UDL CONTRACTING LIMITED v WATER SUPPLIES DEPARTMENT OF THE GOVERNMENT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION

Read the full judgment text of HCCT 28/2008 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 29 August 2008 before Hon Reyes J.

Arbitration — Contract disputes — Interest assessment — Scheme of Arrangement — Set-off — Arbitrator’s jurisdiction — Interim Award — Leave to appeal. UDL CONTRACTING LIMITED claimed principal and interest sums from WATER SUPPLIES DEPARTMENT under a 1994 contract. Dispute arose amidst UDL’s insolvency process involving a Scheme of Arrangement providing for mutual set-off of debts. The Arbitrator held that WSD’s claim under the Scheme exceeded UDL’s claim, thereby extinguishing UDL’s claim post-Scheme Effective Date and limiting interest entitlement accordingly. UDL sought leave to appeal, arguing the Arbitrator erred in assessing interest and improperly relied on a purported Scheme Administrator’s assessment. The Court examined the Arbitrator’s jurisdiction as previously confirmed, finding no obvious or egregious error in the recognition of the Scheme or the reliance on the assessment letter. The Arbitrator’s approach was held to be competent and consonant with the Arbitration Ordinance and insolvency principles, without usurping the Scheme Administrator's role in determining precise balances. Leave to appeal was refused, maintaining the Interim Award’s validity and preserving the principled handling of interests and set-offs under insolvency schemes in arbitration proceedings.

Legal issues: Arbitrator's jurisdiction on interest assessment

Outcome: Leave to appeal refused; UDL’s application dismissed