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Kong Kee Brothers Construction Co Ltd v Attorney General

Judgment Cited authorities 26 Cited in Precedent Map Related
Vincent
Judgment Date27 February 1986
Year1986
Judgement NumberHCMP2712/1985
Subject MatterMiscellaneous Proceedings
CourtHigh Court (Hong Kong)
HCMP002712/1985 KONG KEE BROTHERS CONSTRUCTION CO LTD v. ATTORNEY GENERAL

HCMP002712/1985

1985 No. MP 2712

HEADNOTE

On an Application under Section 24 of the Arbitration Ordinance to remit for further consideration the award of an Arbitrator held

1. After a review of authority, that the Court should normally exercise its power to remit only in cases of misconduct, admitted (or perhaps very obvious) mistake or fresh evidence

2. Technical misconduct or mishandling included uncertainties in the operative part of the award : excess of jurisdiction : incompleteness and breach of the rules of natural justice

3. No such misconduct was made out

4. Prior leave of the Court was required before a subpoena ad testificandum was served upon an Arbitrator in relation to an Application to remit, and would rarely be granted.

5. Application refused.

1985 No. MP 2712

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

MISCELLANEOUS PROCEEDINGS

________

In the matter of the Arbitration Ordinance Cap. 341

and

In the matter of an arbitration

________

BETWEEN

KONG KEE BROTHERS CONSTRUCTION COMPANY LIMITED Plaintiff

AND
THE ATTORNEY GENERAL Defendant

___________

Coram: Hon. Hunter, J. in Court

Date of hearing: 27 - 31 January 1986 & 3 February 1986

Date of delivery of judgment: 27 February 1986

___________

JUDGMENT

___________

1. I have before me a motion to remit for further consideration an award of Mr. Peter Scott Caldwell (the Arbitrator) made and published on 23rd October 1985 on a reference to him of three disputes arising between the plaintiff as claimant and Hong Kong Government as respondent under a PWD Contract No. 528/80. One of the disputes so referred concerned the plaintiff’s entitlement to receive payment for manual transportation. The motion asks for two aspects of this claim to be remitted. In relation to these the plaintiff contends that the award is incomplete, or uncertain, or made in excess of jurisdiction or without providing the plaintiff with a proper opportunity to lead evidence and argument. The plaintiff further submits that the award should be remitted pursuant to the Court's alleged general discretionary power, or because there has been a "procedural mishap" or because the Arbitrator has been guilty of technical misconduct. The Crown challenges these propositions in principle.

2. It is therefore necessary at the outset to attempt to ascertain and define the ambit of the Court's powers under the two relevant sections in the Ordinance. They read as follows.

s.24(1)

"

 In all cases of reference to arbitration the Court or a judge thereof may from time to time remit the matters referred, or any of them, to the reconsideration of the Arbitrator or umpire.

s.25(2) Where an Arbitrator or umpire has misconducted himself or the proceedings, or an arbitration or award has been improperly procured, the Court may set the award aside".

3. On its face section 24 gives the Court an unfettered discretion. Its terms are identical to its predecessor in England, section 22 of the Arbitration Act 1950, about which Donaldson, M. R. has said :

"It is in terms wholly discretionary, but that discretion has to be exercised in accordance with established principles".

Moran v Lloyds (1). It is these which have to be identified. Section 25, also like its identical predecessor, draws a distinction between "himself" and "the proceedings". The first alternative covers areas like bias or conflict of interest and can well involve personal turpitude. Not so the second. In the words of Atkin, J. (as he then was) in Williams v Wallis and Cox(2):

"The term does not really amount to much more than such mishandling of the arbitration as is likely to amount to some substantial miscarriage of justice".

The use of one word to describe such widely differing situations has long been regretted, but the Commercial Court Committee Report on Arbitration in England which suggested the use of a word "which reflects the idea of irregularity "(3) was not taken up there or later here. This has left us with imprecise euphemisms like "technical misconduct" and "procedural mishap".

