内地与香港特别行政区发布相互执行仲裁裁决的典型案例(4)

　　The Respondent’s position was that repayment of the balance of the purchase price and payment of the other sums under items (b) and (c) above were conditional upon the return of the rejected sulphur to the Respondent “in the same status and quality” as and when the same was delivered to the Appellant.

　　In response to the Respondent's written application and enquiries, the arbitral body issued three letters (“the Arbitral Body’s Letters”), the first two being the arbitral body’s confirmation of the Respondent’s interpretation of the award, with the third stating the tribunal’s view that the first two were “supplementary explanations” of the award and formed part of it.

　　Neither the Respondent’s letters requesting clarification with a view to the production of a supplemental award nor the arbitral body's responses contained in the second and third of the Arbitral Body’s Letters were copied to the Appellant.  The Appellant disagreed with the Respondent’s interpretation of the award and sought leave to enforce items (b) and (c) of the award in Hong Kong. This was opposed by the Respondent who also applied for leave to enforce item (a) of the award. The judge in the Court of First Instance ruled in favour of the Respondent.  Then, the Appellant appealed to the Court of Appeal.

　　II.Issues

　　1.Whether, as a matter of award recognition, the court should “enter judgment in terms of the award, order or direction”, having regard to s. 2GG(1) of the Arbitration Ordinance (Cap.341) (repealed) (“Arbitration Ordinance”)? (“Issue 1”)

　　2.Whether the obligations stated in items (b) and (c) above be conditional or dependent on item (a), in light of the wording of the award and the obligation of the enforcing court? (“Issue 2”)

　　3.Whether the obligations under item (a) were independent of those under item (b) under the law of restitution? (“Issue 3”)

　　4.Whether the Arbitral Body’s Letters constituted a supplemental or additional award pursuant to Article 56 of the Arbitration Law of the PRC (“Arbitration Law”) and / or the relevant provision of the Arbitration Rules of the arbitral body in the Mainland? (“Issue 4”)

　　5.Whether the questions about the validity of the Arbitral Body’s Letters should have been dealt with by the relevant court in the Mainland, not the enforcement court in Hong Kong? (“Issue 5”)

　　III.Analysis

　　Issue 1

　　Citing authorities holding that award enforcement should be “almost as a matter of administrative procedure” and that there is an important policy interest in ensuring the effective and speedy enforcement of arbitration award, the court held that it should respect the plain intent of the award in question and the court is not entitled to go behind the award by exploring the reasoning of the tribunal or second-guessing its intention. Therefore, under s.2GG(1) Arbitration Ordinance, an award entered as a judgment had to be entered “in terms of the award” at the award recognition stage.

　　Issue 2

　　The court was of the view that, the Arbitral Body’s Letters aside, it was plain that the award did not say that payment obligations under items (b) and (c) were conditional or dependent on those under item (a). Thus, in the context of enforcing items (b) and (c) by means of entering a judgment “in terms of the award”, no such condition should be imposed. To do otherwise would be to alter, rather than to enforce, the award. By the same token, there was no justification for imposing the further condition as to the status and quality of the sulphur.

　　Issue 3

　　The court rejected the Respondent’s submissions that the obligations under items (a) and (b) were not independent ones since they dealt with a restitution situation for these reasons: first, the court should not second-guess the intention of the tribunal; second, the law of restitution may vary from one jurisdiction to another, and it is for the tribunal seized of the arbitration to apply the applicable law; third, even if one were to assume that return of the goods and repayment of the price already paid are not mutually independent of each other, it did not follow that the respective awards must be conditional on each other. The rights and obligations under the law of restitution must not be confused with awards and orders as means to give effect to those substantive rights and obligations.

　　Issue 4

　　The Arbitral Body’s Letters did not constitute a supplemental or additional award pursuant to Article 56 of the Arbitration Law and / or the relevant provision of the Arbitration Rules of the arbitral body in the Mainland. Thus, the views expressed by the tribunal or in the Arbitral Body’s Letters were simply inadmissible in the enforcement proceedings in Hong Kong.

　　Issue 5

　　The court rejected the Respondent’s submissions that all questions about the validity of the Arbitral Body’s Letters as supplemental awards should have been dealt with by the relevant court in the Mainland, not the enforcement court in Hong Kong for these reasons:  first, the enforcement court did not have to accept every piece of paper placed before it that was said to be an award or supplemental award as such, despite glaring discrepancies between the description of what amounted to an award or supplemental award in the relevant law or rules and what the court found on the face of the so-called award or supplemental award; second, the enforcement court is entitled to look at its own public policy relating to enforcement of foreign or Mainland awards.  In the present case, public policy in terms of the rules of natural justice were at issue so far as the second and third of the Arbitral Body’s Letters were concerned.

　　IV.Decision

　　Appeal allowed.

