Construction Arbitration in Mainland China
According to the official data from China’s National Bureau of Statics, the added value of China’s construction industry in 2018 reached 6,180.8 billion yuan with growth of 4.5 per cent. General contracting and professional contracting construction enterprises with national qualifications have contributed a profit of 810.4 billion yuan.
With the booming development of the construction industry, construction disputes took up a large portion of the overall cases filed in 2018. As calculated by the Supreme People’s Court (SPC), there were over 110,000 cases arising out of construction contracts heard before people’s courts in the Mainland.Beijing Arbitration Commission (BAC) released its Report on the Work for 2018, stating that, out of 4,872 cases it had registered, 618 were construction disputes that constituted 12.7 per cent of its year’s caseload. Similarly, according to the Report on the Work for 2018 and Plan of the Work for 2019 issued by China International Economic and Trade Arbitration Commission, 228 cases were construction disputes with the overall registered cases being 2,962.
In order to meet the increasing needs of parties to construction disputes, in recent years arbitration institutions in the mainland have attached greater importance to the amelioration of dispute resolution services specialised in and tailored to construction disputes. Early in 2019, Shanghai Arbitration Commission and Jinan Arbitration Commission respectively established specialised construction arbitration sub-commissions.
Release of the Second Interpretation on disputes over construction contracts
On 29 December 2018, the SPC issued the Interpretation of the Supreme People’s Court on Issues concerning the Application of Law in the Trial of Cases Regarding Disputes over Construction Contracts for Construction Projects (II) (the Second Interpretation), which came into effect on 1 February 2019. Prior to the promulgation of the Second Interpretation, the people’s courts and arbitral tribunals when rendering the judgments and awards would follow the provisions of the Interpretation of the Supreme People’s Court on Issues concerning the Application of Law in the Trial of Cases Regarding Disputes over Construction Contracts for Construction Projects (the First Interpretation), which was published in 2004. However, over a decade, regulations and practice in construction industry have developed a great deal, resulting in inconsistent or even divergent decisions among adjudicators. Therefore, the Second Interpretation was published with the purpose of providing a set of specific and unified rules on the major issues including the validity of a construction contract, cost of a construction project and protection of the actual constructor.The Second Interpretation will play a decisive role for arbitrators when hearing cases over construction disputes and making arbitral awards, and is therefore worth a detailed analysis.
Validity of a construction contract
The validity of a construction contract was previously addressed in Article 2 and Article 4 of the First Interpretation, under which a construction contract shall be null and void if:
- the contractor has not acquired the qualifications for a construction enterprise or is in excess of its level of qualification;
- an unqualified actual constructor works in the name of a qualified construction enterprise;
- the construction project belongs to the one that must undergo the bidding process but fails to do so or the bid is invalid; and
- the contractor assigns the construction contract to a third party or illegally sublets the construction contract.
However, parties in dispute often raised the claim to void a construction contract in circumstances beyond the scope of the First Interpretation, and in particular to void the contract when the employer fails to acquire the construction project planning permit. The reason is that, according to Article 40 of the Urban and Rural Planning Law of the People’s Republic of China (2019 Revision) (the Urban and Rural Planning Law),the construction project planning permit is a precondition to lawfully construct a project while the First Interpretation was silent on the consequence to the validity of a construction contract if the employer did not acquire such permit.
Absent specific rules at the level of interpretation of laws, some high people’s courts such as Beijing High People’s Court, Jiangsu High People’s Court and Guangdong High People’s Court issued guidance that stipulated that the contract should be invalid if the employer fails to acquire the construction project planning permit.However, these guidelines shall not be treated as having the same legal effect as the interpretation of laws and cannot be applied nationwide. The Second Interpretation put an end to the uncertainty of the validity of a construction contract, stipulating in Article 2 that a construction contract shall be invalid if the employer fails to get the construction planning permit or to undergo other approval formalities. The SPC explained that Article 40 of the Urban and Rural Planning Law was a compulsory provision because the planning of construction projects concerned the reasonable use and the overall planning of land, which was of public and national interest. Violation of this article was a violation of Article 52(2) of the Contract Law of the People’s Republic of China, rendering the invalidity of the construction contract.
The duty to acquire the construction project planning permit is on the employer. Therefore, Article 2 of the Second Interpretation further provides that if the employer alleges that the construction contract is invalid owing to the lack of construction project planning permit or the planning approvals when it is able to acquire such permit or undergo such approval formalities but fails to do so, the people’s court shall reject the claim.
Cost of a construction project
The determination of the cost of a construction project has aroused heated discussion when the employer and contractor enter into two substantially different contracts, namely, the Yin and Yang contracts (or the Black and White contracts), for a single construction project that is subject to compulsory bidding in order to evade bidding supervision. The Yang (or White) contract is used for filing with the competent authority while the Yin (or Black) contract is the one that the parties intend to follow.
According to Article 46(1) of the Bidding Law of the People’s Republic of China (2017 Revision) (the Bidding Law) and Article 21 of the First Interpretation,the cost of a construction project shall be determined in accordance with the Yang (or White) contract if there is a substantial change of content in the Yin (or Black) contract.
However, neither the Bidding Law nor the First Interpretation provided a clear definition as to what constituted a substantial change of content, and the standards of review were different among courts. The Second Interpretation clarified this issue, stipulating in Article 1 that the scope and cost of a construction project, construction period and project quality shall be deemed as the substantial content of a construction contract. In the case of any discrepancy on the substantial content between the White contract and the Black contract, the people’s courts shall determine the rights and obligations according to the White contract, which is the one recorded by the competent authority.
Another issue that is frequently debated is the determination of the cost of a construction project if the parties conclude two substantially different contracts for a single construction project that is not subject to the compulsory bidding. One view is that because the employer voluntarily chooses to undergo the bidding process for a project that is not required by law to do so, the provisions under the Bidding Law shall not apply. Therefore, the Black contract, although not recorded by the competent authority, is the one that reflects the true intent of the parties and should be the basis to calculate the cost of the construction project. The other view is that, according to Article 2 of the Bidding Law,as long as the employer decides to undergo the bidding process, it should be subject to the rules on bidding. Consequently, the cost of the construction project shall be determined by the White contract.
Article 9 of the Second Interpretation put an end to the debate by providing that if the parties sign two substantially different contracts (one for filing and one for actual performance) for a construction project that is not subject to compulsory bidding, the people’s court shall determine the cost of the construction project based on the recorded contract (the White contract), unless the employer and the contractor otherwise enter into a construction contract (the Black contract) owing to changes caused by objective conditions that are unforeseeable at the time of bidding.
Protection of the actual constructor
The concept of actual constructor was put forward in Article 26 of the First Interpretation. Where an actual constructor brings a lawsuit against the employer in the case that the construction contract is assigned or illegally sublet to it, the people’s court shall accept the lawsuit. Considering that there is no contractual relationship between the actual constructor and the employer, this concept allows a breach of the privity of contract in order to protect the right of actual constructor who are mainly composed of off-farm workers (refer to migrant workers from rural areas to cities). Article 24 of the Second Interpretation strengthened the concept and prescribed that where an actual constructor claims against an employer, the people’s court shall join the assignor of the construction contract or the party that illegally sublet the contract as a third party.