4. There is no authority in Hong Kong; no guidance to the practitioner as how this Court might act. Having first noted any legislative or practical differences between England and Hong Kong, we must look for guidance to the practice in England, both before and since the passage of the Arbitration Act 1979, and attempt to gauge what "established principles" appear to be recognised there, and how far these are applicable to Hong Kong. This was the task undertaken by Counsel in argument and I am much indebted to them both for the care they took.

5. The 1982 amendments to our Ordinance were substantially based upon the Arbitration Act 1979. Both provisions abolish the Court's principal supervisory powers : the power to direct the statement of a special case : and the jurisdiction "to set aside or remit an award ... on the ground of errors of fact or law on the face of the award" in the words of section 23(1). There was substituted a limited right of appeal on law alone. The proper exercise of the Court's jurisdiction in granting leave to appeal has been narrowly circumscribed in the UK in The Nema(4) and The Antaios(5). The proper approach in Hong Kong was considered by the Court of Appeal in Attorney General v Technic Construction Co Ltd. (not yet reported)(6). That Court cited from Lord Diplock's reference in the Nema to:

"..... several indications in the Act itself of a Parliamentary intention to give effect to the turn of the tide in favour of finality in arbitration awards".

It went on :

"We therefore conclude, as did Lord Diplock, that it is proper to assume that those who resort to arbitration in Hong Kong do not wish also to be involved in subsidiary litigation in the Courts, save where it is abundantly clear that the Arbitrator has made serious errors of law" p.8.

An important question here is whether the same holds true of serious errors of procedure.

6. In material respects the Hong Kong Ordinance went further than the UK Act in two different directions which have collective significance. On the one hand it gave additional powers to the Court to intervene in support of arbitrators during the course of the arbitration, e.g. by ordering consolidation under section 6B or by dealing with delay under section 29A. On the other hand, it gave the parties complete freedom to enter into exclusion agreements and thus exclude all the Court's appellate powers, section 23B. The amendments collectively have brought about a radical alteration in the setting in which sections 24 and 25 are now to be found.

7. There is a further difference between the two jurisdictions in relation to reasoned awards. The statutory powers are the same. Both Courts have power to direct the giving of reasons, curiously only in the context of an application to appeal, section 23(5). But the practice varies. Hong Kong arbitrators, I believe, share the view on reasons expressed by the same Commercial Court Committee, namely

"the making of an award is or should be a rational process. Formulating and recording the reasons tends to accentuate its rationality. Furthermore unsuccessful parties will often, and not unreasonably, wish to know why they have been unsuccessful" (3) para.26.

Mr. Caldwell certainly takes this view for he has provided the parties with a fully reasoned award. For my part I would be minded to go further and say that now that the deterrents to the giving of reasons have been removed, a Hong Kong arbitrator who is the judge of fact, and either the or nearly the judge of law, would be failing in his duty if he could not and did not set out his reasons in his award.

8. In England, however, habit appears to have died hard. Before 1979 a practice developed of keeping any reasons given separate from and off "the face" of the award. This satisfied the parties' curiosity but left the award and, the reasoning safe from attack. This practice of separating reasons and making them confidential has survived, at least amongst the Marine Arbitrators, and to an extent has been upheld by the Court: The Montan(7). I sympathize with Sir Roger Ormrod's difficulty in giving a contractual basis to this, p.198, but it is sufficient to say that I am not aware of any such practice in Hong Kong. I can see no reason why this Court should not treat a reason, as a reason, wherever it is to be found, and consider it openly. The abolition of the " error on the face of the award" jurisdiction should surely encompass all its procedural side effects, otherwise the old provision will still be ruling us from its grave.

This approach has its problems. They were most clearly expressed by Lloyd, J. (as he then was) in The Achillet(8) :-

"Applications to set aside for technical misconduct have in the experience of this Court become more frequent since the passing of the 1979 Arbitration Act; not, I suspect, because the amount of misconduct is on the increase, but because such applications provide the unsuccessful party to the arbitration with his last line of defence, where no question of law is involved. Moreover the 1979 Act has, in one particular respect, made such applications easier to make, if not to sustain; for by obliging arbitrators to give reasons for their award when required, the Act has enabled the unsuccessful party to argue, more frequently than before, that the arbitrators have decided a dispute on a ground which was not in issue, or on which he had no proper opportunity to be heard. It is...

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