Achieve Goal Holdings Ltd v. Zhong Xin Ore Material Holding Co Ltd

HCA 1987/2005

[2022] HKCFI 2638

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

ACTION NO 1987 OF 2005

________________________

________________________

(By original action)

________________________

(By counterclaim)

Before:  Hon Wilson Chan J in Chambers

Date of Hearing:  14 June 2022

Date of Judgment:  26 August 2022

____________________

J U D G M E N T

____________________

A. INTRODUCTION

1.This is the hearing of a summons filed by the 2^nd plaintiff (by Counterclaim) (“Bai Jun”) dated 15 February 2022 (“Summons”) for further enforcement of the judgment order of the Court of First Instance dated 15 December 2018 ([2018] HKCFI 2718) as partially amended on appeal by the Court of Appeal in these proceedings dated 17 January 2020 ([2020] HKCA 51) (“CA Order”) including:

(1)  An injunction to prevent the 2^nd defendant (by Counterclaim) (“Angola”) from holding out as a shareholder of the 5^th defendant (by Counterclaim) (“Zhong Xin”) contrary to the CA Order.

(2)  An injunction to prevent Angola from continuing with or prosecuting the Xi’an Proceedings (as defined in the Summons).

2.On 19 October 2021, Angola instituted a new proceeding in the Xi’an Intermediate People’s Court (“Xi’an Court”) (2021) 陝01民初1708號 (“Xi’an Proceedings”) trying to challenge and reverse the CA Order (for details of the claims in the Xi’an Proceedings - see paragraph 36 below).  Bai Jun submits that such conduct is vexatious, oppressive and was done in bad faith in order to undermine the 16-year litigation process in Hong Kong and when the result of the courts’ decisions is against the Angola camp.  For the purpose of the present application, the most pertinent is the CA Order which had finally decided against Angola on the 2 issues sought to be raised by Angola in the Xi’an Proceedings.

3.As the successful party, Bai Jun submits it is entitled to the quiet enjoyment of the fruit of the litigation which has been finally settled by the Court of Final Appeal dismissing any leave to appeal against the CA Order.  It is only just to make the necessary orders prayed for to effect and enforce the CA Order here and now.

B.      BACKGROUND

4.The background of the case has been set out in §§1 to 111 of the Judgment of Au-Yeung J dated 15 December 2018 (“CFI Judgment”) and §7 of the Judgment of the Court of Appeal dated 17 January 2020 (“CA Judgment”).  A brief summary of the salient points has been set out in Bai Jun’s Skeleton Submissions as follows.

5.In December 2004, Bai Jun and Angola entered into a joint venture agreement (the “JV Agreement”) under which Bai Jun was to transfer 50% of the shares in Zhong Xin to Angola (“Relevant Shares”) upon the performance of various obligations by Angola, chief among which was the capital injection of RMB 50 million “以相當於人民幣5000萬元的等值美元融資投入”.  The amount was to be injected in 3 stages the first of which was for the amount of RMB 20 million.

6.Around the same time, on 12 December 2004, Zhong Xin and a PRC entity known as Yulin City Yu Yang District Changle Industrial and Trading Limited (“Changle I&T”) signed an agreement for the establishment of a Sino-foreign joint venture company called Yulin Changlebao Mining Corporation Limited (“CLB”) to operate a coal mine in Yulin City, Shaanxi (the “SJV Agreement”).  By this SJV Agreement, Zhong Xin was to inject RMB 49.5 million by three instalments in return for a 70% shareholding of CLB.

7.Between 7 February 2005 and 15 February 2005, with the involvement of Angola, a loan agreement was signed on 14 February 2005 between Zhong Xin as the borrower and the plaintiff (by Original Action) (“Achieve Goal”) as the lender for HK$20 million.  The terms of this loan agreement were very harsh and bizarre.  Angola never injected any funds by itself.

8.On 22 June 2005, Bai Jun by letter accepted the repudiation by Angola of the JV Agreement on the basis that Angola had failed to inject the first instalment in the amount of RMB 20 million and commenced action entitled HCA 1284/2005 on 6 July 2005 for return of the Relevant Shares which claim was subsequently dropped on 9 July 2008.

9.In response, on 10 October 2005, Achieve Goal commenced the original action herein (ie HCA 1987/2005) against Zhong Xin for the repayment of the loan under the Loan Agreement.  By counterclaim, the Bai Jun camp claimed against Achieve Goal and Angola for, inter alia, breach and termination of the JV Agreement and return of the Relevant Shares.

