INTERNATIONAL COMMERCIAL ARBITRATION

CLOUT: UNCITRAL MODEL LAW ABSTRACTS

Court opinions and arbitral awards construing the UNCITRAL Model Law on International Commercial Arbitration as enacted in various jurisdictions are collected by the UNCITRAL Secretariat through a system known by the acronym "CLOUT" . The CLOUT system covers all UNCITRAL texts, including, for example, the U.N. Sales Convention. The abstracts relevant to the Model Law are collected below. You may also wish to consult the world wide web site of UNCITRAL , which gives you access not only to the abstracts on all texts but also other information about the Commission.

This page was last updated on June 13, 1997.




Case 9: MAL 8

Canada: Federal Court of Canada, Trial Division (Denault, J.)

2 November 1987

Coopers and Lybrand Limited (Trustee) for BC Navigation S.A. (Bankrupt)

v. Canpotex Shipping Services Limited

Published in English: 16 Federal Trial Reporter, 79

Where a valid arbitration agreement exists and a party requests a transfer of the dispute to the arbitration tribunal at the first opportunity, article 8 MAL obliges the court to refer the matter to arbitration.

The charter-party agreement executed by the parties contained an arbitration clause. After Coopers and Lybrand commenced an action against the Canpotex in court, Canpotex filed a conditional appearance objecting to the jurisdiction of the court and sought a stay of proceedings in order to allow the objection to be made. Canpotex also sought an order pursuant to section 50(1)(b) of the Federal Court Act seeking a stay of proceedings.

The court granted Canpotex's motion. Pursuant to article 8 of the Model Law, which is enacted by the Commercial Arbitration Act, R.S.C.1985, c.C-34.6, the court was obliged to refer the matter to arbitration. A valid arbitration agreement existed and Canpotex had requested a transfer of the dispute to the arbitration tribunal at the first opportunity. In the alternative, the court would have granted a stay pursuant to section 50 of the Federal Court Act.

Case 10: MAL 31(2); 34

Canada: Superior Court of Quebec (Gonthier J.)

16 April 1987

Navigation Sonamar Inc. V. Algoma Steamships Limited and others

Published in French: Rapports Judiciaires de Québec 1987, 1346

The court ruled that arbitrators cannot be criticized for expressing themselves as commercial men and not as lawyers. Where the agreement between the parties does not specify the form of the award, that form is governed by article 31(2).

In accordance with the arbitration clause contained in a charter-party agreement concluded on 9 January 1981, the parties submitted to arbitration a dispute concerning their respective liability with regard to certain damages that resulted from the grounding, on 26 April 1984, of the vessel that was the subject of the charter-party. The applicant (Navigation Sonomar), based on alleged lack of coherent and comprehensible reasons, submitted an application to set aside the award rendered on 29 October 1986.

The Superior Court dismissed the application. The court ruled that the reasons were adequate, taking into account not only what was expressly stated but also what was implicit in the award. Arbitrators cannot be criticized for expressing themselves as commercial men and not as lawyers.

Case 11: MAL 8; 9

Canada: Federal Court of Canada, Trial Division (Pinard, J.)

19 February 1988

Relais Nordik v. Secunda Marine Services Limited

Published in English and French: 24 Federal Trial Reporter, 256

A mandatory interim injunction requiring compliance with the terms of a charter party is not an interim measure within the scope of article 9 MAL.

Relais Nordik applied pursuant to article 9 of the Model Law which is enacted by the Commercial Arbitration Act , Revised Statutes of Canada, 1985, c.C-34.6 for a mandatory interim injunction to force Secunda Marine to comply with the terms of a charter-party signed by both parties.

The Court dismissed the application for an injunction on the grounds that the applicant had not made out a strong prima facie case for an injunction. As well, damages would compensate any loss suffered by the applicant. Moreover, the court held that the remedy sought was not an interim measure within article 9 MAL. The applicant was seen as attempting to have the court rather than the arbitrators resolve the substance of the dispute, notwithstanding the respondent's objection pursuant to article 8 MAL.

Case 12: MAL 31; 34

Canada: Federal Court of Canada, Trial Division (Denault J.)

7 April 1988

D. Frampton & Co. Ltd. v. Sylvio Thibeault and Navigation Harvey & Frères Inc.

Original in English and French

With respect to an application to set aside an arbitral award, the powers of the court are limited to examining the award on the basis of the restrictive provisions of article 34 of the Model Law, as those provisions are reproduced in the Commercial Arbitration Code, S.R.C. 1985, c.C-34.6. The court cannot draw authority from article 34(4) MAL to refer the matter back to the arbitral tribunal and request that it consider the question of the applicable rate of interest where that question was not originally considered by the arbitrators.

Thibeault and Navigation Harvey requested the court to set aside an arbitral award where only two out of the three arbitrators had submitted their opinion. Where a defendant signed the charter-party which contained the arbitration clause, that defendant is personally involved in the charter-party since he signed it in his personal capacity. However, the court allowed the application of another defendant who had signed the charter-party while acting as president of his company. According to the court, the defendant is bound by the charter-party in his official capacity but not in his personal capacity. The decision of the arbitrator to involve that defendant personally was beyond the scope of the submission to arbitration in that it affected a third party who was not a party to the arbitration.

The application of Navigation Harvey to set aside the arbitral award was dismissed even though only two arbitrators rendered the award. Article 31 MAL provides that "the signatures of the majority of all members of the arbitral tribunal shall suffice, provided that the reason for any omitted signature is stated". That reason was formally given to the court by the president of the tribunal. The application for homologation of the arbitral award was allowed.

Case 13: MAL 1(2); 5; 16

Canada: Ontario District Court, York Judicial District (Mandel, J.)

27 October 1989

Deco Automotive Inc. v. G.P.A. Gesellschaft für Pressenautomation mbH Original in English

Where an arbitration occurs outside of Canada, pursuant to article 1(2), articles 5 and 16 will not apply.

GPA (a German corporation) entered into a contract with Mareda (a U.S.A. company) to design, manufacture, deliver and put into operation a transfer system. This contract contained references to general conditions (ECE 188), which contained a clause referring disputes to arbitration. The arbitration terms provided for reference of any dispute to the International Chamber of Commerce for resolution through the application of the arbitration conditions of the Economic Commission for Europe (ECE). Mareda assigned the contract to Deco, a Canadian company. Deco refused to pay following disputes with GPA and sued in court for damages. GPA moved to have the action stayed.

The court dismissed the motion finding that the reference to arbitration in the ECE rules did not cover the areas in dispute between the parties. Furthermore, the court ruled that where the arbitration is in Canada, then the matter may proceed as set out in Article 16, but where it is not (as in the present case) then article 16 does not apply by virtue of article 1(2). Also based on article 1(2), article 5 of the Model Law restricting judicial intervention does not apply because the place of arbitration is not in Canada.

Case 14: MAL 8

Canada: Federal Court of Canada, Appeal Division (Marceau, Hugessen and Desjardins, JJ.A.)

2 June 1989

Iberfreight S.A. et al. v. Ocean Star Container Line AG and J.W. Lunstedt KG

Published in English: 104 National Reporter, 164

Both applications were dismissed by the motions judge, but were upheld in part by the Federal Court of Appeal. Article 8 of the Model Law, which is enacted by the Commercial Arbitration Act, Revised Statutes of Canada 1985, c.C-34.6, does not require the dismissal of a motion for service ex juris nor require the court to decline jurisdiction whenever the contract documents contain an arbitration agreement. Therefore, the application by the defendants concerning service ex juris was dismissed.

The court stayed the action against Ocean Star and dismissed the appeal of Lunstedt concerning the arbitration clause. With regard to Ocean Star, the Court stayed the action and referred the matter to arbitration in accordance with the terms of the bill of lading. The application by Lunstedt was dismissed due to a lack of evidence.

Case 15: MAL 8

Canada: Federal Court of Canada, Trial Division (Joyal, J.)

17 January 1989

Navionics Inc. v. Flota Maritima Mexicana S.A. et al.

Published in English: 26 Federal Trial Reporter, 148

Article 8 is to be given a fairly strict interpretation and its imperative provision is an exceptional departure from the inherent jurisdiction of the Court to grant stays of proceedings. However, in this case, the court refused to decide if article 8 had been complied with and granted the stay based on its inherent jurisdiction.

A dispute arose between the parties concerning their obligations with respect to a standard-form charter party they had signed. Flota Maritima moved to stay the proceedings brought by Navionics, relying on article 8 of the Model Law as enacted by the Commercial Arbitration Act, Revised Statutes of Canada, 1985, c.C-34.6. The motion was adjourned and before it could be heard, Navionics filed its own motion seeking default judgment against the defendant. The defendant was subsequently granted two extensions in order to allow it to obtain an affidavit. After Flota Maritima was refused any further extension, it filed a statement of defence in order to avoid being held in default.

The court granted the stay of proceedings sought by Flota Maritima. The court relied on section 50(1)(b) of the Federal Court Act, Revised Statutes of Canada, 1985, c F-7, in granting the stay pursuant to its inherent jurisdiction. Article 8 is to be given quite a strict interpretation.

Case 16: MAL 1; 5; 23(1); 34, especially 34(2)(a)(iii)

Canada: British Columbia Court of Appeal (Hutcheon, Proudfoot and Giggs, JJ.A.)

24 October 1990

Quintette Coal Limited v. Nippon Steel Corp. et al.

Published in English and French: Canada Supreme Court Reports 1990 volume 2

The appropriate standard of review of arbitral awards is one which preserves the autonomy of the forum chosen by the parties and minimizes judicial intervention.

Quintette, a Canadian company, agreed to supply coal to the respondent, a Japanese company. Their agreement provided that any contract disputes would be submitted to binding arbitration under British Columbia Law. Accordingly, a dispute concerning the interpretation of a contract clause outlining a pricing mechanism was referred to arbitration and an award rendered. Quintette, relying on sections 5 and 34 of the Model Law as enacted by the International Commercial Arbitration Act, Statutes of British Columbia, 1986, c. 14 sought to set aside the award on the grounds that the arbitrators had exceeded their jurisdiction by dealing with a matter not contemplated by or falling within the scope of the submission to arbitration.

The Court of Appeal upheld the lower court's affirmation of the award. The Court noted the world-wide trend toward restricting the scope of judicial intervention into commercial arbitration. The award could be justified under the terms of the contract so the Court was prevented from intervening under article 34(2)(a)(iv) of the British Columbia Act (which is the same as article 34(2)(a)(iii) of the Model Law).

(The Supreme Court of Canada denied leave to appeal from the British Columbia Court of Appeal judgment on 13 December 1990.)

Case 17: MAL 8

Canada: British Columbia Court of Appeal (Carrothers, Southin and Wood, JJ.A.)

26 February 1990

Stancroft Trust Limited, Berry and Klausner v. Can-Asia Capital Company,

Limited, Mandarin Capital Corporation and Asiamerica Capital Limited

Published in English: 3 Western Weekly Reports 1990, 665

Under article 8(1) MAL, the fact that one defendant is entitled to an order staying the proceedings does not entitle other defendants to the benefit of the stay.

Mandarin and Asiamerica are British Columbia corporations. Can-Asia is a Hong Kong corporation. Stancroft is a United Kingdom company, Berry resides in London, England, and Klausner resides in Switzerland. The parties had concluded a number of agreements and security instruments. One instrument contained an arbitration clause requiring the resolution of disputes by the London Court of International Arbitration and according to British Columbia law. The plaintiffs sued the defendants for breach of contract. Can-Asia sought a stay of proceedings, citing the court's inherent jurisdiction and the Model Law as enacted by the International Commercial Arbitration Act, Statutes of British Columbia, 1986, c.14. The other defendants filed statements of defence after their applications to stay the proceedings.

