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HCCT 207/2025 [2026] HKCFI 4946 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTRUCTION AND ARBITRATION PROCEEDINGS NO 207 OF 2025 ____________________
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_____________ D E C I S I O N _____________ Background 1.This is the application made by the Defendant under section 20 of the Arbitration Ordinance (“Ordinance”) for a stay of these proceedings to arbitration. 2.The Plaintiff’s claim in this action is for money said to be due in respect of works carried out by the Plaintiff under a sub-contract between the parties in respect of part of the demolition works subcontracted by the Defendant to the Plaintiff (“Subcontract”). The Defendant was the main contractor under an agreement made between the Defendant and the Hong Kong Post of the Government (“Main Contract”) for construction and demolition works to be carried out for the redevelopment of the Air Mail Centre (“Project”). 3.There is no dispute that the questions for determination of an application for stay under section 20 are those set out in Tommy CP Sze & Co v Li & Fung (Trading) Ltd [2002] HKCFI 682, namely:
4.In PCCW Global Ltd v Interactive Communications Service Ltd [2007] 1 HKLRD 309, it was held that in considering an application to stay in favor of arbitration, the proper test was whether there was a prima facie case that the parties were bound by an arbitration clause. At paragraph 60 of his judgment, Tang VP (as His Lordship then was) observed as follows:
5.In this case, the dispute between the parties at this stage is whether there was an arbitration agreement which had been incorporated into the Subcontract. 6.The Defendant claims that there is an arbitration agreement contained in clause 18.2 of the Standard Form of Domestic Sub-Contract (2008 Edition) published by the Hong Kong Construction Association (“Standard Form DSC”), and that the Standard Form DSC formed part of, and had been incorporated into, the Subcontract made between the Plaintiff and the Defendant. On its part, the Plaintiff disputes the incorporation of the Standard Form DSC, and denies that the terms of the Standard Form DSC formed part of the Subcontract made between the Plaintiff and the Defendant. The pre-contract negotiations 7.There is no dispute that in March 2023, the parties were in discussion and corresponding on a tender to be made for the demolition works in the Project. On 20 March 2023, the Defendant sent an email to the Plaintiff (“20/3 email”), under the subject:
8.The 20/3 email to the Plaintiff stated:
9.On the following day, the Defendant sent a further email to the Plaintiff, referring to the same subject matter and stating:
10.The Plaintiff replied to the Defendant’s two emails, on 22 March 2023, as follows:
11.There is no dispute, that a meeting took place between representatives of the Plaintiff and the Defendant on 23 March 2023 (“23/3 Meeting”), to discuss (inter alia) the Plaintiff’s alternative design and the Plaintiff’s quotation for the demolition works to be undertaken. On the Plaintiff’s case, the Plaintiff and the Defendant orally agreed on a Pre‑Bid Agreement (“PB Agreement”) in the course of the 23/3 Meeting, whereby the alternative design proposed by the Plaintiff was adopted and the price was agreed for the Plaintiff to execute the relevant demolition works. According to the Plaintiff, the PB Agreement was evidenced by the Defendant’s email to Mr Liu Chin Yu of the Plaintiff on 24 March 2023, in which it was stated:
12.Following that email, the Plaintiff sent its quotations to the Defendant on 4 April 2023, for both the so-called conforming design and the alternative design, in the respective sums of $73 million and $30 million. According to the Defendant, the Plaintiff’s quotations were incorporated into or formed the basis of the Defendant’s own tender to the employer for the works under the Main Contract. 13.On 19 June 2023, the Defendant’s tender was accepted and it was awarded the Main Contract. The Plaintiff claims that the Defendant only informed it of this fact, and that possession of the site could commence at the end of June 2023, but there was no further discussion or agreement on the other terms of the Subcontract. 14.The parties do not dispute that the Letter of Acceptance (“LOA”), which was dated 30 June 2023 and which on the Defendant’s case set out the documents which form the Subcontract as well as the other more detailed terms of the Subcontract, was only signed by the parties later, in October 2025, in circumstances which are disputed. By that time, the employer had announced that the Main Contract works should be suspended. 15.On the Defendant’s case, the Plaintiff’s tender to the Defendant was made on the terms of the tender documents which include the Special Conditions of Tender (“SCT”), the Special Conditions of Sub-Contract for Specialist Sub-contractor (“SCSC”), which were available for inspection and review on the links sent to the Plaintiff by the 20/3 email. According to the Defendant, the Plaintiff’s tender and offer to enter into the Subcontract with the Defendant was accepted when the Defendant informed the Plaintiff in June 2023 that the Defendant had been awarded the Main Contract, and alternatively in September 2023, when the Plaintiff commenced the demolition works for the Project at the site. 16.The Plaintiff’s main contention is that the Standard Form DSC (on which the Defendant relies as the document containing the arbitration agreement) was not a document contained in the links sent with the 20/3 email, and there was no valid incorporation of the Standard Form DSC (and the arbitration clause therein) in the Subcontract. The Plaintiff further contends, in the alternative, that the Subcontract between the parties is actually contained in the LOA which was signed, and that version deleted and removed the references to the Main Contract documents and the SCSC as part of the Subcontract. 17.The Defendant denies that the amendments allegedly made by the Plaintiff in 2025 had been accepted by the Defendant. 