10.Zhong Xin had duly injected the first instalment of the capital into CLB.  As to the 2^nd instalment, on 1 and 2 February 2008, the Bai Jun camp injected a total of US$4,172,590 into CLB’s account purportedly under the SJV Agreement as outstanding capital contribution made by Zhong Xin (ie the Disputed Capital Injection by Bai Jun). This injection was subsequently ratified by Zhong Xin through the Old Interim Receivers on 6 March 2009.

11.On 17 July 2008, Changle I&T commenced the PRC Proceedings in the Shannxi Intermediate Court against Zhong Xin and Bai Jun (with Angola and CLB being joined as third parties), contending that the Disputed Capital Injection was invalid and there was breach of the SJV Agreement by Zhong Xin, and Changle I&T had the pre-emptive right under the SJV Agreement to acquire 42% of the shareholding in CLB.

12.On 15 July 2008 and 27 August 2008, the Keeneye Agreements were entered into whereby Xie/Gao agreed to transfer the entire shareholding of Bai Jun to companies controlled by Liu but retained interest in the 50% shares of Zhong Xin that Bai Jun might recover from Angola.

13.On 7 November 2008, for the purpose of defending the PRC Proceedings, receivers (ie the Old Interim Receivers) were appointed in respect of Zhong Xin by the Hong Kong Court of Appeal.

14.On 21 May 2009, Xie/Gao issued the Stop Notice on the basis of various grounds that vitiated the Keeneye Agreements.  On 2 June 2009, Xie/Gao commenced proceedings entitled HCA 1315/2009 to set aside the Keeneye Agreements to retrieve the shareholding of Bai Jun.

15.On 25 June 2009, the Court appointed receivers for Bai Jun (the “Bai Jun’s IR”).  The receivers were subsequently discharged on 20 July 2009.

16.On 28 November 2008, the Shannxi Intermediate Court dismissed the claim by Changle I&T and upheld the Disputed Capital Injection.  Changle I&T as well as the third parties appealed.  On 29 June 2009, the PRC Court Sanctioned Settlement Agreement was signed in respect of the PRC Proceedings under appeal and this agreement was sanctioned by the Shaanxi Higher People’s Court (“Shaanxi HPC”).  The court sanctioned order is hereinafter referred to as the “PRC Court Sanctioned Settlement” which contained the following terms:

(1)  CLB shall return the outstanding capital contribution made by Bai Jun via the account of the 1^st plaintiff (by counterclaim) (“Clarigain”), and after further discussion between the shareholders of Zhong Xin, Zhong Xin shall on its own make a fresh capital contribution to CLB.

(2)  After the making of the fresh capital contribution, Changle I&T shall withdraw all its claims against Zhong Xin in respect of any alleged failure to make capital contribution.

(3)  Changle I&T and Angola shall withdraw all their claims for pre-emption rights and other relief.

17.The Original Trial of this action HCA 1987/2005 was fixed for 22 July to 4 August 2009, however, on the first day of the trial on 22 July 2009, the Angola camp for the first time produced a document, the “Settlement Agreement” and wanted to terminate the present action by virtue of the Settlement Agreement.  The Original Trial was thereafter adjourned pending resolution of dispute over the ownership of Bai Jun.

18.In relation to the dispute over the ownership, Keeneye & New Purple commenced arbitration proceedings against Xie/Gao.  The dispute was resolved in arbitration in favour of Xie/Gao whereby the Keeneye Agreements were set aside pursuant to the Xi’an Award dated 3 June 2010 which was enforced in Hong Kong under HCA 1315/2009 heard together with HCA 466/2012 by To J’s Judgment dated 11 August 2016.

19.Despite various challenges by both the Old Interim Receivers and the Bai Jun camp, the PRC court refused to set aside the PRC Court Sanctioned Settlement or to revive the PRC Proceedings.  These judgments are dated 17 August 2010, 28 March 2013 and 10 May 2019 (“SPC Decisions”).

20.The Bai Jun Camp does recognize and respect the legal effect of the SPC Decisions affirming that the PRC Court Sanctioned Settlement could not be set aside even though it wants to reserve its right to seek further challenge of the decision should such avenue exist.

21.On the other hand, the PRC Court Sanctioned Settlement has never been performed and has been agreed not to be performed between Zhong Xin and Changle I&T on 26 May 2012 after the expiration of the limitation period of its enforcement.  Changle I&T and Zhong Xin affirmed that they held respectively 30% and 70% of the shares in CLB.

