FACV 3 / 2019

IN THE COURT OF FINAL APPEAL OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION
CIVIL APPEAL NO. 3 OF 2019
(ON APPEAL FROM CACV NO. 158 OF 2012)
__________________________

BETWEEN
廈門新景地集團有限公司 formerly known as Plaintiff
廈門市鑫新景地房地產有限公司 (Respondent)

and
ETON PROPERTIES LIMITED 1st Defendant
(裕景興業有限公司) (1st Appellant)

ETON PROPERTIES (HOLDINGS) LIMITED 2nd Defendant

(裕景興業(集團)有限公司) (2nd Appellant)

ETON PROPERTIES GROUP LIMITED formerly known as 3rd Defendant

ETON PROPERTIES (INTERNATIONAL) LIMITED

LEGEND PROPERTIES (XIAMEN) COMPANY LIMITED 4th Defendant

(利景興業(廈門)有限公司), a limited company incorporated
in Hong Kong

LEGEND PROPERTIES (XIAMEN) COMPANY LIMITED 5th Defendant

(利景興業(廈門)有限公司), a foreign-owned
enterprise incorporated in the People’s Republic of China

TAN LUCIO C (陳永栽) 6th Defendant

CHUA DOMINGO (蔡黎明) 7th Defendant

TAN ENG LIEN MARIANO (陳永年) 8th Defendant

KWAN KIE YIP (關基業) 9th Defendant

CHEUNG CHI MING (張志明) 10th Defendant

MOK PUI HONG (莫沛杭) 11th Defendant

___________________________________________

CASE FOR THE PLAINTIFF (RESPONDENT)

___________________________________________

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A. INTRODUCTION

1. This appeal involves the last in the long line of attempts

made by D1/ D2 to deprive P of the fruits of the award
obtained in the Mainland China (“the Award”). This
appeal will be the 12th time that D1/ D2 has sought
before the courts of Hong Kong to thwart P. It arises in
the following manner.

2. D1/D2 breached their agreement with P (“the

Agreement”). P brought the matter to the CIETAC
Tribunal (“the Tribunal”). At that stage D1/D2’s CA Judgment §54
defence was some argument that the Agreement was [PtA/4/166]
invalid under PRC law.

3. The Tribunal made an award (“the Award”) in P’s CA Judgment §§58-61

favour. It held that the Agreement was valid in law. It [PtA/4/168/170]
also held that performance was not impossible and
D1/D2 should continue to perform the Agreement.

4. D1/D2 failed to perform the Agreement as required by CA Judgment §§75-78

the Award, or take any steps to effect a transfer of shares [PtA/4/174-177]
in D4 to P. It brought the matter back to the Tribunal to
seek a termination of the Agreement. The Tribunal
again ordered D1/D2 to continue performance.

5. D1/D2 brought the matter back to the Tribunal again CA Judgment §§82-83
and sought directions as to how the Agreement could be [PtA/4/178]

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 performed, as their stance was that the Agreement could
not be performed. The Tribunal maintained its Award
and also held that it was functus officio.

6. P came to the Hong Kong courts to enforce the Award,

which was maintained by the Tribunal and not set aside
by the court in the seat of arbitration. P first obtained a CA Judgment §69
judgment in terms of the Award under the statutory [PtA/4/173]
process. But D1/D2 contended that because they had
transferred the shares of D4 to D3, it was not possible
for them to perform the Agreement and transfer the
shares to P. Following this, P then, inter alia, brought a CA Judgment §72
common law action on the award, seeking damages to [PtA/4/173]
put P in the position it would have been in if D1/D2 had
indeed performed the Award.

7. There is no longer any dispute in this Court as to the

existence of the common law action to enforce the
implied promise governed by the lex fori to perform an
award. It is a cause of action distinct from suing on the
underlying matrix contract. On the strength of this
common law action, P obtained a judgment from the
Court of Appeal (“the CA Judgment”) for damages to
be assessed for D1/D2’s failure to perform the Award.
The CA did, however, require P before entering
judgment to set aside the statutory judgment referred to
above. The assessment of damages is a matter for the

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 Hong Kong courts applying Hong Kong law but is
presently stayed.

8. D1/D2 insist, however, that this is somehow not

permissible. Their stance is to deprive P of the fruits of
a valid Award.

9. The mainstay of D1/D2’s theory throughout has been

that if P seeks damages for breach of the implied
promise to honour the Award, this is a matter that
should have been referred back to the Tribunal, and was
compulsorily within the province of the Tribunal’s
jurisdiction, and was governed by PRC law. This is of
course without any foundation and involves a
fundamental misconception of the common law action
on the award for enforcement of the implied promise to
perform the award. It is a matter solely for the
enforcement court. Moreover, as the CA has found (in CA Judgment §184
respect of which no leave to appeal has been granted), [PtA/4/212-213]
the Tribunal is functus. The case advocated by D1/D2
would lead to the absurd result that P should be left with
no remedy against D1/D2 despite their blatant refusal to
honour a valid arbitral award.

10. Another notable feature of this case is that the Award

was obtained some 14 years ago. Enforcement
proceedings against D1/D2 had started in Hong Kong
some 13 years ago. The attempts to delay the

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 enforcement of the Award by D1/D2 have rightly been
described by the CA as a “filibustering exercise”, and it
is high time that P should get the fruits of the Award.

11. The Appeal Committee granted leave to appeal to [PtA/21/405]

D1/D2 on the following 2 questions:

(1) Whether the jurisdiction of a Hong Kong court as

an enforcement court under a common law action
to enforce a Mainland arbitral award is
circumscribed or otherwise affected by the
statutory regime for enforcement of international
awards covered by the New York Convention
and Mainland awards; and if the answer is ‘yes’,
what should the approach of the court be?

(2) Whether the rule in Johnson v Agnew and/or

legal principle prevent(s) an enforcing court from
awarding damages on the basis that the
underlying contract was no longer subsisting
when there was an extant award for continued
performance of the underlying contract?