On appeal, the British Columbia Court of Appeal ruled that Can-Asia was entitled to stay under section 8(1) of the Act, but the other defendants were not as they had filed statements of defence. The court upheld section 8(2) of the Act as representing no denial of access to the courts as those who were bound by the section had given up access voluntarily by agreeing to arbitration. As well, laws of a similar nature have existed for almost 300 years.

(Leave of appeal was denied by the Supreme Court of Canada.)

Case 18: MAL 5; 8; 16

Canada: Ontario Court of Justice - General Division (Henry J.)

1 March 1991

Rio Algom Limited v. Sammi Steel Co.

Original in English

The interaction of articles 8 and 16 restricts the court's role in arbitrations to determining whether the arbitration clause is null and void. Any determination of the arbitrator's jurisdiction is made by the arbitrator pursuant to article 16.

The parties agreed that Sammi would purchase Rio's steel manufacturing business in Ontario, Quebec and New York State. The agreement provided that the parties each prepare a Closing Date Balance Sheet as soon as possible after closing. Arbitration was provided for if the parties could not resolve any dispute arising out of the Closing Date Balance Sheets. Such a dispute did arise. Sammi followed the required procedure and submitted the matter to an arbitrator. Rio commenced an action in court challenging the jurisdiction of the arbitrator and seeking an order staying the arbitration proceedings. The Chambers judge granted the order finding that the arbitrator's jurisdiction is a threshold issue of contract construction to be decided by the court. Leave to appeal the Chambers judge's order was sought.

The court granted leave to appeal. It found that the Chambers judge's decision had been erroneously based on principles of the domestic arbitration act rather than those found in the Model Law as enacted by the International Commercial Arbitration Act, Statutes of Ontario, 1988, c.30. In particular the court cited article 16 which provides the arbitral tribunal with the power to rule on its own jurisdiction. The court further noted article 8 which restricts court involvement to a determination of whether the arbitration agreement is null and void.

Case 19: MAL 8

Canada: British Columbia Supreme Court (Chambers) (Harvey J.)

22 November 1991

Krutov v. Vancouver Hockey Club Limited

Original in English

The mere presence of procedural irregularities in the implementation of the arbitration process, under either the agreement itself or the collective bargaining agreement, will not prevent the dispute from proceeding to arbitration.

Krutov, a hockey player residing in Moscow and the Club, a British Columbia corporation, had a contract for playing services of three years' duration. The Club refused to pay Krutov for the second and third seasons and Krutov in turn refused to play. The Club sent the dispute to arbitration pursuant to the agreement. The Club argued that the dispute was automatically subject to arbitration and that article 8 of the Model Law as enacted by the International Commercial Arbitration Act, Statutes of British Columbia, 1986, c.14 contains no discretion for the court to deflect a consensual arbitration. Krutov argued that the contract was null and void and thus there was no arbitration agreement. Krutov also argued that procedural irregularities existed making referral to arbitration impossible.

The Court found that the agreement was not null and void within the meaning of section 8 of the Act. The procedural irregularities referred to by Krutov concerned time limits and notice requirements. The Court concluded that such irregularities in themselves would not prevent the parties from proceeding to arbitration.

(In making this finding, the court placed particular emphasis on the decision reported as Case 9.)

Case 20: MAL 1(3)(b)(ii); 3; 8; 10; 11; 16

Hong Kong: High Court of Hong Kong (Kaplan J.)

29 October 1991

Fung Sang Trading Limited v. Kai Sun Sea Products and Food Company Limited

Original in English

Excerpts of judgement in

Doyles dispute resolution practice: Asia, Pacific in 1 volume. North Ryde, N.S.W.: CCH International, c1990-Tab 80-036, p.80, 661-80
Yearbook Commercial Arbitration, (Deventer, Netherlands, Kluwer) vol. XVII, 1992, p. 289-303
[1992] 1 Hong Kong Law Reports (HKLR), 40..

Commented on in:

Doyles ADR update 5: 4-5, 28 February 1992, and by Pryles, World Arbitration and Mediation Report 2:12:329 (December 1991).
Summarized and commented on by Kaplan, Spruce and Moser in Hong Kong and China Arbitration, Cases and Materials, Butterworths, 1994.

(Abstract prepared by the Secretariat)

The plaintiff, a Hong Kong company, asked the court to appoint a second arbitrator, relying on a contract with another Hong Kong company that contained an arbitration clause. The contract was for the sale of soybean extraction meal FOB Dalian; Dalian, which is in China, was stated to be the place of delivery. The defendant, asserting that there was no valid contract since the person who had signed had no authority to bind it, contended that an arbitrator had no jurisdiction to rule on whether or not a contract had been concluded. Even if an arbitration agreement existed, the arbitration would be domestic and thus have to be conducted by a sole arbitrator.

The court determined the arbitration to be international pursuant to article 1(3)(b)(ii) of the Model Law as enacted by the Hong Kong Arbitration (Amendment) (No.2) Ordinance, 1989. It regarded delivery (which was to take place outside Hong Kong) as "a substantial part of the obligations of the commercial relationship", without ignoring that payment and nomination of the vessel (which were to take place in Hong Kong) were also important obligations in a contract of sale.

The court refused to deal with the question of whether a valid contract had been concluded since, according to article 16 MAL, it was first for the arbitral tribunal to decide on its jurisdiction. Recognizing the autonomy or separability of the arbitration clause except in the case of ab initio illegality of the contract (with references to English law), the court stated that the decision of the arbitral tribunal was neither final nor exclusive but subject to immediate review under article 16(3) MAL.

In making the appointment under article 11(5) MAL, the court deemed it important that when "appointing on behalf of the defaulting appointing party, it should go out of its way to ensure that no sense of grievance is felt, however unreasonable that attitude might appear to others".

Case 27: MAL 16(1)

Argentina: Cámara Nacional de Apelaciones en lo Commercial - Sala

26 September 1988; judgement not final

"Enrique C. Wellbers S.A.I.C. A. G. v. Extraktionstechnik Gesellschaft für Anlagenbau M.B.M.: S/ Ordinario"

Excerpts published in Spanish: La Ley, 1989-E-302, Buenos Aires

In accordance with an arbitration clause contained in a contract of sale FOB port of Hamburg, one of the parties to the contract brought an action before the courts of Argentina for the constitution of the arbitral tribunal. The respondent raised a plea that the arbitral tribunal did not have jurisdiction. It was argued that the courts in Hamburg, the place of performance of the contract, had international jurisdiction over the subject-matter of the contract, and, since the arbitration clause was accessory to the contract of which it forms part, the arbitration clause should follow the fate of the contract.

The court of first instance rejected the plea of lack of jurisdiction. The court of appeals affirmed that the arbitration clause was autonomous, and therefore its validity did not depend on the validity of the contract, on the applicable law or on the court with international jurisdiction to resolve any dispute. The principle of the autonomy of such a clause is internationally accepted and, as such, incorporated in MAL (Article 16(1)). Although MAL has not been adopted in Argentina, it reflects generally accepted principles in the matter and can be taken into account to make up for the absence of a specific national norm.

Case 28: MAL 1(2); 8

Canada: Saskatchewan Court of Queen's Bench (MacPherson C.J.Q.B.)

19 March 1993

BWV Investments Ltd. v. Saskferco Products Inc., UHDE-GmbH, et al.

Original in English

Unpublished

The parties entered into a series of contractual relationships concerning the construction of a fertilizer plant for Saskferco. The subcontract between UHDE and BWV for the construction contained an arbitration clause requiring that the arbitration take place in Zurich and the interpretation, application and performance of the sub-contract be governed by Swiss law. BWV sued the defendants in court for monies owing on the contract. UHDE applied to have the proceedings stayed in order that the case might be resolved by arbitration. In issue was the application of MAL to this dispute.

The court, stating that despite the provision in article 1(2) that only articles 8, 9, 35 and 36 of MAL apply to arbitration agreements where the place of arbitration is outside the state, found that it could refer to the definitions in MAL by virtue of s. 2(2) of the International Commercial Arbitration Act, Statutes of Saskatchewan 1988-89, c.I-10.2, which enacts MAL. This section provides that all terms used in the Act will have the same meaning as in MAL. The court found that the agreement in question was an international commercial arbitration agreement within the meaning of the Act. The court found that the agreement was void as it conflicted with the Builders' Lien Act, Statutes of Saskatchewan 1984-85-86, c. B-7.1. The agreement would have rendered inapplicable the rights of several lien holders who would not be involved in an arbitration. The court declared the arbitration agreement void and did not grant a stay of proceedings.

Case 29: MAL 2;35;36

Canada: Ontario Court, General Division (While J.)

30 January 1992

Kanto Yakin Kogyo Kabushiki-Kaisha v. Can-Eng Manufacturing Ltd.

Published in English: 7 Ontario Reports (3d), 779

Commented on by Tetley in [1993] Lloyd's Maritime and Commercial Law Quarterly, 238

Concluding an agreement prior to the existence of legislation implementing MAL will not mean that MAL will not apply to arbitrations taking place pursuant to the agreement.

The parties concluded an agreement which contained an arbitration clause and provided that arbitration would take place in Tokyo. Arbitration of an issue arising out of the agreement was held and an award was made. Kanto Yakin sought to enforce the award in Ontario. The court found that, despite the fact that the agreement was concluded prior to the coming into force of the International Commercial Arbitration Act, Revised Statutes of Ontario, 1990, c. 1.9, which enacts MAL, the agreement was still an arbitration agreement governed by the Act and was enforceable as such.

Case 30: MAL 35;36

Canada: Ontario Court, General Division (Feldman J.)

13 February 1992; appeal pending in the Ontario Court of Appeal

Robert E. Schreter v. Gasmac Inc.

Published in English: 7 Ontario Reports (3d), 608

Commented on by

Tetley in [1993] Lloyd's Maritime and Commercial Law Quarterly, 238
Chukwumerije in Canadian Business Law Journal, Vol. 22, 1993, 296

For the purposes of MAL, an arbitral award does not merge in a judgment which confirms it. The court should not re-open the merits of an arbitral award where there has been no misconduct, simply on the grounds of ensuring conformity with public policy.

The agreement between the parties provided that the law of the state of Georgia, United States of America, would govern and that disputes arising out of the agreement would be determined by binding arbitration to take place in Atlanta. An arbitral award in favour of Schreter was subsequently confirmed by the Georgia court. Gasmac challenged the enforcement of the award in Ontario on a number of procedural grounds, all of which were rejected by the court. Gasmac claimed that the award had merged in the Georgia court judgment and could therefore only be enforced in Ontario as a foreign judgement. Gasmac also claimed that the acceleration of royalty payments for breach of contract was contrary to the public policy of Ontario.

The court found that article 35 MAL as enacted by the International Commercial Arbitration Act, Revised Statutes of Ontario, 1990, c. 1.9 made recognition and enforcement of arbitral awards mandatory. The court found no indication in article 35 or 36 that awards should be considered to merge in judgments which confirm them. The court indicated that to make such a finding would "create a gaping hole in the scope of the Act." The court determined that the facts did not warrant re-opening the arbitral award on public policy grounds pursuant to article 36(1)(b)(ii) MAL. The court enforced the arbitral award.

Case 31: MAL 8

Canada: British Columbia Court of Appeal (Hinkson, Southin and Cumming JJ.A.)

