KENON ENGINEERING LTD v. NIPPON KOKAN KOJI KABUSHIKI KAISHA

KENON ENGINEERING LTD v. NIPPON KOKAN KOJI KABUSHIKI KAISHA

Clause 21.1 is ambiguous and expressly refers to a "mediation procedure"; given the parties' trade experience and the express reference to mediation the clause cannot be construed as an arbitration agreement obliging Kenon to refer disputes to arbitration. The court has jurisdiction to determine existence of an arbitration agreement for the purposes of Article 8 and it is impracticable to refer the question back to the arbitrator in the circumstances; accordingly there is no valid arbitration agreement and NK3's stay applications fail while Kenon's declaratory relief is granted.

Citation
KENON ENGINEERING LTD v. NIPPON KOKAN KOJI KABUSHIKI KAISHA
Parties
Plaintiff (hca3492, Hcct21); Defendant (hca3973): Kenon Engineering Limited; Defendant (hca3492, Hcct21); Plaintiff (hca3973): Nippon Kokan Koji Kabushiki Kaisha (also known as Nippon Kokan Koji Corporation)
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
2 July 2003
Case Number
HCA3492/2002
Procedural Posture
Civil Commercial Dispute — Arbitration/contract / Hearing of Applications to Stay Proceedings to Arbitration and Originating Summons for Declaration; Judgment Delivered
Outcome
Kenon's originating summons in HCCT No.21 of 2003 granted; NK3's two summonses (HCA No.3492/2002 and HCA No.3973/2002) dismissed.
Legal Topics
Stay to Arbitration, Validity of Arbitration Agreement, Mediation Vs Arbitration, Competence Competence, Model Law Articles 8 and 16
Source Language
EN
Arbitration Contract Law Civil Procedure Stay to Arbitration Validity of Arbitration Agreement Mediation Vs Arbitration Competence Competence Model Law Articles 8 and 16

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Parties

Kenon Engineering Limited

Plaintiff (hca3492, Hcct21); Defendant (hca3973)

Nippon Kokan Koji Kabushiki Kaisha (also known as Nippon Kokan Koji Corporation)

Defendant (hca3492, Hcct21); Plaintiff (hca3973)

Procedural Posture

Civil Commercial Dispute — Arbitration/contract / Hearing of Applications to Stay Proceedings to Arbitration and Originating Summons for Declaration; Judgment Delivered

Legal Issues

  1. 1 Whether Clause 21.1 of the Sub-Contract is an arbitration clause
  2. 2 Whether Clause 21.1 is superseded by Clause 5.5 of the 2nd Supplemental Agreement
  3. 3 Whether the court should stay the proceedings to arbitration or mediation

Ratio Decidendi

Clause 21.1 is ambiguous and expressly refers to a "mediation procedure"; given the parties' trade experience and the express reference to mediation the clause cannot be construed as an arbitration agreement obliging Kenon to refer disputes to arbitration. The court has jurisdiction to determine existence of an arbitration agreement for the purposes of Article 8 and it is impracticable to refer the question back to the arbitrator in the circumstances; accordingly there is no valid arbitration agreement and NK3's stay applications fail while Kenon's declaratory relief is granted.

Court Disposition

Kenon's originating summons in HCCT No.21 of 2003 granted; NK3's two summonses (HCA No.3492/2002 and HCA No.3973/2002) dismissed.

Orders

  • Declare Clause 21.1 of the Sub-Contract is not an arbitration clause and that there is no valid arbitration agreement obliging Kenon to refer the disputes to arbitration.
  • Grant Kenon's Originating Summons in HCCT No.21 of 2003 with costs, to be taxed if not agreed.