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Case 38: MAL 8
Hong Kong: High Court (Kaplan J.)
2 March 1991
China State Construction Engineering Corporation, Guangdong Branch v. Madiford Limited
Published in English: 1992, Hong Kong Law Digest, C4
(Abstract prepared by Kaplan J.)
The plaintiff agreed to supply to the defendant the services of a number of Chinese construction workers to carry out certain works in Libya. The defendant admitted that the amount claimed by the plaintiff was correct but contended that it was not obliged to pay it in full on the basis of a settlement agreement it had reached with the plaintiff.
The plaintiff had obtained a judgement by default and, in accordance with s. 6A of the Arbitration Ordinance (with his summons the plaintiff invoked article 8 MAL), the defendant applied for a stay of the proceedings, on the ground that the agreement between the plaintiff and the defendant contained an arbitration clause. The arbitration clause provided that "In case of any incompleteness of the contract, both parties shall reach settlement ... If settlement cannot be reached ... the matter may be submitted for arbitration ..." (emphasis added).
The court set aside the judgement by default obtained by the plaintiff as it was satisfied that the defendant had "a reasonable prospect of success".
The court found that MAL was not applicable as the arbitration agreement was entered into before 6 April 1990, namely the commencement date of the Arbitration (Amendment)
(No. 2) Ordinance 1989, by which MAL was made part of the Hong Kong law of arbitration.
The court, applying article 6A of the Arbitration Ordinance, granted the stay of
proceedings as it found that there was a valid arbitration agreement. The word
"incompleteness" in the arbitration clause was held to be wide enough to cover a
failure to perform the contract. The words "may be submitted" in effect meant
"shall", as once one party had elected to proceed to arbitration for the
resolution of a dispute the other party was obliged to honour the agreement to arbitrate.
Additional Information published in later CLOUT issue (on "14 October 1994"):
Summarized and commented on by Kaplan, Spruce and Moser in Hong Kong and China Arbitration, Cases and Materials, Butterworths, 1994.
Additional Information published in later CLOUT issue (on "10 April 1995"):
Commented on by Kaplan in Asia LawJanuary/February 1995, 23.
Additional Information published in later CLOUT issue (on "9 February 2000"):
Abstract published in English: [1995] Model Arbitration Law Quarterly Reports, Vol. 1, issue 3, 59
Text of the court decision published in English: [1995] Model Arbitration Law Quarterly Reports, Vol. 1, issue 3, 62
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