10 March 1992

Gulf Canada Resources Ltd. v. Arochem International Ltd.

Published in English: 66 British Columbia Law Reports (2d), 113

Commented on by Tetley in [1993] Lloyd's Maritime and Commercial Law Quarterly, 238

While the court must grant a stay of court proceedings pursuant to article 8 MAL where its terms are satisfied, the court retains some residual jurisdiction to exercise on an application for a stay.

A contract existed between the parties for the delivery of 375,000 barrels of crude oil. The contract contained an arbitration clause. The defendant refused delivery and the plaintiff sued for damages. The trial court granted the defendant's request for a stay of court proceedings pending arbitration pursuant to s. 8 of the International Commercial Arbitration Act, Statutes of British Columbia 1986, c. 14, which enacts MAL. The plaintiff appealed.

The court determined that, while s. 8 requires that the court grant a stay unless the arbitration agreement is null and void, inoperative or incapable of being performed, the court still has some residual jurisdiction to exercise. The court may exercise this jurisdiction and refuse to grant a stay should it conclude that one of the parties named in the proceeding is not a party to the arbitration agreement, the alleged dispute does not come within the terms of the arbitration agreement or if the application is out of time. The court upheld the trial court's decision to grant the stay of proceedings.

Case 32: MAL 7; 8

Canada: Ontario Court, General Division (Zelinski J.)

30 April 1992

Mind Star Toys Inc. v. Samsung Co. Ltd.

Published in English: 9 Ontario Reports (3d), 374

Agreements containing both an arbitration clause and a right to sue will still be subject to article 8 MAL, depending on the particular agreement.

Mind Star was a licensee of a product which it sub-licensed to Samsung. The sub-licensing agreement contained an arbitration clause and also a clause providing Mind Star with the right to sue should Samsung fail to perform any of its obligations. Mind Star claimed that Samsung had fundamentally breached the agreement and that Mind Star was entitled to claim damages. The parties agreed that the arbitration clause in the agreement qualified as an arbitration agreement pursuant to article 7 MAL as enacted by the International Commercial Arbitration Act, Revised Statutes of Ontario, 1990, c.1.9.

The court concluded that the right to sue did not qualify the duty to arbitrate. Even disputes concerning the clause creating the right to sue were subject to arbitration. The court found this "consistent with the requirement that the arbitrator will, in the first instance, determine its own jurisdiction, and the scope of its authority." The arbitration clause was operative and as such article 8 MAL required that the parties be referred to arbitration.

Case 33: MAL 8

Canada: Federal Court of Appeal (Marceau, Desjardins and Décary JJ.A.)

29 May 1992

Ruhrkohle Handel Inter GMBH and National Steel Corp. et al. v. Fednav Ltd. and Federal Pacific (Liberia) Ltd. and Federal Calumet (The)

Published in English and French: 3 Federal Court Reports 1992, 98

Commented on by Tetley in [1993] Lloyd's Maritime and Commercial Law Quarterly, 238

In order for the court to grant a stay of proceedings pursuant to article 8 MAL, the party requesting the stay must satisfy the court that the request was made in a timely fashion and that the request was made to the court, not just to the other party.

The parties entered into a charter-party which contained an arbitration clause. The charter-party was subsequently breached. The appellants asked the respondents for an extension of time to "commence suit and/or arbitration". The respondents granted an extension of time to commence arbitration only. The appellants filed a statement of claim for damages which made no mention of arbitration. The respondents filed a statement of defence and counterclaim, and requested a stay of proceedings. Both the Senior Prothonotary and the Trial Division refused the appellants' request that the action be stayed. The appellants appealed.

The court found that while article 8 MAL which is enacted by the Commercial Arbitration Act, Revised Statutes of Canada 1985, c.C-34.6 requires the court to grant a stay of proceedings and refer the matter to arbitration, such an order is not made as of right. Certain conditions must first be met. The party seeking such an order must demonstrate that a request for arbitration was made in a timely fashion (not later than when submitting their first statement on the substance of the dispute). The court noted that the request for arbitration required in article 8 MAL is a request to the court, not just to the other party. No such request was made to the court here and, therefore, no stay was granted.

Case 34: MAL 8

Canada: Federal Court of Canada, Trial Division (Joyal J.)

30 September 1992 and 9 October 1992 (identical decisions)

Miramichi Pulp and Paper Inc. v. Canadian Pacific Bulk Ship Services Ltd.

Original in English and French

Unpublished

While the Federal Court possesses some permissive jurisdiction over the granting of stays of proceedings, strong reasons are required to overcome the assumption that contracts must be respected and, therefore, article 8 MAL must operate.

The parties entered into a charter-party agreement whereby any dispute would be referred to arbitration in London. A dispute arose and court proceedings were commenced. A stay of these proceedings was granted by the Senior Prothonotary. This decision was appealed.

The court noted the mandatory nature of article 8 MAL (enacted by the Commercial Arbitration Act, Revised Statutes of Canada 1985, c.C-34.6) which requires the court to grant a stay of proceedings and refer matters to arbitration where certain conditions are met. The court also noted the permissive jurisdiction in s. 50 of the Federal Court Act, Revised Statutes of Canada 1985, c.F-7 which allows the Federal Court to grant stays of proceedings in the interest of justice. The court found that the interest of justice generally dictated that contractual agreements be upheld. In order to overcome this assumption, strong reasons are required. The court found that no such strong reasons existed in this case and upheld the decision of the Senior Prothonotary granting the stay.

Case 35: MAL 8

Canada: Ontario Court, General Division (Day J.)

1 October 1992

Canada Packers Inc. et al. v. Terra Nova Tankers Inc. et al.

Published in English: 11 Ontario Reports (3d), 382

The fact that a claim on which a party seeks arbitration is grounded in tort does not preclude the application of MAL.

The parties entered into a charter-party agreement which contained an arbitration clause. The respondent sued the applicant in both contract and tort. At issue was whether the court should grant a stay of proceedings pursuant to article 8 MAL. The respondent claimed that MAL did not apply to tortious actions and that the absence of the word "commercial" characterizing the term arbitration in the International Commercial Arbitration Act, Revised Statutes of Ontario, 1990, c. 1.9. indicated that MAL would not apply to the situation.

The court found that the fact that a claim is grounded in tort does not preclude arbitration. The court also determined that even though the word "commercial" does not appear in the implementing legislation, it does appear in the schedule to the legislation and as such MAL will apply to commercial arbitrations in Ontario. The court granted the stay of proceedings.

Case 36: MAL 8

Canada: Federal Court of Canada, Trial Division (Walsh J.)

19 January 1993

Nanisivik Mines Ltd. and Zinc Corporation of America v. F.C.R.S. Shipping Ltd., Canarctic Shipping Co. Ltd. et al.

Original in English and French

Unpublished

The mandatory nature of article 8 MAL does not remove the permissive jurisdiction of the Federal Court to grant stays of proceedings pursuant to s. 50 of the Federal Court Act.

Nanisivik and Canarctic entered into a charter-party which required that all disputes of law and fact arising under it be referred to arbitration. The ship sank. The plaintiffs sued in contract and tort. Canarctic argued that the court was required to grant a stay of proceedings and refer the matter to arbitration pursuant to article 8 MAL which is enacted by the Commercial Arbitration Act, Revised Statutes of Canada 1985, c. C-34.6. Nanisivik argued that a stay should not be granted against those parties to the litigation who were not parties to the charter-party.

The court relied on its discretion pursuant to s. 50(1) of the Federal Court Act, Revised Statutes of Canada 1985, c.F-7 rather than on article 8 MAL and granted a stay of proceedings only against Canarctic. In so doing, the court relied on previous Federal Court decisions which determined that article 8 MAL as invoked by an agreement to arbitrate does not affect or impinge on the permissive jurisdiction of the Federal Court (see A/CN.9/SER.C/ABSTRACTS/1, cases 8 and 15).

Case 37: MAL 36(1)(b)(ii)

Canada: Ontario Court, General Division (Eberle J.)

12 March 1993

Arcata Graphics Buffalo Ltd. v. Movie (Magazine) Corp.

Original in English

Unpublished

In order to refuse to enforce an award as contrary to public policy (article 36(1)(b)(ii) MAL) the award must be contrary to the morality of the community of the enforcing State.

The arbitral award in question included interest at the rate of 1.5% per month with no annual interest rate. This violated s. 4 of Canada's Interest Act which imposes limits on interest rates not expressed annually. The respondent argued that to give force to this provision would be contrary to public policy and thus contrary to article 36(1)(b)(ii) MAL enacted by the International Commercial Arbitration Act, Revised Statutes of Ontario, 1990, c.1.9.

The court adopted the principle that to refuse to enforce an award pursuant to article 36(1)(b)(ii) MAL the award must be contrary to the essential morality of the state in question. The court upheld the award.

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

Summarized and commented on by Kaplan, Spruce and Moser in Hong Kong and China Arbitration, Cases and Materials, Butterworths, 1994; commented on by Kaplan in Asia LawJanuary/February 1995, 23.

(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.

Case 39: MAL 1(3) (b) (ii), 9

Hong Kong: High Court of Hong Kong (Kaplan J.)

Katran Shipping Co. Ltd. v. Kenven Transportation Ltd.

Published in English: 1992, Hong Kong Law Digest, G9

Reported on in English: [1992] The Arbitration and Dispute Resolution Law Journal (ADRLJ) 235, [1992] ADRLJ 240, [1993] ADRLJ 100 and [1994] ADRLJ 49, 295, 307, 291, 290, 298.

Commented on in:

Kaplan, Spruce and Moser in Hong Kong and China Arbitration, Cases and Materials, Butterworths, 1994
Kaplan in Asia LawJanuary/February 1995, 23

(Abstract prepared by Kaplan J.)

The defendant, a Hong Kong company, sought to have set aside a Mareva injunction that the court had granted the plaintiff, also a Hong Kong company. The issue before the court was whether it had jurisdiction to grant such an interim measure of protection, in view of the fact that a charter-party agreement entered by the plaintiff and the defendant contained an arbitration clause which provided that "any dispute will be settled before Hong Kong Arbitrators and under British Maritime law ...".

The court, relying on article 1(3)(b)(ii) MAL and its decision on Fung Sang Trading v. Kai Sun Sea Products and Food Co. Ltd. [see A/CN.9/SER.C/ABSTRACTS/1, case 20], found that MAL covered this dispute, since a substantial part of the obligations provided in the charter-party was to be performed outside Hong Kong.

The court held that the interim measure of protection referred to in article 9 MAL was wide enough to cover a Mareva injunction. "The protection afforded by a Mareva injunction" was held to be "the reduction in the risk of the amount of the claim, or part of it, being dissipated or otherwise put out of the plaintiff's reach before the resolution of the dispute".

The court concluded that it had jurisdiction to grant a Mareva injunction in support of a domestic arbitration carried out in Hong Kong, both under article 9 MAL and s. 14(6) of the Arbitration Ordinance which were identical in regard to domestic arbitration.

Case 40: MAL 7; 11(4)

Hong Kong: High Court of Hong Kong (Kaplan J.)

30 July 1992

Pacific International Lines (PTE) Ltd. & Another v. Tsinlien Metals and Minerals Co. Ltd.

Published in English: 1992, Hong Kong Law Digest, G5; International Arbitration Report, Vol. 7, 1992, 9; excerpts of judgement in The Arbitration and Dispute Resolution Law Journal, Part 4, December 1992, 240; and in [1993] 2 Hong Kong Law Reports (HKLR), 249.