12. Before these two last remaining questions are dealt with
it is critical to examine what have now been finally
determined and from which no appeal lies. D1/ D2 in
their Case all too frequently ignores, contradicts or
strays into the following final determinations:

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(1) A common law action on the award is available
in Hong Kong as a means of enforcing the
obligations to honour the Award. The common
law action in Hong Kong exists as a right or
avenue of enforcement, in addition to and not
limited by the statutory machinery for entry of a
judgment in the same terms as the Award. See
CA Judgment §§97-103. [PtA/4/186-188]

(2) The common law action is an independent cause

of action from that of suing under the underlying
or matrix contract which gave rise to the Award.
It is founded on the breach of the implied
promise (implied in law) to honour the arbitral
award and arises as a new cause of action, if the
losing party does not honour the Award. It is not
governed by PRC law, the law governing the
matrix contract but is governed by Hong Kong
law, the lex fori. See CA Judgment §§104-114, [PtA/4/188-191, 202-
155-160; Appeal Committee’s Determination §8. 204]; [PtA/19/395]

(3) The common law action on the implied promise

for damages is not a matter which falls within the
scope of the arbitration agreement or has to be
brought before the arbitrators, who are in any
event functus. The common law action, to the
extent available on the particular facts, is a matter

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 for the Hong Kong courts alone and the Court
should not stay its proceedings. See CA
Judgment §§178-186; Appeal Committee’s [PtA/4/210-214];
Determination §7. [PtA/19/395]

(4) The necessary elements needed to plead in the

common law action have been pleaded, there is
no deficiency in the pleading, and it is not
necessary to establish an implied promise under
PRC law. See CA Judgment §§147-154; Appeal [PtA/4/201-202];
Committee’s Determination §9. [PtA/19/396]

(5) The entry of the statutory judgment did not give

rise to an election between inconsistent remedies.
The CA has determined that P is entitled to
vacate the statutory judgment and proceed by
way of a judgment for damages to be assessed.
See CA Judgment §§187-202; Appeal [PtA/4/214-220];
Committee’s Determination §11. [PtA/19/396]

13. These determinations of the Appeal Committee and the

CA mean that all that remain to be considered in D1/
D2’s Notice of Motion are: (1) §31(1)(b) (albeit this has [PtA/18/376-377];
been slightly re-framed by the Appeal Committee); and Appeal Committee’s
(2) §31(4). D1/ D2 have been refused leave on the Determination §§7, 10
[PtA/19/395-396]
remaining grounds.

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14. D1/D2’s key arguments in this appeal can be
summarised as follows:

(1) The damages granted by the CA Judgment for

breach of the implied promise to honour the
Award outflank the mandatory principles of the
New York Convention (“Convention”). Such
relief is different from or inconsistent with the
rights established by the Award and even barred
by it. The enforcing court in Hong Kong must
apply the mechanistic approach under the
statutory regime for registration and enforcement
of foreign awards.
(“the Outflanking Argument”)

(2) P’s claim for damages for non-performance of

the Award is based on loss of the benefit of the
underlying contract and is within the jurisdiction
of the Tribunal. It should be stayed and referred
back to the Tribunal, which is not functus to
arbitrate such claim.
(“the Stay Argument”)

(3) The damages claim is barred by the extant Award

which requires parties to continue to perform the
underlying contract. Applying Johnson v Agnew,
P ought to have applied to the Tribunal or the

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 supervisory court to set aside the Award to
enable it to make the damages claim.
(“the Johnson v Agnew Argument”)

15. As will be elaborated below, none of D1/D2’s

arguments are of merit. P’s headline responses to those
arguments are as follows:

The Outflanking Argument

(1) The action on the award is a straightforward and

unconstrained right of enforcement under
common law expressly allowed by the law of
Hong Kong by statute, here the enforcing court.
Its history stretches back over hundreds of years
and derives from an implied contract or implied
promise. It is expressly provided for in ss.40B
and 42 of the Arbitration Ordinance (Cap. 341)
(now repealed) (“AO”) in Hong Kong.1 It is a
new cause of action for breach of an implied
promise to honour the award separate from the
underlying matrix contract and governed by the
lex fori: see CA Judgment §§104-114, 155-160. [PtA/4/188-191, 202-
This is not open to challenge in this appeal. 204]

1
The present Arbitration Ordinance (Cap. 609) contains
provisions similar to ss.40B and 42 of Cap. 341: see ss.87 and
92 of Cap. 609.
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(2) A party enforcing such a breach can invoke the
full range of remedies or secondary obligations
for breach of promise and this includes damages.

(3) The enforcement remedy is not inconsistent with

or barred by the Award. Quite the opposite. It is
designed to and the ultimate assessment will put
P in the position by a sum of damages as if the
Award had been honoured: see Chitty on
Contracts (33rd edn, 2019), §26-001; One Step
(Support) Limited v Morris- Garner [2019] AC
649, §§31-36. The promise to honour the Award
is itself the source of the secondary obligation to
pay damages in consequences of breach:
Photoproduction Limited v Securicor [1980] AC
827, 848G-849D.

(4) The action on the award is also not inconsistent

with the Convention or the statutory machinery.
The right to such an action at common law is
clearly and expressly provided for and preserved
by Article VII(1) of Convention and ss.40B and
42 of the AO.

(5) It is also quite clear from the authorities and

textbooks that P is not restricted in the common
law action to the mechanistic entry of a judgment
in the precise terms of the Award, particularly

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 when here this would not address or compensate
P for D1/ D2’s breach of promise to honour the
Award. It does not outflank the arbitration
agreement either. The enforcement of this
promise is a matter for the enforcement court not
the Tribunal: see §12(3) above.

(6) The correct approach is for P’s claim for

damages to proceed to a trial for assessment. The
relevant limits or circumscription on the
assessment of damages are those considerations
that apply to all claims for breach of promise
under Hong Kong law (whether express or
implied promises) and will be governed by the
compensatory principle – to place P by an award
of money in the position it would have been in
had the promise to perform the Award been
honoured.

The Stay Argument

(7) The Stay Argument arises out of the

“construction argument” in respect of which
leave to appeal was refused: Appeal [PtA/19/395]
Committee’s Determination §8. This is the end
of the matter.

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(8) In any event, P’s damages claim for non-
performance of the Award falls within the
enforcement jurisdiction of the Hong Kong
court, which should not be confused with the
determination jurisdiction of the Tribunal. It is
not a claim under PRC law for loss of the benefit
of the underlying contract, but is a claim under
Hong Kong law for loss resulting from D1/D2’s
failure to give effect to the Award (which
mandates D1/D2 to continue to perform the
underlying matrix contract).

(9) Furthermore, the rulings of the CA/Appeal

Committee in refusing to stay P’s claims in
favour of arbitration have created an issue
estoppel.

(10) Referring P’s damages claim back to the

Tribunal is also impossible as the Tribunal has
treated itself as functus and the arbitration
agreement as spent.

The Johnson v Agnew Argument

(11) It is no longer open to D1/ D2 to contend that the

statutory judgment continues to act as a barrier to
entry of a judgment on the common law action:
Appeal Committee’s Determination §11. The [PtA/19/396]

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 last argument therefore is whether the Award
itself operates as a barrier to a judgment on the
common law action. The answer is plainly not.

(12) Requiring P to vacate the Award would remove

the essential foundation of the common law
action on the award in the enforcing court. As is
clear from CA Judgment §151, the existence of [PtA/4/201-202]
the Award and its dishonour are necessary
constituent elements. The common law action
seeks remedies for non-performance of the
award, not the underlying contract. There is no
reason why P has to set aside the Award in order
to enforce the Award. The underlying policy now
is to aid enforcement of the promise to honour
the award. D1/D2’s submissions cut right across
this.

