Chen Hongqing v. The Persons Whose Names Are Set Out in theSecond Column of the Schedule To the Re-amendedWrit of Summons Filed on 26 March 2018 and Others

HCA 2648/2017

[2019] HKCFI 2123

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 2648 OF 2017

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BETWEEN

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D E C I S I O N

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The
“SHD Injunction Decision”

This Decision and my Jurisdiction Decision

1.At the same time when I handed down this Decision (which I refer to as the “SHD Injunction Decision”), I also handed down my Decisions on the SHD Jurisdiction Summons and the Jinan Group Jurisdiction Summons (the“Jurisdiction Decision” [1] ) and my Decisions on the Receivership Summons (“Receivership Decision” [2] ).  For the reasons set out in the Jurisdiction Decision, I acceded to the jurisdiction challenges brought by the SHDs and Jinan Group (the “Jurisdiction Challenge”) and set aside the Service Out Order.  I also set aside the ASI.  For reasons set out in the Receivership Decision, I dismissed the Receivership Summons. 

2.This SHD Injunction Decision has to be read in conjunction with my Jurisdiction Decision and Receivership Decision, as they are related. I repeat the background leading and relevant to those Decisions, and will not repeat them.  I also use in this Decision the same terms and abbreviations as they are used in the Jurisdiction Decision and Receivership Summons.

This application

3.This is the hearing of the Summons dated 7 May 2019 (the “SHD Injunction Summons”) taken out by 1,880 of the 2265 defendants.  Their identities are set out in Appendix I attached to that Summons.  They are represented by Stephenson Harwood, and have hence been referred to as the “SHDs”, which abbreviation I will continue to adopt.  By the Summons, they are seeking the following interlocutory relief:

“ 1.  An injunction to restrain [P] from using, or continuing to use, the judgments arising out of the proceedings commenced by [P] in the Henan Province Ruzhou City People’s Court against 2,262 employees from around July 2018 (the ‘3^rd Ruzhou Proceedings’) in any other proceedings, including but not limited to an order compelling [P] to withdraw all papers concerning the 3^rd Ruzhou Proceedings (including the aforesaid judgments) from consideration in ongoing Arbitrations before CIETAC as set out in Appendix II attached hereto (the ‘CIETAC Arbitrations’);

2.  Pending determination of paragraph 1 above, an interim injunction mandating [P] to stay by consent the CIETAC Arbitrations;

3.  Pending this Court’s determination of the SHDs’ application by way of Summons dated 6 September 2018 to set aside the anti-suit injunction granted by DHCJ To on 29 May 2018 (the ‘ASI Discharge Application’), an interim injunction to compel [P] to withdraw the proceedings commenced by him in the Henan Province Ruzhou City People’s Court from around 12 March 2019 as set out in Appendix III attached hereto (the ‘4^th Ruzhou Proceedings’);

4.  As an alternative to paragraph 3 above, pending the determination of the SHDs’ ASI Discharge Application, an injunction requiring [P], whether by themselves or their agent(s), servant(s) or otherwise howsoever from continuing, pursuing or otherwise taking any or any further steps in the 4^th Ruzhou Proceedings;

5.  Further to paragraphs 3 or 4 above, pending the determination of the SHDs’ ASI Discharge Application, an injunction restraining [P], whether by themselves or their agent(s), servant(s) or otherwise howsoever from commencing any further legal proceedings in any Court for any relief identical or material similar to those claimed in the 3^rd and 4^th Ruzhou Proceedings;”

4.At the conclusion of the hearing, I refused to make any interim- interim order under §2.  Applying the “balance of fairness” test explained by the Court of Appeal in China Shanshui Cement Group Ltd & Others v Zhang Caikui & Others [2018] HKCA 409 (19 July 2018), I formed the view that the making of the interim-interim injunction sought was not justified. Now that I have set aside the ASI, §§3, 4 and 5 have been superseded, and no order under those paragraphs are called for.  What is left for consideration is §1.

Affirmations filed in support and opposition

5.For the purpose of this hearing, the following main affirmations have been filed:

(a)  in support of the Summons:

(i)   the draft 8^th affirmation of Zhao Hongbo [3] (“Zhao” and “Zhao #8”);

(ii)   the draft 9^th affirmation of Zhao Hongbo [4] (“Zhao #9”) in response to P’s 13^th affirmation (“Chen HQ #13”);

(iii)   the draft 6^th affirmation of Hou Jianguo [5] (“Hou” and “Hou #6”), and

(b)  in opposition of the Summons:

the draft Chen HQ’s 13^th affirmation [6] ;

(c)  included in the hearing bundles were also, amongst other affirmations previously filed, Zhao’s 1^st, 3^rd and 7^th affirmations and Chen HQ’s 1^st, 3^rd and draft 8^th affirmations.

Relevant factual background

6.I have in the Jurisdiction Decision and Receivership Decision stated in some details the full background to the disputes between the parties. They are complex and convoluted.  I will not repeat them here.  I will simply expand upon the following matters.  I also provide some updates. Those latest events sparked off the present application. 

7.On 29 May 2018, Deputy Judge To upon Chen HQ’s application granted the ASI (details of which I have covered in my two other Decisions).

8.On 21 September 2017, Chen HQ commenced 10 CIETAC Arbitrations against 10 of the 11 Representatives.  I call them the Nominee Arbitrations in the Jurisdiction Decision.  To recap, Chen HQ in reliance upon the SALA, sought a declaration that the said 10 Representatives purchased the CSI shares from the Employee Shareholders in August as his agents.

9.In January 2018, 9 of the 11 Representatives commenced 9 CIETAC Arbitrations against Chen HQ.  I called them in the Jurisdiction Decision the Counterclaim Arbitrations.

