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Philips Hong Kong V. Ag Of Hong Kong Notes

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This is an extract of our Philips Hong Kong V. Ag Of Hong Kong document, which we sell as part of our Commercial Remedies BCL Notes collection written by the top tier of Oxford students.

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PHILIPS HONG KONG V. AG

OF

HONG KONG

FACTS The decision was given in proceedings commenced by Philips Hong Kong Limited ("Philips") by originating summons. The purpose was to obtain a ruling of the Hong Kong High Court upon the provisions contained in a contract which Philips had entered into with the Government of Hong Kong in connection with the construction of a highway project known as "Route 5" between Tsuen Wan and Sha Tin. The contract contained an arbitration clause and the present proceedings were initiated by Philips to obtain the ruling of the court on preliminary issues prior to arbitration. Instead of adopting the more usual course of employing a main contractor with overall responsibility for constructing the Shing Mun Section and allowing the main contractor to sub-contract portions of the contract, the Government entered directly into a total of seven separate contracts, the designated contracts, including the Philips contract. The flow charts identified as Key Dates interfaces with other contracts. Key Dates were dates which a contractor was under an obligation to meet so as to enable other contractors to continue with their work unimpeded. If those dates were not met by a contractor, then the contract specified a liability to pay liquidated damages to the Government at a daily rate. In addition the whole of the contract work was required to be completed within a specified time and, if this was not met, the contract provided that the contractor was required to pay additional liquidated damages also at a daily rate. In the case of the Philips contract, the works were to commence on the date to be notified by week 36 by the engineer and had to be completed by week 195 (a period of 160 weeks). The amount of liquidated damages which was payable for not completing the whole of the works within the specified time was $74,104 per day, a figure set out in the Appendix to the Form of Tender. That Appendix also specified the amount of the liquidated damages for delay in meeting Key Dates. The amount stated varied according to the section of the works to which they related, the sum increasing according to the number of other contractors who could be affected by the delay. HOLDING Defendant's argument At this stage Mr. Nicholas Dennys Q.C. does not suggest on behalf of Philips that the sum claimed by the Government by way of liquidated damages is in fact exorbitant in view of the very substantial delay which in fact occurred in the execution of this

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