C.      CONCLUSIVE FINDINGS AND ORDERS BY THE HONG KONG COURTS

22.The trial of the present proceedings was finally held in March 2018 with the CFI Judgment delivered on 15 December 2018 ruling that the Settlement Agreement was deliberately backdated, fraudulently presented to the Court and was invalid by reason of lack of authority on the part of those purporting to represent Bai Jun in signing the agreement, so that the present action was not settled.  However, the CFI Judgment refused to order return of the Relevant Shares as the CFI Judge, Au-Yeung J took the view that under the JV Agreement, Angola’s obligation was merely to make arrangement for Zhong Xin to get RMB 50 million for its capital and having arranged the loan from Achieve Goal, Angola was not in breach in failing to arrange for the capital.

23.Upon appeal, the Court of Appeal partially reversed the ruling of the CFI Judgment and held that on true construction of the JV Agreement, Angola’s obligation was to make monetary contribution for the capital in the amount of RMB 50 million and had failed to do so. Accordingly, Bai Jun was entitled to and had validly terminated the JV Agreement on 22 June 2005 and further Bai Jun was entitled to recover the 50% shareholding of Zhong Xin from Angola who has been holding these shares on trust for Bai Jun at all material times.  On the issue of the validity of the Settlement Agreement, the Court of Appeal affirmed the CFI Judgment.

24.The Angola camp sought to appeal against the CA Judgment, but its leave application was rejected both by the Court of Appeal on 10 July 2020 and by the Appeal Committee of the Court of Final Appeal (by way of order under Rule 7 of the Hong Kong Court of Final Appeal Rules, Cap 484A) on 31 May 2021 (“CFA Order”). The CFI Judgment, the CA Judgment and the CFA Order are hereinafter collectively called the “Hong Kong Decisions”.

25.From the Hong Kong Decisions, it is the express finding of the CFI Judgment as partly amended by the CA Judgment that:

(1)  At the CFI Judgment:

“510. The Settlement Agreement was signed sometime between 21 June and 6 July 2009. It was deliberately backdated to 20 May 2009. The application to adjourn the Original Trial on the ground of there being a Settlement Agreement was plainly misleading to Chung J.

511.  The Settlement Agreement was signed by Wang Li without authority to settle.  It was dishonest and irrational for Zeng/Li/Zhang to rely on any apparent authority of Wang Li to uphold the validity of the Settlement Agreement.  This action has not been settled.”

(2)  Pursuant to the CA Order §2(c) that there be:

“(c) A declaration that Angola Group Holdings Limited, the 2^nd Defendant by counterclaim, is not entitled to the 50% shareholding in Zhong Xin Ore-Material Holding Company Limited, the 5^th Defendant by counterclaim, now registered in its name and that it is holding the same on trust for Bai Jun Tian Cheng Limited, the 2^nd Plaintiff by counterclaim, since 22 June 2005;

(d) an order that Angola Group Holdings Limited, the 2^nd Defendant by counterclaim, do forthwith have the 50% shareholding in Zhong Xin Ore-Material Holding Company Limited, the 5^th Defendant by counterclaim, now registered under its name, transferred to Bai Jun Tian Cheng Limited, the 2^nd Plaintiff by counterclaim.”

26.In addition, it is important to highlight that as found by the CFI Judgment and the CA Judgment, the Angola camp is a fraudulent party who had employed various deceptive and underhand tactics against the Bai Jun camp in order to take away and keep the Relevant Shares.

(1)  In clear breach of “the single most important duty of Angola” under the JV Agreement: ie to make direct capital injection, Angola fraudulently misrepresented to Bai Jun that it did not have the necessary funds to inject and Angola further concealed its common ownership in Achieve Goal; conspired with the rest of the Angola camp to exploit the imminent deadline for Zhong Xin to inject capital under the SJV Agreement; and coerced and defrauded Bai Jun to agree to have Zhong Xin to enter into the Loan Agreement which was of very harsh terms.

(2)  The Angola camp further attempted to capitalize such conspiracy by instituting the present proceedings to demand repayment under the Loan Agreement so as to get hold of the entire Zhong Xin’s shareholding in CLB by relying on the very harsh terms of the Loan Agreement (clause 6A.04 in particular).

(3)  It was only after the fierce resistance and the subsequent discovery of the 1^st Misrepresentation and the 2^nd Misrepresentation by the Bai Jun camp in these proceedings that Angola camp’s conspiracy was uncovered.