The Arbitration Law of the People’s Republic of China (the Arbitration Law) does not recognise the notion of third party to arbitration. The jurisdiction of an arbitral tribunal comes from the arbitration clause or arbitration agreement between the parties, and the arbitral tribunal cannot join a third party into an ongoing arbitral proceeding unless all parties involved agree. Therefore, as was ruled in Xiong Daohai v. Qinghai Senko Salt Industry Group by the SPC,absent arbitration agreement between the actual constructor and the employer, the actual constructor cannot request for arbitration against the employer by relying on the arbitration agreement between the employer and the contractor.
Arbitrability of public–private partnership disputes in China
The year 2014 witnessed heavy law-makings in the mainland encouraging the use of the public-private partnership (PPP) model for public construction projects, facilities and services. By the end of December 2018, there were 8,654 projects in the management database of the National PPP Integrated Information Platform with an investment of 13.2 trillion yuan.
Cases are not rare where private parties in PPP projects are discouraged from resorting to litigation owing to concerns of local protectionism. In contrast, arbitration institutions are generally more distanced from government authorities and arbitrators usually have a stronger business sense and can better embrace the need to maintain a level playing field for private participants. Therefore, the private players are strongly motivated to submit the disputes arising from PPP contracts to arbitration. However, the current judicial practice in the mainland splits as to whether the disputes arising from PPP projects can be submitted to arbitration. This is largely due to the unspecific nature of PPP contracts.
There are three categories of views on the nature of PPP contracts in the mainland. The first is that a PPP contract is in fact a civil and commercial contract, while the second view holds that it is of purely administrative nature. The difference between the two is that parties to civil and commercial contracts have equal legal status while parties to administrative contracts are not. According to Article 2 and Article 3 of the Arbitration Law, disputes between parties of unequal status and administrative disputes that should be settled by administrative organs are not arbitrable in the mainland.Therefore, if a PPP contract is considered as an administrative contract, parties to the PPP contract cannot submit their disputes to arbitration.
There is also a third view, which holds that PPP contracts are of hybrid nature. Whether a dispute arising from a certain PPP contract is arbitrable shall be decided on a case-by-case basis. This is said to be the mainstream opinion in the mainland.
Courts in the mainland will look to the content of a PPP contract to determine the arbitrability issue. When a PPP contract does not concern government regulation, approval, licence or the dispute arising from a PPP contract that does not concern governmental acts, the relevant disputes can be submitted to arbitration. For example, in Henan Xinlin Highway Construction Co. Ltd v. the Government of Huixian City,the SPC held that a contract to which a governmental authority was a party was not per se an administrative contract. Rather, the nature of a PPP contract needed to be determined by taking into account several factors, such as whether the private party was of an equal footing with the governmental authority when the contract was concluded, whether the private party had full autonomy and was not compelled by administrative power, and whether the contract contained equitable consideration and the parties’ mutual consent. Similarly, in a case tried by the Beijing Second Intermediate People’s Court in 2017, the court ruled that the arbitration clause in the PPP contract was valid because in view of the purpose of the contract and the rights and obligations of the parties and other factors, the PPP contract apparently had the characteristics of a civil and commercial contract.
In contrast, in Jinan Yuqing Water Making Co. Ltd v. Government of Shangqiu City,the SPC ruled that the joint venture contract between the private party and the government was of administrative nature because the contract was concluded on the basis that the government would grant the private party a 30-year concession to supply water in the city without the need to pay concession fees. Thus, the rights and obligations under the joint venture contract should be governed by the Administrative Procedure Law of the People’s Republic of China and the dispute was an administrative dispute.
The SPC is suggested to promulgate specific interpretations on the unification of standard of review on the nature of PPP contracts and provide guidance to the arbitrability issue for PPP contracts.
Dispute over independent guarantee in construction projects
With the ever-deepening implementation of the Belt and Road Initiative and Chinese enterprises going global, the volume of infrastructure construction is continuously expanding, and the number of independent guarantees issued by banks and other financial institutions are surging. As a result, disputes arising from independent guarantees are also increasing with time both in litigation and in arbitration.
To keep abreast of international practice, the SPC issued the Provisions on Several Questions regarding Trial of Independent Guarantee Letter Dispute Cases (the Independent Guarantee Interpretation), which came into force on 1 December 2016, aiming to unify the standard of review on major issues such as the jurisdiction, applicable law and rights and obligations of the parties in disputes over independent guarantee.
The Independent Guarantee Interpretation holds fast to the principle of independence and abstraction of independent guarantees. Upon presentation of documents specified in the guarantee by the beneficiary, the issuer’s role is to examine whether the documents comply with the guarantee on its appearance and where they comply, make payment without raising any arguments or the need to seek the guarantee applicant’s approval.These principles have simplified the process of getting paid for the beneficiary, but may also facilitate their bad faith claims.
In view of the above, the Independent Guarantee Interpretation provides for fraud as the exception to the independence principle. In the case of fraud, the issuer is entitled to withhold payment, and the court may render an order to suspend payment or a judgment to stop payment at the request of the applicant, issuer or instructor.The mechanism of suspending payment under independent guarantee is quite self-contained. The sections below will focus on major procedural and substantive issues within the mechanism.
Objection to jurisdiction is not uncommon in proceedings of fraudulent demand disputes, which call for unification and predictability in the courts’ standard of ascertaining jurisdiction. Pursuant to Article 21 of the Independent Guarantee Interpretation, the jurisdiction of disputes related to independent guarantees should be differentiated between disputes over the guarantee itself and disputes over independent fraudulent demand.The parties to an independent guarantee are the issuer and the beneficiary, and the jurisdiction of dispute between them arising from the guarantee should be subject first to the dispute resolution clause contained in the guarantee. However, the applicant is not a party to the guarantee, and thus the dispute between the applicant, the beneficiary, and the issuer over fraudulent demand are not bound by the dispute resolution clause in the guarantee. Unless the parties expressly agreed otherwise, the fraud dispute should be heard by the people’s court located in the domicile of the issuer or the defendant.
Ex parte procedure
Before the official issuance of the Independent Guarantee Interpretation, the SPC released a draft version to invite public comments. Article 22 of the draft provided that the people’s courts shall make a ruling on the application of suspending payment within 48 hours of acceptance of the application, and may inquire of a party or all parties if the court deemed necessary within the specified time limit.
However, the provision on inquiry of the parties by the court before rendering the decision is not reflected in the final text. The Independent Guarantee Interpretation only provides that the court shall inquire of the parties when examining the application for reconsideration of the order of suspension.Accordingly, commentators believe that application for suspension of payment is an ex parte procedure. The rulings of the court on suspension applications that are made public did not mention that the defendant had been given the opportunity to state its defence either.
Circumstances constituting fraudulent demand
Article 12 of the Independent Guarantee Interpretation sets forth five grounds on which a demand raised under an independent guarantee may be considered to be fraudulent:
- the transaction is fraudulent;
- the documents presented by the beneficiary are false;
- there is a court decision or arbitration award holding that the debtor is not liable to payment;
- confirmation from beneficiary that debtor’s obligation is fulfilled or not triggered; and
- beneficiary’s deliberate abuse of rights where the beneficiary clearly knows it does not have rights to demand payment.
