## Facts

- Philips Hong Kong, Ltd. (Philips) and Hyundai Electronics Industry Co. (Hyundai) entered into a contract containing an arbitration clause for disputes not resolved by consultation.
- The clause contemplated a single arbitrator to be:
  - mutually chosen by the parties; or, failing agreement,
  - appointed at the request of either party by the Chairman of the Hong Kong General Chamber of Commerce; or
  - appointed “in accordance with” the Rules of Conciliation and Arbitration of the International Chamber of Commerce (ICC).
- The clause also stated that the arbitration would be conducted in accordance with Hong Kong’s Arbitration Ordinance (Cap. 341).
- A dispute arose and the parties did not agree on the identity of a sole arbitrator.
- Philips approached the Hong Kong General Chamber of Commerce for an appointment, but the Chamber declined, stating it no longer handled arbitrator appointments.
- Neither party approached the ICC for an appointment under the clause’s ICC mechanism.
- Philips applied to the High Court for appointment of an arbitrator under s. 12(1) of the Arbitration Ordinance.
- Philips argued the ICC language was surplus or ineffective because the arbitration was to proceed under the Ordinance rather than under ICC procedures, and ICC involvement could introduce procedures that did not apply or could conflict with the Ordinance.
- Hyundai resisted the application, arguing that where the parties designated appointing authorities, the matter fell within s. 12(2), and the court should not act until the ICC route had been attempted and had failed or been refused.

## Issues

1. Whether the court could appoint an arbitrator under s. 12(1) when the arbitration clause provided a third-party appointment method that had not been pursued (ICC appointment).
2. Whether s. 12(2) governed because the parties had specified appointing authorities, such that court intervention was premature until those mechanisms were invoked and shown to have failed.
3. Whether the ICC reference was operative as an appointment mechanism despite the clause’s statement that the arbitration would be conducted under the Arbitration Ordinance.

## Decision

- The High Court declined to appoint an arbitrator under s. 12(1) on the application as presented.
- The court treated the clause’s ICC mechanism as effective and not mere surplus wording.
- Because the ICC mechanism had not been invoked, the application for a court appointment was premature.
- The court indicated that the agreed appointment process should be used first, and the statutory basis for court involvement (if any) would arise only after the designated mechanism had been tried and had failed or been refused within the meaning of the Ordinance.

## Legal Principles

- Where an arbitration agreement specifies an appointing authority (or an alternative appointing method) outside the parties themselves, the parties are generally expected to use that agreed machinery before seeking a court appointment.
- Section 12(1) is not a shortcut to bypass an agreed third-party appointment process; where the agreement points to a designated appointing route, the court will generally require that route to be attempted first.
- An arbitration clause can validly combine (i) a Hong Kong-law procedural framework (the Arbitration Ordinance) with (ii) an institutional reference (ICC Rules) for the limited purpose of appointing an arbitrator; the ICC reference is not automatically void or meaningless merely because the arbitration is otherwise governed by local statute.
- A court appointment application will usually fail if the applicant cannot show that the contractual appointment method has been invoked and has refused to act or has not acted within a reasonable time.

## Conclusion

Philips Hong Kong, Ltd. v. Hyundai Elecs. Indus. Co. holds that where an arbitration clause provides alternative third-party appointment mechanisms—including appointment in accordance with ICC rules—the court will not appoint an arbitrator under s. 12(1) merely because one named body will not act, when the ICC appointment route remains available and has not been attempted; the parties must first pursue the contractual mechanism before seeking court intervention.


Philips Hong Kong, Ltd. v. Hyundai Elecs. Indus. Co., [1993] 1 H.K.L.R. 263 (H.C.)