18 May, 2019
Often, parties wish to appeal to the Court if they are dissatisfied with an arbitral award. Sections 5 to 7 of Schedule 2 of the Arbitration Ordinance (Cap. 609) (New AO) together provide a mechanism for seeking leave to appeal to the Court against an arbitral award on a question of law, if the arbitration agreement was entered into before 1 June 2017 or provides expressly that those sections are to apply.[1]
However, the application for leave to appeal must be made promptly, as there is a statutory time limit for doing so. While the time limit is clear, the question of when that time limit starts to run is, however, open to debate.
Under Order 73, rule 5(2) of the Rules of the High Court (Cap.4A) (RHC) (Current O.73 r.5(2)):
“An application for leave to appeal on a question of law arising out of an arbitral award under section 6 of Schedule 2 to the Arbitration Ordinance (Cap. 609) must be made, and the originating summons or summons must be served, within 30 days after the award is delivered and, if there is a correction or interpretation of the award under section 69 of that Ordinance, the period of 30 days runs from the date on which the award with the correction made or interpretation given is delivered.”
At the risk of stating the obvious, the 30-day time limit for making an application for leave to appeal against an arbitral award starts to run when the award is “delivered”. However, when is the award “delivered”?
What do the authorities say?
Before we examine the case authorities on the meaning of “delivered”, it should be noted that the Current O.73 r.5(2) is a product of amendments brought about by paragraph 12 of Schedule 4 in section 112 of Gazette No. 17 of 2010, as a result of the repeal of the old Arbitration Ordinance (Cap.341) (Old AO). The old O.73 r.5(2) before that (Old O.73 r.5(2)) read:
“In the case of an appeal to the Court under section 23(2) of the Arbitration Ordinance (Cap. 341), the summons must be served, and the appeal entered, within 30 days after the award has been made and published to the parties…”
With the above in mind, we can see why the Court referred to the Old O.73 r.5(2) when interpreting the meaning of “delivered” under the Current O.73 r.5(2).
In Po Fat Construction Company Ltd v. The Incorporated Owners of Kin Sang Estate, HCCT 15 of 2013 (6 November 2013), the Plaintiff Contractor sought leave to appeal against an award by Originating Summons, which later had to be amended as it failed to specify the questions of law which the Contractor sought to appeal against. The learned judge inferred that the Plaintiff filed an insufficient Originating Summons because it had to comply with the 30-day time limit, which ran from the date when the award was published by the arbitrator and available for collection (at §§10 and 11).
In arriving at this conclusion, the learned judge stated that she saw no reason why “delivered” under the Current O.73 r.5(2) RHC should be construed differently from “made and published” under the Old O.73 r.5(2) (at §9). Her view was that since “made and published to the parties” has been interpreted by the Court of Appeal in Kwan Lee Construction Co Ltd v. Elevator Parts Engineering Co Ltd CACV 127/1996 (14 November 1996) to mean “when the arbitrator informs the parties that the award has been made and is ready for collection, with or without the prior payment of fees”, “delivered” should be construed accordingly (at §9).
Recently in Buda Pipe Rehab Eng Co Ltd v. CPC Construction Hong Kong Ltd HCCT 69 of 2018 (22 February 2019), this question was briefly revisited by the same learned judge and her view remained unchanged. There, the learned judge concluded that the date on which the award is amended and delivered under the Current O.73 r.5(2) is the day on which the award was “amended and published”, and thus the time limit started to run from that date (at §4).
A case for an alternative interpretation of the Current O.73 r.5(2)
With all due respect to the learned judge’s decisions in Po Fat and Buda Pipe, the meaning of “delivered” under the Current O.73 r.5(2) is arguably different from the meaning of “made and published” under the Old O.73 r.5(2).
Firstly, no reason was given in either Po Fat or Buda Pipe as to why “delivered” under the Current O.73 r.5(2) should have the same meaning as “made and published” under the Old O.73 r.5(2). In Po Fat, the learned judge simply stated that she “saw no reason why” it should be otherwise, while in Buda Pipe she arrived at this conclusion without any explanation.
In fact, there are reasons why “delivered” under the Current O.73 r.5(2) should have a different meaning to “made and published” under the Old O.73 r.5(2):-
(1) Legal language, especially when used in statutory provisions, is precise and should not be changed without good reason. Thus, it is a principle of construction that one should not change the form of words unless one intends to change the meaning: see Hadley v Perks (1866) LR 1 QB 444 at 457. The change from “made and published” to “delivered” must have its underlying reasons.
(2) It should be noted that the words “deliver” and “delivered” also appear in sections 67(1) and 77(1) of the New AO respectively:-
Section 67(1): “… (4) After the award is made, a copy signed by the arbitrators in accordance with paragraph (1) of this article shall be to each”
Section 77(1): “An arbitral tribunal may refuse to deliver an award to the parties unless full payment of the fees and expenses of the tribunal is made.”
It is a usual presumption that a word should bear the same meaning throughout the same legislation: Clarke v. Kato [1998] 1 W.L.R. 1647 at 1659. While the Current O.73 r.5(2) belongs to the RHC rather than the New AO, the former is made to supplement the latter. Hence, the word “delivered” likely refers to the status after the award is handed over to the parties by some physical act, possibly after the payment of the arbitrator’s fees and expenses, rather than having the same meaning as “made and published” under the Old O.73 r.5(2).
(3) The intention behind the use of the word “delivered” in the Current O.73 r.5(2) will be even clearer once reference is made to the Departmental Advisory Committee on Arbitration Law Report on the Arbitration Bill (February 1996) (DAC Report), which introduced the 1996 Arbitration Act (1996 Act).