(13) The multiple other defects in D1/ D2’s analysis

of Johnson v Agnew is set out in §§81-90 below.

B. RELEVANT BACKGROUND

16. P and D1/D2 were parties to the Agreement dated CA Judgment §§12-18
04.07.2003 containing promises to transfer D1/D2’s [PtA/4/152-155]
shares in D4 to P.

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17. Disputes between P and D1/D2 had arisen as to whether CA Judgment §§25-
D1/D2 were entitled to terminate and stop performing 28, 32 [PtA/4/157-
158]
the Agreement. The matter went to arbitration.

18. By the Award dated 27.10.2006, the Tribunal ordered CA Judgment §61
D1/D2 to “continue to perform the Agreement made on [PtA/4/170]
4 July 2003”. As explained in §§84-90 of P’s Case in
FACV 5/2019, the obligation imposed on D1/D2 by the
Award under PRC law was in essence that they ought
to perform their obligations under the Agreement,
including the transfer of shares in D4 to P.

19. Pausing here, the reliance on the trial judge’s

observations in §8 of D1/D2’s Case is misplaced. The
suggestion that D5’s development of the land had
rendered the performance of the Agreement impossible CA Judgment §59(4)
has not only been rejected by the Tribunal, but also [PtA/4/169]
forcibly by Reyes J in his Judgment dated 24.06.2008
(at §§102-109).

20. On 31.10.2007, the Hong Kong court entered a

judgment in terms of the Award (“HCCT Judgment”)
upon P’s ex parte application under ss.2GG and 40B of
the AO.

21. On 02.01.2008, D1/D2 applied to set aside the HCCT CA Judgment §§70-71
Judgment on the ground that performance of the Award [PtA/4/173]
was now impossible by reason of inter alia the divest of

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 control of D4 from D1/D2 to D3 back in November
2005, which was not known to P during the arbitration.

22. P commenced this Action on 27.05.2008.

23. On 24.06.2008, D1/D2’s application to set aside the

HCCT Judgment was dismissed by Reyes J, whose
judgment was affirmed by the CA on 22.05.2009. In the
CA’s Reasons for Judgment (“CA Set Aside
Judgment”), Le Pichon JA held (at §31) that there was
no insuperable impediment to the transfer of D4’s
shares registered in the name of D3 to P, and in any
event the alleged impossibility was “self-inflicted” by
the Eton group.

24. The criticism (at D1/D2’s Case §10) that P did nothing
to enforce the HCCT Judgment - which ought to be
honoured by D1/D2 in the first place - is wholly unfair.
As observed in §32 of the CA Set Aside Judgment,
direct enforcement by way of contempt proceedings
was practically impossible.

25. D1/D2 continued to refuse to honour the Award, and CA Judgment §§75-78
they commenced a 2nd arbitration in an attempt to obtain [PtA/4/174-177]
orders for the termination of the Agreement. The
Tribunal rejected D1/D2’s claims in another award
made on 22.04.2009.

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26. On 19.06.2009, D1/D2 applied to the Tribunal seeking, CA Judgment §82
inter alia, (a) directions on how the Agreement should [PtA/4/178]
be performed; and/or (b) what relief – including
damages or other appropriate reliefs – that P should
have for meeting the purpose of the Agreement.

27. The Tribunal replied on 27.07.2009 (“July 2009 CA Judgment §83

Reply”) that it did not accept D1/D2’s application, [Pt/A/4/178]
stating that the Award was final and it had not left out
any matter which would need to be further determined
according to the PRC Arbitration Law.

28. D1/D2 then applied for, and Fok J (as Fok PJ then was)
in his Judgment dated 16.03.2010 (“CFI Stay
Judgment”) granted, an order to stay the Action against
D1/D2 for arbitration on the basis that P’s claims,
including the constructive trust and conspiracy claims,
were within the scope of the arbitration agreement.

29. By Judgment dated 15.12.2010 (“CA Stay

Judgment”), the CA held that the Action should not be
stayed to arbitration. Kwan JA noted (at §§29-30) that
P’s claims against D1/D2 were on the basis of breach of
implied promise to perform a valid arbitration award,
which fell within the court’s enforcement jurisdiction.

30. By Determination dated 04.05.2011 (“Appeal

Committee’s Determination on Stay”), the Appeal

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 Committee refused D1/D2’s application for leave to
appeal against the CA Stay Judgment. The Chief Justice
held that:

(1) P’s claims were aimed at undoing the

dispositions made in the impugned transactions
or at assigning liability for such dispositions, and
they formed part of proceedings to enforce the
Award based on the implied promise, instead of
claims arising out of the Agreement which have
to be referred to arbitration (at §§2-4);

(2) as the Tribunal had by the July 2009 Reply

treated the arbitration agreement as spent and
incapable of further performance, there was no
effective basis for a stay to arbitration (at §5).

31. On 14.12.2011, P applied for leave to introduce the

green amendments at RASoC §35 to give further
particulars of P’s loss and damage. §35(5) pleads P’s
loss and damage if the court is to refuse to grant relief
to enable P to become the sole shareholder of D4, which
P says should be measured by the difference between (i)
the value of the entire shareholding of D4 and (ii) the
sum of RMB120,000,000 which P agreed to pay under
the Agreement.

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32. It is a recurring theme of D1/2’s submissions that the
damages claim in RASoC §35(5) in green is for loss of
economic benefit of the Agreement or loss of bargain
upon termination of the Agreement (see D1/D2’s Case
§§2(3), 17, 24, 33). This mischaracterises the nature of
P’s claim:

(1) §35(5) does not identify the basis of the claim for
damages. But it certainly does not assert the basis
of the damages claim to be breach of the
Agreement.

(2) As noted in §§29-30 above, in the CA Stay

Judgment and the Appeal Committee’s
Determination on Stay, the courts had already
noted that P was seeking to enforce the implied
promise to enforce the Award.

(3) RAD §83B avers that the claim could be based

on (i) enforcement of the Agreement; (ii)
enforcement of the implied promise to perform
the Award; and (iii) damages on the basis of the
tort of conspiracy. RAD §83D then pleads to
possibility (ii). It is noteworthy that §83D does
not assert that the claim on the basis of the
implied promise to perform the Award is within
the ambit of the arbitration clause (in contrast see
RAD §83C which pleads to possibility (i)).

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(4) In AReply §24(3) (which pleads to RAD §§83B-
D), P confirms that it is entitled to enforce the
Award by “any remedy which is exigible from the
Hong Kong court of enforcement”.

(5) In the premises P was perfectly entitled to base

its damages claim under §35(5) on the cause of
action of breach of the implied promise to
perform the Award.

