厦門新景地集團有限公司 v. Eton Properties Ltd and Others
Read the full judgment text of FAMV 5/2011 on BabelCite. This FAMV judgment was delivered on 4 May 2011 before Chief Justice Ma, Mr Justice Bokhary PJ, Mr Justice Ribeiro PJ.
Civil procedure – leave to appeal – enforcement of arbitral award – CIETAC arbitration – whether High Court action concerns enforcement of award or goes beyond it – whether arbitration agreement is spent and incapable of further performance – stay of High Court action to arbitration – inherent jurisdiction to grant stay – parties to arbitration agreement impliedly promise to perform valid award – whether proposed grounds of appeal reasonably arguable – CIETAC arbitral award obtained by plaintiff 厦門新景地集團有限公司 against ETON PROPERTIES LIMITED and ETON PROPERTIES (HOLDINGS) LIMITED requiring them to perform contract – 1st to 5th defendants allegedly executed share transfers and property sales to make performance impossible – self-induced impossibility of performance constitutes breach of agreement – plaintiff commenced HCA 961/2008 against Eton Group defendants seeking equitable relief, alleging breach of fiduciary duty and that five defendants made themselves constructive trustees of 4th defendant's shares – 1st and 2nd defendants applied for stay of High Court action to arbitration under arbitration agreement – Fok J granted stay, holding claims fell within arbitration clause – Court of Appeal reversed, holding claims were aimed at undoing impugned transactions or assigning liability for those dispositions, forming part of proceedings to enforce award rather than claims arising out of agreement – applicant defendants sought leave to appeal to Court of Final Appeal – whether applicants' grounds reasonably arguable – applicant defendants argued High Court action went well beyond anything decided by CIETAC and therefore not merely concerned with enforcement – court held this was a non sequitur – pleaded claims going beyond CIETAC's decisions does not mean they are not concerned with enforcement – parties to arbitration agreement impliedly promise to perform valid award – successful claimant can proceed by action in ordinary courts for breach of implied promise and obtain judgment giving effect to award, including specific performance, injunction, or declaration – plaintiff seeking in present action to obtain fruits of award – CIETAC had already rejected defendants' attempt to reopen arbitration on basis of inability to perform – CIETAC stated it had fully adjudicated arbitration and there was nothing left for tribunal to do – arbitrators treated arbitration agreement as spent and incapable of further performance – no effective basis for stay to arbitration – leave refused to 1st and 2nd defendants as not reasonably arguable – application by other defendants (3rd to 5th) also refused – 3rd to 5th defendants not parties to any arbitration agreement and so could not seek stay in favour of arbitration – they sought stay under court's inherent jurisdiction pending outcome of any arbitral proceedings – where no stay of present action as against 1st and 2nd defendants, no stay based on inherent jurisdiction can be granted – both applications for leave to appeal dismissed – no order as to costs mentioned in determination – Mustill and Boyd on Commercial Arbitration (2nd Ed, p 417) cited for principle on enforcement of arbitral award by ordinary courts.
Legal issues: Whether leave to appeal should be granted on the question whether the High Court action concerns enforcement of the CIETAC arbitral award
Outcome: Both applications for leave to appeal dismissed. Leave to appeal refused to the 1st and 2nd defendants (FAMV 5/2011) and to the 3rd to 5th defendants (FAMV 4/2011).