Reported on in English: [1992] The Arbitration and Dispute Resolution Law Journal (ADRLJ) 235, [1992] ADRLJ 240, [1993] ADRLJ 100 and [1994] ADRLJ 49, 295, 307, 291, 290, 298.

Summarized and commented on by Kaplan, Spruce and Moser in Hong Kong and China Arbitration, Cases and Materials, Butterworths, 1994; commented on by Kaplan in Asia LawJanuary/February 1995, 23.

(Abstract prepared by Kaplan J.)

The plaintiff, owner and manager of a vessel which was chartered to the defendant, sought payment of damages for breach of the charter-party with the defendant. When the defendant failed to pay, the plaintiff appointed an arbitrator pursuant to an arbitration clause contained in the charter-party. The defendant failed to appoint a second arbitrator and the plaintiff applied in accordance with article 11(4) MAL for the court to appoint a second arbitrator.

Although the charter-party was not signed by both parties, the court found that there was a charter-party between the plaintiff and the defendant, since there was no doubt from the facts and the pre-voyage communications that the defendant had chartered the vessel of the plaintiff and had paid also certain sums to the plaintiff in accordance with that charter-party. The court concluded that article 7 MAL requiring a written agreement to arbitrate had been complied with and gave the defendant seven days to appoint a second arbitrator, otherwise the court was to appoint him.

Case 41: MAL 8(1)

Hong Kong: High Court of Hong Kong (Barnett J.)

24 September 1992

Guangdong Agriculture Company Limited v. Conagra International (Far East) Limited

Published in English: (1993) 1, Hong Kong Law Reports and 1992, Hong Kong Law Digest, H11. Excerpts of judgement published in The Arbitration and Dispute Resolution Law Journal, Part 2, June 1993, 100

Reported on in English: [1992] The Arbitration and Dispute Resolution Law Journal (ADRLJ) 235, [1992] ADRLJ 240, [1993] ADRLJ 100 and [1994] ADRLJ 49, 295, 307, 291, 290, 298

Commented on by Kaplan in Asia LawJanuary/February 1995, 23.

(Abstract prepared by Kaplan J.)

The plaintiff sought a summary judgement for damages for short delivery of a shipment of urea. The defendant applied for a stay of the action pending arbitration on the grounds that the agreement with the plaintiff contained an arbitration clause providing that "... In case no settlement can be reached, the case under dispute can then be submitted to the chartered loss adjuster for arbitration ... The arbitration shall take place in Hong Kong and shall take place in accordance with the rules of Hong Kong ...".

The court found that there was a binding arbitration agreement, since all article 8 MAL required was that the parties plainly agreed to settle any dispute by arbitration.

The court also found that this case involved a real dispute that could be referred to arbitration as required by s. 6A(1) of the Arbitration Ordinance, but not by article 8 MAL. The words " ... or that there is not in fact any dispute between the parties with regard to the matter agreed to be referred ...", omitted from article 8(1) MAL but contained in section 6A(1) of the Arbitration Ordinance, made it clear that under the Arbitration Ordinance only where it was readily and immediately demonstrable that a claim has not been admitted by the party against whom it is made, the matter should be referred to arbitration. The court granted a stay of proceedings.

Case 42: MAL 9

Hong Kong: High Court of Hong Kong (Barnett, J.)

2 March 1992

Interbulk (Hong Kong) Ltd. v. Safe Rich Industries Ltd.

Published in English: (1992) 2 Hong Kong Law Reports, 185 and 1992 Hong Kong Law Digest, C7

(Abstract prepared by the Secretariat)

The plaintiff, shipowner, obtained an injunction against the defendant, charterer. The charter-party contained a clause providing for arbitration in England under English law. The defendant sought to have the injunction set aside.

The court held that, pursuant to s. 14(6) of the Arbitration Ordinance, Hong Kong courts had no jurisdiction to grant interim relief, in cases where there was a valid arbitration agreement providing for arbitration elsewhere than in Hong Kong.

The court noted that under article 9 MAL the courts of Hong Kong were empowered to grant an "interim measure of protection" to a party to an arbitration to which MAL applied. The court recognized that it was "... at least open to argument" that a court of a state that had adopted MAL might be more ready to assist a party to an international arbitration agreement, notwithstanding the fact that the arbitration had its seat elsewhere.

Case 43: MAL 7(2) MAL

Hong Kong: High Court of Hong Kong (Mayo J.)

8 September 1992

Hissan Trading Co. Ltd. v. Orkin Shipping Corporation

Published in English: 1992, Hong Kong Law Digest, H8

Summarized and commented on by Kaplan, Spruce and Moser in Hong Kong and China Arbitration, Cases and Materials, Butterworths, 1994; commented on by Kaplan in Asia LawJanuary/February 1995, 23.

(Abstract prepared by Kaplan J.)

The plaintiff, sub-charterer, filed an action against the defendant, ship-owner, for loss of cargo occasioned by the vessel's sinking. The claim was made under a bill of lading subject to Japanese law, which incorporated the arbitration clause of a charter-party to which neither the plaintiff nor the defendant were parties. The bill of lading itself contained an exclusive jurisdiction clause in favour of the Tokyo District Court. At the commencement of the action the plaintiff obtained an injunction against the defendant with regard to the proceeds of the insurance policy on the vessel.

The defendant applied for a stay of court proceedings on the ground of the arbitration clause, alternatively on the basis of the exclusive jurisdiction clause, contained in the bill of lading. The defendant also sought to have the injunction set aside.

The court found that, since the bill of lading was not signed by both parties, there was no written agreement to arbitrate contained in a document signed by both parties, as required by article 7(2) MAL. The correspondence between the parties was held to be insufficient as article 7(2) MAL precluded the adoption of memoranda being relied upon, which were issued after the conclusion of the agreement to arbitrate [see, however, A/CN.9/SER.C/ABSTRACTS/2, case 44]. In addition, the court could not apply the relevant arbitration clause, even if it were a written agreement in the meaning of article 7(2) MAL, since it was not clear whether the parties had agreed to resolve their disputes through arbitration or through court proceedings before the Tokyo District Court. In order to apply the arbitration clause the court would have to manipulate the language of the agreement of the parties in a substantial and, thus, impermissible way. The court dismissed the application for a stay of proceedings.

The court dismissed also the defendant's application to have the injunction set aside. The court held that there was sufficient evidence that the main asset of the defendants, the proceeds of the insurance policy on the vessel, might be dissipated, as the defendant was a one-ship-owning Panamanian company which was unlikely to continue trading after the vessel had sunk.

Case 44: MAL 7(2); 8

Hong Kong: High Court of Hong Kong (Kaplan J.)

17 February 1993

William Company v. Chu Kong Agency Co. Ltd. and Guangzhou Ocean Shipping Company

Published in English: 1993, Hong Kong Law Digest, B7

Summarized and commented on by Kaplan, Spruce and Moser in Hong Kong and China Arbitration, Cases and Materials, Butterworths, 1994; commented on by Kaplan in Asia LawJanuary/February 1995, 23.

(Abstract prepared by the Secretariat)

The plaintiff filed a suit against the defendants requesting damages for loss and damage to its cargo carried under a bill of lading issued by the first defendant in Hong Kong. The bill of lading, which was subject to the Hague-Visby Rules, contained an arbitration clause providing for arbitration in China under Chinese law and an exclusive jurisdiction clause in favour of Chinese courts.

The defendants sought a stay of proceedings in favour of arbitration in China, alternatively a stay on the grounds of the Chinese exclusive jurisdiction clause and/or on the grounds of forum non conveniens.

The court found that the arbitration clause constituted a valid written agreement to arbitrate. Declining to follow a previous High Court decision to the contrary, namely Hissan Trading Co Ltd. v. Orkin Shipping Corporation [see A/CN.9/SER.C/ABSTRACTS/2, case 43], the court held that, although the bill of lading was not signed by both parties and the arbitration clause contained therein could not be said to be a written agreement to arbitrate in the sense of article 7(2) MAL, material addressed by one party to the other after the conclusion of the agreement to arbitrate could provide a record of the agreement to arbitrate. In this case it was shown conclusively through the presentation of such material that the parties had agreed on arbitration in China.

As the bill of lading contained both an arbitration and an exclusive jurisdiction clause, the court addressed the question whether the arbitration clause was void. It was held that the claimant had a choice, either to seek arbitration or litigation in China. As the plaintiff opted for a method of dispute resolution not foreseen in the bill of lading, namely litigation in Hong Kong, it was open to the defendants to exercise that choice. By applying for a stay of proceedings pursuant to article 8 MAL, the defendants opted for arbitration in China. The court granted the stay of proceedings.

Case 57: MAL 8

Hong Kong: High Court of Hong Kong (Kaplan J.)

5 May 1993

Lucky-Goldstar International (H.K.) Limited v. Ng Moo Kee Engineering Limited

Excerpts published in [1993] 2 Hong Kong Law Reports (HKLR), 73

Reported on in English: [1992] The Arbitration and Dispute Resolution Law Journal (ADRLJ) 235, [1992] ADRLJ 240, [1993] ADRLJ 100 and [1994] ADRLJ 49, 295, 307, 291, 290, 298

Summarized and commented on by Kaplan, Spruce and Moser in Hong Kong and China Arbitration, Cases and Materials, Butterworths, 1994.

(Abstract prepared by the Secretariat)

The plaintiff, a Hong Kong company and subsidiary of a Korean company, sold sets of elevators to the defendant, a Hong Kong company. The contract contained an arbitration clause which provided for arbitration in a "3rd country, under the rule of the 3rd country and in accordance with the rules of procedure of the International Commercial Arbitration Association".

The plaintiff sued for damages in the Hong Kong courts and the defendant sought a stay of the proceedings pursuant to article 8 MAL.

The plaintiff argued that the arbitration agreement should be considered null since it referred by mistake to an unspecified third country, or inoperative since it referred to a non-existent organization and non-existent rules.

The court found that the arbitration clause sufficiently indicated the parties' intention to arbitrate. It held that the reference to an unspecified third country, to a non-existent organization and non-existent rules did not render the arbitration agreement inoperative or incapable of being performed since arbitration could be held in any country other than the countries where the parties had their places of business and under the law of the place of arbitration, which could be chosen by the plaintiff. The court granted the stay of proceedings sought by the defendant and ordered the plaintiff to pay the costs of the proceedings.

Case 58: MAL 1(3)(b)(ii)

Hong Kong: High Court of Hong Kong (Kaplan J.)

22 June and 12 July 1993; appeal pending

Ananda Non-Ferrous Metals Ltd. v. China Resources Metal and Minerals Co. Ltd.

Excerpts published in [1993] 2 Hong Kong Law Reports (HKLR), 348

(Abstract prepared by the Secretariat)

The plaintiff, a Hong Kong company, agreed to sell to the defendant, also a Hong Kong company, 40 metric tonnes of cadmium c.i.f. Rotterdam. Upon arrival in Rotterdam, the goods were inspected and the defendant contended that they did not comply with the description contained in the contract. The issue was submitted to arbitration and the arbitral tribunal in an interim award found in favour of the defendant. The plaintiff sought leave from the court to appeal against that interim award. The defendant argued that an international arbitration was involved, to which MAL applied, and that under MAL there was no right to appeal. It was agreed that the court should first deal with the issue whether it had jurisdiction depending on whether a domestic or international arbitration was involved. The plaintiff argued that the arbitration was domestic since both parties were Hong Kong companies and that, even if it were international, the defendant was estopped from raising that defence or had waived such a defence since the circumstances and the conduct of the parties indicated that a domestic arbitration was involved.