(6) The loss suffered by P resulting from D1/D2’s

failure to give effect to the Award, which
required parties to continue to perform the
Agreement, may understandably be similar to the
loss resulting from D1/D2’s failure to perform
the Agreement. But a claim for loss of the benefit
of the Award aims to put P in the position as if
the Award (as opposed to the matrix contract)
had been honoured, applying the lex fori on the
quantification and assessment of damages as well
as causation. As Barma JA rightly observed at
§10 of the Judgment dated 10.12.2018 (refusing [PtA/12/316-317]
to grant D1/D2 leave to appeal to this Court),
damages to compensate for the non-performance
of the Award might well be different from the
loss of bargain under the Agreement. There may
well also be different limitation periods and dates
of assessment.

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 (7) In short, the claim for the breach of the implied
promise is juridically different from a claim for
breach of the Agreement. It cannot possibly be
caught by the arbitration clause.

33. By Judgment dated 14.06.2012, the trial judge (DHCJ [PtA/1/1+]

Stone QC) dismissed all of P’s claims.

34. By the CA Judgment dated 15.04.2016, the CA allowed [PtA/4/146+]

P’s appeal in respect of the claim for the breach of the
implied promise to perform the Award.

35. Upon P’s election to give up the HCCT Judgment, [PtA/10/295-296]

judgment was entered for damages against D1/D2 for
breach of the implied promise to honour the Award. The
precise measure and quantum of such damages will
have to be determined in the trial of RASoC §35(5)
which has been hived off by the CA in the Decision
dated 03.02.2012.

C. THE OUTFLANKING ARGUMENT

36. The central argument advanced by D1/D2 is that

irrespective of whether a successful party in arbitration
seeks an order to enforce an award in the same manner
as a judgment to the same effect or brings a common
law action on the award, in each case the same

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 mechanistic approach applies requiring ultimately a
judgment only in the exact terms of the award,
otherwise it would permit the outflanking of the
operation of the arbitration agreement and be
inconsistent with the statutory and Convention regimes.
See D1/D2’s Case, §§44-50.

37. These arguments are without foundation or merit. The

common law action on the award permits the full range
of remedies available to enforce breach of promise. This
is clear from the many authorities and textbooks
examined in CA Judgment §§115-145. It is also clear [PtA/4/191-200]
by reference to first principles regarding the
enforcement of implied promises at common law. The
promise to perform the Award it itself the source of the
secondary obligation to pay damages: see §15(3) above.
Indeed D1/ D2’s contention is also inconsistent with the
binding effect of those portions of the CA judgment
from which there is no leave, that an action on the
implied promise is not a matter to be referred to
arbitration or within the arbitration agreement but is a
new cause of action under a separate and distinct
promise to honour the Award: see §§12(2)-(3) above.
This will be examined in Section C2 below.

38. It cannot properly be said that the statutory enforcement

regime and the Convention demand such a mechanistic
approach to the common law action or that the common

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 law action somehow operates impermissibly to outflank
that regime. Quite the contrary, the common law action
is expressly allowed for and it takes effect according to
its terms permitting a court to grant all such remedies as
are available for breach of promise. It will be
convenient to start with examining the Convention and
statutory regimes in Section C1 below.

C1. The statutory regime in Hong Kong and Article

VII(1) of the Convention

39. Irrespective of whether a court is dealing with

enforcement of a Mainland award (s.40B of the AO) or
a Convention Award (s.42 of the AO), in Hong Kong it
is open to a successful party in arbitration to enforce
either by way of a common law action or by the
statutory judgment: see CA Judgment §§97, 192. [PtA/4/186-187, 216]

40. As CA Judgment §101 correctly found the entry of a [PtA/4/188]

statutory judgment is expressly limited to the entry of a
judgment in the terms of the award. This is clear from
the terms of s.2GG referred to in each of s.40B and s.42.

41. A common law action for breach of the implied promise

to honour the award, however, stands on a different
footing. It is not a cut through statutory procedure for
the direct enforcement of the Award itself as judgment
in the same terms, but rather an action for breach of an

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 implied promise to honour the award governed not by
the terms or governing law of the underlying contract:
see CA Judgment §§104-114, 155-160; Appeal [PtA/4/188-191, 202-
Committee’s Determination §8. It does not offend the 204]; [PtA/19/395]
statutory requirement to arbitrate disputes under the
matrix contract (see D1/ D2’s Case §§40-42 and the
reliance on Article II of the Convention and Article 8 of
the UNCITRAL Model Law) because as the CA has
determined and the Appeal Committee has confirmed,
this is not a dispute under the matrix contract at all; it
is enforcement of a fresh cause of action for breach of
promise to honour the award: see CA Judgment §§178- [PtA/4/210-214];
186; Appeal Committee’s Determination §7. [PtA/19/395]

42. The common law action does not offend or outflank the
Convention regime. Rather, it is expressly preserved as
it is. This is made expressly clear by Article VII(1) of
the Convention, which is not referred to by D1/D2:2

“The provisions of the present Convention shall not

affect the validity of multilateral or bilateral
agreements concerning the recognition and
enforcement of arbitral awards entered into by the
Contracting States nor deprive any interested party
of any right he may have to avail himself of an
arbitral award in the manner and to the extent
allowed by the law or the treaties of the country

2
§40 of D1/D2’s case says “The Convention provides (where
material)” but it glaringly omits Article VII(1).
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 where such award is sought to be relied upon.”
(emphasis added)

43. The second part of Article VII(1) (as underscored

above) is known as the “more-favourable-right”
provision (“mfr-provision”) which has also been
referred to as the Convention’s “treasure and ingenious
idea”. It is a consequence of the Convention’s purpose
to facilitate the enforcement of foreign arbitral awards.
It embodies the principle that the Convention does not
operate to limit or curtail any right of enforcement
available under the laws of the court of enforcement.
The Convention operates as a ceiling of or maximum
level of control, it does not in any way restrict additional
methods or rights of enforcement: see Gaillard and
Berman, Guide on the Recognition and Enforcement of
Foreign Arbitral Awards, pp.305-310 (at p.306). The
rationale of this provision is to ensure enforcement to
the greatest extent possible and avoid depriving a party
who seeks recognition of an award of more favourable
possibilities under the national law of the State where
enforcement is sought. It is also said that the mfr-
provision’s underlying idea is to make possible the
enforcement of foreign awards in the greatest number
of cases possible. See Albert Jan van den Berg, The
New York Arbitration Convention of 1958 (1981), §I-
4.2.1, pp.81-83.

