Hong Kong: Construction Arbitration in Hong Kong

Last Updated: 15 October 2002

Two recent decisions of the Hong Kong courts have looked at important aspects of the law of arbitration. The first decision concerned the scope of an arbitration clause and the second when a party can appeal against an arbitrator’s award.

The Scope of the Clause

On 22 June 2002 the Court of Appeal gave its decision in Lui Man Wai & Another v Chevalier (Hong Kong) Ltd. The court had been asked to decide whether a contract between Lui Man Wai and Chevalier provided for arbitration of a dispute arising out of variations.

Lui Man Wai had started court proceedings suing for, amongst other things, HK$3,176,540 for variations. However, the contract contained a clause providing for arbitration in the following circumstances:

"If the said variations and/or additional works result in an increase or decrease in the contract price, the difference in price shall be adjusted with reference to and on the basis of the Schedule of unit rates as stipulated in clause 39 to be agreed between the Company and the Contractor and failing which the difference shall be submitted to arbitration…"

Chevalier asked for a stay of the court proceedings so that the dispute could be referred to arbitration. However, the court agreed with Lui Man Wai that the contract only provided for arbitration of disputes on the value of variations and/or additional works where the parties had failed to agree an adjustment of the contract price. As Lui Man Wai claimed that the parties had agreed the value of the works, that claim did not fall within the arbitration clause. Consequently, Chevalier’s application for a stay of the action was dismissed.

Analysis – Scope

This decision is one of many where the court has been required to consider the scope of an arbitration clause. The parties to construction contracts often assume that including any arbitration clause will mean that all disputes must go to arbitration. That assumption is wrong. Before the court will stay litigation proceedings it must be satisfied that the particular dispute which has arisen falls within the scope of the clause. In this case, Chevalier could have avoided litigation if the arbitration clause had been drafted differently. Simply put, if you want all disputes on a project to go to arbitration, it is important to ensure that your contract says this.

Appealing against an arbitrator’s decision

The second decision considered here, Mak’s Construction Co Ltd v. Sun Fook Kong (Civil) Ltd, concerned a dispute on an arbitration award where the unsuccessful claimant, Mak’s Construction, asked for the court’s permission to appeal against the award.

Although the grounds for an appeal against an arbitration award are limited, an appeal can be made under the Arbitration Ordinance on a question of law where the question substantially affects the rights of one or more of the parties.

The court explained, however, that there is "a presumption of finality in arbitrations…. Where a one-off event or clause is involved, the applicant for leave must demonstrate quickly and easily that the arbitrator was plainly or obviously wrong. Where, on the other hand, the event or clause is not one-off or … the case has important repercussions, all that needs to be demonstrated is that the arbitrator was arguably wrong or that the point on appeal is capable of a serious argument".

Was the clause or event in question a one-off? The dispute related to the proper method of measurement for pipes laid by Mak’s Construction under a sub-contract. Mak’s Construction argued that although the contract was not a standard form of sub-contract published by a professional body, it Construction arbitration was nevertheless commonly used by Sun Fook Kong in many Government sub-contracts. They also argued that, as Sun Fook Kong was a related company of Great Eagle Company Limited, this form of sub-contract might well be used in numerous sub-contracts in Hong Kong and as a consequence it was not a one-off. In reply, Sun Fook Kong argued that the form was a one-off as:

  1. the form was one of a number of forms used by them;
  2. that since commencement of the arbitration the wording of the relevant clause had been amended to put its meaning beyond doubt; and
  3. that existing contracts had been amended accordingly.

The court agreed that the claim related to a one-off term. Therefore, the court would only allow Mak’s Construction to appeal the award if they could show that the arbitrator was plainly or obviously wrong. They could not do so and the court refused leave to appeal.

Analysis – Appeal

There is a sliding scale from unique contracts and events to the commonplace. In unique cases, the Court will not grant leave to appeal against an award unless it is readily apparent that the arbitrator was wrong. In cases on the construction of standard forms, leave to appeal is more likely to be granted. However, the simple fact that a major contractor has used the form in question does not mean that the case sits at the commonplace end of the scale.

© Herbert Smith 2002

The content of this article does not constitute legal advice and should not be relied on as such. Specific advice should be sought about your specific circumstances.

For more information on this or other Herbert Smith publications, please email us.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.