X v Jemmy Chien (Also Known As Chien, Ching Yu Or 簡慶裕)

CourtCourt of First Instance (Hong Kong)
Judgment Date05 September 2019
Neutral Citation[2019] HKCFI 2172
Subject MatterConstruction and Arbitration Proceedings
Judgement NumberHCCT31/2019
HCCT31/2019 X v. JEMMY CHIEN (also known as CHIEN, CHING YU or 簡慶裕)

HCCT 31/2019

[2019] HKCFI 2172

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 31 OF 2019

____________

IN THE MATTER of a Final Award on Merits (save as to costs) dated 25 February 2019 in HKIAC/A16115 made by the HKIAC

and

IN THE MATTER of a Final Award on Interest and Costs dated 26 June 2019 in HKIAC/A16115 made by the HKIAC

and

IN THE MATTER of section 81 of the Arbitration Ordinance (Cap 609) and Article 34 of the UNCITRAL Model Law on International Commercial Arbitration

and

IN THE MATTER of Order 73 of the Rules of the High Court (Cap 4A)

______________

BETWEEN
X Plaintiff

and

JEMMY CHIEN Defendant
(also known as CHIEN, CHING YU or 簡慶裕)

____________

Before: Hon Mimmie Chan J in Chambers
Date of Hearing: 30 August 2019
Date of Decision: 5 September 2019

_____________

D E C I S I O N

_____________

Background

1. By its Originating Summons issued on 18 June 2019, the Plaintiff in these proceedings applied to set aside an arbitral award on merits dated 25 February 2019, and an award on interest and costs dated 26 June 2019 (“Awards”) made in an arbitration in Hong Kong (“Arbitration”). The Plaintiff is a BVI company which manufactures and supplies power tools and power adapters (“Products”) for industrial customers. It is within a group known as the X Group of companies (“Group”), the parent company in Taiwan (“Parent”) being listed on the Taiwanese Stock Exchange. The Defendant is a Taiwanese national.

2. The Arbitration concerns a dispute between the Defendant as Claimant, and the Plaintiff as Respondent, arising under a Service Agreement dated 26 April 2010 (“Service Agreement”) made between the parties, whereby the Defendant agreed to provide product, marketing and promotion services (“Services”), in exchange for a commission of 5% on the payment received from customers and buyers of the Products sold by the Plaintiff. Under clause 7 of the Service Agreement, the parties agreed to refer all disputes relating to the Service Agreement to arbitration in Hong Kong, according to Hong Kong arbitration rules, if such disputes cannot be resolved by negotiation (“Arbitration Agreement”).

3. In the Arbitration, the Defendant as Claimant sought payment from the Plaintiff/Respondent of US$388,437.09 and RMB 9,325,125.03, as commission outstanding and payable by the Plaintiff under the Service Agreement. The arbitral tribunal ruled in favor of the Defendant, ordering the Plaintiff to pay the commissions claimed. In the Award on merits, the tribunal dealt with the Plaintiff’s challenge to its jurisdiction, on the basis that there was no valid arbitration agreement between the Plaintiff and the Defendant, as the Defendant was not the true party to the Service Agreement, but had signed the same as agent for his principal, Mr Philip Chen (“Chen”), who was the true party to the Service Agreement. The Plaintiff claimed that the Defendant was made a party to the Service Agreement, to conceal the fact of Chen’s interest under the Service Agreement, as Chen had a conflict of interest by virtue of his capacity as the Vice President of a company (“3rd Party”) which acted as an intermediary that ordered products from the Group and resold them to its customers, and the performance of the Service Agreement by Chen himself would be prejudicial to the interests of the 3rd Party and in conflict with Chen’s duties to the 3rd Party.

4. These claims of the Plaintiff were denied by the Defendant, who maintains that he was the true party to the Service Agreement. According to the Defendant, he merely delegated the performance of the duties under the Service Agreement to Chen, who acted as the Defendant’s agent. The Defendant reiterated that he was entitled so to delegate the performance of the Service Agreement to Chen, as it was not a contract for the Defendant’s personal services.

5. By these proceedings, the Plaintiff applied to set aside the Awards, on the grounds that: (1) there was no valid arbitration agreement between the parties; and (2) the Awards are in conflict with the public policy of Hong Kong.

6. The Defendant applied on 19 July 2019 to dismiss the Plaintiff’s application to set aside, for leave to enforce the Awards, and further seeks security under O73 r 10A RHC as a condition for the further conduct of the Plaintiff’s setting aside application. The Defendant also seeks security for his costs of the proceedings, on the basis that the Plaintiff is a company resident abroad.

7. The substantive hearing of the application to set aside has been fixed for 23 September 2019, whereas the application for security came up for hearing by this Court on 30 August 2019.

Applicable legal principles

8. The legal principles applicable to determination of an application for security are not disputed between the parties. They are as set out in Soleh Boneh International Ltd v Government of the Republic of Uganda [1993] 2 Lloyd’s Rep 208 at 212, applied in Guo Shun Kai v Wing Shing Chemical Co Ltd [2013] 3 HKLRD 484 and Dana Shipping and Trading SA v Sino Channel Asia Ltd [2017] 1 HKC 281, and will not be repeated here.

The strength of the argument that the Award is invalid

9. The strength of the argument that the Award is invalid, as perceived on a brief consideration by the court, is the first important factor to be considered on an application for security. As Staughton LJ explained in Soleh Boneh, if the award is manifestly invalid, there should be an adjournment and no order for security, and if it is manifestly valid, there should be either an order for immediate enforcement, or else an order for substantial security. In between where there are various degrees of plausibility in the argument for invalidity, the court must be guided by its preliminary conclusion on the point.

10. On my preliminary consideration of the grounds set out in the Originating Summons, I cannot agree with the Plaintiff that the Awards are manifestly invalid.

Whether there was an arbitration agreement between the parties

11. There is no dispute, that the Plaintiff signed the Service Agreement as Party A, and the Defendant signed it as Party B. The Plaintiff was described as Party A to the Service Agreement, and the Defendant was described as Party B, desirous of supplying the relevant services to the Plaintiff as Party A. There is no reference in the Service Agreement to the Defendant acting as agent for any third party, nor any indication of the Defendant contracting in any capacity other than on his own behalf. I agree with the Defendant, that there is no ambiguity in any of the provisions of the Service Agreement with regard to either the capacity, or the obligations, of the parties as described.

12. The Plaintiff relies on the fact that in the space provided for the parties’ execution of the Service Agreement, the typing which appears describes the parties as: “Party A: (blank) Representative: (blank)” and...

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1 cases
  • W v Aw
    • Hong Kong
    • Court of First Instance (Hong Kong)
    • 17 June 2021
    ...of Uganda [1993] 2 Lloyd’s Rep 208, as applied in Hong Kong in Weili Su v Sheng Kang Fei [2019] 2 HKLRD 1214 and X v Jemmy Chien [2019] HKCFI 2172, are undisputed by the parties, and will not be repeated here. 27. AW also seeks security under section 905 of the Companies Ordinance and Order......

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