- 24 -
 44. The consequence of the mfr-provision is that the
domestic law on the enforcement of foreign awards is
preserved: van den Berg, §I-4.3, p.88. The mfr-
provision refers to the “manner” one may “avail”
himself of a foreign arbitral award, and the common law
action on the award is unaffected and allowed: van den
Berg, §I-4.3, p.89; Wolff, New York Convention:
Convention on the Recognition and Enforcement of
Foreign Arbitral Awards of 10 June 1958 (2nd edn,
2019), p.491. As Professor van den Berg explained in
the aforementioned pages of his work:

“A consequence of the mfr-provision is that the New

York Convention does not supersede the domestic
law on the enforcement of foreign awards of the
country where the enforcement is sought.
…
The enforcement of foreign awards under domestic
law is, in principle, not limited to actions based on
specific statutory provisions. A possible action
outside the statutory provisions may be the action ex
3
contractu. Under this action the award is
considered as a contract between the parties. A
variant of this action is to base it on the obligation
assumed under the arbitration agreement to carry
out the arbitral award. The action ex contractu is
more complicated than the enforcement of foreign

3
Footnote 228 of p.89 of van den Berg says action ex contractu
is called an “action on the award” in the common law countries.
- 25 -
 awards under the New York Convention and most of
the domestic laws as it involves the bringing of an
ordinary contract claim with all possible defences
thereto. It is a last remedy which may be useful in
cases where the other actions fail”. (emphasis
added)

45. The preservation of the common law action on the

award is consistent with the object and purpose of the
Convention, which was intended to interface with a
variety of legal traditions and leave a substantial role for
national law and national courts to play in the
international arbitral process: see Yugraneft
Corporation v Rexx Management Corporation [2010] 1
SCR 649, §19.

46. Mainland awards are not enforceable under the

Convention after 01.07.1997 (as it does not apply to
inter-regional enforcement). They are enforceable
under the Arrangement Concerning Mutual
Enforcement of Arbitral Awards Between the Mainland
and HKSAR (“Arrangement”) dated 21.06.1999.
Nevertheless, the legislative regime implementing the
Arrangement was made in accordance with the spirit of
the Convention. See Arbitration in Hong Kong, A
Practical Guide (4th edn, 1999), §§19.039, 19.041.

- 26 -
47. In the premises, the following points are abundantly
clear:

(1) The Convention, by virtue of the mfr-provision

under Article VII(1), does not circumscribe, limit
or supersede the common law action on the award
available in Hong Kong.

(2) The common law action on the award, together

with all its features under domestic law (which
will be discussed in Section C2 below), is
therefore allowable under the Convention. The
Hong Kong statutory regime expressly preserved
the common law action in relation to enforcement
of a Mainland award by virtue of s.40B of the AO.

(3) The nature and juridical basis of the common law

action on the award should therefore be
determined by looking into the common law
jurisprudence. It is in no way circumscribed or
otherwise affected by the regime under the
Convention.

(4) The submissions in Section C of D1/D2’s Case

have simply overlooked Article VII(1) of the
Convention. The analysis there is based on the
fundamentally wrong premise that the domestic

- 27 -
 law on enforcement of foreign awards has been
wholly excluded and replaced by the Convention.

C2. The features of the common law action on the award

and its greater flexibility as treated in the authorities

48. The availability of the common law action on the award

can be traced back to the early 18th century: Purslow v
Bailey (1705) 2 Ld. Raym 1039. An examination of the
features of the common law on the award as treated by
the authorities, together with the fact that it is preserved
as it is by the Convention and statutory regimes,
completely refute D1/D2’s argument that the enforcing
court should apply a mechanistic approach in granting
relief in the common law action.

49. First, in an action on the award, the action is founded on

the promise implied in the arbitration agreement to
perform a valid award: Purslow, 1040; Bremer
Oeltransport GmbH v Drewry [1933] 1 KB 753, 759,
764; Mustill & Boyd, Commercial Arbitration (2nd edn,
1989), p.417. It is not brought on the award itself or the
underlying matrix agreement.

50. Second, the action on the award is based on the new

cause of action to perform the award, which replaces the
original cause of action under the substantive
agreement: see The Bumbesti [1999] 2 All ER (Comm)

- 28 -
 187, §§9-12; FJ Bloemen Pty Ltd v Council of the City
of Gold Coast [1973] AC 115, 126D-E; Agromet v
Maulden Engineering Ltd [1985] 1 WLR 762, 772D-E;
Hogg, The Law of Arbitration (1936), pp.121-122.

51. Third, a foreign award is (like a domestic award)

enforceable by bringing an action on it: Norske Atlas
Insurance Co Ltd v London General Insurance Co Ltd
(1927) 28 Ll.L.R. 104. The enforcing court in Hong
Kong (and England) would imply the promise to
perform the award as part of the law of remedies and
procedure of the lex fori: see Kahn, Arbitration in
England and Germany (1930) JCL 228, 239, 244-245;
Dicey, Morris & Collins on the Conflict of Laws (15th
edn, 2012), §16-107

52. Each of the above features have been conclusively

determined by the CA and the Appeal Committee: see
CA Judgment §§104-114, 155-160; Appeal [PtA/4/188-191, 202-
Committee’s Determination §8. 204]; [PtA/19/395]

53. Fourth, as examined above (see §12(3) above) by

reference to first principles since the cause of action is
contractual in nature, the enforcing court may grant a
wide range of remedies to the party enforcing the award.
It is not confined to entering judgment in terms of the
award under the statutory process covered by the
Convention. The flexibility afforded by the common

- 29 -
law action on the award is also well-established by the
leading arbitration textbooks and authorities on the
common law action:

(1) See (a) Mustill and Boyd, p.416; (b) Hogg,

pp.158-159; and (c) Merkin, Arbitration Law,
§19.6. Beatson J (as he then was) in African
Fertilizers & Chemicals NIG Ltd (Nigeria) v BD
Shipsnavo GmbH [2011] 2 CLC 761 at §§16-17
applied the passage in Mustill & Boyd as a correct
statement of the law.

(2) D1/ D2’s Case does not expressly deal with the
passage in Mutsill & Boyd save to repeat what was
said by the trial judge (see fn 12). Nevertheless,
as is clear from the CA’s analysis, the common
law action in the present case does not involve the
re-characterisation of the Award but the
enforcement of the implied promise. The
authorities cited by Mustill & Boyd are addressed
by CA Judgment §§117-145 and in sub- [PtA/4/191-200]
paragraphs (4)-(10) below. To the extent it is
suggested that the common law action only exists
when the statutory remedy is unavailable
(D1/D2’s Case §55) this is incorrect. It is clear
from the terms of the Convention and the AO that
either can be used.

- 30 -
(3) When the arbitral tribunal orders the losing party
to perform some non-monetary obligations, the
enforcing court is at the liberty to import its own
rules of substantive law as to specific performance
to decide whether a decree of specific
performance is appropriate to give effect to the
order of the arbitrators: see Blackett v Bates
(1865) L.R. 1 Ch. App 117, 124-125; Nickels v
Hancock (1855) 7 D.M. & G. 300, 314.

