Read the full judgment text of FACV 4/2022 on BabelCite. This Court of Final Appeal judgment was delivered on 14 June 2022 before Chief Justice Cheung, Mr Justice Ribeiro PJ, Mr Justice Fok PJ, Mr Justice Lam PJ, Lord Collins of Mapesbury NPJ.
Civil law – winding up – foreign company – unregistered company – statutory jurisdiction to wind up foreign-incorporated company – three threshold or so-called 'core' requirements (sufficient connection with Hong Kong; reasonable possibility of benefit to petitioner; ability to exercise jurisdiction over persons in distribution of assets) – self-imposed restraints, not statutory provisions – whether the second core requirement is satisfied by 'leverage' or commercial pressure arising from presentation of winding-up petition based on undisputed debt, even where no winding-up order is made – appellant solvent Mainland-incorporated paper manufacturer with substantial PRC assets but H share listing in Hong Kong – respondent obtained arbitration award in Hong Kong for damages of RMB167,860,000 plus interest and costs – appellant failed to comply with statutory demand – presentation of winding-up petition would have severe impact on H share listing – petition adjourned on terms that appellant procure payment of HK$355,141,100.06 plus HK$33,971,332.38 interest into court – whether the second core requirement demands a benefit flowing from the making of a winding-up order – whether comity requires narrower interpretation – the three requirements are judicially fashioned threshold for exercise of statutory jurisdiction, going to discretion rather than existence of jurisdiction – comity primarily relevant to first requirement of sufficient connection – long line of authority confirming propriety of presenting winding-up petition to bring pressure to pay undisputed debt – statutory demand mechanism as conclusive proof of insolvency – winding-up jurisdiction may be invoked even where similar result could be achieved by other means – benefit need not be monetary, need not flow from company's assets, and may benefit petitioner alone – low threshold for benefit requirement – leverage does not disappear upon making of winding-up order – significant leverage benefit from presentation of petition is not excluded from assessment of second requirement – no basis for adding forum conveniens as separate jurisdictional requirement – forum conveniens is a factor to consider at hearing of petition when deciding whether to make a winding-up order – appeal dismissed – sum paid into court to be paid out to respondent forthwith – costs order nisi against appellant.
Legal issues: Nature of benefit under the 2nd core requirement for winding up foreign companies · Comity as an additional restraint on winding-up jurisdiction over foreign companies
Outcome: Appeal unanimously dismissed. The Court of Final Appeal answered the certified question in the affirmative for both ways it was put.
Cited by 11 cases · Cites 5 cases