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In the case of Suzhou Quam-SND Venture Capital Enterprise & Anor v Great East Packaging International Ltd & Ors, 23 July 2013, Hong Kong's High Court (Court of First Instance) considered an application for a stay of proceedings in favour of arbitration.
The parties had entered into an "Agreement on Additional Issues" ("AAI") in connection with a share subscription agreement between them. The AAI contained dispute resolution and arbitration provisions to the effect that disputes arising from or in connection with it would be finally settled by arbitration in Hong Kong at the Hong Kong International Arbitration Centre, in accordance with the UNCITRAL Arbitration Rules (1976).
The parties had also entered into an "Acknowledgement of Debt" by which the Defendants acknowledged their debt to the Plaintiff. The debt was not paid and the Plaintiff issued a writ against the Defendants, the cause of action being based on the Acknowledgement of Debt. One of the Defendants made an application to stay the proceedings in favour of arbitration, arguing that the Acknowledgement of Debt did not constitute a cause of action in itself, the proper cause of action being under the AAI, which contained the arbitration provision.
The Court dismissed the application for a stay, holding that:-
In its judgment, the Court also set out its views on the stay application and the relevant principles applying to such. It said that four questions needed to be answered, namely:-
The first, third and forth questions needed to be answered "yes" and the second "no" or there could be no stay.
The Court answered those questions as follows:-
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