In Wing Bo Building Construction Company Limited v Discreet Limited (HCA 146/2015) the Hong Kong Court of First Instance ("CFI") has upheld the constitutionality of s.20(8) Arbitration Ordinance, which provides that CFI decisions to stay proceedings in favour of arbitration are not subject to appeal. This decision follows the Court of Appeal ("CA") decision in China International Fund Limited v Dennis Lau & Ng Chun Man Architects & Engineers (HK) Limited v Secretary for Justice, [link to our blog post] which upheld the constitutionality of the limits on appeal in s.81(4) of the Arbitration Ordinance. That section requires leave from the CFI to appeal its decision on setting aside an arbitral award.
The dispute arose from a construction contract that contained an arbitration clause. Ng J heard an appeal against a decision to refuse to stay proceedings under s.20 Arbitration Ordinance, which had been made by a Master in Chambers. Notwithstanding that s.20(8) expressly provides that a decision of the CFI to refer the parties to arbitration is not subject to appeal, Wing Bo sought leave from the CFI to appeal on grounds that the provision was unconstitutional.
Wing Bo argued that s.20(8) Arbitration Ordinance limits the power of final adjudication vested in the Court of Final Appeal (CFA) by Article 82 of the Basic Law (which operates as the constitutional document of the Hong Kong SAR), and that any restriction on this power of final adjudication must be proportionate. The proportionality test requires that any such restriction must (i) pursue a legitimate aim; (ii) be rationally connected to that legitimate aim; and (iii) be no more than is necessary to accomplish that legitimate aim. Wing Bo contended that the total elimination of rights to appeal referrals to arbitration under s.20(8) (as opposed to its mere restriction under s.81(4)) was disproportionate, and therefore unconstitutional.
Wing Bo also argued that the CFI lacked jurisdiction to hear Discreet's appeal from the Master's decision, as Discreet had failed to seek the leave of the Master as required by s.20(9) of the Arbitration Ordinance. The Court rejected this argument, noting that Masters have no jurisdiction to give or refuse leave to appeal. The application had been improperly brought before the Master; applications under s.20 must instead be brought before the judge in charge of the CFI's Construction and Arbitration List.
In testing the proportionality of the bar on appeals imposed by s.20(8), the Court referred to the broad aims of the Arbitration Ordinance and examined the entire scheme of the statute. Underscoring the principle of minimal judicial intervention, the judge noted that the Arbitration Ordinance aims to "facilitate the fair and speedy resolution of disputes by arbitration without unnecessary expense" and that the Court should interfere in the arbitration of a dispute "only as expressly provided for" in the Ordinance.
Applying the proportionality test, the Court held that determinations to stay proceedings under s.20 are based on a prima-facie or "plainly arguable" case made out by the applicant, and that any issues concerning the tribunal's jurisdiction can be raised or re-opened for a fuller examination under s.34 of the Ordinance which affords parties a right of appeal from the tribunal's decision to assume jurisdiction. Ng J was accordingly of the view that although the nature of the limitation under s.20(8) of the Arbitration Ordinance is absolute, it is not final. She went on to hold that the bar on appeals imposed by s.20(8) of the Arbitration Ordinance is "no more than necessary" to accomplish its legitimate aim.
This decision, which is noteworthy for its strong endorsement of the broad aims of the Arbitration Ordinance, sends another clear signal that the Hong Kong courts will not interfere with the legitimate policy aims of the Arbitration Ordinance, and the limitations therein are constitutionally sound.