C v. D

At a glance

Parties

C (Hong Kong satellite owner and operator; plaintiff and appellant; respondent in the arbitration) v. D (Thai satellite operator; defendant and respondent; claimant in the arbitration)

Case no.

Civil Appeal No 387 of 2021, [2022] HKCA 729 (on appeal from HCCT No 24 of 2020)

Court

High Court of the Hong Kong SAR, Court of Appeal

Court members

Peter Cheung JA, Maria Yuen JA, Anderson Chow JA (Chow JA gave the judgment of the Court)

Underlying award(s)

Partial Award on Jurisdiction and Liability dated 21 April 2020 (HKIAC-administered arbitration in Hong Kong under the UNCITRAL Arbitration Rules)

Forum and rules

Set-aside application under section 81 of the Arbitration Ordinance (Cap 609) and Article 34 of the UNCITRAL Model Law

Treaty

None; arbitration clause in the Co-operation Agreement of 15 December 2011 (Clauses 14.2 and 14.3)

Sector

Satellite telecommunications

Outcome

Appeal dismissed with costs to D. The Court held that the tribunal's finding that a pre-arbitration negotiation requirement had been met goes to admissibility, not jurisdiction, and cannot be reviewed under Article 34(2)(a)(iii) or (iv).

Amount

Not stated. The Partial Award found C liable for damages to be assessed later. Costs of the appeal went to D, to be taxed if not agreed.

The dispute

C, a Hong Kong satellite operator, and D, a Thai satellite operator, signed a Co-operation Agreement on 15 December 2011. Under it they deployed Satellite A at the 120° East orbital slot. Half of the satellite's 28 transponders (the "Thai Payload") belonged to D. After a dispute over D's video broadcasts reaching the PRC, C switched off two of D's transponders on 6 December 2018. D treated this as a repudiatory breach. It sent a letter on 24 December 2018 and referred the dispute to arbitration on 18 April 2019. C argued that the tribunal lacked jurisdiction because the pre-arbitration step in Clauses 14.2 and 14.3 had not been taken. In C's view, that step required a written notice referring the dispute to the parties' Chief Executive Officers, followed by 60 business days. The tribunal rejected the objection and found C liable for breach of Clause 4.7. C applied to set aside the Partial Award under Article 34(2)(a)(iii) and (iv) of the Model Law. G Lam J dismissed the application, and C appealed.

Key holdings

1. The distinction between jurisdiction and admissibility is not written into Article 34(2)(a)(iii), but it is recognised through statutory construction. A dispute that goes to the admissibility of a claim, rather than the tribunal's jurisdiction, falls "within the terms of the submission to arbitration". The distinction is ultimately controlled by the parties' agreement. ¶¶ 45–46
2. It is an over-simplification to say that a tribunal's decision on whether a condition precedent to arbitration was fulfilled must be jurisdictional. The question is whether the parties intended the tribunal to decide that issue, and this depends on the true construction of their agreement. ¶ 57
3. C's objection goes only to admissibility. C did not say that D's claim could never be arbitrated, only that the reference was premature. The objection was therefore aimed "at the claim", not "at the tribunal", and the Partial Award is not open to review under Article 34(2)(a)(iii). The Court did not need to decide whether D's proposed presumption in favour of admissibility applies. ¶ 60
4. The result would be the same without the admissibility/jurisdiction distinction. Clause 14.3 refers "any" dispute to arbitration, and nothing confines it to substantive disputes. The parties could easily have excluded disputes about the pre-arbitration requirement had they intended to. ¶¶ 61–64
5. Ground 2 was rejected. The Court assumed, without deciding, that "arbitral procedure" in Article 34(2)(a)(iv) should be read like Article V(1)(d) of the New York Convention. Even so, the parties intended the tribunal to decide the pre-arbitration requirement, so they did not intend its non-fulfilment to bar arbitration altogether. ¶ 68
6. The Court found no unjustified curtailment of the right of access to the courts under Article 35 of the Basic Law. If a proportionality analysis had been needed, any interference would be proportionate. ¶ 50
7. Ground 3, on the construction of Clauses 14.2 and 14.3 and whether the condition precedent was met, did not need to be decided. The appeal was dismissed with costs to D. ¶¶ 69–70

Procedural history

1. 6 December 2018C switches off two of D's transponders on Satellite A.
2. 24 December 2018D's Chief Executive Officer writes to C's Chairman (the "December Letter").
3. 18 April 2019D refers the dispute to arbitration under Clause 14.3.
4. 21 April 2020After a hearing in Hong Kong on 2–3 January 2020, the tribunal issues its Partial Award. It rejects C's jurisdictional objection and finds C liable, with damages to be assessed.
5. 21 May 2020C issues an originating summons to set aside the Partial Award under section 81 (HCCT No 24 of 2020).
6. 24 May 2021G Lam J dismisses the application, holding that the objection goes to admissibility, not jurisdiction.
7. 8 August 2021G Lam J grants C leave to appeal. C files its Notice of Appeal on 13 August 2021.
8. 26 April 2022Hearing before the Court of Appeal.
9. 7 June 2022Court of Appeal dismisses the appeal with costs to D.

Tribunal, counsel and experts

Decided by

• Peter Cheung Judge, High Court of the Hong Kong SAR, Court of Appeal
• Maria Yuen Judge, High Court of the Hong Kong SAR, Court of Appeal
• Anderson Chow Judge, High Court of the Hong Kong SAR, Court of Appeal (gave the judgment of the Court)

For the claimant

Herbert Smith Freehills LLP

For the respondent

Baker & McKenzie

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Keywords

• set-aside
• jurisdiction versus admissibility
• multi-tiered dispute resolution clause
• pre-arbitration negotiation
• condition precedent
• Article 34(2)(a)(iii) Model Law
• Article 34(2)(a)(iv) Model Law
• Arbitration Ordinance Cap 609 section 81
• New York Convention Article V(1)(c)
• New York Convention Article V(1)(d)
• satellite transponders
• Hong Kong Court of Appeal
• HKIAC
• UNCITRAL Arbitration Rules
• Fiona Trust
• SL Mining
• BBA v BAZ
• Basic Law Article 35

Summary generated with AI from the published documents — refer to the award for the authoritative text.