(4) Where the court considers a decree of specific

performance is not appropriate to give effect to the
award, it is entitled to exercise its ordinary
jurisdiction to award damages for failure to
perform the award. In Selby v Whitbread & Co
[1917] 1 KB 736, the plaintiff sought specific
performance of the arbitral award, which had
ordered that certain works be carried out to the
building by way of support to a neighbouring
building under a party wall agreement. It was held
by the enforcing court that a decree of specific
performance would not be granted as the
difficulties of enforcement were obvious.
Nevertheless, McCardie J ordered damages for the
“default of the defendants in carrying out the
award”: see 754-755. In this regard, see also the
analysis in §§128-137 of the CA Judgment which [PtA/4/195-198]
is irrefutable.

- 31 -
(5) The attempt to distinguish Selby in D1/D2’s Case
§§66-67 is misconceived and without substance.

(a) The fact that the award in Selby was made

under a statutory arbitration is a distinction
without difference.

(b) In giving damages for the “default of the

defendants in carrying out the award”,
McCardie J was clearly not rescinding the
award or modifying the award. Precisely the
same applies in the present appeal.

(c) The action in Selby was brought to enforce an

award made under the London Building Act,
1894, and also to recover damages at
common law for the withdrawal of support
afforded to the plaintiffs’ house by the
defendants' house (see 737). Nevertheless,
the latter claim for damages at common law
was rejected (see headnote 3 and 752-753)
and so it is incorrect for D1/D2 to contend
(see D1/ D2’s Case §66) that the damages
awarded were on the common law action for
withdrawal of support.

(6) In Birtley & District Co-Operative Society Ltd v

Windy Nook & District Industrial Co-Operative

- 32 -
Society Ltd (No 2) [1960] 2 KB 1, an arbitral
tribunal made an order that co-operative services
were to be provided exclusively by the plaintiffs
in a particular area and that the defendants should
not canvass for customers or trade in a defined
area (see 5). The defendants refused to abide by
the terms of the award. The plaintiffs then claimed
a declaration that this award was binding on the
defendants, along with an injunction preventing
the defendants from providing a co-operative
service in the defined area, and inquiry as to
damages by reason of the dishonour of the award.
The claim for injunction was allowed; equally an
inquiry of damages was directed (see 19). In doing
so first it is quite clear that this was not
mechanistic enforcement. The court must have
satisfied itself that it had jurisdiction to order an
inquiry into damages and injunction for failure to
perform a non-monetary award. The judgment is
sound and reflects the overall policy of the court
to give effect to the promise (as a matter of
contract) to honour the award: see Gee on
Commercial Injunctions, (6th edn, 2016), §6-033,
fn 122. The CA’s treatment of Birtley in CA
Judgment §§138-145 is adopted. Furthermore, [PtA/4/198-200]
Birtley has been cited more recently in African
Fertilizers at §17 without any suggestion it is not
reliable or accurate.

- 33 -
(7) In Dalmia Cement Ltd v National Bank of
Pakistan [1975] QB 9, the claimant (“Dalmia”)
sought to enforce two awards under the statutory
machinery in s26 of the Arbitration Act, each of
which ordered the bank to pay Dalmia a sum of
money “in India” with interest “until the date of
actual payment”, under the statutory process. Kerr
J refused the application as the awards were for
payment “in India”, holding that if Dalmia wished
to benefit from the awards in England”, they
would have to bring an action for damages for
failure to pay the sums awarded (see 24G). This
clearly contemplates that an action at common law
could be brought to seek relief which is not in
identical terms to the award.

(8) Dalmia accordingly brought a common law action

on the awards in proceedings reported as Dalmia
Dairy Industries Ltd v National Bank of Pakistan
[1978] 2 Lloyd’s Rep 223. Kerr J and the Court of
Appeal granted Dalmia’s damages for the bank’s
failure to pay the sums awarded “in India”, again
illustrating the non-mechanistic nature of the
common law action.

(9) Dalmia by cross appeal also sought to claim

interest at rates over and above that expressly
stipulated in the awards, up until the date of

- 34 -
 payment under s.3(1) of the Law Reform
(Miscellaneous Provisions) Act 1934 on the basis
that its claim was for damages. The Court of
Appeal considered (at 302) that: it did have a
discretion under s.3(1) of the 1934 Act to award
interest at such rates as it considered fit for the
claim in damages; as a matter of discretion,
however, it would have been wrong to make an
order to substitute its decision for the decision
made by the arbitrator as regards interest, as the
parties had left it to the arbitrator to make a
decision on the rate of interest and it had done so.

(10) This decision assists P and the attempt in D1/D2’s

Case §§63-65 to diminish the importance of
Dalmia should be rejected. Not only does it cut
across the mechanistic approach of D1/D2 but in
the present action clearly P is not seeking the
recovery of a sum in damages by way of
substitution of or inconsistent with a sum ordered
in the Award. To the contrary, it is seeking to be
put in the position as if the Award made was
honoured. This is further emphasised by the
manner in which this case was then treated in
Yukos (see below).

(11) In Yukos v Rosneft [2014] 2 Lloyd’s Rep 435 (a

Convention award case), Simon J held that interest

- 35 -
 under s.35A of the Senior Courts Act 1981 could
be awarded in principle by the court in the
common law action where the arbitrators had
jurisdiction, but did not, order interest in the award
(§81(2)(b)). The award debtor contended that the
English court could not order interest, because the
parties had agreed that the question of interest
should be dealt with by the tribunal (§75). Simon
J rejected that submission, after citing Dalmia, by
pointing out that the arbitrators in the case before
him had not made any decision on interest, nor is
there a possibility of two rates of interest –
accordingly an award of interest would not be
“altering” the arbitrators’ decision (§78). It is
therefore clear that an action on the award can
yield remedies which could have been ordered by
the tribunal, and what the enforcement court is
asked to do is not altering the arbitrators’ decision,
but only enforcing it.

54. The flexibility afforded by the common law action is

also supported by the Appeal Committee’s
Determination on Stay, in which the Chief Justice took
the view the constructive trust claim to undo the
dispositions of D4’s share formed part of proceedings
to enforce the implied promise to perform the Award
(see §30 above).

- 36 -
55. It is hardly surprising that the common law action on
the award should be afforded greater flexibility than the
statutory procedure under s.2GG of the AO:

(1) The statutory procedure is a summary process

which is to be invoked ex parte. The judgment
entered has to be, on the terms of the statute itself,
“in terms of the award”. There is a policy interest
to enter judgment in terms of the award under this
procedure, namely in ensuring the effective and
speedy enforcement of international arbitration
awards (see Re PetroChina International (Hong
Kong) Ltd [2011] 4 HKLRD 604, §12).

(2) Neither the wording of s.2GG (which does not

apply to the common law action) nor the policy
underlying the Convention (a mechanistic
approach being the quid pro quo for speed of a
summary procedure) applies to the enforcement
by way of a common law action on the award
which stretches back over hundreds of years, and
was expressly preserved by the Convention. The
dictum of Gross J in Norsk (see D1/D2’s case §56)
does not assist D1/D2.