　　V.Significance

　　Enforcement of arbitral awards should be "as mechanistic as possible".  The enforcing court is neither entitled nor bound to go behind the award in question, explore the reasoning of the arbitral tribunal or second-guess its intention.  Hong Kong court as the enforcement court is entitled to determine whether a document constituted an award or a supplemental award, or a part thereof. The court is also entitled to decide whether or not to refuse enforcement of an award on the basis of its own public policy relating to enforcement of foreign or Mainland awards. Observance of the rules of natural justice, which the Arbitral Body’s Letters in the present case concerned, is to be taken into account by the court.

　　CASE No.5：Guo Shun Kai v. Wing Shing Chemical Co Ltd

　　[2013] 3 HKLRD 484

　　HCCT 35/2012

　　I.Brief Facts

　　Pursuant to an arbitration between the Applicant and the Respondent administered by an arbitral body in the Mainland, an award was made against the Respondent (the “Award”). The Award required the Respondent to pay the Applicant: (1) compensation for economic loss in the amount of RMB 29,195,470.58 and interest thereon in the amount of RMB 12,293,716.33; (2) legal costs in the amount of RMB 500,000; and (3) costs of the arbitration proceedings in the amount of RMB 675,473 and costs of the arbitrators in the amount of RMB 134,574.

　　Thereafter, the Applicant obtained an order granting leave to enforce the Award in Hong Kong (the “Order”).

　　The Respondent applied to the People’s Court in the Mainland to set aside or dismiss the Award on the grounds that the Award exceeded the scope of the arbitration and the procedures of the arbitration were contrary to law. The Hong Kong court was of the view that the application was not an appeal on the merits of the underlying dispute.

　　Subsequently, the Respondent took out a summons (the “Summons”) to set aside or vary the Order granting leave pursuant to Order 73 rule 10(6) of the Rules of the High Court (Cap. 4A) (“RHC”), which was the matter before the court in the present case.

　　II.Issues

　　1.Whether the court has jurisdiction to adjourn proceedings relating to the enforcement of a Mainland award? (“Issue 1”)

　　2.What factors should a court take into account in considering the application for security upon adjournment of the Summons dealing with an application to set aside or vary the Order? (“Issue 2”)

　　III.Analysis

　　Issue 1

　　In respect of the adjournment of proceedings, the court pointed out that the absence of provisions specifically on adjournment in relation to the enforcement of a Mainland award, of which equivalent provisions in relation to the enforcement of an ordinary award or a convention award are present in the Arbitration Ordinance, does not mean the court has no jurisdiction to adjourn enforcement proceedings on a Mainland award.  The court held that it had general and inherent power to regulate its own proceedings including adjournment, which power is presupposed in Order 73 rule 10A of the RHC

　　Issue 2

　　The court referred to principles set out in Soleh Boneh International Ltd v Government of the Republic of Uganda [1993] 2 LLR 208, where the English court decided to adjourn hearings and require the provision of security in the entire amount of the award pending the Swedish court’s determination of whether the award was binding.  On appeal of that case, the court considered two factors – the strength of the argument that the award is invalid, on a brief consideration by the court, as well as the ease or difficulty of enforcement of the award and whether enforcement would be made more difficult by movement of assets or by improvident trading if enforcement was delayed. The stronger the argument for invalidity of award, or the stronger the case for difficulty of enforcement as a result of delay in enforcement, the more likely the provision of security is ordered.

　　In light of the above principles, the court considered a number of aspects of the present case, including the fact the Respondent had not produced any documents stating grounds or merits of its application to the People’s Court in the Mainland to set aside or dismiss the Award in support of its contention that it was “manifestly invalid”; the fact that the Respondent had changed its registered office; the fact that the Respondent had sold its industrial property, the fact that the Respondent’s financial performance was deteriorating and shares in the Respondent company (described as obsolete asset) were sold by its parent company shortly after the Award was made; as well as the publicly announced total assets (approximately HK$45.04 million) and unaudited net liabilities (approximately HK$143.50 million).

　　IV.Decision

　　On the basis of the foregoing factors, and the fact that no submission on the specific amount of security that would be beyond the capacity of the Respondent was made, the court ordered adjournment of the Summons pending resolution of the application to the People’s Court in the Mainland to set aside or dismiss the Award, and security in the sum of HK $20 million to be provided to protect against any deterioration of the prospects of successfully enforcing the Award in Hong Kong as a result of the adjournment.

　　V.Significance

　　The High Court of the HKSAR has the jurisdiction to adjourn hearings relating to the enforcement of a Mainland award and order provision of security by the Respondent.

　　As to whether the Respondent should be ordered to provide security to satisfy the award, the court should consider two factors, first, the strength of the argument that the award was invalid. If the award was manifestly invalid, there should be an adjournment and no order for security; but if it was manifestly valid, there should either be an order for immediate enforcement or an order for substantial security. Second, the Court should consider the ease or difficulty of enforcement and the effect of any delay in enforcement, for example by the movement of assets or improvident trading.