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The recent case of Schindler Lifts (Hong Kong) Ltd v Sui Chong Construction and Engineering Co Ltd concerned a lift contractor, Schindler Lifts, claiming outstanding debts for works done from the main contractor, Sui Chong. There were two disputes between the parties, namely:-
Sui Chong applied to stay the District Court proceedings on the ground that the parties had agreed to submit the dispute to arbitration. The issues before the Court were:-
Section 20 of the Arbitration Ordinance, Cap 609 provides for a mandatory stay of court proceedings in favour of arbitration where the action is the subject of an arbitration agreement, as follows:-
“(1) Article 8 of the UNCITRAL Model Law, the text of which is set out below, has effect:
(1) A court before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration unless it finds that the agreement is null and void, inoperative or incapable of being performed.
…… (4) If the court refers the parties in an action to arbitration, it must make an order staying the legal proceedings in that action.” [emphasis added]
Thus, the three requirements of Article 8(1) must be complied with before a mandatory stay can be ordered. The first requirement i.e. that the applicant must request the court to refer the parties to arbitration not later than when submitting his first statement on the substance of the dispute was one of the key issues to be resolved in this case. The question was whether by filing a defence in the SCT Proceedings, Sui Chong had submitted its “first statement on the substance of the dispute” within the meaning of Article 8(1) of the Model Law.
The Court held that Sui Chong had not waived its right to arbitrate because:-
The Court also rejected Schindler Lift’s argument that the arbitration agreement was null, void, inoperative or incapable of being performed. It also found that the disputes fell within the ambit of the arbitration clause. Accordingly, the Court held that the action be stayed pending arbitration.
The Court held that even if wrong on the 1st issue, it would have exercised its discretion to allow the proceedings to be stayed under section 48(5) of the District Court Ordinance, Cap.336 because:-
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