10.These Nominee and Counterclaim Arbitrations were the CIETAC Arbitrations referred to in the present Summons (in particular §1 thereof).

11.There have been thus altogether 19 sets of CIETAC proceedings that have been commenced between Chen HQ and the 11 Representatives (or at least 9 or 10 of the 11 Representatives).

12.The hearings of those CIETAC Arbitrations have been divided into four groups, and multiple hearings have been held for each of the Group before a number of CIETAC Tribunals (the “CIETAC Tribunals”):

(a)  Group 1 comprises 2 commenced by P and 2 commenced by the Nominees; 

(b)  Group 2 again comprises 2 commenced by P and 2 commenced by the Nominees;

(c)  Group 3 comprises the balance commenced by P; and

(d)  Group 4 comprises the balance commenced by the Nominees.

13.Subsequent to the ASI, Chen HQ in July 2018 started what have been described as the 3^rd Ruzhou Proceedings. Depending upon whether Confirmations had been signed by the Employee Shareholders, the 3^rd Ruzhou Proceedings had been divided into two groups: (1) the Confirmation Actions against 1,204 Employee Shareholders (the “3^rd Ruzhou Confirmation Actions”), and (2) the Infringement Actions against 885 employees (the “3^rd Ruzhou Infringement Actions”).

14.By 6 November 2018, the Ruzhou Court had handed down some judgments in the 3^rd Ruzhou Confirmation Actions, but had not processed the 3^rd Ruzhou Infringement Actions.  Subsequently in December 2018, Chen HQ withdrew the 3^rd Ruzhou Infringement Actions.

15.In February 2019, and despite evidence having been closed, Chen HQ submitted judgments he had obtained from the 3^rd Ruzhou Confirmation Proceedings to some of the CIETAC Tribunals.

16.On 12 March 2019, Chen HQ commenced what have been referred to as the 4^th Ruzhou Proceedings (the “4^th Ruzhou Proceedings”).  The 4^th Ruzhou Proceedings in effect resurrected the 3^rd Ruzhou Infringement Actions that Chen HQ had previously withdrawn. 

17.To complete the picture, and according to Zhao [7], those 9 of the 11 Representatives who commenced the Counterclaim Arbitrations had lost confidence in the CIETAC Tribunals and withdrew those arbitrations they commenced on 26 April 2019.

SHDs’ stance

18.In gist, Mr Maurellet SC (who together with Mr Alexander Tang and Mr Kevin Lau appeared for the SHDs) submitted that Chen HQ had blown hot and cold on the issue of forum conveniens.  Before Deputy Judge To when seeking the ASI, Chen HQ asserted that Hong Kong was the proper forum. But then, having obtained the ASI, he started the 3^rd Ruzhou Proceedings.  Worse still, he sought to use the judgments he had obtained from the 3^rd Ruzhou Confirmation Actions to influence the CIETAC Tribunals.  He had further started the 4^th Ruzhou Proceedings. Mr Maurellet submitted that such conduct on the part of Chen HQ was abusive and should be restrained — hence the SHD Injunction Summons.

Discussion and disposition

19.The nature of the order sought under §1 of the SHD Injunction Summons is noted.  It is a wide order, and is in effect an anti-suit order intended to target at the conduct of the Nominee Arbitrations.  In this regard, I accept the submissions of Ms Eu SC [8], who together with Mr Law Man Chung appeared for Chen HQ.  

20.With no disrespect to the detailed submissions made to me by leading counsel for the parties, I have formed the view that for the following main reasons (and perhaps I may again be forgiven for the brevity given that I have set out the full background in my Jurisdiction Decision and having considered some of the related issues therein), the application under §1 of the SHD Injunction Summons should be dismissed:

(a)  Given my Jurisdiction Decision and the setting aside of the Service Out Order (and the related service), the substratum for any interlocutory injunction has in effect gone; and

(b)  Further, I have expressed my views on the issue of forum conveniens in the Jurisdiction Decision.  Hong Kong has not been demonstrated as or to be the appropriate forum to try the case. Given the view and conclusion, I see no sufficient justification at this stage to make any order restraining parties’ conduct in respect of the Nominee Arbitrations or the Counterclaim Arbitrations (or indeed any other proceedings in the Mainland relating to the Stake).

21.In the circumstances, I dismiss the SHD Injunction Summons in its entirety.

Costs

22.Chen HQ should have the costs of the SHD Injunction Summons, with certificate for two counsel.  Any party who seeks any variation or summary assessment should lodge their submissions within 14 days from the date hereof, response within 14 days upon receipt, and reply within 7 days thereafter.  

In respect of the hearing on 14 May 2019:

Mr Law Man Chung, instructed by Gallant, for the plaintiff

Mr Simon Westbrook SC, leading Mr Alexander Tang and Mr Kevin Lau, instructed by Stephenson Harwood, for the SH Defendants (the SHDs, as defined in Appendix I attached to the Summons of 7 May 2019)

Mr Anson Wong SC, instructed by Linklaters, for Jinan Group (the 2266^th defendant)

In respect of the hearing on 6 June 2019:

Ms Audrey Eu SC, leading Mr Law Man Chung, instructed by Gallant, for the plaintiff

Mr José-Antonio Maurellet SC, leading Mr Alexander Tang and Mr Kevin Lau, instructed by Stephenson Harwood, for the SH Defendants (the SHDs, as defined in Appendix I attached to the Summons of 7 May 2019)

Mr Anson Wong SC, leading Mr Ross Li, instructed by Linklaters, for Jinan Group (the 2266^th defendant)