Lo Pui Fan and Anor v HongKong United Dockyards Ltd and Keppel Fels Ltd [2013] HCPI 171/2011 (July 2013)

The Plaintiff was the administrator of the Deceased who was killed in a work related accident involving a floating dock.The Defendant denied liability and served a third party notice against the Third Party who had supplied the floating dock several years before to the Defendant pursuant to a sales contract ("the Contract"). The Defendant claimed indemnity and/or contribution pursuant to the Civil Liability (Contribution) Ordinance and/or common law and/or under the Employees' Compensation Ordinance.

The Third Party applied to stay the third party proceedings on the ground that the arbitration clause in the Contract stipulated that all disputes arising under the Contract must be resolved by arbitration. They relied on an English Court of Appeal case which held under similar facts that the defendant could not seek contribution by way of third party proceedings since they had agreed under their sub-contract to submit all disputes to arbitration.

The Defendant submitted that the arbitration clause in the Contract only covers contractual claims and claims connected with the Contract between the Defendant and the Third Party. It does not cover claims brought by the Defendant against the Third Party under the Civil Liability (Contribution) Ordinance or the Employees' Compensation Ordinance. The arbitration clause was not wide enough to cover those statutory claims which are brought under Hong Kong laws.

The Court agreed with the Defendant and held that the arbitration clause is only for "disputes arising under or by virtue of this Contract or any differences of opinion between the parties hereto concerning their rights and obligations under this Contract". The clause does not cover the statutory claims being brought by the Defendant and accordingly, the Third Party's application to stay was dismissed.

This decision has important implications for defendants and insurers as it suggests that Hong Kong courts may be reluctant to stay litigation for arbitration unless the clause specifically mentions that statutory claims must also be arbitrated.