These types of situations that constitute fraudulent demand conform to the definition of fraud under the civil law of China, which is false statement and deliberate concealment of facts.They also bear similarities to the grounds of exception to payment obligation in the United Nations Convention on Independent Guarantee and Stand-by Letters of Credit (the Convention). Article 19(1) and 19(2) of the Convention refer to the exception as situations in which it is manifest and clear that any document is not genuine or has been falsified, that no payment is due on the basis asserted in the demand or that the demand has no conceivable basis.
The fifth circumstance, ‘beneficiary’s deliberate abuse of rights where the beneficiary clearly knows it does not have rights to demand payment’, is a miscellaneous clause, the main consideration of which is that the fact patterns related to fraudulent demand are complicated and diverse and cannot be exhaustively enumerated.
Conditions for order of suspending payment
According to Article 14 of the Independent Guarantee Interpretation, the court will order the suspension of payment if all of the following three preconditions have been met:
- the suspension applicant has proved a high possibility of an independent fraudulent demand;
- the circumstances are urgent so that if no suspension of payment is ordered, the legitimate rights and interests of the suspension applicant will be irremediably damaged; and
- the suspension applicant has provided adequate security to compensate the damage that might be sustained by the respondent caused by a ruling of suspension.
The fraud exception is carved out by the issuer’s payment in good faith. Where the issuer has made payment in good faith under the independent guarantee issued on the instructions, the people’s court shall not rule to suspend payment under the independent guarantee that maintains the issuer’s right of recourse.
Through comprehensive case research on major case databases in China,up to 2 July 2019, there have been 15 publicly announced cases related to application of suspending payment under the independent guarantee since the promulgation of the Independent Guarantee Interpretation. Among them, there are only two cases where the court refused the application. In the 13 cases where the court ordered suspending payment, six rulings were based on abuse of right, two on false documents and no liability to pay as held by the court judgment, and the other five court rulings did not state the specific reason for ordering suspension of payment.
It can be concluded from these statistics that, first, the threshold for Chinese courts to order suspending payment under independent guarantee is not very high; second, abuse of right is a most frequently cited ground for ruling on suspension; and third, a large percentage of the rulings did not comply with the requirement to state reasons under Article 16 of the Independent Guarantee Interpretation.
In one of the two cases where the court did not support the application, the applicant alleged that the beneficiary had breached the underlying contract, so that its demand was an abuse of right that was dismissed by the court.The court held that because of the fundamental principle of independence, the dispute arising from the underlying contract should be distinguished from dispute over the guarantee and breach of underlying contract did not constitute fraudulent demand. The reasoning of the court was consistent with Article 14(2) of the SPC Interpretation.
In the other case, where application was not upheld, the applicant, which was also the applicant of the guarantee, alleged that the demand was raised by the beneficiary after the validity period of the guarantee, and thus requested the court to order suspending payment.The court held that only in case of fraud can the applicant applied for suspending payment, thus refusing its application.
Construction Arbitration in Hong Kong
Unique position of Hong Kong Special Administrative Region
Under the ‘One Country, Two Systems’ doctrine, Hong Kong has a high degree of autonomy and enjoys executive, legislative and independent judicial power.
Hong Kong is the only common law jurisdiction within China.The Court of Final Appeal is the highest local court exercising the power of final adjudication. Hong Kong prospers as a free port, a separate customs territory and an international financial centre, with a free flow of capital and under the policy of free trade.
Construction industry in Hong Kong
A few figures suffice to demonstrate the socio-economic importance of the construction industry in Hong Kong. According to the latest available statistics, the construction industry accounted for 5.1 per cent of the gross domestic product in 2017.The gross value of construction works performed by main contractors in nominal terms was HK$56.9 billion for the first quarter of 2019. Among that, residential buildings projects amounted to HK$14.9 billion and transport projects HK$6.8 billion.
Compliance and management
There is no consolidated code of laws regulating the construction industry. Instead, various ordinances and subsidiary regulations govern different aspects of a construction project. Among them, the Buildings Ordinance (Cap 123), Building (Minor Works) Regulation (Cap 123N), Fire Service (Installation and Equipment) Regulations (Cap 95B) and Waterworks Ordinance (Cap 102) are the most relevant. The Building Management Ordinance (Cap 344) is the primary legislation that regulates building management.
Standard forms of contract are widely in use in the construction industry in Hong Kong,such as the Agreement and Schedule of Conditions of Building Contract (Standard Form of Building Contract) for Use in Hong Kong (the Standard Form of Building Contract) frequently adopted in private projects. For the public sector, the past few years have seen a shift away from the Government’s General Conditions of Contract for Building Works (1999) since the introduction of the New Engineering Contracts in 2009, in line with the trend towards collaborative management of construction projects.
Apart from the conventional building contracts, there are also standard form design-and-build contracts such as the Government’s General Conditions of Contract for Design and Build Contracts (1999),and a number of projects used them. The Drainage Services Department first used the design build operate form of contract in an upgrading project commenced in mid-2014. In contrast, and unlike the situation in Mainland China, the FIDIC series of contracts including the EPC Turnkey Projects version are not commonly in use in the construction projects in Hong Kong.
Some stakeholders in private and public sectors adopt their own standard forms of contract.
Subcontracting is sometimes facilitated with back-to-back contracts, which are prone to ambiguity.There are also standard-form subcontracts in use, such as the Government’s Subcontract for Building Works (2000), the Agreement and Schedule of Conditions of Nominated Subcontract for Use in HKSAR (2005) (the Standard Form of Nominated Subcontract) and the Hong Kong Construction Association’s Standard Form of Domestic Subcontract (2008).
Standard forms of contract often contain a multi-tiered dispute resolution mechanism where one party has to give timely notice of the disputed matter for an internal arbiter to decide.When the internal mechanism fails, parties are ultimately required to submit their dispute for arbitration.
When a simplistic back-to-back subcontract is used, an issue frequently arises as to whether the dispute resolution mechanism under the main contract would apply as between the parties to the subcontract (or sub-subcontract).In contrast, a standard-form subcontract may have a well-drafted dispute resolution clause that resembles its counterparty under the corresponding main contract. For instance, the Standard Form of Nominated Subcontract provides for referral of the dispute to the parties’ designated representatives and for mediation, failing which either party may refer the dispute to arbitration.
Hong Kong’s arbitration regime
The current Hong Kong legislation governing arbitration-related matters is the Arbitration Ordinance (Cap 609) (the Ordinance), whereby the predecessor legislation (Cap 341) was repealed in 2011. The Ordinance has undergone a number of amendments since its enactment to keep up with the latest international practice.
The Ordinance is based on the UNCITRAL Model Law (as amended in 2006), in which a majority of the Model Law provisions are given the force of law verbatim or with minor amendments. Unlike the predecessor legislation that provided for separate regimes for international and domestic arbitration, the Ordinance contains a unified regime regulating Hong Kong-seated and foreign-seated arbitration.
As noted above, standard forms of contract provide by default for domestic arbitration under the HKIAC Domestic Arbitration Rules,which is a short and convenient set of arbitration rules for ad hoc arbitration in Hong Kong. The latest rules were revised in 2014. Unlike Mainland China, Hong Kong allows for ad hoc arbitration.
