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Klöckner Pentaplast Gmbh & Co Kg v Advance Technology (Hk) Co Ltd

Judgment Cited authorities 4 Cited in Precedent Map Related
Vincent
Judgment Date09 September 2011
Subject MatterCivil Action
Judgement NumberHCA1526/2010
CourtHigh Court (Hong Kong)
HCA1526A/2010 KLÖCKNER PENTAPLAST GMBH & CO KG v. ADVANCE TECHNOLOGY (HK) CO LTD

HCA 1526/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO. 1526 OF 2010

____________

BETWEEN

KLÖCKNER PENTAPLAST GMBH & CO KG Plaintiff

and
ADVANCE TECHNOLOGY (H.K.) COMPANY LIMITED Defendant

____________

Before: Hon Saunders J in Chambers

Date of Hearing: 7 September 2011

Date of Decision: 7 September 2011

Date of Reasons for Decision: 9 September 2011

__________________________________

REASONS FOR DECISION

___________________________________

1. I am not satisfied either that Klöckner’s proposed appeal has a reasonable prospect of success, or that there is any reason in the interests of justice why an appeal should be heard. Leave to appeal and a stay of the arbitration pending appeal are refused.

2. I accept that the applicant for leave to appeal does not have to demonstrate that the appeal will probably succeed: see Apple Daily Ltd v Oriental Press Group Ltd, unreported, HCA 1396/2009, Chu J, 3 January 2011, but the applicant must show that there is a reasonable prospect of success in the appeal.

3. Two questions arose in the decision sought to be appealed, first what was the proper law of the arbitration agreement, and second whether the dispute fell within the scope of the arbitration agreement. A subsidiary question, whether as a result of Chinese law the arbitration agreement was incapable of performance arose only if the answer to the first question was that Chinese law was the proper law of the arbitration agreement.

4. Mr Khaw correctly identified three factors as pointing overwhelmingly to German law being the proper law of the arbitration agreement. They were:

(i) that the MoU expressly provided that: “all of the obligations contained herein shall be governed in its entirety by the laws of the Federal Republic of Germany.” (My emphasis)

(ii) that the arbitration clause provided that the third arbitrator shall be a person admitted to practice German law;

(iii) that both the governing law clause and the arbitration clause were set out under a heading in the MoU entitled “Governing Law and Jurisdiction”.

5. Against this, the only factor upon which Mr Cheng can rely to argue that the proper law of the arbitration agreement should be Chinese law is the fact that the seat of the arbitration is stated in the MoU to be Shanghai. While I accept that an argument can be mounted, indeed has been mounted, based upon this point alone, I am satisfied that it has no reasonable prospect of success. That is particularly so when regard has had to the statement in Dicey and Morris, §16-017, cited at §24 of the decision.

6. Mr Cheng referred me to Article 58 of the Minutes of the Second National Working Conference on the Trial of Foreign-Related Commercial and Maritime Case promulgated by the PRC Supreme People’s Court on 26 December 2005. The Article reads:

“The lex causae agreed to by the parties to a contract for settling disputes arising from the contract cannot be used for determining the validity of foreign-related arbitration clauses. Where parties to a contract have specified the lex causae for determining the validity of arbitration clauses, the laws agreed shall apply; where parties to a contract have not specified the lex causae for determining the validity of arbitration clauses, the arbitration place, the laws of the country or region of the arbitration place shall apply.” (My emphasis).

7. Consequently, said Mr Cheng, the Chinese courts being the supervisory courts to the arbitration process would be bound to conclude that Chinese law was the appropriate law for determining the validity of the arbitration clause. Other than pointing to the fact that the seat of the arbitration was in Shanghai...

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