed to solicit past or present customer’s of the company and if so, on what terms.

6.3 Whether any obligations shall be imposed upon either party to continue to use the manufacturing capacity of the Company.

6.4 Whether either shall be at liberty to engage any former or present employees of the Company and if so, on what terms.

6.5 The price, mode of payment, indemnity and other terms in respect of the purchase of one party’s interest from the other and in the event of such consideration being by instalments he shall determine what, if any, security shall be required.

7. The appointment of Mr. Dickson shall be irrevocable save with the written consent of all parties hereto.

8. Mr. Dickson shall have the power to proceed ex-parte in the event that either party fails after reasonable notice to comply with any request made by him.

9. Mr. Dickson shall make his determination within 30 days from the delivery of the valuation referred to in Clause 3 hereof or within such extended time as may be agreed between the parties hereto.

10. The parties hereby undertake that during the term of appointment of Mr. Dickson under the terms hereof :-

10.1 Neither party shall transfer, encumber or pledge any shares in the Company to any third party without the written consent of the other party and Mr. Dickson.

10.2 That neither party shall engage in any activity prejudicial to the Business or compete with the Business during the appointment and determination of Mr. Dickson herein.

11. All determinations of a Mr. Dickson shall be binding on the parties who expressly waive all rights of appeal or recourse to any Court except such rights as cannot be so waived.

12. None of the parties hereto shall bring or prosecute any action against Mr. Dickson for or in respect of the determination to be made in pursuance of this Deed of Submission.

13. Mr. Dickson may direct the execution by each of the parties of all notices, deeds and documents whatsoever necessary or proper for giving full effect to his determination.

14. The costs of Mr. Dickson shall be borne by ED and BD hereto in equal proportion but both shall in any event be jointly and severally liable for such cost.

IN WITNESS whereof the parties hereto have caused their hands and seals to be affixed the day and year first above written.