The enforcement of arbitral awards under the Ordinance mostly follows the New York Convention, with four similarly-worded regimes for enforcing arbitral awards, Convention awards, Mainland awards and Macau awards respectively.
Construction arbitration is by no means an entirely different species from a commercial arbitration. However, as the construction industry has its own trade usages as mentioned above, issues peculiar to construction arbitration may arise.
Incorporating arbitration agreements in back-to-back subcontracts
In construing a subcontract, general principles of contract law such as contextual construction of the terms at the time of the contractare applicable. Whether a term has been incorporated into the subcontract by reference is a question of construction, namely a task to ‘ascertain the parties’ intention when they entered into the contract by reference to the words used’.
‘Back-to-back’ is not a legal or technical term and can have different meanings.It depends on the circumstances of an individual case whether a specific clause in the main contract applies to the subcontract made on a back-to-back basis. Take two cases that arrived at different conclusions for illustration.
In WH-SCG JV Limited v. Hong Kong Construction (Holdings) Limited  HKCFI 912, the Court derived little help from the use of the phrase ‘back-to-back’ in background materials in construing an express clause that the subcontractor ‘shall assume, observe, perform and comply with all obligations and liabilities of the Main Contract between [the Employer] and [the Main Contractor] on the … project’ and refused a stay application to refer to arbitration on the ground that ‘obligations and liabilities’ did not normally include the dispute resolution mechanism of arbitration.In this case, another specific clause entitling the subcontractor to use the main contractor’s name in relation to the latter’s rights and obligations under the main contract against the employer featured as an important counter-factor for a simplistic substitution-of-name argument.
In Ho Fat Sing t/a Famous Design Engineering Co v. Hop Tai Construction Co Ltd, DCCJ 3600/2007 (23 December 2008), the Court found that where the benefits and obligations of the employer and the main contractor were expressly vested in the subcontractor and the sub-subcontractor on a back-to-back basis, the benefits of the employer including the benefit of the agreed mechanism for settlement of dispute, namely, an arbitration agreement, were likewise vested in the subcontractor.
At first glance, the two cases seem to differ on a point of the classification of the dispute resolution mechanism as ‘obligation’ or ‘benefit’. We suggest that the distinction should by no means be mechanic. As illustrated above, the whole contractual instrument should be analysed as to the parties’ intention on a case-by-case basis.
Stay for arbitration under construction contract
The general principles governing an application for stay of court proceedings to refer to arbitration under Section 20 of the Ordinance are well settled in Hong Kong.
The onus is on the applicant for stay to demonstrate that there is a prima facie case that the parties were bound by the arbitration clause, and unless the point is clear the court should not attempt to resolve the issue but should stay the matter in favour of arbitration.Each case should be decided on its own facts.
Where an arbitration clause is deleted from the standard form of contract, the insertion of a new arbitration clause that the parties ‘may’ submit to arbitration may be held as permissive only, thus not binding the parties to submit to arbitration.
Where a multi-tiered dispute resolution mechanism is provided for in the contract, compliance with the mechanism is generally a precondition for arbitration.
The arbitration agreement must not be null, void, inoperative or incapable of being performed, and the onus is on the opposing party to prove on a high standard.
The matter in the action must fall within an arbitration agreement, not ‘related’ to it or ‘involved’ in it, and the Court should consider the substance of the controversy as it appears from the circumstances as revealed by the evidence but not just the particular terms in which the claimant has sought to formulate its claim.Under certain circumstances, a non-contractual claim falls in the ambit of the arbitration clause. For instance, a claim by a contractor seeking reimbursement of a labour tribunal’s award against its subcontractor may fall into the wide wording of an arbitration clause in the subcontract.
The time limit for requesting a stay of proceedings for arbitration is set to be no later than when submitting the defendant’s first statement on the substance of the dispute, either in the arbitral process or in the action sought to be stayed.For a related argument of a waiver of the right to arbitrate, it seems that there can be no unilateral waiver as the arbitration is intended for the benefit of both parties.
Finally, the Court has an inherent jurisdiction by virtue of Section 16 of the High Court Ordinance (Cap 4) or Order 1B r1 of RHC to grant a discretionary stay even if a mandatory stay under Section 20 of the Ordinance is precluded.
HKIAC Domestic Arbitration Rules
As noted above, the HKIAC Domestic Arbitration Rules (2014) seek to solve domestic disputes in ad hoc arbitrations in Hong Kong, where the provisions make express reference to and are construed in accordance with the Ordinance.
The duty of confidentiality in the HKIAC Domestic Arbitration Rules is:
subject to the exception, [inter alia], that disclosure is permitted when, and to the extent to which it is reasonably necessary for the protection of the legitimate interest of an arbitrating party, and that means reasonably necessary for the establishment or protection of an arbitrating party’s legal rights vis-à-vis a third party in order to found a cause of case against that third party or to defend a claim (or counterclaim) brought by the third party.
In Hong Kong Housing Authority v. Sui Chong Construction & Engineering Co Ltd & Anor, HCCT 47/2007 (28 November 2007), the Court found that the whole scheme of the sale and purchase agreement made by the shareholder of one party to arbitration contemplated that the right to claim under the main contract would remain with that party, and thus the shareholder and other professionals were acting as that party’s agent committing no breach of the duty of confidentiality.
Schedule 2 as applied to construction contracts
As noted above, standard forms of contract provide by default for domestic arbitration. Local users with their places of business in Hong Kong thus used to, by default, commence a domestic arbitration under the predecessor legislation,subject to any opt-out agreement.
Under the Ordinance, some features of the domestic arbitration regime with a wider scope of court intervention are retained in Schedule 2, whereby Section 99 allows for opt-in.
Subject to express agreement to the contrary,Section 100 prescribes automatic application of Schedule 2 to an arbitration agreement, which has provided or provides that ‘arbitration under the agreement is a domestic arbitration’, that was entered into before or within six years after the commencement of the current Ordinance (1 June 2011). Hence, Schedule 2 remains relevant if the main contract or the subcontract included an arbitration agreement for domestic arbitration entered into on or before 2 June 2017.
Schedule 2 is deemed to apply to an arbitration agreement under a subcontract of a construction contract where it automatically applies to that main contract,unless the express agreement provides otherwise, or where the subcontractor or the operation under subcontract lacks connection with Hong Kong. This deeming provision applies mutatis mutandis to a further subcontract.
Schedule 2 has seven sections, providing for:
- sole arbitrator;
- consolidation of arbitrations;
- the Court’s decision of preliminary question of law;
- challenge arbitral award on ground of serious irregularity;
- appeal against arbitral award on question of law;
- application for leave to appeal against arbitral award on question of law; and
- supplementary provisions on challenge or appeal against arbitral award.
Under Section 3, an application may not be made except with all parties’ agreement or the tribunal’s permission in writing.The court must satisfy itself that the decision of the question might produce substantial savings in costs to the parties before it can entertain the application.
An application of challenge on the ground of serious irregularity under Section 4 or for leave to appeal on a question of law under Section 6 must be made and the originating summons or summons must be served within 30 days ‘after the award is delivered’.If the challenge is found, the Court can remit the award for reconsideration, and only if remit is inappropriate set aside the award or, in the case of a challenge on ground of serious irregularity declare the award ineffective and in the case of an appeal vary the award.