Cited by 1 case · Cites 1 case
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FAMV Nos 4 and 5 of 2011 FAMV No.4 of 2011 IN THE COURT OF FINAL APPEAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MISCELLANEOUS PROCEEDINGS NO. 4 OF 2011 (CIVIL) (ON APPLICATION FOR LEAVE TO APPEAL FROM CACV NO. 89 OF 2010) _____________________ Between:
_____________________ FAMV No.5 of 2011 IN THE COURT OF FINAL APPEAL OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION MISCELLANEOUS PROCEEDINGS NO. 5 OF 2011 (CIVIL) (ON APPLICATION FOR LEAVE TO APPEAL FROM CACV NO. 88 OF 2010) _____________________ Between:
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_____________________ D E T E R M I N A T I O N _____________________ Chief Justice Ma: 1.The plaintiff obtained a CIETAC arbitral award in respect of a contract with the 1st and 2nd defendants, requiring those defendants to perform the contract. The plaintiff seeks to enforce that award in Hong Kong. However, difficulties were placed in the way of its enforcement by the 1st to 5th defendants executing share transfers and property sales which, they say, makes performance of that agreement impossible. As CIETAC pointed out, such a self-induced impossibility of performance itself constitutes a breach of the agreement. 2.With a view to overcoming the difficulties created by the 1st and 2nd defendants, the plaintiff began a High Court Action (HCA 961/2008) asserting various causes of action and claiming equitable relief against the Eton Group defendants. The plaintiff alleges (among other things) that the reorganization of the shareholdings was a breach of fiduciary duty and that the five defendants made themselves constructive trustees of the 4th defendant’s shares. The 1st and 2nd defendants’ response was to apply for the High Court action to be stayed to arbitration under the arbitration agreement that had led to the award. Mr Justice Fok was persuaded that the claims fell within the arbitration clause. However, the Court of Appeal held that the claims were aimed at undoing the dispositions made in the impugned transactions or at assigning liability for such dispositions, forming part of proceedings to enforce the award, instead of claims arising out of the agreement which have to be referred to arbitration. 3.The grounds for leave to appeal advanced by the 1st and 2nd defendants seek to attack the Court of Appeal’s conclusion that the High Court action concerns enforcement of the award. They argue that the High Court action goes well beyond anything decided by CIETAC and therefore is not merely concerned with enforcement of the award. It is plainly true that the pleaded claims go beyond what CIETAC decided, but it is a non sequitur to say that they are therefore not concerned with enforcement. 4.As the learned authors of Mustill and Boyd on Commercial Arbitration,[1] point out:
The steps taken by the plaintiff clearly represent such steps taken by way of enforcement. Quite simply, the plaintiff is seeking in the present action to obtain the fruits of the award in their favour. 5.Additionally, in the present case, CIETAC has already rejected an attempt by the 1st and 2nd defendants to reopen the arbitration on the basis that the agreement can no longer be performed and asking the tribunal to consider “what relief including damages or other appropriate reliefs” the plaintiff should have for the purposes of the agreement. CIETAC stated that it had fully adjudicated the arbitration and that there was nothing left for the tribunal to do. The arbitrators have therefore treated the arbitration agreement as spent and incapable of further performance, removing any effective basis for a stay to arbitration. 6.We accordingly do not consider the 1st and 2nd defendants’ application reasonably arguable and refuse them leave to appeal. 7.The application by the other defendants is also refused. They are not parties to any arbitration agreement and so were obviously not able to seek a stay in favour of arbitration. They seek a stay under the court’s inherent jurisdiction in this action pending the outcome of any arbitral proceedings between the plaintiff and the 1st and 2nd defendants. Where, as we have held, there is no stay of the present action as far as the 1st and 2nd defendants are concerned, no stay based on the inherent jurisdiction can therefore be granted. 8.We therefore dismiss both applications for leave to appeal.
Mr Chan Chi Hung SC and Mr Richard Khaw (instructed by Messrs Mayer Brown JSM) for the 1st and 2nd Defendants (Applicants in FAMV 5/2011) Mr Winston Poon SC and Ms Elizabeth Cheung (instructed by Messrs Wilkinson & Grist) for the 3rd to 5th Defendants (Applicants in FAMV 4/2011) Mr Barrie Barlow SC and Mr Anson Wong(instructed by Messrs Stephenson Harwood) for the Plaintiff (Respondent in both FAMV 4 & 5/2011) |
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