KENON ENGINEERING LIMITED (Plaintiff in HCA3492/2002 and HCCT21/2003, Defendant in HCA3973/2002) v NIPPON KOKAN KOJI KABUSHIKI KAISHA also known as NIPPON KOKAN KOJI CORPORATION (Defendant in HCA3492/2002, Plaintiff in HCA3973/2002 and Defendant in HCCT21/2003)

Read the full judgment text of HCA3492/2002, HCA3973/2002 & HCCT21/2003 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 2 July 2003 before Deputy High Court Judge Muttrie in Chambers.

Arbitration — Mediation Clause — Construction of Clause 21.1 of Sub-Contract — Whether Clause 21.1 constitutes a valid arbitration agreement — Arbitration Ordinance (Cap.341) and UNCITRAL Model Law — Jurisdiction of court versus arbitrator — Stay of proceedings to arbitration — The parties entered into sub-contracts and supplemental agreements involving dispute resolution clauses. Clause 21.1 was drafted as a mediation clause requiring disputes to be settled by a 'Mediation Procedure' with final and binding award, while Clause 5.5 in a later supplemental agreement also required disputes to be settled by mediation. NK3 contended that Clause 21.1 was a valid arbitration clause and sought stay of court proceedings to arbitration. Kenon disputed this, contending the clause was a mediation agreement only and no valid arbitration agreement existed. The court held that Clause 21.1 was ambiguous but construed against arbitration because the clause expressly referred to mediation and the parties knew the difference between mediation and arbitration. The court decided it had jurisdiction under Article 8 of the UNCITRAL Model Law to determine the existence of an arbitration agreement and that the arbitrator's jurisdiction was provisional and subject to court review. As Clause 21.1 was not an arbitration clause, the court dismissed NK3's applications for stay to arbitration and allowed Kenon's Originating Summons declaring no valid arbitration agreement, with costs to Kenon. The question whether Clause 21.1 was superseded by Clause 5.5 was unnecessary to consider. This case illustrates the interpretative approach to dispute resolution clauses ambiguously referring to mediation and arbitration and affirms the court’s role in deciding the existence of arbitration agreements before compelling arbitration.

Legal issues: Whether Clause 21.1 is an arbitration clause

Outcome: Kenon's declaration that Clause 21.1 is not an arbitration clause and no valid arbitration agreement exists was granted. NK3's applications to stay proceedings in favour of arbitration were dismissed.

Cited by 3 cases