For all applications intervening in substance of the tribunal’s award or decision, leave is required for an appeal from a decision.
‘Serious irregularity’ is statutorily defined and set out in full:
an irregularity of one or more of the following kinds which the Court considers has caused or will cause substantial injustice to the applicant –
(a) Failure by the arbitral tribunal to comply with section 46;
(b) The arbitral tribunal exceeding its powers (otherwise than by exceeding its jurisdiction);
(c) Failure by the arbitral tribunal to conduct the arbitral proceedings in accordance with the procedure agreed by the parties;
(d) Failure by the arbitral tribunal to deal with all the issues that were put to it;
(e) Any arbitral or other institution or person vested by the parties with powers in relation to the arbitral proceedings or the award exceeding its powers;
(f) Failure by the arbitral tribunal to give, under section 69,an interpretation of the award the effect of which is uncertain or ambiguous;
(g) The award being obtained by fraud, or the award or the way in which it was procured being contrary to public policy;
(h) Failure to comply with the requirements as to the form of the award; or
(i) Any irregularity in the conduct of the arbitral proceedings, or in the award which is admitted by the arbitral tribunal or by any arbitral or other institution or person vested by the parties with powers in relation to the arbitral proceedings or the award.
Internal inconsistency between two awards or rulings of the tribunal may potentially constitute a ground for serious irregularity,although it might be said to go to the tribunal’s substantive jurisdiction or the substantive merits of the claim.
The Court will not accede to a challenge if the conduct of the tribunal in allowing some issues to be raised and making findings against a party on these issues is not ‘so serious or egregious’ as to justify the award being set aside.Even if a party was unable to present its case or there had been some serious procedural irregularity that undermined the due process, the Court retains a discretion not to set aside the arbitral award if it is not satisfied that the outcome of the dispute would have been affected by such irregularity or breach of due process, or if it is satisfied that the arbitral tribunal could not have reached a different conclusion.
In N v. W  HKCFI 2405; HCCT 39/2018 (30 October 2018), in dealing with a challenge to an arbitral award on ground of inter alia misconduct of the arbitrator under the repealed predecessor legislation, the Court noted that:
bearing in mind the objectives of the Ordinance and the policy of the Court to uphold the validity of arbitration agreements and the finality of arbitral awards, the Court would only exercise its discretion to set aside an award for the arbitrator’s misconduct under section 25 of [Cap 341] if there was likewise serious, even egregious, conduct of the arbitrator which offends the Court’s most basic notions of justice, morality and fairness, and which results in a denial of due process and serious prejudice to a party. Generally speaking, the Court is only concerned with the structural integrity of the arbitration proceedings. The remedy of setting aside is not an appeal, and the Court will not address itself to the substantive merits of the dispute, or to the correctness or otherwise of the award, whether concerning errors of fact or law.
Appeal on a question of law
Before a party can appeal under Section 5, Section 6 requires the leave of the Court or the agreement from all parties, the latter of which is rarely forthcoming in practice. Order 73 Rule 5(5) of RHC allows the appeal under Section 5 to be included in the application for leave to appeal.
The threshold for granting leave to appeal on question of law is high, namely only if the Court is satisfied that, on the basis of the findings of fact in the award, either the decision of the arbitral tribunal on the question is ‘obviously wrong’or the question is one of general importance and the decision of the tribunal is ‘at least open to serious doubt’. The law applies different tests to a one-off dispute and a question of general importance, but the distinction is not solely based on whether the subject clause of the construction is a provision in a standard form of contract.
In addition, the Court must be satisfied that the decision of the question will ‘substantially affect the rights of one or more of the parties’ and that the question is one that the arbitral tribunal was asked to decide.
Further leave is required for an appeal from the decision of the Court to grant or refuse leave to appeal,and leave will be granted only if the question is one of general importance or for some other special reason should be heard. Section 14AA of the High Court Ordinance (Cap 4) imposes additional conditions for an interlocutory appeal from an interim award.
Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong Special Administrative Region
On 2 April 2019, the HKSAR government and the mainland authorities signed the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong Special Administrative Region.
Under the Arrangement, Hong Kong becomes the first and only jurisdiction outside the mainland where, as a seat of arbitration, parties to arbitral proceedings administered by its arbitral institutions would be able to apply to the mainland courts for interim measures.
The commencement date of the Arrangement will be decided after the promulgation of a judicial interpretation by the Supreme People’s Court and completion of relevant procedures in the HKSAR.
Hong Kong has passed its legislative amendments allowing for third party funding in arbitration.As rightly observed by a professional body in the Law Reform Commission Report:
As most construction disputes are commercial in nature, whether Third Party Funding for arbitration is available would naturally form part of the commercial consideration when parties pursue their claims in arbitration. Hong Kong is known for its multi-tiered subcontracting arrangements in the construction industry. Many of the smaller subcontractors may not necessarily have the financial means or flexibility in resource allocation to pursue their claims against the larger, more resourceful contractors or project employers despite having meritorious claims. A third party may also have a vested interest in a dispute. Take the example when progress of work is disrupted when a small scale subcontractor is having a dispute with his supplier. It would be of genuine interest to the main contractor if he could fund the subcontractor’s case. Third party funding for arbitration in Hong Kong should provide these less resourceful contractors or subcontractors with alternative options when considering whether they should pursue their claims.
The remaining sections under the new Part 10A of the Ordinance came into effect on 1 February 2019.
The Code of Practice for Third Party Funding of Arbitration under Part 10A has been issued.
Security for payment
The proposed Security for Payment Legislation for the Construction Industry spearheaded by the Development Bureau was released in June 2015, with the Report on public consultation compiled in April 2016.The proposed legislation included the provisions such as that ‘pay when paid’ clause and similar clauses are ineffective and unenforceable under the law, that interim and final payments must be paid within 60 and 120 calendar days counting from receipt of the payment applications, that interim amounts decided by an adjudicator must be paid pending litigation or arbitration.
While there is not yet a detailed schedule, initiatives might be taken to introduce a new legislation in this regard.
 Wei Sun is a partner, Zhao Yingfu is an associate and Wang Ziyue is a paralegal at Zhong Lun Law Firm. Adela Mao is a barrister in Tower Chambers.
 See Statistical Communique of the People’s Republic of China on National Economic and Social Development in 2018, available at www.stats.gov.cn/tjsj/zxfb/201902/t20190228_1651265.html, last accessed on 3 July 2019.
 See Answers to the Reporters by the Person in Charge of the Supreme People’s Court concerning the Interpretation of the Supreme People’s Court on Issues concerning the Application of Law in the Trial of Cases Regarding Disputes over Construction Contracts for Construction Projects (II), available at www.chinacourt.org/article/detail/2019/01/id/3641356.shtml, last accessed 3 July 2019.
 See Report on the Work for 2018 and Plan of the Work for 2019, available at www.ccpit.org/Contents/Channel_4132/2019/0218/1127033/content_1127033.htm, last accessed 3 July 2019.
 See www.legaldaily.com.cn/Arbitration/content/2019-04/17/content_7833703.htm and http://finance.dzwww.com/zt/2018sdjc1/, last accessed 3 July 2019.
