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HCCT 61/2020
[2021] HKCFI 2341
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
CONSTRUCTION AND ARBITRATION PROCEEDINGS
NO 61 OF 2020
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IN THE MATTER OF THE ARBITRATION ORDINANCE, CAP 609 |
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and |
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IN THE MATTER OF AN ARBITRATION |
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| BETWEEN |
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A CONSORTIUM COMPRISING TPL AND ICB |
Applicant |
and |
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AE LIMITED |
Respondent |
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Before: Hon Mimmie Chan J in Chambers
Date of Hearing: 26 March 2021
Date of Decision: 13 August 2021
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D E C I S I O N
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Background
1. On 22 September 2020, this Court made an order (“Enforcement Order”) granting leave to the Applicant named in these proceedings to enforce an arbitral award issued on 14 May 2020, which award was amended and supplemented by a Supplemental Award issued on 29 June 2020 (“Awards”). This was on the Applicant’s ex parte application made on 18 September 2020. The Awards were made in an arbitration commenced by the Applicant against the Respondent (“Arbitration”), pursuant to a Request for Arbitration submitted to the Dubai International Arbitration Centre, in a dispute which had arisen between the Applicant and the Respondent under a Sub-Consultancy Agreement and a Supplemental Agreement for the design and construction of a Complex in Riyadh, Saudi Arabia (“Project”). Under the Award, the Respondent was ordered to pay to the Applicant Saudi Arabian Riyals (“SAR”) 16,315,181 as damages, SAR 3,361,744.30 as monies owed, SAR 7,946,387.91 as costs, and SAR 525,537 as financial penalty.
2. On 8 October 2020, the Respondent applied by summons to set aside the Enforcement Order (“Setting Aside Application”), on the grounds that (1) the Enforcement Order is irregular as the Applicant is not a legal entity capable of suing and being sued under the laws of Hong Kong and has no capacity to institute the present action (“Irregularity Ground”); (2) there was material non-disclosure on the part of the Applicant when it applied for the Enforcement Order (“Disclosure Ground”); and (3) under section 89 (2) (a), (b), (d) (i), (d) (ii) and (e) (i) of the Arbitration Ordinance (“Ordinance”) (“section 89 Grounds”). The section 89 Grounds are that the Applicant is under some incapacity, that there was no valid arbitration agreement, that the Awards dealt with a difference not falling within the terms of the submission to the Arbitration or contained matters beyond the scope of the submission to Arbitration, and that the arbitral procedure was not in accordance with the arbitration agreement.
3. The Disclosure Grounds are that at the time of the Applicant’s ex parte application for leave to enforce the Awards, it was known to the Applicant that the validity of the Awards was under challenge by the Respondent, and that the Respondent had on 12 June 2020 applied to the Dubai Court of Appeal to nullify and to stay enforcement of the Awards (“Nullification Proceedings”). Notwithstanding such knowledge, the Applicant did not inform the Hong Kong Court of the existence of the Nullification Proceedings, which was a matter material to the Court’s decision as to whether to grant leave to enforce the Awards.
4. The Respondent further sought by the summons of 8 October 2020 an order that the proceedings for enforcement of the Awards be adjourned until the final disposal of its application in Dubai to set aside the Awards (“Adjournment Application”).
5. On 4 November 2020, this Court gave directions for evidence to be filed on the summons for the Setting Aside Application and the Adjournment Application, and for the said applications to be adjourned for substantive argument.
6. On 25 November 2020, the Applicant applied by its summons for leave to amend the Originating Summons issued on 18 September 2020, to name the Applicant as the 1st Applicant, and to add TPL and ICB as 2nd and 3rd Applicants (“Amendment Application”).
7. On 11 January 2021, the Amendment Application was, by consent, adjourned to be heard together with the Setting Aside Application.
The Irregularity Ground
8. The substance of the Irregularity Ground has to be explained before the Setting Aside Application and the Amendment Application can be properly considered.
9. The Respondent claims that the Enforcement Order was granted in favour of an entity which does not exist, nor is such entity recognized under the laws of Hong Kong. The “Consortium comprising TPL and ICB” is not an incorporated company nor is it registered, and it has no recognized existence in Hong Kong to either commence proceedings to sue, or be sued. On behalf of the Respondent, reference to and reliance was made on a criminal case, HKSAR v Hyundai-CCECC Joint Venture & Anor HCMA 530/2005, where the Court observed that to convict an unincorporated association such as the Joint Venture named in the action would be a “legal nonsense”. It was argued that the same uncertainties and the lack of legal status apply to the Applicant as originally named in these proceedings.
10. There is no evidence that TPL and ICB carry on business in Hong Kong as a partnership in the name of the Consortium. On the Applicant’s case, TPL and ICB are in law separate and distinct legal entities. TPL is described as a branch of a foreign company registered under licence in Dubai, and ICB is described as a foreign company registered in Lebanon.
11. The Applicant has highlighted the fact that the dispute which was submitted to the Arbitration arose under the Sub-Consultancy Agreement dated 23 April 2015 (“Agreement”). The Agreement was supplemented by a Supplemental Agreement of the same date (“Supplemental Agreement”), and amended by an Amendment to the Agreement dated 31 January 2016 (“Amendment”). These agreements were all expressed to have been made between “the Joint Venture of TPL and ICB” referred to as the Consultant, and the Respondent referred to as the Sub-Consultant. They were all executed by “authorized signatories of the Joint Venture partners of the Consultant”, and signed in the name of TPL and ICB respectively. I do not see any real distinction between the use of “Joint Venture” and the use of “Consortium”. The Joint Venture referred to in the Agreements was clearly identified as the venture of TPL and ICB, and no other.
12. The Respondent sought to argue that “Consortium” was referred to and has a different meaning in the Agreements, as opposed to “Joint Venture”. The Agreement recites that TPL and ICB, referred to as the Consultant, had formed a “Consortium of Sub-Consultants” to provide some of the services required of it under its agreement with the client on the Project. Clearly, that consortium was of a totally different nature to the joint venture comprising TPL and ICB which contracted with and engaged the Respondent, referred to in the Agreements as the Sub-Consultant, as one of those sub-consultants.
13. The Agreement contained the arbitration clause, and the Arbitration was commenced by the Request for Arbitration served in the name of the Applicant (namely, “A Consortium comprising TPL and ICB). The Answer and Counterclaim dated 24 October 2017 served by the Respondent likewise referred to the Applicant as the Consortium comprising TPL and ICB. There was no claim in the Answer that the Applicant was not a legal or valid entity, nor any defence raised on the basis that the Agreement was not a valid contract made with a non‑existent entity which had no capacity. Evidence was filed, and submissions were made in the Arbitration, on the merits of the different claims made by the Applicant in relation to the Project. Clearly, the Respondent was under no doubt or confusion as to who had commenced the Arbitration and made the claims against it, and it certainly did not raise such query in the Arbitration.
14. As the Applicant further highlighted, the Applicant had provided in the Arbitration two separate Powers of Attorney, executed by and on behalf of each of TPL and ICB, to demonstrate that the representatives in the Arbitration had authority to act on behalf of TPI and IBC. The Applicant and...
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