I have before me an application by the defendant for a stay of these proceedings pending the award under an arbitration under which the liability, if any, of the defendant's subsidiary under a building contract will be determined.
The subsidiary employed the plaintiff to do some mechanical and electrical work on a building in Guangzhou. The subsidiary also entered into another contract with the plaintiff in relation to some consultancy services. In this action, the plaintiff is claiming these sums from the defendant on the basis of an undertaking to pay given by the defendant to the plaintiff. The defendant says that the plaintiff rendered no services under the consultancy contract and nothing is due in this respect.
Under the building contract, the parties agreed to refer any disputes to arbitration. There is no such agreement in relation to disputes under the consultancy contract. The disputes under the building contract have been referred to arbitration. The plaintiff relies on two letters in alleging the "guarantee" by the defendant. They are dated 6 May and 22 May They both refer to a letter written by the plaintiff to the subsidiary dated 29 April This letter of 29 April said -.
On 6 May, , the defendant wrote to the plaintiff saying -. On 16 May , the plaintiff faxed a draft of another letter that it wanted the defendant to sign. This draft mentioned both contracts and concluded -. On 22 May , the defendant wrote to the plaintiff saying -. We hereby confirm our agreement that we will assume and honour all the obligation of [the subsidiary] under the above mentioned contracts if [the subsidiary] were unable to meet its commitments.
The crucial argument in the defendant's case for a stay is the effect of the undertaking by the defendant. If it is the case that, assuming the undertaking to mean what it says, the defendant is bound to pay to the plaintiff what the arbitrator finds is due by the subsidiary to the plaintiff, and if the plaintiff Subscribers can access the reported version of this case. Search over million documents from over countries including primary and secondary collections of legislation, case law, regulations, practical law, news, forms and contracts, books, journals, and more.