 See Protection of the Legal Rights of the Parties and Promoting the Development of the Construction Industry – the Supreme People’s Court Releasing the Second Interpretation on Disputes over Construction Contract, available at www.court.gov.cn/zixun-xiangqing-137951.html, last accessed 3 July 2019.
 Article 40 of the Urban and Rural Planning Law of the People’s Republic of China (2019 Revision) provides that ‘To build any structure, fixture, road, pipeline or other engineering project within a city or town planning area, the construction entity or individual shall apply to the competent department of urban and rural planning under the people’s government of the city or county or the town people’s government specified by the people’s government of the province, autonomous region or municipality directly under the Central Government for a planning permit on construction project.’
 See Article 1 of the Answers of the Beijing High People’s Court on Questions concerning the Trial of Cases Regarding Disputes over Construction Contracts for Construction Projects, Article 3 of the Opinions of the Jiangsu High People’s Court on Questions concerning the Trial of Cases Regarding Disputes over Construction Contracts for Construction Projects, and Article 18 of the Minutes of Meeting of the Guangdong High People’s Court on the Trial of Civil Cases in 2012.
 See First Civil Division of the SPC: Interpretation and Application of the Supreme People’s Court’s Second Interpretation on Disputes over Construction Contracts, People’s Courts Press, 2019, p.67.
 Article 52(5) of the Contract Law of the People’s Republic of China provides that ‘A contract shall be null and void under any of the following circumstances: … (5) violating the compulsory provisions of laws and administrative regulations.’
 Article 46(1) of the Bidding Law provides that ‘A written contract shall be concluded between the tenderee and bid winner within 30 days after the issuance of the bid-winning notice according to the Invitation to Bid and bidding documents. The tenderee and bid winner shall not conclude other agreements deviating from any substantial provision of the contract.’ Article 21 of the First Interpretation provides that ‘Where the contract on undertaking construction of a project, which was separately concluded between the parties regarding the same construction project, is inconsistent with the substantive contents in an archived bid-winning contract, the archived bid-winning contract shall be deemed as the basis for settling the construction cost.’
 Article 2 of the Bidding Law provides that ‘This law shall be applicable to the bidding activities within the territory of the People’s Republic of China.’
 See Supreme People’s Court Ruling (2015) Min Shen Zi No. 919.
 China Public Private Partnership Center, ‘Annual Report of the Project Database of the National PPP Integrated Information Platform (2018)’, www.cpppc.org/en/Quarterly/7940.jhtml, last accessed 3 July 2019.
 Article 2 of the Arbitration Law provides that ‘Contractual disputes and other disputes over rights and interests in property between citizens, legal persons and other organisations that are equal subjects may be arbitrated.’ Article 3 prescribes that ‘The following disputes may not be arbitrated: (1) marital, adoption, guardianship, support and succession disputes; (2) administrative disputes that shall be handled by administrative organs as prescribed by law.’
 See (2015) Min Yi Zhong Zi No. 244.
 See (2017) Jing 02 Min Te No.11.
 See (2018) Zui Gao Fa Min Zhong No. 829.
 Article 1(1) of the Independent Guarantee Interpretation provides, ‘Article 1 For the purpose of these Provisions, an ‘independent guarantee’ means any undertaking given in writing by a bank or a non-banking institution as the issuer to the beneficiary for the payment of a certain amount or an amount within the maximum guaranteed amount at the request of the beneficiary when submitting documents in conformity with the guarantee.’
 Article 13 of the Independent Guarantee Interpretation provides, ‘Upon finding any of the circumstances as specified in Article 12 hereof, the applicant, the issuer or the instructing party to the independent guarantee may, before filing an action or applying for arbitration or during the litigation or arbitration process, apply for suspending payment under the independent guarantee to the people’s court at the place of the issuer’s domicile or any other people court with jurisdiction over cases involving disputes over independent guarantee fraud.’
 Article 21 of the Independent Guarantee Interpretation provides, ‘A case involving disputes between the beneficiary and the issuer over the independent guarantee shall be under the jurisdiction of the people’s court at the place of the domicile of the issuer or the defendant, unless the independent guarantee specifies that any other people’s court has jurisdiction over the case or the case should be settled through arbitration. Where a party claims that the court having jurisdiction is determined or the case is settled through arbitration in accordance with the dispute resolution clause of the underlying transaction contract, such claim shall not be supported by the people’s court.
A case involving disputes over independent guarantee fraud shall be within the jurisdiction of the people’s court at the place of the domicile of the issuer of the independent guarantee under which the application for suspension of payment is filed or the domicile of the defendant, unless the parties has agreed in writing that any other court has jurisdiction over it or it is settled through arbitration. Where a party claims that the court having jurisdiction over the case is determined or the case is settled through arbitration in accordance with the dispute resolution clause of the underlying transaction contract, such claim shall not be supported by the people’s court.’
 Article 17(2) of the SPC Interpretation provides, ‘The people’s court shall conduct an examination within 10 days after the receipt of the application for reconsideration and question the party.’
 See, e.g., (2018) Jing 0105 Min Chu No. 65291, (2017) Jin 02 Cai Bao No.1.
 Article 68 of the Opinions of the Supreme People’s Court on Certain Issues Concerning the Implementation of the General Principles of the Civil Law of the People’s Republic of China (Trial) provides, ‘Where one party induces the other party to make a manifestation of wrong intention by deliberately informing the other party of false information or deliberately concealing any fact, that party’s conduct may be determined as fraud.’
 See (2018) E 01 Cai Bao No.63.
 Article 14 (2) of the Independent Guarantee Interpretation provides, ‘The people’s court shall not uphold the cessation claimant’s claim for cessation of payment on the ground that the beneficiary has defaulted the agreement under the underlying transaction.’
 See (2019) Su 02 Min Zhong No.1058.
 The Basic Law of the Hong Kong Special Administrative Region, Article 2.
 The laws previously in force in Hong Kong, that is, the common law, rule of equity, ordinances, subordinate legislation and customary law are maintained, except for any that contravenes the Basic Law and subject to any amendment by the local legislature (ibid, Article 8).
 Chinese national laws are not applied in Hong Kong except for those listed in Annex III to the Basic Law relating to defence and foreign affairs as well as other matters outside the limits of the autonomy of the special administrative region (ibid, Article 18).
 ibid, Article 82.
 The case law adjudicated by the UK courts or other common law courts are only persuasive where appropriate: A Solicitor v. the Law Society of Hong Kong, FACV No. 24 of 2007,  2 HKLRD 576.
 The Basic Law, Articles 109, 112, 114–116.
 Gross Domestic Product (GDP) by major economic activity – percentage contribution to GDP at basic prices, the Census and Statistics Department of HKSAR, last accessed https://www.censtatd.gov.hk/hkstat/sub/sp250.jsp?tableID=036&ID=0&productType=8 on 7 July 2019.
 Report on the Quarterly Survey of Construction Output, first quarter of 2019 (published in June 2019), Census and Statistics Department of HKSAR, https://www.statistics.gov.hk/pub/B10900022019QQ01B0100.pdf, last accessed 7 July 2019.
 ibid, Table 3.
 See Building Management in Hong Kong, Third ed. (2016), LexisNexis and A Guide on Building Management Ordinance (Cap 344), ninth ed. (Jan 2017), published by the Home Affairs Department of the Government at https://www.buildingmgt.gov.hk/en/bmo_guide/bmo_guide.htm, last accessed 10 July 2018.