C3. P’s damages claim does not outflank the Convention

- 37 -
56. P’s damages claim is for D1/D2’s breach of the implied
promise to perform the Award as part of the
enforcement proceedings. It is not for the failure to
perform the Agreement (see §32 above).

57. For the reasons set out in Section C1 above, the

common law action on the award and its features are not
circumscribed or otherwise affected by the Convention.
By virtue of the mfr-provision, the Convention
expressly preserves the domestic law on enforcement of
foreign awards.

58. Under the common law action on the award, the party
should enjoy the flexibility of pursuing a range of
remedies as if it is an ordinary contract claim: see
Section C2 (in particular §§53-55) above.

59. Accordingly, the Outflanking Argument and the

submissions made in Section D1 of D1/D2’s Case must
be rejected by this Court.

60. For completeness, it is difficult to see how the various

cases cited in Section C of D1/D2’s Case support their
argument. For example:

(1) Fiona Trust is a case concerning the scope of the

arbitration agreement and has no bearing on the
nature of the common law action on the award.

- 38 -
 (2) Walker, Gater, and Sonatrach all dealt with
enforcement under the statutory process and
concerned entirely with the relevant statutory
regime on interest. The present case is not
concerned with enforcement via the statutory
process at all. The analysis in CA Judgment [PtA/4/207-210]
§§170-176 is adopted.

(3) West Tankers was a case entirely on the scope of

the statutory process and there was no action on
the award: see CA Judgment §191. It is not easy [PtA/4/215-216]
to see how the dictum of Toulson LJ (as referred
to in D1/D2’s Case §56(2)) is relevant.

(4) IPCO was also an enforcement case under the

statutory process. Given that the Convention
preserves the common law action on the award as
it is, it offers no assistance to D1/D2. Furthermore,
the wording of the procedural rules in England did
not authorise the imposition of security in the first
place (see §44).

D. THE STAY ARGUMENT

D1. No leave to appeal

- 39 -
61. As a preliminary objection, it is submitted that the Stay
Argument arises out of the “construction argument” in
respect of which leave to appeal was refused. At its
core, this argument hinges on whether P’s damages
claim fell within scope the arbitration agreement:
D1/D2’s Case §§72, 74. The Appeal Committee held
that this is a case-specific issue which raises no question
of great general or public importance: see §12(3) above.

D2. The Tribunal has no jurisdiction over matters of

enforcement

62. In any event, the argument that P’s damages claim

should be stayed in favour of arbitration is devoid of
merit.

63. The clear position on the authorities is that the common

law action on the award is based on the fresh cause of
action of breach of implied promise to perform the
award, which replaces the original cause of action under
the underlying contract: see §50 above. This is a matter
of enforcement and is by its nature beyond the scope of
the arbitration agreement. In the graphic language of
the authors of Redfern & Hunter quoted in D1/D2’s
Case §49, “When the arbitrators take charge they take
over the baton and retain until they have made an
award. At this point, having no longer a function to
fulfil, the arbitrators hand back the baton so that the

- 40 -
 court can in case of need lend its coercive powers to the
enforcement of the award”.

64. For reasons stated in §32 above, P’s damages claim

does not concern the breach of the Agreement. It
concerns the breach of implied promise to perform the
Award.

65. The fact that the implied promise is contractual in

nature (see §49 above) does not confer jurisdiction on
the Tribunal. The Tribunal only has jurisdiction over the
parties’ substantive disputes. It does not have
jurisdiction over matters of enforcement of its orders:
see Mustill & Boyd, p.416; Hogg, p.117.

66. On D1/D2’s logic, any claim under the common law

action on the award, even if it seeks relief in terms of
the award, should be referred back to the arbitral
tribunal as the promise is contractual and rests upon the
arbitration agreement. This cannot be right. The
arbitration agreement plainly does not cover claims
arising from the stage of enforcement.

67. The two authorities referred to in D1/D2’s Case §74, i.e.

Playa Larga and Damianos, applied the “sufficient
close connection test” in determining whether the tort
claims (not involving enforcement of awards) fell
within the scope of the relevant arbitration clauses.

- 41 -
 They clearly have no bearing on the issue to be decided
by this Court, viz. whether the damages claim in the
enforcement stage for breach of the implied promise to
perform the Award fell within the arbitration agreement
between P and D1/D2.

D3. Issue Estoppel

68. Moreover, the very question of whether D1/D2’s

liability for breach of implied promise to perform a
valid arbitration award was a matter for the Tribunal
was the subject of the final determination of the CA
Stay Judgment and Appeal Committee’s Determination
on Stay: see §§15-18 (Rogers VP) and §§28-32 (Kwan
JA) of the CA Stay Judgment; §6 of the Appeal
Committee’s Determination on Stay.

69. As a matter of law, determinations in interlocutory

application can give rise to issue estoppel, as long as
they finally determine an issue in the case: The Sennar
(No 2) [1985] 1 WLR 490, 494.

70. This is particularly so where the question is whether the

Court should cede jurisdiction to an arbitral tribunal,
and where that question has already been decided by the
Court: Doleman & Sons v Ossett Corporation [1912] 3
KB 257, 268-269.

- 42 -
71. The fact that the green amendments were not before the
CA/Appeal Committee is neither here nor there. Both
the CA/Appeal Committee were well aware that the
basis of P’s claims were breach of implied promise to
perform a valid arbitral award (see §§29-30 above).

72. Further, as noted in §180 of the CA Judgment, the CA [PtA/4/211]

was then fully aware that P was seeking substantive
damages for the failure of D1/D2 to honour the Award.

73. For these reasons D1/D2 should be debarred from

making the Stay Argument.

D4. The Tribunal is functus

74. As a further answer to the Stay Argument, it is clear that

the Tribunal has treated itself as functus and there
cannot be any stay in favour of arbitration. The CA was CA Judgment §184
absolutely right in making this holding, and no leave to [Pt/A/212-213]
appeal was granted in this connection. This is once more
the end of the matter.

75. The Tribunal was asked to consider an order of damages

as an alternative remedy for P against D1/D2: see §26
above. By the July 2009 Reply, it declined this request.
The July 2009 Reply was not predicated on the fact that
the application had been made by D1/D2, instead of by
P. As observed by the Chief Justice in §5 of the Appeal

- 43 -
 Committee’s Determination, the Tribunal has therefore
treated the arbitration agreement as spent and incapable
of further performance.

76. Under Hong Kong law when an arbitrator makes a final

award his authority as an arbitrator comes to an end:
Hogg, p.117.