The court, applying article 1(3)(b)(ii) MAL and citing its ruling on Fung Sang Trading Limited etc. (case 20), held that an international arbitration was involved since a substantial part of the obligations of the commercial relationship was to be performed outside Hong Kong. It was found that the documents submitted by the plaintiff and the circumstances did not indicate that the parties had agreed to opt into the domestic regime. It was also found that the defendant was not estopped from raising the defence that an international arbitration was involved since there was no representation by the defendant on which the plaintiff might have acted to its detriment; nor did the defendant waive such defence since the fact that the arbitration was international was never an issue in the arbitration proceedings and the defendant could not have waived a right of which it was not aware. The court dismissed the application.

Case 59: MAL 11(4)(a)

Hong Kong: High Court of Hong Kong (Leonard J.)

28 September 1993

China Ocean Shipping Company v. Mitrans Maritime Panama S.A.

Original in English

Unpublished

(Abstract prepared by the Secretariat)

The defendant failed to appoint an arbitrator and the plaintiff sought the appointment of an arbitrator by the court on behalf of the defendant pursuant to article 11(4)(a) MAL. One day before the hearing the defendant indicated its willingness to consent to the appointment of an arbitrator by the court, provided that each party would bear its share of the costs of the proceedings. The plaintiff, who had some difficulty in getting the matter before the court because of problems concerning service of documents, rejected the defendant's offer and asked the court to appoint an arbitrator and order that the defendant pay the costs of the proceedings.

The court found that the defendant had failed to honour its obligation under the arbitration agreement and appoint an arbitrator and that the defendant's conduct was such that it was proper that the plaintiff should be placed in a position in which it would have been if the defendant had honoured its obligation. The court ordered the defendant to pay the costs of the plaintiff occasioned by the application for the appointment of an arbitrator by the court on behalf of the defendant.

Case 60

Hong Kong: High Court of Hong Kong (Kaplan J.)

6 October 1993

Safond Shipping Sdn. Bhd. v. East Asia Sawmill Corp.

Original in English

Excerpts published in English: [1993] 1 Hong Kong Law Digest J 11.

Reported on in English: [1992] The Arbitration and Dispute Resolution Law Journal (ADRLJ) 235, [1992] ADRLJ 240, [1993] ADRLJ 100 and [1994] ADRLJ 49, 295, 307, 291, 290, 298

(Abstract prepared by the Secretariat)

The plaintiff had a claim for demurrage against the defendant on the basis of a charterparty containing an arbitration clause which provided for arbitration in Hong Kong under English law and that each party would nominate one arbitrator. The plaintiff informed the defendant about the appointment of an arbitrator and invited the defendant to appoint its arbitrator. The defendant did not respond. The plaintiff then sought the appointment of an arbitrator by the court on behalf of the defendant pursuant to article 11 MAL. The court granted the plaintiff leave to serve out of the jurisdiction of the court and process was served, but the defendant again did not respond.

The court found that the defendant's conduct, which reflected what was becoming a standard pattern in claims before Hong Kong courts arising usually out of charterparties or contracts for the international sale of goods, involved cost and delay and as such was contrary to the spirit of arbitration which seeks to resolve a dispute quickly and economically. It was held that such conduct constituted a flagrant breach of the contractual obligation to arbitrate and an unacceptable defiance of the court proceedings, which caused delay and expense. The court appointed an arbitrator and ordered the defendant to pay the plaintiff's costs.

Case 61: MAL 8

Hong Kong: High Court of Hong Kong (Kaplan J.)

21 January 1994

Zhan Jiang E & T Dev Area Service Head Co. v. An Hau Company Limited

Original in English

Unpublished

Reported on in English: [1992] The Arbitration and Dispute Resolution Law Journal (ADRLJ) 235, [1992] ADRLJ 240, [1993] ADRLJ 100 and [1994] ADRLJ 49, 295, 307, 291, 290, 298

(Abstract prepared by the Secretariat)

The plaintiff sued for damages on the ground that the defendant failed to deliver a shipment of wire rods. The defendant requested a stay of the proceedings pursuant to article 8 MAL.

The plaintiff argued that there was no dispute to be referred to arbitration since the defendant in a letter addressed to the plaintiff had admitted liability and offered to compensate the plaintiff. The defendant denied that this letter could be construed as a sufficient admission of liability to justify refusing the stay and argued that it was unable to deliver the wire rods because it could not accept a condition set unilaterally by the plaintiff after the conclusion of the contract that the defendant submit a performance bond.

The court found that the letter referred to by the plaintiff did not constitute an unequivocal admission of liability but was merely a commercial offer to settle. Even if the letter were accepted as an admission of liability, it could clearly not be construed as an admission of the quantum of the claim. The court held that there was a dispute in the sense of article 8 MAL and granted the stay of the proceedings sought by the defendant.

Case 62: MAL 7(2); 11

Hong Kong: High Court of Hong Kong (Kaplan J.)

2 February 1994

Oonc Lines Limited v. Sino-American Trade Advancement Co. Ltd.

Original in English

Unpublished

Reported on in English: [1992] The Arbitration and Dispute Resolution Law Journal (ADRLJ) 235, [1992] ADRLJ 240, [1993] ADRLJ 100 and [1994] ADRLJ 49, 295, 307, 291, 290, 298

Commented on by Kaplan in Asia LawJanuary/February 1995, 23.

(Abstract prepared by the Secretariat)

The plaintiff requested the court to appoint an arbitrator on behalf of the defendant pursuant to article 11 MAL. The defendant objected on the ground that article 7(2) MAL was not complied with since the defendant never signed the charterparty which contained in a rider the arbitration agreement invoked by the plaintiff.

The court found that, although the charterparty was not signed by either party, a number of communications exchanged between the parties provided a sufficient record in writing of their agreement to arbitrate. The court appointed an arbitrator on behalf of the defendant.

Case 63: MAL 8

Hong Kong: High Court of Hong Kong (Kaplan J.)

31 March 1994

Joong and Shipping Co. Limited v. Choi Chong-sick (alias Choi Chong-sik) and Chu Ghin Ho trading as Chang Ho Company

Original in English

Unpublished

Reported on in English: [1992] The Arbitration and Dispute Resolution Law Journal (ADRLJ) 235, [1992] ADRLJ 240, [1993] ADRLJ 100 and [1994] ADRLJ 49, 295, 307, 291, 290, 298

(Abstract prepared by the Secretariat)

The plaintiff sought summary judgement against the defendant for a claim for freight and demurrage, which the defendant had admitted in correspondence with the plaintiff. The defendant requested a stay of proceedings and requested that the matter be submitted to arbitration pursuant to article 8 MAL.

The court, citing its decisions in Guangdong Agriculture Co. Ltd etc. (case 41) and on Zhan Jiang & T. Dev Area Service Head Co. etc. (case 61), found that article 8 MAL was predicated upon the existence of a dispute and that in the present case there was no dispute that could be referred to arbitration since the defendant had admitted the plaintiff's claim unequivocally both as to liability and quantum. The court dismissed the application for a stay and granted the plaintiff a summary judgement for the sum claimed.

Case 64: MAL 7

Hong Kong: High Court of Hong Kong (Kaplan J.)

13 May 1994

H. Small Limited v. Goldroyce Garment Limited

Original in English

Unpublished

Reported on in English: [1992] The Arbitration and Dispute Resolution Law Journal (ADRLJ) 235, [1992] ADRLJ 240, [1993] ADRLJ 100 and [1994] ADRLJ 49, 295, 307, 291, 290, 298

Commented on by Kaplan in Asia LawJanuary/February 1995, 23.

(Abstract prepared by the Secretariat)

The plaintiff, who had previous dealings with the defendant, sent to the defendant a purchase order, which, in its general conditions, contained an arbitration clause. The goods were delivered and a dispute arose as to their quality. The defendant made an offer for compensation. The plaintiff rejected it and sought the appointment of an arbitrator by the court on behalf of the defendant pursuant to s. 12 of the Hong Kong Arbitration Ordinance, on the ground that the defendant failed to appoint an arbitrator.

The plaintiff was not able to produce a copy of the purchase order signed by the defendant but stated that a former employee of the defendant told them that the defendant had signed the purchase order and had kept the signed copy. The plaintiff argued that the evidence met the threshold of article 7 MAL requiring an arbitration agreement in writing. The plaintiff further argued that it was clearly beyond doubt that a contract existed between the parties and that the contract contained an arbitration clause.

The court, citing its ruling on Pacific International Lines etc. (case 40), found that the evidence produced by the plaintiff was hearsay, which, in the absence of a testimony from the former employee of the defendant, could not be held to meet the threshold of article 7 MAL. As to the second argument of the plaintiff, the court held that the arbitration agreement was separable from the contract of the parties and its existence could not be assumed on the basis of the conduct of the parties, but had to be either in a writing signed by the parties or in another document which provides a record of the agreement. The court decided in favour of the defendant and dismissed the plaintiff's application.

Case 65: MAL 8(1)

Canada: British Columbia Supreme Court (Mackoff J.)

28 November 1988

ODC Exhibit Systems Ltd. v. Lee, Expand International et al.

Published in English: 41 Business Law Reports, 286

The plaintiff, a British Columbia company, claimed damages from the defendants, including a former general manager of the plaintiff and Expand International, a Swedish company which was the exclusive agent of the plaintiff in Canada, on the ground that they had conspired, deceived and defrauded the plaintiff with a view to terminating the exclusive agency agreement between the plaintiff and Expand International and giving it to the former general manager of the plaintiff. The defendant argued that the court did not have jurisdiction since a breach of contract committed in Sweden was involved and, alternatively, requested a stay of proceedings under s. 8 of the International Commercial Arbitration Act (ICAA, art. 8 MAL) on the basis of an agreement, reached with the plaintiff after the dispute arose, containing an arbitration clause, which provided that "... any dispute arising out of this agreement shall be settled by arbitration ...".

The court found that the plaintiff's action was founded on tort committed in Canada and thus established its jurisdiction. It was found that conspiracy, deceit and fraud were not matters arising out of "this agreement". It was also found that these torts could not have been agreed or even contemplated by the parties as matters that could be settled by arbitration since they were committed before the conclusion of the arbitration agreement. It was thus held that the basic condition precedent for the granting of a stay of proceedings under s. 8, namely that the court action must relate to a matter agreed to be arbitrated, was not met. The court dismissed the defendant's application for a stay of the proceedings.

Case 66: MAL 8

Canada: Superior Court of Quebec (Moisan J.)

14 March 1989

Jean Charbonneau v. Les Industries A.C. Davie Inc. et. al.

Published in French: Recueil de Jurisprudence du Québec 1989, 1255

The plaintiff sued for damages caused by the delay in the delivery of a fishing boat, which one of the defendants was to construct and the other, the Minister of Agriculture, to partly finance. The defendants sought a stay of proceedings pursuant to s. 8 of the International Arbitration Arbitration Act (art. 8 MAL) on the ground that the construction contract contained an arbitration clause.

The court found that under the arbitration agreement the Minister of Agriculture was to arbitrate any dispute arising between the parties. It was held that the arbitration clause was inoperative on the ground that the Minister of Agriculture could not act as an impartial arbitrator being a party to the contract. The court dismissed the defendant's application for a stay of the proceedings.

Case 67: MAL 36(1)(a)(ii)

Canada: Saskatchewan Court of Appeal (Vancise, Wakeling and Gerwing JJ.A.)

