Yau Lee Construction Co Ltd v. China Steel Engineering Co., Ltd and Another
Read the full judgment text of HCCT 49/2010 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 21 December 2010 before Hon Reyes J.
Construction dispute — Arbitration agreement — Clause 16c in subcontract requires arbitration if certified interim payments remain unpaid after approximately 45 days — All interim certificates actually paid on time — Claim for further sums after final account not covered by clause 16c — Stay of proceedings refused — No arbitration agreement with guarantor Mr Siu — Claim against Mr Siu must proceed in Court — Exercising discretion against stay of entire action. Yau Lee, the head contractor, sued China Steel for approximately $10 million comprising material wastage, administration costs, and restitution. China Steel applied to stay the action relying on arbitration clause 16c. The Court held the clause only covers unpaid certified interim payments and does not extend to claims arising after final account assessment. Since all interim payments were made, the arbitration clause did not apply. Additionally, as the guarantor Mr Siu was not party to an arbitration agreement, the claim against him had to continue before the Court. Consequently, the Court declined the stay application and allowed the action to proceed. No costs or sentencing order was discussed.
Legal issues: Applicability of arbitration clause in cl.16c · Discretion to grant stay of proceedings
Outcome: Refusal of stay; China Steel’s application dismissed; action proceeds in Court
Cites 1 case
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HCCT 49/2010 IN THE HIGH COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION COURT OF FIRST INSTANCE CONSTRUCTION AND ARBITRATION PROCEEDINGS NO. 49 OF 2010 _____________
Before: Hon Reyes J in Chambers Date of Hearing: 21 December 2010 Date of Judgment: 21 December 2010 ______________ J U D G M E N T ______________ 1.Yau Lee was the Head Contractor and China Steel the Sub-Contractor on a project. The Sub-Contract in cl. 16c contained the following provision (in agreed translation):-
2.Yau Lee commenced this action against China Steel. By the action, Yau Lee claims about $10 million. That amount comprises a claim of nearly $5 million for material wastage, $1.15 million for extra administrative costs incurred in relation to the payment of wages to China Steel’s workers, and some $3 million in restitution. Yau Lee further sues Mr Siu as Guarantor of China Steel’s performance. 3.Relying on cl. 16c, China Steel has applied to stay Yau Lee’s action against it to arbitration. China Steel itself claims that it has not been paid $10 million by Yau Lee upon the completion of the project. 4.I do not think that cl. 16c is applicable on its plain terms. 5.That clause comes into play when an interim payment certified by Yau Lee has remained unpaid for 45 days. China Steel’s right to request arbitration only crystallises on the happening of that event. China Steels’ right to arbitration arises in that single limited situation. 6.Here all interim certificates issued by Yau Lee have been duly paid. There is no suggestion that the interim certificates have been paid out of time. So the requisite crystallising event has not occurred. 7.It is true that China Steel contends that monies remain due and owing from Yau Lee on the taking of a final account. But, even if that is correct, cl. 16c does not deal with a claim for monies due to China Steel after the taking of a final account, including after the assessment of any alleged set-off or cross-claim by Yau Lee. 8.Therefore, I refuse a stay and dismiss China Steel’s application. 9.I note that Mr Siu is not party to an arbitration agreement with Yau Lee. In that circumstance, the claim against Mr Siu would have to proceed in any event before this Court. Insofar as I have any residual discretion whether or not to stay Yau Lee’s claim to arbitration, the fact that the action would still have to proceed in Court against Mr Siu militates against the exercise of my discretion. 10.I shall now hear the parties on consequential matters.
Mr Victor Dawes, instructed by Messrs Stephenson Harwood, for the Plaintiff Mr Ivan Cheung, instructed by Messrs Tam, Pun & Yipp, for the 1st Defendant | ||||||||||||||||||||
Cases cited in this judgment
Further hearings and rulings under HCCT 49/2010