77. D1/D2 have adduced no evidence on the PRC

Arbitration Law or CIETAC Rules to justify the
speculations that:

(1) “had P informed the Tribunal that it opted for

damages for failure to perform the Agreement,
there is no reason the Tribunal would even
hesitate to rule on the matter” (D1/D2’s Case,
§77); and

(2) P could have recourse to the Beijing court as the

supervisory court to rule on the Tribunal’s
jurisdiction, and that the Beijing court would remit
the matter to the Tribunal (D1/D2’s Case, §79).
Under Hong Kong law, a ruling of the arbitral
tribunal that it does not have jurisdiction is not
subject to appeal: see s.34(4) of the Arbitration
Ordinance (Cap. 609). Brunswick is a case on
UNCITRAL Modal Law, but not the PRC
Arbitration Law or CIETAC Rules. Lam J (as Lam

- 44 -
 VP then was) held that as the tribunal in that case
declined to assume jurisdiction to arbitrate on the
counterclaims there was no issue estoppel or res
judicata on those counterclaims and the
respondents could litigate the same afresh. It is not
easy to see how this case can assist D1/D2.

78. Cukurova does not assist D1/D2 too. As rightly

analysed in CA Judgment §§185-186, in Cukurova the [PtA/213-214]
two awards on specific performance were partial
awards and the claimant had reserved its claim for
damages (see §17) before the final award was made.
There was, on the facts of that case, no question of
functus.

E. THE JOHNSON V AGNEW ARGUMENT

79. The essence of D1/D2’s argument on Johnson v Agnew

is that the extant Award and the judgment for damages
to be assessed by way of an action on the Award are
mutually inconsistent. As such, P must take necessary
steps to vacate the Award in the Tribunal or the
supervisory court before it may obtain any remedy for
its damages claim.

80. The argument is unsustainable for multiple reasons.

- 45 -
81. First, the Award is not inconsistent with the action on
the Award (contrast D1/D2’s Case §81). Indeed, the
existence of the Award and its subsequent dishonour are
necessary elements for the action at common law (see
CA Judgment §147 and Appeal Committee’s [PtA/4/201];
[PtA/19/396]
Determination §9). If P were to give up the Award, or
seek its setting aside, this would cut away the essential
foundation on which the action on the Award is based.
Without the Award, there could be no common law
action for its enforcement. It cannot possibly be a
requirement for a common law action for damages for
dishonour of an award that the contract be performed
that the award must first be set aside.

82. Second, once more under this issue, D1/D2 conflates

the enforcement of the award with the underlying
claims in arbitration under the matrix contract. This
Court is only concerned with the enforcement of the
Award. The CA rightly described the relevant issue
(see CA Judgment §§187- 202, and 190 in particular) as [PtA/4/214-220]
being whether entry of the statutory judgment precluded
P once and for all from later seeking to bring a common
law action on the award. The CA concluded that it did
not, so long as the statutory judgment was set aside,
which it has been.

83. Third, Johnson v Agnew concerns only one contract,

and one decree of specific performance. The claimant

- 46 -
 was only required to discharge the decree of specific
performance and accept the termination of the contract
– but not, obviously, to set aside the contract itself.
Here, the relevant contract is not the underlying matrix
agreement, but the implied contract / promise to
perform the award. What P is required to do, therefore,
is only to obtain a discharge of the court order ordaining
the specific performance of that contract, i.e. the
statutory judgment, and to accept the termination and
sue for damages under the implied contract to perform
the award (which it has done by this action).

84. One must be careful to distinguish between the Award

(which is not a contract in the sense examined in
Johnson v Agnew) and the relevant contract, i.e. the
implied promise to perform the Award.

85. Before this Court there is no question of election

between inconsistent remedies under the matrix
agreement, or indeed acceptance of renunciation (see
D1/D2’s Case §82). None of these are matters before
this Court or indeed before the Tribunal which is
functus and in any event would not be governed by
Hong Kong law.

86. Fourth, in any event, Johnson v Agnew does not stand

for the proposition that under Hong Kong law, the
underlying contract has to be somehow “set aside”

- 47 -
 before damages can be claimed for its breach or
dishonour. It is elementary contract law that where a
party fails to perform and commits a repudiatory
breach, an innocent party may elect to treat the contract
as subsisting (such that it would be bound by its
provisions in respect of events occurring after the
affirmation), waive that breach, but retain the right to
damages for that breach: see Hain Steamship Co. Ltd. v
Tate and Lyle Ltd [1935] 2 All ER 596, 608; Chandris
v Isbrandtsen-Moller Co. Inc [1951] 1 KB 240, 248;
Suisse Atlantique Societe D’Armement Maritime S.A. v
N.V. Rotterdamsche Kolen Centrale [1967] 1 AC 361,
395B-C. There is therefore nothing inherently
inconsistent with a party demanding performance and
seeking damages. Just as there is nothing inherently
inconsistent with a party seeking specific performance
and/or damages in lieu.

87. In Johnson v Agnew (and also Austins) the vendors had

to put the contract to an end as the contract would be a
blot on the title: see 393G. Moreover, the present case
does not constitute a sale of land but an agreement to
transfer shares in a land development company.

88. As such, P should be only required to set aside the

HCCT Judgment being the alternative avenue or
remedy open to a party seeking to enforce an award. It
has already done so.

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89. The Award itself is not inconsistent with an order of
damages. To be enforceable by the machinery of the
Hong Kong court (such as committal) the Award has to
be first converted into a judgment or order of the court:
Mustill & Boyd, p.416. It can, therefore, in principle co-
exist with an order of damages by the enforcing court.

90. Finally, the discussion on Cukurova (see D1/D2’s Case

§83) does not assist D1/D2. There was no discussion of
Johnson v Agnew or election in that case. The case
turned on a straightforward analysis of jurisdiction and
due process under the Convention and there was no
action for damages at common law on the award.
Furthermore, in the underlying arbitration in Cukurova,
unlike the present case, prior to the Tribunal issuing the
Final Award it was not functus. D1/D2 attempted to put
the self-induced impossibility of performance to the
Tribunal who refused to re-open the submission and
declared themselves functus. P is not of course required
to apply to set aside the Award; from the binding
findings of the CA as to the present status of the
arbitration this would be futile.

91. D1/ D2’s submission as with all prior 12 attempts is

simply another attempt through its own breach to
deprive P of the fruits of the Award.

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 F. CONCLUSION

92. For all the reasons stated above, P respectfully invites

the Court to dismiss the appeal of D1/D2.

Dated 13th February 2020.

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 David Joseph QC
Counsel for the Plaintiff (Respondent)

Edward Chan SC
Counsel for the Plaintiff (Respondent)

Bernard Man SC
Counsel for the Plaintiff (Respondent)

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 Lee Tung Ming
Counsel for the Plaintiff (Respondent)

Keith Lam
Counsel for the Plaintiff (Respondent)

Justin Ho
Counsel for the Plaintiff (Respondent)

James Man
Counsel for the Plaintiff (Respondent)

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