17 September 1991

AAMCO Transmissions Inc. v. Kunz

Published in English: 97 Saskatchewan Reports, 5

The appellant terminated a franchise agreement with the respondent citing as reasons, inter alia, the respondent's failure to file business reports and to pay fees with the result that its indebtedness to the appellant had continued to increase at a rapid rate. The matter was submitted to arbitration in the U.S. pursuant to an arbitration clause, which however, contained a proviso excluding from arbitration matters arising from "... termination by AAMCO which is based in whole or in part upon the fraudulent acts of Franchisees or Franchisee's failure to deal honestly and fairly with any customer or Franchisees's failure to accurately report his gross receipts to AAMCO ...". The arbitral tribunal found in favour of the appellant, who subsequently sought to have the award recognized and declared enforceable by the courts in Canada.

The court of first instance refused to recognize the arbitral award. On appeal, at issue was whether the award dealt with a matter "not contemplated by or not falling within the terms of the submission to arbitration", or whether it contained "decisions on matters beyond the scope of the submission to arbitration" (article 36(1)(a)(ii) MAL). The appellant argued that the proviso mentioned above should be interpreted narrowly so as to cover only fraudulent or quasi-fraudulent actions and not termination for failure of the franchisee to file reports. The respondent argued that the dispute dealt with a matter which clearly was not contemplated by the parties or did not fall within the arbitration agreement.

The appellate court found that the failure of the respondent to file business reports was explicitly mentioned in the arbitration clause as a non-arbitrable matter and dismissed the appeal upholding the decision of the court of first instance.

Case 68: MAL 9; 27

Canada: Federal Court of Canada, Trial Division (Denault J.)

3 December 1993

Delphi Petroleum Inc. v. Derin Shipping and Training Ltd.

Original in English and French

Unpublished

The plaintiff, a charterer, had a dispute with the defendant, a shipowner, involving freight and demurrage costs. Pursuant to an arbitration clause contained in the charterparty the matter was submitted to a single arbitrator in New York who issued a final award.

The plaintiff, who was not satisfied with the award as far as the claim for demurrage costs was concerned, applied to the court for an interim order in order to secure the evidence of a witness with regard to that claim and a number of additional claims for unjust enrichment, quantum meruitand misrepresentation.

The court referred to the travaux préparatoiresof MAL (A/CN.9/264, article 9, paras. 1 and 4) pursuant to sections 4(2)(b), 5 and 6 of the International Commercial Arbitration Act and found that it had jurisdiction to grant an interim order pursuant to article 9 MAL. The court noted that it had a mandate to render assistance in matters of evidence in arbitration but it should avoid taking measures conducive to dilatory tactics of the parties (A/CN.9/264, article 27, paras. 5-6).

The court dismissed the plaintiff's application on the ground that it did not meet the test of rule 466.3(3)(a) of the Federal Rules of Procedure that the witness whose testimony is sought "may have information on an issue in the action" since the issue of demurrage had been decided upon by the arbitrator and the court was not satisfied that the evidence before it demonstrated that the witness had any information on the other issues raised in the application.

Case 69: MAL 8(1)

Canada: Ontario Court of Justice, General Division (Blair J.)

24 January 1994

Onex Corp. v. Ball Corp.

Original in English

Unpublished

A dispute arose between the plaintiff and the defendant as to whether the plaintiff had the right under their joint venture agreement to acquire the defendant's share in the joint venture. The parties agreed that the matter should be submitted to arbitration pursuant to an arbitration clause contained in their agreement. However, the plaintiff sought from the court to rectify a provision of the agreement or, alternatively, to declare that provision void on the ground that it contained a drafting mistake and did not actually reflect the parties' agreement. The defendant sought a stay of proceedings and submission of the whole dispute to arbitration.

The court found that the issue whether the arbitral tribunal had the power to rectify the parties' written agreement was a matter of interpretation of the arbitration agreement. It was held that, while the expression arising "under" or "in relation to the construction" of the agreement contained in the arbitration clause was not as broad as the expression "all disputes arising in connection with", which was held by courts to be sufficient to cover the equitable remedy of rectification, it was broad enough to cover rectification of the agreement. The court, citing its decision on Gulf Canada etc. (case 31) noted that in doubt the arbitration clause should be interpreted in a manner that would be conducive to arbitration. The court granted a stay of the proceedings and referred the matter to arbitration.

Case 70: MAL 8

Canada: Federal Court of Appeal (Mahoney, MacGuigan and Linden, JJ.A.)

10 February 1994

Nanisivik Mines Ltd. and Zinc Corporation of America v. Canarctic Shipping Co. Ltd.

Original in English and French

Full text published in English: The Arbitration and Dispute Resolution Law Journal, 1996, 6, 117

The case involved an appeal against the decision of the court of first instance (case 36).

There were three issues involved: first, whether the first instance court had discretion as to referring the claim against Canarctic to arbitration and whether it erred in exercising that discretion; second, if the court had no discretion to refer the matter to arbitration, whether it had discretion as to staying the proceedings and whether it erred in the exercise of its discretion; and third, whether, in any event, the court erred in referring the claim of Zinc Corp. to arbitration and, if so, in staying the proceedings in the action by it.

As to the first issue, which was before the Court of Appeal for the first time, the Court of Appeal upheld the decision of the court of first instance that if the conditions of article 8 MAL are met, namely if an arbitration agreement is in writing, is not null and void or inoperative or incapable of performance, the court, if asked by a party, has no discretion but is obliged to refer the matter to arbitration ("shall" in article 8 MAL clearly means "must", not "may").

As to the second issue, the Court of Appeal noted that there were two approaches followed by courts with regard to a stay of proceedings after a mandatory reference has been made. In some cases, courts held that the reference to arbitration is mandatory pursuant to article 8 MAL, but with regard to the stay of the proceedings the courts have a residual "permissive" jurisdiction under section 50 of the Federal Court Act to grant a discretionary stay unless there are "strong reasons" not to (case 15). In other cases, it was held that reference of a matter to arbitration pursuant to article 8 MAL left the courts no discretion but to stay the proceedings (case 9). The Court of Appeal found that the same policy considerations existing in favour of a mandatory legislative requirement that a dispute subject to an arbitration agreement be referred to arbitration seem to be conclusively in favour of the staying of litigation of the same issues until the issuance of an arbitral award. Thus the Court of Appeal, overturning the decision of the court of first instance, held that once a reference to arbitration had been made, there was no residual discretion in the court to refuse to stay the proceedings between the parties to arbitration even though there may be particular issues between them that are not subject to arbitration.

As to the third issue, the Court of Appeal found that Zinc Corp. was a party to the bill of lading but not to the charterparty out of which the present dispute arose. It was held that the arbitration clause of the charterparty, incorporated in the bill of lading by general reference to the terms and conditions of the charterparty, did not bind the parties to the bill of lading. It was noted that that result could only be achieved by an arbitration clause in a charterparty which expressly provided that it applied to disputes arising in connection with bills of lading that incorporated generally the terms of the charterparty without specific reference to the arbitration clause, or by way of a provision in the bill of lading incorporating the terms and conditions of the charterparty including, by specific reference, its arbitration clause. The Court of Appeal overturned the decision of the court of first instance with regard to the reference of the claim of Zinc Corp. to arbitration on the ground that Zinc. Corp. was not bound by the arbitration clause contained in the charterparty, but upheld that decision with regard to the stay of proceedings holding that under section 50(1)(b) of the Federal Court Act the court had discretion to stay the litigation of the claim of Zinc Corp. against Canarctic pending arbitration of Nanisivik's claim.

Case 71: MAL 9

Canada: British Columbia Supreme Court (Bouck J.)

25 February 1994

Trade Fortune Inc. v. Amagalmated Mill Supplies Ltd.

Original in English

Full text published in English: The Arbitration and Dispute Resolution Law Journal, 1996, 6, 132

The plaintiff, a Greek shipowner, claimed payment of demurrage costs on the ground that the defendant, a Canadian charterer, was responsible for a delay in unloading a cargo in Korea. The plaintiff sought and obtained an interim court order designed to secure funds for payment of the claim upon issue of a final decision. The defendant paid into court the full amount of the claim, but sought that the matter be referred to arbitration in London pursuant to an arbitration clause contained in the charterparty, litigation be stayed and the interim order be set aside. The plaintiff agreed to the reference to arbitration and stay of proceedings but objected to the setting aside of the interim court order.

There were two main issues; first, whether interim measures of protection that could be taken by courts (article 9 MAL) included the interim order granted in the present case or whether such an order could be granted only by the arbitral tribunal dealing with the substance of the dispute (article 17 MAL); and second, whether staying the procedures had the effect of setting aside the interim order. On the first issue, the court, referring to the travaux préparatoires of MAL, held that interim court orders designed to protect the applicant from the risk of being unable to enforce a final arbitral award were not incompatible with arbitration (article 9 MAL). The application of the defendant to set aside the interim court order was thus dismissed. On the second issue, the court found that staying the proceedings would not set aside the interim order since the original claim of the plaintiff would not merge into the arbitration award and the plaintiff was thus not prevented from pursuing its claim until it was paid in full. The court ordered a stay of proceedings and dismissed the application of the defendant to set aside the interim court order.

Case 72: MAL 8(1)

Canada: Federal Court of Canada, Trial Division (Strayer J.)

22 March 1994

Continental Resources Inc. v. East Asiatic Co. (Canada) et al.

Original in English and French

Unpublished

A dispute arose out of a charterparty for loss of cargo, and the plaintiff sued the defendants

in court. The defendants requested that the matter be referred to arbitration since the charterparty contained an arbitration clause and sought a stay of the proceedings pursuant to article 8 (1) MAL. The plaintiff argued that the arbitration clause did not preclude the continuance of litigation since the plaintiff had a claim, based on a bill of lading, against the ship and the shipowners, who were not bound by the arbitration clause contained in the charterparty since they were not parties to to the charterparty. The defendant argued that the bill of lading incorporated the terms and conditions of the charterparty, including the arbitration clause, by general reference.

The court held that it was bound to submit the matter to arbitration since the dispute was within the scope of the arbitration agreement and the defendant had not filed its first statement of defence on the substance of the dispute (article 8(1) MAL). The court exercising its discretion under section 50 of the Federal Court Act granted a stay of the proceedings. It was noted that the criteria followed by the court in exercising its discretion included the likelihood of injustice to the defendant if the action proceeded and the unlikelihood of injustice to the plaintiff if it did not. It was also noted that, even if the plaintiff had a claim in tort not covered by the arbitration agreement, the court could still exercise its discretion and grant a stay of proceedings pending arbitration, and the plaintiff could seek the stay to be lifted if after arbitration it still had a claim.

Case 73: MAL 8(1)

Canada: Ontario Court of Appeal (Morden, Blair and Austin JJ.A.)

25 April 1994

Automatic Systems Inc. v. Bracknell Corp. (Canal Contractors) and Chrysler Canada Ltd.

Original in English

Unpublished

Automatic, a Missouri company, entered into a contract with Chrysler to supply and install a conveyor system at the Chrysler plant in Ontario. Automatic subcontracted part of the work to Bracknell, an Ontario company. The subcontract contained an arbitration clause providing for arbitration in Missouri under Missouri law. Bracknell, which had a lien claim under the Ontario Construction Lien Act against Automatic, sought and obtained a lien certificate and had it registered against the title to Chrysler's land in Ontario. Automatic sued Bracknell for damages and sought a stay of the proceedings and submission of the matter to arbitration. Bracknell declined to arbitrate and Automatic applied to the court for an order referring the matter to arbitration and staying the proceedings.

