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KluwerArbitration
Search term
"non-existent"
Document information
Publication
A contribution by the ITA Board of Reporters
Jurisdiction
Hong Kong
Court
High Court of Hong Kong, Court of First Instance
Arbitrators/Judges
Mimmie Chan, Judge
Case date
30 January 2015
Case number
Construction and Arbitration Proceedings No. 8 of 2013, HCCT 8/2013
Parties
Applicant, Z Respondent, A
Key words
arbitrator
jurisdiction determination of place of arbitration
Construction of arbitration agreement
Bibliographic reference
Briana Young, 'Z v. A [2015] HKEC 289, High Court of Hong Kong, Court of First Instance, Construction and Arbitration Proceedings No. 8 of 2013, HCCT 8/2013, 30 January 2015', A contribution by the ITA Board of Reporters, Kluwer Law International
Z v. A [2015] HKEC 289, High Court of Hong Kong, Court of First Instance, Construction and Arbitration Proceedings No. 8 of 2013, HCCT 8/2013, 30 January 2015
Briana Young
Headnote
In Z v A, the Hong Kong Court of First Instance has declined to set aside a partial award for lack of jurisdiction where the arbitration clause provided for ICC arbitration “in China” and the ICC had determined that the seat was Hong Kong, citing concerns over enforceability of awards made in mainland China by non-Chinese arbitral institutions.
See the full text of this case on KluwerArbitration.com at KLI-KA-15-13-008.pdf
Summary
Facts of the case
In an application by a mainland company (the “Applicant”) to set aside a partial arbitral award, the Hong Kong Court of First Instance has considered arbitration clauses providing for ICC arbitration with a seat in China. The clauses were found in two separate contracts between the Applicant and its Egyptian counterparties (the “Respondents”) for the manufacture, sale and purchase of goods in mainland China. The first contract is referred to as the CKD and Agency agreement (the “CKD Agreement”) and the second contract is referred to as the Technical Cooperation Agreement (the “TC Agreement”) (together the “Agreements”). The CKD Agreement provides for “arbitration as per the International Chamber of Commerce and held in CHINA”. The arbitration clause in the TC Agreement does not specify an arbitration institution but only the application of the ICC Rules, stating that any dispute shall be “finally settled in CHINA by arbitration pursuant to the Rules of the International Chamber of Commerce”.
Disputes arose under the Agreements. The Respondents filed a Request for Arbitration with the ICC, based on the arbitration clause in the CKD Agreement, seeking relief in respect of the Applicant’s alleged breach of both the CKD Agreement and the TC Agreement. The Respondents submitted that the place of arbitration should be Hong Kong, whilst the Applicant insisted the place of arbitration should be mainland China.
In view of the parties’ disagreement, the ICC Court fixed Hong Kong as the place of arbitration, pursuant to Article 14(1) of the 1998 ICC Arbitration Rules, which states that “the place of arbitration shall by fixed by [the ICC Court] unless agreed upon by the parties”. The ICC appointed a sole arbitrator, who was asked to determine whether he had jurisdiction to hear this matter. The sole arbitrator issued a partial award confirming his own jurisdiction, upholding the ICC’s decision to fix Hong Kong as the place of arbitration, and determining that the law applicable to the arbitration was Hong Kong law.
Question in Dispute
The Applicant applied to the Court of First Instance under s. 34 of the Hong Kong Arbitration Ordinance for a declaration that the sole arbitrator lacked jurisdiction and to set aside the partial award. The Applicant initially raised additional issues, including the validity of the arbitration clauses in the Agreements, but later opted not to pursue these issues.
Arguments of the Parties
The Applicant argued that it is not open to the ICC Court to rule on Hong Kong as the place of the arbitration, when the place of arbitration had already been agreed by the parties as China, and “China” is a reference to mainland China. The expert for the Applicant took the view that an arbitration held on the mainland and administered by the ICC is not a domestic arbitration. Since the ICC is not an arbitration institution that is registered with the authorities on the mainland as required by the PRC Arbitration Law, the mainland Courts may decline to enforce an ICC award made in mainland China. Moreover, the Applicant argued that the arbitration clause in the TC Agreement is not valid or enforceable under PRC law, since the clause does not specify the arbitration institution (as required by Article 16 PRC Arbitration Law), but only the application of the ICC Rules.
The Respondents’ expert on PRC law referred to the Longlide case decided by the Supreme People’s Court in 2014, in which the SPC upheld an arbitration clause providing for ICC arbitration on the mainland. The Respondents also referred to a Ningbo case, in which a mainland court enforced an ICC award made on the mainland under the New York Convention, although the court did not consider such an award as a domestic award.
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