 For an outline, see Chapter 19: ‘Standard Form of Contract’, Construction Law and Practice in Hong Kong, Third ed. (2013) Sweet & Maxwell.
 With quantities (2005) or without quantities (2006) editions published by the Hong Kong Institute of Architects, the Hong Kong Institute of Construction Managers and the Hong Kong Institute of Surveyors.
 Promulgated by the Institution of Civil Engineers in the United Kingdom; now in the fourth edition, i.e., NEC4 as revised in 2017.
 For a summary of the latest statistics, www.devb.gov.hk/filemanager/en/content_1057/NEC_Journey_201712_Single_Page.pdf, last accessed 7 July 2019.
 Supplemented by the Government’s Administrative Procedures 2015 for Use with General Conditions of Contract for Design and Build Contracts 1999, www.devb.gov.hk/en/publications_and_press_releases/publications/standard_contract_documents/administrative_procedures_2015/administrative_procedures_2015_content/index.html, last accessed 7 July 2019.
 LC Paper No. PWSC143/15-16(01), the Drainage Services Department of HKSAR Government, www.legco.gov.hk/yr15-16/english/fc/pwsc/papers/pwsc20160217pwsc-143-1-e.pdf, last accessed 7 July 2019.
 For example, the Conditions of Contract for Civil Engineering and Building Works Construction and Conditions of Contract for Engineering Works (Minor) of the MTR Corporation Limited, as well as the General Conditions of Contract, Building and Civil Works, Issue No. 11 (August 2015) and various forms of contracts published by the Hong Kong Airport Authority, https://extranet.hongkongairport.com/pds/, last accessed 7 July 2019.
 For an illustration, see Brington Engineering Ltd v. Cheerise Asia Ltd  HKCFI 567; HCCT 2/2010 (18 August 2011).
 To be used in conjunction with the General Conditions of Contract for Building Works (1999).
 Published by the Hong Kong Institute of Architects, the Hong Kong Institute of Construction Managers and the Hong Kong Institute of Surveyors.
 For instance, Clause 25 of the Standard Form of Building Contract (2005 ed., with quantities) where the Architect first decides the extension of time.
 ibid, Clause 41 provides by default for a ‘domestic arbitration’ in accordance with the repealed Cap 341 under the Domestic Arbitration Rules of HKIAC.
 See below.
 Clause 42.
 Order No. 28 of 2012 (consequential changes pursuant to the enactment of a new Companies Ordinance), Order No. 7 of 2013 (including provisions for enforcement of emergency relief and introduction of provisions for enforcement of Macau awards), Order No. 11 of 2015 (including changes to provisions for application of Schedule 2), Order No. 5 of 2017 (introduction of provisions in relation to IPRs), Order No. 6 of 2017 (introduction of provisions in relation to third party funding).
 Schedule 1 of the Ordinance sets out in full the UNCITRAL Model Law (as amended in 2006) and underlines the provisions that were not adopted verbatim.
 With the caveat that only some of the provisions apply to an arbitration if the place of arbitration is outside Hong Kong: Section 5(2), the Ordinance. Those provisions relate to ancillary powers of the Court to render a ruling, direction or order in aid of the foreign arbitral proceedings and to render enforcement.
 See also the Government’s General Conditions of Contract (1999), Clause 86(5).
 2014 HKIAC Domestic Arbitration Rules, www.hkiac.org/arbitration/rules-practice-notes/domestic-arbitration-rules, last accessed 21 June 2018.
 ‘Arbitration’ is defined as ‘any arbitration, whether or not administered by a permanent arbitral institution’: Section 2, the Ordinance.
 Divisions 1-4, Part 10, the Ordinance.
 Fully Profit (Asia) Ltd v. Secretary for Justice (2013) 16 HKCFAR 351, 361 (per Ma CJ), as recently cited in Kim Hung Construction & Engineering Co Ltd v. Standard Refrigeration & Engineering Co Ltd, CACV 90/2015 (7 January 2016) (Hong Kong Court of Appeal), paragraph 4.7.
 Ho Fat Sing t/a Famous Design Engineering Co v. Hop Tai Construction Co Ltd, DCCJ 3600/2007 (23 December 2008) (per Mimmie Chan J as Her Hon HC Judge in charge of the construction and arbitration list then was).
 WH-SCG JV Limited v. Hong Kong Construction (Holdings) Limited  HKCFI 912, paragraphs 28–29.
 ibid, paragraphs 14–16.
 ibid, paragraph 20.
 Tommy CP Sze & Co v. Li & Fung (Trading) Ltd  1 HKC 418, 425 (per Ma J as the Hon Chief Justice then was), namely there are four questions: (1) whether there is an arbitration agreement between the parties; (2) whether the clause in question is capable of being performed; (3) whether there is in reality a dispute or difference between the parties; and (4) whether the dispute or different between the parties within the ambit of the arbitration agreement.
 PCCW Global Ltd v. Interactive Communications Service Ltd  1 HKLRD 309 (Hong Kong Court of Appeal).
 ibid, in respect of a standard form service agreement.
 Lim Choon Hock otherwise known as William Lim and Anor v. Hung Ka Hai Clement and Ors, HCA 1282/2016 (24 August 2016), paragraph 19 where the court seemed to have considered pre-arbitral steps as a pre-condition without express indication of such; in contrast, in Sulamerica CIA Nacional de Seugros S.A. v. Enesa Enenharia S.A.  EWCA Civ 638, the pre-arbitral mediation requirement did not constitute a binding obligation and hence no condition precedent to arbitration as the clause was not sufficiently precise.
 Schindler Lifts (Hong Kong) Ltd v. Sui Chong Construction and Engineering Co Ltd, DCCJ 2784/2014 (26 November 2014), paragraph 26, citing Klockner Pentaplast GmbH v. Advance Technology  4 HKLRD paragraph 19.
 Bluegold Investment Holdings Ltd v. Kwan Chun Fun Calvin, HCA 1492/2015, 4 March 2016 (Mimmie Chan J).
 Fili Shipping Co Ltd v. Premium Nafta Products Ltd  UKHL 40 (Fiona Trust) where the court held that ‘… the construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to have entered to be decided by the same tribunal’ (paragraph 13).
 Chevalier (Construction) Co Ltd v. Universal Aluminium Industries Ltd, HCA 2338/2013 (18 June 2014); see also Pollard Construction Co Ltd v. Lee Kwong Kong and To Chun Yin t/a Hung Chong (Foundation) Construction Ltd, DCCJ 5635/2016 (27 October 2017).
 Section 20(1), the Ordinance; Schindler Lifts (Hong Kong) Ltd, ibid, paragraphs 28–30, citing Bab Systems v. McLurg  Carswell Ont 4426 (Canada) and Paladin Agricultural v. Excelsior  2 HKC 215 at 222F-223D where the Court found the applicant’s defence filed in a small claim tribunal proceeding that was subsequently discontinued for the present District Court action did not constitute a ‘statement’ within Section 20, the Ordinance.
 Schindler Lifts (Hong Kong) Ltd, ibid, paragraphs 60–62, citing Aggressive Construction v. Data-Form Engineering, HCA 2143/2008 (4 August 2009).