Under section 70(3) of the 1996 Act, any application for leave to appeal against an arbitral award “must be brought within 28 days of the date of the award or, if there has been any arbitral process of appeal or review, of the date when the applicant or appellant was notified of the result of that process”.
Paragraph 294 of the DAC Report explained the drafting of section 70(3) of the 1996 Act as follows:
“The time limit in Clause 70(3) runs from the date of the award, or, where applicable, the date when a party was notified of the result of any arbitral process of appeal or review. It has been suggested that difficulties might arise if an award is held back by the arbitrators, pending payment by the parties (i.e. under Clause 56). It is possible that the time limit in Clause 70(3) will have expired by the time an award is released. However, the DAC is of the view that the date of the award is the only incontrovertible date from which the time period should run. Any other starting point would result in great uncertainty (e.g. as to the exact point at which an award is “released” or “delivered”). Further, any difficulties arising from specific circumstances can be easily remedied by way of an extension of time under Clause 79.”
From the above, we can see that section 70(3) of the 1996 Act refers to “the date of award” rather than the date when the award is “released” or “delivered” to avoid “great uncertainty”. However, the DAC Report admitted that this might create a situation where the time limit would have expired by the time the award is released or delivered, when for instance the arbitrator withheld the award pending payment by the parties. In contrast, the Current O.73 r.5(2) uses the word “delivered” to replace “made and published”. Bearing in mind that the legislature likely took the DAC Report into account when drafting the Arbitration Bill[2], they likely intended that the time limit should start to run from the date when the award is delivered by the arbitrator without withholding it.
Secondly, the interpretation of Kwan Leein Po Fat is debatable. As explored above, the learned judge in Po Fat was of theview that “delivered” should mean the same as “made and published”, as defined in Kwan Lee. However, Litton VP in Kwan Lee implicitly suggested that “made and published” indeed has a different meaning from “delivered”. He cited Parker J’s view in The Archipelagos [1979] 2 Lloyd’s Rep 289 and held that “made and published” shall mean when the arbitrator informs the parties that the award has been made and is ready for collection (at [52] to [53]). It is worth to note his judgment at [53] and [55]:
“[53] In my judgment, there is no justification for the courts in Hong Kong to give to the same expression a different meaning. Where an arbitrator refuses to deliver his award except on payment of the fees demanded by him, the parties are not without redress. Pursuant to s21(1) of the Arbitration Ordinance, the court may, on an application for the purpose, order the arbitrator to deliver the award to the applicant on payment into court of the fees demanded and further order that the fees demanded be taxed.”
Here, Litton VP addressed the concerns of following The Archipelagos, namely that if time starts to run when the arbitrator informs the parties that the award is ready, but retains it because there are disputes as to his fees, the time limit for applying for leave to appeal might have expired by the time the award is “delivered” to the parties. In that case, the parties can ask the Court to order the arbitrator to deliver his award on payment of fees demanded into court, or can simply ask for an extension of time for applying for leave to appeal. Therefore, Litton VP likely had in mind that “deliver” means physical transfer of the award by the arbitrator to the parties, an event which is different from and happens after the arbitrator informs them that the award is ready for collection.
Therefore, Kwan Lee does not provide a sound basis for ruling that “delivered” under the Current O.73 r.5(2) means the same as “made and published” under the Old O.73 r.5(2). In fact, Kwan Lee points against such conclusion.
Conclusion
In view of the tight 30-day time limit for lodging an application for leave to appeal against an arbitral award under the Current O.73 r.5(2), the parties must be able to ascertain clearly when that time limit starts to run. The question of when is an award “delivered” is crucial.
To summarise:
(a) Under existing case law, “delivered” under the Current O.73 r.5(2) has the same meaning as “made and published” under the Old O.73 r.5(2), so that the time limit for making an application for leave to appeal against an arbitral award on a question of law runs from the date when the arbitrator informs the parties that the award is ready for collection, with or without the payment of the arbitrator’s fees.
(b) However, we have also examined arguments which suggest that the word “delivered” might have a different meaning, namely the physical act of the arbitrator delivering the award to the parties.
The true meaning of “delivered” is crucial, as the possible time gap between (a) and (b) (which is likely caused by issues on payment of the arbitrator’s fees) can be longer than the 30-day time limit. If the view in (a) is taken, by the time such payment issues are settled, the time limit might have already expired.
Nothing is better than certainty to parties in an arbitration. It would be very helpful if the Court could give further clarification on the meaning of the Current O.73 r.5(2). In the meantime, parties should err on the side of caution by lodging the application for leave to appeal without delay.
[1] Section 100 of the New AO provides that Schedule 2 will only automatically apply to a domestic arbitration agreement entered into before the commencement of the New AO (i.e. 1 June 2011) or within 6 years after its commencement. If parties enter into an arbitration agreement on or after 1 June 2017, they must expressly opt into sections 5 to 7 of Schedule 2 of the New AO to have the benefit of those provisions, pursuant to section 99 of the New AO.
[2] For example, the Department of Justice in the Report of the Bills Committee on Arbitration Bill for the House Committee Meeting on 22 October 2010 indicated that they seek to implement the Report of Committee on Hong Kong Arbitration Law issued in 2003 (2003 Report), which made numerous references to the DAC Report. The 2003 Report can be viewed at: https://www.legco.gov.hk/yr08-09/english/bc/bc59/papers/bc590728cb2-2261-3-e.pdf
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