18.As Tang VP made it clear in PCCW Global Ltd v Interactive Communications Service Ltd, what the applicant for stay is required to show is only a prima facie, or plainly arguable case, that the parties are bound by an arbitration clause, and that unless the point is clear, the court should not resolve the issue but should stay the matter in favor of arbitration, for the arbitral tribunal to determine its own jurisdiction. Despite the arguments made by Counsel for the Plaintiff in this case, I am satisfied that the Defendant has shown a plainly arguable case that the Plaintiff’s tender for the Subcontract was made on the basis of the terms set out in the SCT and the SCSC, and that the Standard Form DSC and its terms have been incorporated into the Subcontract, when its offer to bid for the Subcontract on those terms was accepted at the latest by the parties’ conduct, when the Plaintiff commenced demolition works at the site in September 2023 on instructions from and with the agreement of the Defendant. 19.The reasons for my conclusions are set out below. Incorporation of the Standard Form DSC 20.The 20/3 email sets out the Defendant’s invitation to the Plaintiff to tender for the demolition works of the Subcontract, and informed the Plaintiff that the tender documents of the Subcontract Works, and the full set of the tender documents and the addendums, could be downloaded at the links provided. The documents accessible from the links include the SCT, and the SCSC, which (inter alia) referred to the amendment of clause 2.4 of the Standard Form DSC. 21.It is of course indisputable that the SCT only sets out the conditions of the tender for the Main Contract. 22.However, it has been highlighted by Counsel for the Defendant that clause 14(1)(a) of the SCT expressly provided that the demolition works portion of the Subcontract Works shall be carried out by a specialist sub‑contractor which is included in the Register of Specialist Contractors maintained by the Buildings Department (“Specialist List”). Materially, clause 14(7) and (8) of the SCT further expressly provided as follows:
23.There is no evidence that the Standard Form DSC was a document included in the links set out in the 20/3 email. However, it is indisputable that it is a standard form sub-contract widely adopted in agreements between contractors and sub-contractors in the Hong Kong construction industry. It is also not disputed that the Plaintiff is not a novice in the industry, but was a company included in the Specialist List maintained by the Buildings Department. 24.Clause 14(1)(a) of the SCT in fact states that the demolition works which were the subject matter of the Main Contract shall be executed by a contractor included in the Specialist List. That must have been a reason for the Defendant to invite the Plaintiff to bid for the Subcontract. 25.Against the factual matrix of the present case, I agree with and accept the submissions made for the Defendant, that prior to submitting its tender to the Defendant for the demolition works for the Project, the Plaintiff was well aware that it would be proposed by the Defendant as a specialist subcontractor for the demolition works, and that pursuant to clause 14(7) of the SCT, in the event that the Defendant was successful in its tender for the Main Contract, the Defendant was obliged to enter into a sub-contract with the Plaintiff, in the specified Standard Form DSC (as amended by the as SCSC). There was no choice or any other option available to the Defendant, or to the Plaintiff, in relation to the latter’s tender for the Subcontract with the Defendant. The terms of the Standard Form DSC would apply to and govern the Subcontract to be made between the Defendant and the Plaintiff. 26.A reasonable tenderer in the position of the Plaintiff, at the material time in March and April 2023, upon receiving the invitation to tender and on receipt of the 20/3 email, would have considered it necessary to review the documents assessable by the links provided. Such documents referred to the Standard Form DSC and the terms thereof including those amended by the SCSC. The Standard Form DSC could be downloaded from the website of the Hong Kong Construction Association. It is reasonably arguable that the Standard Form DSC referred to in the documents provided by the links were part of the terms and documents incorporated into the Subcontract which was being tendered for. 27.As Counsel for the Defendant rightly pointed out, by virtue of Article 7(6) of the Model Law (incorporated by section 19 of the Ordinance), the reference in a contract to any document containing an arbitration clause (such as the Standard Form DSC in this case) constitutes an arbitration agreement in writing, and it is not necessary for references to be actually made to the arbitration clause itself. 28.On behalf of the Plaintiff, it was argued that the ex post facto execution of the LOA in October 2025 and the amendments made by the Plaintiff to the LOA in May and October 2025 had somehow excluded the incorporation of the Standard Form DSC and its terms. However, as Counsel for the Defendant rightly pointed out, the relevant time of the conclusion of the Subcontract in this case was April or September 2023, the latter being the time when the Plaintiff commenced (and completed) a part of the demolition work on the site, and the parties’ subsequent conduct in October 2025 cannot amount to a valid variation of the terms of the Subcontract, which had by then been already partly performed. In any event, questions arise as to the parties’ intentions for the signing of the LOA in October 2025 and the Plaintiff’s amendments to the terms, and whether these amendments could have and had been validly accepted by the Defendant, and these are not matters which can be clearly determined now, but should be properly decided by the tribunal in the arbitration, after hearing the evidence of the witnesses. The Defendant further has an arguable case that any agreement made in October 2025 to vary the terms of the Subcontract was not supported by consideration in this case. 29.In short, the matter is certainly not clear at this stage, that it can be concluded in favour of the Plaintiff that there is no good arguable case of the Subcontract having been concluded in 2023, on terms which include those in the Standard Form DSC including the arbitration clause. Disposition 30.As I am satisfied that there is a prima facie case that the parties are bound by an arbitration agreement, a stay is granted pursuant to section 20 of the Ordinance. The Plaintiff is to pay to the Defendant the costs of the summons, with certificate for counsel, to be taxed if not agreed.
Ms Ellen Pang, instructed by Mike So, Joseph Lau & Co, for the plaintiff Mr Paul Yuk Pui LEE, instructed by Wong & Lawyers, for the defendant | ||||||||||||||||||||
Cases cited in this judgment