The court of first instance found that an agreement for international arbitration for an Ontario lien claim was unenforceable since the Ontario Construction Lien Act made provision only for domestic arbitration and dismissed the application of Automatic.

The appellate court found that, having regard to international comity and the strong commitment of the Ontario legislator in support of international arbitration demonstrated through the adoption of MAL, only very clear language in a statute could preclude international arbitration. The appellate court overturned the decision of the court of the first instance on the ground that the Ontario Construction Lien Act by providing only for domestic arbitration did not clearly and expressly preclude international arbitration. The court, without commenting in detail, drew a distinction between the present case and BWV Investments Ltd etc. (case 28; appeal pending) in several respects, including that in the present case the lien had been lifted since Automatic had deposited with the court a letter of credit in the amount of the lien claim and that there were no other lien claimants.

Case 74: MAL 8(1)

Canada: Ontario Court of Appeal (Morden, Blair and Austin JJ.A.)

25 April 1994

Automatic Systems Inc. v. E.S. Fox Ltd. and Chrysler Canada Ltd.

Original in English

Unpublished

Fox was another subcontractor of Automatic (case 73). Unlike the previous case, in the present case the parties disagreed as to whether there was an agreement to arbitrate and the court of first instance did not find it necessary to decide that matter, in view of its decision that at any rate an agreement for international arbitration of an Ontario lien would be unenforceable in Ontario.

The appellate court overturned the decision of the court of first instance and remitted the matter to that court with the question whether there was an agreement to arbitrate between Automatic and Fox and the question of the appropriate relief.

Case 75: MAL 1(3)(b)(ii)

Hong Kong: High Court of Hong Kong (Kaplan J.)

7 July 1994

China Resources Metal and Minerals Co. Ltd. v. Ananda Non-Ferrous Metals Ltd.

Original in English

Unpublished

(Abstract prepared by the Secretariat)

The plaintiff applied to the court ex partefor leave to enforce a final arbitral award against the defendant. The leave was granted subject to the usual stay in order to give the defendant an opportunity to oppose. The defendant requested the court to set the ex parteorder aside on the grounds that the appointment of the arbitrator, or alternatively, the arbitration agreement was void because of mutual mistake on the part of both parties who acted in the belief that the arbitration was a domestic one to which MAL did not apply.

The court dismissed the defendant's application holding that it was res judicata and the defendant was estopped from now raising arguments that were not raised before the same court (case 58) and the Court of Appeal. In any case, the court was convinced that there was no mutual mistake of the parties since, as it had previously held (case 58), the parties did not sufficiently focus on whether the arbitration they agreed upon was a domestic or an international one; and that even if there were a mutual mistake, it would be one of law and not of fact, and one that did not go to the root of the agreement to arbitrate so as to lead to its annulment.

Case 76: MAL 36(1)(a)(iv)

Hong Kong: High Court of Hong Kong (Kaplan J.)

13 July 1994

China Nanhai Oil Joint Service Corporation, Shenzhen Branch v. Gee Tai Holdings Co. Ltd.

Original in English

Unpublished

Reported on in English: [1992] The Arbitration and Dispute Resolution Law Journal (ADRLJ) 235, [1992] ADRLJ 240, [1993] ADRLJ 100 and [1994] ADRLJ 49, 295, 307, 291, 290, 298

(Abstract prepared by the Secretariat)

The plaintiff sought from the court leave to enforce an arbitration award rendered by the Shenzhen Subcommission of the China International Economic and Trade Arbitration Commission (CIETAC). The defendant opposed the enforcement of the award on the grounds that the composition of the arbitral tribunal was not in accordance with the agreement of the parties, which provided for arbitration by CIETAC, Beijing and not CIETAC, Shenzhen (sec. 44(2)(e) of the Hong Kong Arbitration Ordinance, same as article 36(1)(a)(iv) MAL).

The court held that CIETAC, Shenzhen did not have jurisdiction to decide this dispute, because a Chinese court would not allow a Shenzhen arbitrator, who, at the time the dispute was arbitrated, could not arbitrate in Beijing, to decide a case referred to CIETAC, Beijing. However, the court found that the defendant had waived its right to raise the jurisdictional objection since it participated in the Shenzhen arbitration without clearly reserving its right to later object to the award on the grounds that the tribunal lacked jurisdiction. The court declared the award enforceable and held that, even if the defendant had not waived its rights to object on the grounds of lack of jurisdiction, the court would still declare the award enforceable since it was satisfied that the defendant basically obtained what it had agreed to, that is arbitration conducted by three CIETAC arbitrators under CIETAC rules.

Case 77: MAL 1(1) and (3)(a); 5; 9; 27

Hong Kong: High Court of Hong Kong (Kaplan J.)

15 August 1994

Vibroflotation A.G. v. Express Builders Co. Ltd.

Original in English

Unpublished

(Abstract prepared by the Secretariat)

The plaintiff, a sub-subcontractor, appealed against an order of the Master of the court setting aside a subpoena issued by the plaintiff against a third party, the main contractor, for the production of certain documents before the arbitral tribunal (subpoena duces tecum), which was considering the plaintiff's claim against the defendant, sub-contractor, for breach of contract.

The court held that it had jurisdiction to grant subpoenas in order to assist arbitral tribunals in taking evidence on the grounds that an international arbitration covered by MAL was involved since the parties had their places of business in different States (article 1(1) and (3)(a) MAL); and that, while subpoenas could not be characterized as interim measures of protection falling under article 9 MAL, they could be granted under article 27 MAL, if requested by the arbitral tribunal or by a party with the approval of the arbitral tribunal, since the domestic law of Hong Kong provided for subpoenas.

The court was satisfied that in the present case the subpoena had been issued in accordance with article 27 MAL and with the approval of the arbitral tribunal, which was implied by the fact that the tribunal fixed a date for the production of documents that "appeared to be relevant to one of the key issues to this arbitration". The court however dismissed the plaintiff's application on the grounds that it was not timely, since such a subpoena for the production of documents could only be applied for in relation to an evidential hearing and the parties to this arbitration were "months, if not years, away from the main evidential hearing in this arbitration".

Case 78: MAL 7(2)

Hong Kong: High Court of Hong Kong (Kaplan J.)

18 August 1994

Astel-Peiniger Joint Venture v. Argos Engineering & Heavy Industries Co. Ltd.

Original in English

Unpublished

Reported on in English: [1992] The Arbitration and Dispute Resolution Law Journal (ADRLJ) 235, [1992] ADRLJ 240, [1993] ADRLJ 100 and [1994] ADRLJ 49, 295, 307, 291, 290, 298

(Abstract prepared by the Secretariat)

The plaintiff, a sub-subcontractor entrusted with the paint works foreseen in an assembly subcontract concluded between the main contractor and the defendant as a subcontractor, filed a claim in court. At issue was which of them was responsible under the sub-subcontract for the supply and construction of mobile paint sheds. The sub-subcontract was on a "back-to-back-basis" and "proportional" to the subcontract, and the plaintiff was given a copy of the subcontract well before the conclusion of the sub-subcontract, without raising any objections. The defendant sought a stay of the proceedings and referral of the dispute to arbitration on the grounds that the sub-subcontract incorporated by reference the terms and conditions of the subcontract, including an arbitration clause.

The court referred to the travaux préparatoiresof MAL (A/CN.9/264 and A/40/17) and held, contrary to the plaintiff's arguments, that under article 7(2) MAL the document containing the arbitration clause did not have to be between the same parties as the contract into which the arbitration clause was incorporated by reference. The court stayed the proceedings and referred the matter to arbitration, holding that the provision in the sub-subcontract that it would be "back to back" with the subcontract sufficiently demonstrated the intention of the parties to incorporate the arbitration clause into the sub-subcontract; and that the provision that the sub-subcontract should be "proportional" to the subcontract indicated that some modifications would have to be made to the arbitration clause so that it would be capable of being performed in the context of the sub-subcontract.

Case 87: MAL 7(2)

Hong Kong: High Court of Hong Kong (Kaplan J.)

17 November 1994

Gay Constructions PTY Ltd. and Spaceframe Buildings (North Asia) Ltd. v. Caledonian Techmore (Building) Limited and Hanison Construction Co. Ltd. (as a third party)

Original in English

Unpublished

(Abstract prepared by the Secretariat)

Hanison, the main contractor in a construction project, applied as a third party for a stay of court proceedings instituted by Gay Constructions and Spaceframe Buildings, the sub-subcontractors, against Caledonian, the subcontractor. The contract between the plaintiff and the defendant was in writing. It contained an arbitration clause but, while it was signed by Hanison, it was not signed by Caledonian.

At issue was whether the letters exchanged between Hanison and Caledonian provided a record of the contract, including the arbitration clause and whether there is an exchange of a statement of claim and defence in which the existence of the arbitration agreement is alleged and not denied (article 7(2) MAL).

The court held that the letters exchanged between the parties provided a record of their contract in the sense of article 7(2) MAL, despite the fact that no explicit reference was made in the letters to the arbitration clause contained in the contract. In addition, the court found that Caledonian had submitted to Hanison a claim called "contractual claim for loss and expense" on the basis of the contract and held that this claim constituted either a letter or, alternatively, a claim under article 7(2), in which the existence of the arbitration agreement was alleged by Caledonian and not denied by Hanison. The court noted that the phrase "statements of claim and defence" in article 7(2) MAL was not defined and found no reason why it should be interpreted as referring "only to pleadings in the formal sense once an arbitration has commenced". The court stayed the court proceedings under section 6 of the Hong Kong Arbitration Ordinance.

Case 88: MAL 36(1)(a)(ii)

Hong Kong: High Court of Hong Kong (Kaplan J.)

16 December 1994

Nanjing Cereals, Oils and Foodstuffs Import & Export Corporation v. Luckmate Commodities Trading Ltd.

Original in English

Unpublished

(Abstract prepared by the Secretariat)

The plaintiff obtained an arbitration award from the China International Economic and Trade Arbitration Commission (CIETAC) ordering the defendant to pay the purchase price of Peruvian fishmeal, which the defendant had bought from the plaintiff. The defendant failed to pay and the plaintiff applied to the court for leave to enforce the arbitral award.

The court granted leave for enforcement and the defendant requested the court to set aside the leave because it was not given a sufficient opportunity to present its case as to the quantum of the claim (sec. 44 of the Hong Kong Arbitration Ordinance, which is identical to article 36(1)(a)(ii) MAL). The defendant based its argument on the fact that the arbitral tribunal formed its opinion as to the amount of the claim "through independent investigation".

The court found that the defendant had ample opportunity to present its own evidence as to the amount of the claim but failed to do so. It was held that even if there were grounds for the court to set aside the award, it was at the discretion of the court to do so, since MAL provided that enforcement "maybe refused" (emphasis added). The court dismissed the application to set aside the leave for enforcement of the arbitral award.

Case 89: MAL 8

Hong Kong: High Court of Hong Kong (Kaplan J.)

16 December 1994

York Airconditioning & Refrigeration Inc. v. Lam Kwai Hung Trading as North Sea A/C

Elect. Eng. Co.