 Chok Yick Interior Design & Engineering Ltd v. Fortune Works Enterprises Ltd  2 HKC 360 (at paragraph 8) and Marshall-Karson v. Kowloon Canton Railway, HCCT 38/1994 (9 June 1995), as cited by Schindler Lifts (Hong Kong) Ltd, ibid.
 Article 20.1; Hong Kong Housing Authority v. Sui Chong Construction & Engineering Co Ltd & Anor, HCCT 47/2007 (28 November 2007) (at paragraph 18) under the then Rule 26 of HKIAC Domestic Arbitration Rules (1993).
 Under the repealed Cap 341; the corresponding notion of ‘domestic arbitration agreement’ was defined in contrast with ‘international arbitration agreement’, that is ‘an arbitration agreement pursuant to which an arbitration is, or would if commenced be, international within the meaning of Article 1(3) of the UNCITRAL Model Law’ (see Section 2, Cap 341).
 Section 2L, Cap 341.
 Section 102, the Ordinance.
 The Court in A and Ors v. D, HCMP 1014/2016 (22 December 2016) interpreted this requirement (at paragraphs 17–24) as referring to an express provision in the arbitration agreement that such arbitration would be a domestic arbitration or that Schedule 2 would apply, but that any arbitration under the arbitration agreement would or might have been a domestic arbitration under the repealed Cap 341 would not suffice.
 Section 101(2), the Ordinance.
 Section 101(1), the Ordinance; ‘construction contract’ means ‘a contract between an employer and a contractor under which the contractor carries out construction operations but does not include a contract of employment’ under Section 2(1), and ‘construction operations’ is defined under Schedule 1, respectively, of the Construction Industry Council Ordinance (Cap 587).
 Section 102, the Ordinance.
 Such as that the subcontractor is resident, incorporated or managed outside Hong Kong, does not have a place of business in Hong Kong, or a substantial part of the subcontracted operation is performed outside Hong Kong; see Section 101(2), the Ordinance.
 Section 101(3), the Ordinance.
 Section 3(2), Schedule 2, the Ordinance.
 Section 3(3), Schedule 2, the Ordinance.
 Order 73, Rule 5(1)&(2), the Rules of the High Court (Cap 4A) (RHC); the Court in Po Fat Construction Co Ltd v. IO of Kin Sang Estate  2 HKC 254, HCCT 15/2013 & 23/2013 (6 November 2013) decided that ‘delivered’ had the same meaning with the terms ‘made and published’ under the former O 73 r5(2) applicable to the repealed Cap 341, that is, when the arbitrator informed the parties that the award had been made and was ready for collection, with or without the prior payment of fees.
 Section 4(3)&(5), Section 5(5)&(7), Schedule 2, the Ordinance.
 Section 3(5), 4(6), 5(8) & 6(5), Schedule 2, the Ordinance.
 Section 46 deals with equal treatment of parties, as required under Article 18 of the UNCITRAL Model Law.
 Section 69 deals with correction and interpretation of award or issuance of additional award, as required under Article 33 of the UNCITRAL Model Law.
 Section 4(2), Schedule 2, the Ordinance; cf. Section 68, the English Arbitration Act 1996.
 A and Ors v. D, ibid, footnote 86; the Court proceeded to consider the issue of serious irregularity but did not find the alleged inconsistency proved on the facts.
 Po Fat Construction Co Ltd, ibid, at paragraph 28, applying Grand Pacific Holdings Ltd v. Pacific China Holdings Ltd (in liq) (No 1)  3 HKC 498;  4 HKLRD 1; the setting aside application was not expressly made on the ground of serious irregularity but on the arbitrator’s alleged breach of due process (at paragraph 3).
 ibid, at paragraph 29, applying Brunswick Bowling & Billiards Corp v. Shanghai Zhonglu Industrial Co Ltd & Anor  5 HKC 1;  1 HKLRD 707 etc.; the Court similarly retains a residual discretion even if sufficient grounds are made out either to refuse enforcement or to set aside under the general provisions of the Ordinance, see KB v. S & Ors HCCT 13/2015,  2 HKC 325, 328-329.
 Dicta in Pioneer Shipping Ltd v. BTP Tioxide Ltd (The Nema)  AC 724 was cited with approval in Swire Properties v. Secretary for Justice (2003) 6 HKCFAR 236: ‘where, as in the instant case, a question of law involved is the construction of a ‘one off’ clause the application of which to the particular facts of the case is an issue in the arbitration. Leave should not normally be given unless it is apparent to the judge upon a mere perusal of the reasoned award itself without the benefit of the adversarial argument, that the meaning ascribed to the clause by the arbitrator is obviously. But if on such perusal it appears to the judge that it is possible that argument might persuade him, despite first impression to the contrary, that the arbitrator might be right, he should not grant leave; the parties should be left to accept, for better or for worse, the decision of the Tribunal that they had chosen to decide the matter in the first instance.’
 Section 6(4), Schedule 2, the Ordinance.
 Swire Properties, Ibid (under the repealed Cap 341), paragraph 31: ‘Leave should not normally be given in ‘one-off’ disputes unless the arbitral tribunal’s construction is ‘obviously wrong’; but leave can sometimes be given in ‘standard clause’ disputes as long as there is at least ‘a strong prima facie case’ that the arbitral tribunal’s construction is wrong.’
 A and Ors v. The Housing Authority  HKCFI 147, HCCT 54/2017 (26 January 2018) where the court held that the award concerned construction of ‘specific words in provisions of the Contracts, in the context of the facts and particular work procedures of this case’ (at paragraph 26) where the defendant adduced evidence that the special conditions of the contracts in dispute were amended in early 2014 and thus had no relevance to subsequent contracts and that the number of contestants was small.
 Section 6(4), Schedule 2, the Ordinance.
 Section 6(5), Schedule 2, the Ordinance.
 Section 6(6), Schedule 2, the Ordinance.
 Leave may be granted subject to conditions as the court considers necessary in order to secure the just, expeditious and economical disposal of the appeal (Section 144A(3)(b)) and only if the appeal has a reasonable prospect of success or there is some other reason in the interest of justice why the appeal should be heard (Section 14AA(4)); Maeda Kensetsu Kogyo Kabushiki Kaisha (also known as Maeda Corporation) and Another v. Bauer Hong Kong Ltd, HCMP 1342/2017 (Hong Kong Court of Appeal) (4 September 2017).
 https://gia.info.gov.hk/general/201904/02/P2019040200782_307637_1_1554256987961.pdf, last accessed 7 July 2019.
 Part 10A, the Ordinance; Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Ordinance 2017, Ordinance No. 6 of 2017.
 The Law Reform Commission of Hong Kong, Report on Third Party Funding for Arbitration (October 2016), paragraph 3.13.
 Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Ordinance 2017 (Commencement) Notice 2018, L.N. 260 of 2018 (3 December 2018).
 Arbitration Ordinance (Cap 609) (Notice under Section 98P), G.N. 9048 (7 December 2018) https://gia.info.gov.hk/general/201812/07/P2018120700601_299064_1_1544169372716.pdf, last accessed 7 July 2019.
 www.devb.gov.hk/filemanager/en/content_880/SOPL_consultation_report.pdf, last accessed 7 July 2019.