Consolidation in Hong Kong: the Shui On case

Abstract

In the first judicial fitting of Hong Kong's new statutory provisions1 for the consolidation of arbitrations, the Hong Kong High Court has tailored an order directing that two separate arbitrations be heard at the same time. In so doing, Hong Kong copies a fashion, first introduced in New York,2 which is about to become a la mode in Europe.3 In the Shui On case,4 a construction company (Shui On) had contracted to build a large twin-towered office building for the Employers. The contract was on a standard form of building contract providing for the arbitration of disputes. Shui On sub-contracted to Schindler Lifts the installation of the building's lifts, but in the end, Schindler did not find it to be an uplifting experience. Shui On's contract with Schindler had terms similar to the main contract's and also contained an arbitration clause. (The High Court discerned no material difference between the arbitration clauses in the two contracts.) Various delays arose in the construction of the buildings, resulting in a non-payment by the Employers of certain progress payments. The Employers alleged that they were not obliged to pay because they had the right to deduct liquidated damages for the delays. Shui On, in turn, did not make related progress payments to Schindler. Shui On contested the Employers' right to deduct liquidated damages but simultaneously maintained that, under the payment terms of the subcontract, it was not obliged to pay Schindler until it had received the progress payment from the Employers. Schindler commenced the proceedings by filing a writ against Shui On, but that action was stayed pending arbitration. Shui On then commenced arbitration against the Employers, and Schindler commenced arbitration against Shui On. Following the failure of the parties to agree on the appointment of an arbitrator, they …