Original in English

Unpublished

(Abstract prepared by the Secretariat)

The plaintiff, a Hong Kong company, sold to the defendant, a Hong Kong agent of a Chinese company, water cooling machines that were to be installed in Beijing. The contract contained an arbitration clause for arbitration in Beijing under the CIETAC Rules. The defendant paid 30% of the price in Hong Kong, and for the balance a bill of exchange was drawn in Hong Kong on a Hong Kong party and accepted by the defendant. A dispute arose as to the quality of the goods and the defendant failed to honour the bill of exchange upon presentation. The seller sued in Hong Kong. A stay of court proceedings requested by the defendant was not granted by the Master of the court and the defendant appealed.

The court held that under the Chinese law applicable to the sales contract (the law of the place of arbitration), the bill of exchange was to be treated as a separate contract, which was not covered by the arbitration clause contained in the sales contract. In addition, it was held under the Hong Kong law applicable to the bill of exchange that the bill of exchange was a separate contract and a claim on the bill was not covered by the arbitration clause contained in the sales contract. The application for a stay of the court proceedings was dismissed and the claim of the defendant was referred to the appropriate court.

Case 127: MAL 16

The Supreme Court of Bermuda (Meerabux J.)

Skandia International Insurance Company and Mercantile & General Reinsurance Company

and various others

21 January 1994

Original in English

Unpublished

(Abstract prepared by Jeffrey Elkinson)

This case concerns proceedings initiated in the Supreme Court of Bermuda by Skandia International Insurance Company and other insurance companies ("Skandia and others") for an injunction to restrain Al Amana Insurance and Reinsurance Company Limited ("Al Amana") from continuing legal proceedings against Skandia and others in Kuwait.

Skandia and others were reinsurers of Al Amana, a company incorporated under the laws of Bermuda, in respect of real and personal property located in Kuwait and belonging to Alghanim Industries ("Alghanim") and its associated companies. Alghanim sustained extensive property damage in Kuwait during and consequential to the invasion of Kuwait by Iraq in August 1990. Disputes arose as to whether the losses sustained by Alghanim were excluded by virtue of a War Risks Exclusion Clause contained in the reinsurance agreements between Al Amana and Skandia and others.

Al Amana was sued by Alghanim in Kuwait and joined Skandia and others as third parties. Skandia and others argued that the Kuwaiti court had no jurisdiction over them as there were arbitration provisions in the reinsurance agreements with Al Amana. In the meantime, Skandia and others served notices of arbitration on Al Amana and initiated the proceedings in the Supreme Court of Bermuda for an injunction to restrain Al Amana from continuing legal proceedings against them in Kuwait on the ground that there existed an agreement to have their disputes determined by arbitration "at the seat of the defendant party" (i.e., Bermuda).

Al Amana challenged, inter alia , the existence of an arbitration clause in one of the reinsurance agreements. Al Amana argued that article 7(2) MAL requires that, for incorporating an arbitration clause by reference into another document, the reference has to be "such as to make that clause part of the contract." Al Amana submitted that a reference to insurance coverage "as per wording attached" simply incorporated the description of the risks in respect of which reinsurance was effected, but could not incorporate the entirety of the policy and was inadequate to incorporate the arbitration clause contained in another document.

The Supreme Court held that there was prima facie evidence that the arbitration agreement existed and satisfied the requirements of article 7(1) MAL and Article II(2) of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958). The Supreme Court held, under reference to the travaux préparatoires of the MAL, that the contractual documents do not need to make an explicit reference to the arbitration clause and that general words of incorporation suffice under article 7 MAL. The Supreme Court pointed out, however, that, in any event, a challenge to the existence, validity and scope of the arbitration agreement was a matter to be first determined by the arbitral tribunal under article 16(3) MAL. Accordingly, the Supreme Court granted the injunction restraining Al Amana from continuing with the proceedings brought by it against Skandia and others in Kuwait.

Case 128: MAL 8(1)

Hong Kong: Court of Appeal (Nazareth V.P., Bokhary and Liu J.J.A.)

24 November 1995

Tai Hing Cotton Mill Limited v. Glencore Grain Rotterdam B.V. and another

Published in English: [1996] 1 Hong Kong Cases(HKC) 363

(Abstract prepared by Neil Kaplan Q.C.)

Glencore agreed to sell to Tai Hing 1,000 tonnes of raw cotton C&F Hong Kong. The contract provided for arbitration in Liverpool under the Rules of the Liverpool Cotton Association Limited and the contract contained a clause to the effect that the obtaining of an arbitration award should be a condition precedent to the right of either party to start legal proceedings in respect of any arbitrable dispute ("Scott v. Avery-clause").

Disputes arose and the judge granted summary judgement for specific performance of the contract of sale and dismissed Glencore's application for a stay under article 8 (1)MAL.

The Court of Appeal considered whether there were grounds for dismissing the application for stay under article 8(1) MAL, despite the existence of the arbitration agreement. Following Guandong Agriculture v. Conagra International (CLOUT Case 41) and Zhan Jian E&T Dev. Area Service Head Co v. An Hau (CLOUT Case 61), the Court of Appeal held that under article 8(1) MAL "the Court is not concerned with investigating whether the Defendant has an arguable basis for disputing the Claim." The Court of Appeal held further that "if a claim is made against him in a matter which is the subject of an arbitration agreement and he does not admit the claim then there is a dispute within the meaning of the Article."

The Court of Appeal set aside the summary judgement and granted a stay under article 8 (1)MAL.

Case 129: MAL 8(1)

Hong Kong: High Court of Hong Kong (Leonard J.)

19 April 1996

Nassetti Ettore S.p.a. v. Lawton Development Limited

Original in English

Unpublished

(Abstract prepared by the Secretariat)

The plaintiff, an Italian company, sold to the defendant, a Hong Kong company, a production line for the manufacture of granite tiles to be delivered to China. The contract provided for arbitration in Stockholm under the auspices of the Stockholm Swedish International Chamber of Commerce.

Disputes arose and the plaintiff applied for summary judgement for payment of the balance due by the defendant under the contract. The defendant applied for an order that all further proceedings in the action should be stayed pursuant to article 8(1) MAL.

Under reference to Tai Hing Cotton Mill Ltd. v. Glencore Grain Rotterdam B.V. and another (CLOUT Case 128), the court held that under article 8(1) MAL "the Court is not concerned with investigating whether the Defendant has an arguable basis for disputing the Claim." The court also held that "the question is whether there is a dispute between the parties in the ordinary sense of that word" and that there is dispute "unless there is an unequivocal admission of liability and quantum".

The court found that it was the obligation of the court to refer the parties to arbitration and ordered that the proceedings be stayed accordingly.

MAL 146: 18, 34(2)

Russian Federation: Moscow City Court

10 November 1994

Original in Russian

Unpublished

The plaintiff, whose claim in arbitration proceedings had been dismissed, filed an application to have the award set aside on the grounds that in the course of the arbitration proceedings article 18 of the Russian Federation Act on “international commercial arbitration” (corresponding to art. 18 MAL) had been violated in that the parties had not been treated with equality and the award was in conflict with public policy.

The plaintiff argued that the decision to dismiss the claim had been made despite the fact that the defendant partially acknowledged the claim brought against it. In that regard, the court held that such acknowledgement did not constitute grounds for setting aside the award since, in making the award, the arbitrators were not bound by an acknowledgement of the claim.

Since the plaintiff failed to establish that the award was in conflict with public policy, its claim in that respect was found to be unjustified. At the same time, the court noted that a procedural infringement in the arbitral proceedings had no relevance to the notion of “public policy”.

On the basis of the facts presented, the court dismissed the plaintiff's application to set aside the arbitral award.

Case 147: MAL 7(2), 16(1)(3)

Russian Federation: Moscow City Court

13 December 1994

Original in Russian

Unpublished

The plaintiff appealed to the court on the grounds that the arbitral tribunal had found that as no arbitration agreement existed between the the parties, the tribunal had no competence to examine the dispute that had arisen between them.

The court confirmed the right of the arbitral tribunal under article 16(1) MAL to rule on its own jurisdiction. The court found that the question of whether or not a written agreement existed between the parties regarding the procedure for examining disputes had been thoroughly investigated by the arbitral tribunal. The arbitral tribunal had found that at the time of conclusion of the contract, which gave rise to the dispute and which contained an arbitration clause, the person signing the contract on behalf of the defendant did not possess the necessary powers to do so.

On these grounds, the court upheld the ruling of the arbitral tribunal, namely that no arbitration agreement existed in writing between the plaintiff and the defendant.

Case 148: MAL 16(2)(3), 34(2)

Russian Federation: Moscow City Court

Decision on the application to set aside the award made by the Court of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry in case No. 214/1993

10 February 1995

Original in Russian

Unpublished

The plaintiff filed an application to set aside an arbitral award made against it, citing as grounds for doing so the fact that as no arbitration agreement existed between the plaintiff and the defendant, the arbitral tribunal had no jurisdiction to examine the dispute in question. The plaintiff argued that the party signing the contract with the defendant had gone into liquidation as a commercial entity and that the plaintiff was not its legal successor and, hence, not a party to the contract concluded with the defendant which contained the respective arbitration clause. In addition, the plaintiff argued that the contract included an arbitration clause providing for the examination of disputes by the Tribunal of Arbitration at the USSR Chamber of Commerce and Industry, whereas the claim had been brought before the Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry (TICA), which was not competent to examine the dispute in question.

The court noted that article 16(2) and (3) of the Act of the Russian Federation on “international commercial arbitration” (art. 16 MAL) provided that a plea on the grounds that an arbitral tribunal did not have jurisdiction should be raised not later than the submission of the statement of defence. The court held that the plaintiff (respondent in the arbitral proceedings) had presented to the arbitral tribunal its defence against the claim in which it had stated that it was not the legal successor to the party to the contract which had given rise to the claim and could not be a defendant in the action in question. However, the plaintiff made no reference to the lack of jurisdiction of the arbitral tribunal either in its statement of defence or in the subsequent correspondence with the arbitral tribunal, and had not raised any plea regarding the jurisdiction of the arbitral tribunal during the hearing of the case. The court did not concur with the plaintiff's position that its submission in its statement of defence before the arbitral tribunal that it was not the legal successor and did not recognize itself as a party to the contract should be considered an objection to the jurisdiction of the arbitral tribunal. The court found that those references related exclusively to legal succession in respect of disputed legal relationships and to the validity of claims brought by the plaintiff.

The court did not concur with the plaintiff regarding the lack of jurisdiction of the TICA to examine the dispute in question. In that regard, the court noted that under paragraph 4 of the Statutes on the TICA, which was an annex to the Act of the Russian Federation on “international commercial arbitration”, the TICA was the successor to the Tribunal of Arbitration at the USSR Chamber of Commerce and Industry and, in particular, was entitled to settle disputes on the basis of agreement by the parties to refer their disputes to the Tribunal of Arbitration at the USSR Chamber of Commerce and Industry.

The court dismissed the plaintiff's application to set aside the arbitral award.

Case 149: MAL 34(2)

Russian Federation: Moscow City Court

18 September 1995

Original in Russian

Unpublished

The plaintiff, against whom an arbitral award had been made, applied to have the award set aside, arguing that the award was in conflict with the public policy of the Russian Federation, since it obliged the plaintiff (respondent in the arbitral proceedings) to pay the defendant (claimant in the arbitral proceedings) a sum of money in foreign currency whereas the plaintiff did not have a foreign currency account.

The court did not agree that the award made by the arbitral tribunal ordering the Russian plaintiff (respondant) to make the payment in foreign currency was in conflict with the public policy of the Russian Federation, even if the plaintiff did not have foreign currency at its disposal. In that connection, the court noted that, in the enforcement of the award, the competent court had the option of modifying the arrangements and procedures for enforcement.


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