(4)  Seeing that the original conspiracy was exposed, Angola camp then concocted another conspiracy shortly before the trial date which was originally scheduled to start in 2009, to generate the Settlement Agreement and the PRC Court Sanctioned Agreement which were designed and presented to defraud the Hong Kong Court, the PRC court and the relevant parties including the Bai Jun camp to defeat the Bai Jun camp’s rightful counterclaim in these proceedings.  Such conspiracy resulted in further delay of Bai Jun’s recovery of the shares in Zhong Xin for around 10 years before trial was finally held in 2018.

(5)  As part and parcel of the second conspiracy, the Angola camp discontinued Achieve Goal’s original claim under the Loan Agreement on the first day of the Original Trial, at the same time when it fraudulently presented the Settlement Agreement and the PRC Court Sanctioned Agreement to the Hong Kong Court.

(6)  The misconduct, especially those related to the Settlement Agreement is so prominent that Au-Yeung J ordered the Angola camp to pay costs related to the Settlement Agreement (ie Stage 3) on the indemnity basis:

“527. ...Stage 3 came about because of gross litigation misconduct on the part of Angola Camp in misleading the Hong Kong and PRC Courts. This trial could have ended 9 years ago but for such misconduct. I am of the view that Angola Camp should bear costs of Bai Jun on indemnity basis from and including 3 July 2009, the date when Angola Camp issued the summons to stay the action and to amend the pleadings to introduce the Settlement Agreement.”

27.Finally, on 20 August 2021, after over 17 years of litigation, Bai Jun regained control and ownership of the Relevant Shares.

28.By reason of these fraudulent conspiracies, misrepresentations and breaches, Angola had usurped and unlawfully controlled the 50% shareholding of Zhong Xin for over 17 years since the end of 2004.

D.   ANTI-SUIT INJUNCTION

29.Yet, despite the conclusion of the proceedings with binding judgments and orders, Angola is trying further tactics to assert ownership of the Relevant Shares and to reopen and relitigate the very issues that have been decided by the Hong Kong Decisions which triggered the present Summons.  As submitted by Bai Jun, Angola’s apparent attempt to obstruct and frustrate the binding effect of the present proceedings and the Hong Kong Decisions in bad faith should definitely be stopped.

D1.   Legal Principles

30.The court’s jurisdiction to grant an anti-suit injunction is trite.  Such injunction would be granted as a matter of general principle where the suit sought to be enjoined is vexatious and an abuse of process even in the absence of some special circumstances such as in breach of an exclusive jurisdiction clause (see: Liaoyang Shunfeng Iron and Steel Co Ltd v Yeung Tsz Wang, CACV 234/2011 (unrep, 14/06/2012), §88).

31.The commencement of a set of foreign proceedings in bad faith to obstruct or frustrate Hong Kong proceedings is a well-established situation where an anti-suit injunction would be granted (see: Liaoyang Shunfeng Iron (ibid) at§§88-89).

32.A fortiori, an anti-suit injunction is even more justified when the foreign proceedings are seeking to reopen and frustrate the findings and rulings already made in the Hong Kong proceedings.  For that reason, in the case of Michael Wilson & Partners Ltd v Emmott [2018] 1 CLC 77 at §§53-63, an anti-suit injunction was granted to restrain foreign proceedings that sought to reopen issues and challenge findings that had been decided or ought to have been decided in a previous arbitration proceeding.  If the foreign proceeding is aimed at reopening a decision of the Hong Kong Court, the anti-suit injunction is certainly available (see: Hong Kong Civil Procedure 2022, Practice Note 11/1/252).

D2.   Angola’s Defiance

33.The Angola camp’s determination to defy and to frustrate the Hong Kong Decisions is plain and obvious as it commenced the Xi’an Proceedings in October 2021 after it lost its appeal in the Court of Appeal and its hope for any further challenge to the CA Order vanished with the decision of the Court of Final Appeal refusing any leave to appeal on 31 May 2021.

34.Moreover, even before that, after the CA Order of 17 January 2020, it refused to transfer the shares of Zhong Xin and still held out to various parties that it was the shareholder of Zhong Xin despite the clear CA Order by letters and declarations dated respectively 19 May 2020, 20 May 2020 and 29 May 2020.  As a result, the Bai Jun camp had to issue two summonses dated 29 June 2020 and 24 June 2020 to prevent such defiance which summonses were stayed on 1 September 2020 upon the undertakings provided by the Angola camp that inter alia,

(1)  it shall deposit signed instrument of transfer of the 50% shares of Zhong Xin to court; and

(2)  “Angola Camp shall not hold Angola out as a shareholder of Zhong Xin and act as a shareholder of Zhong Xin (whether within or outside Hong Kong) pending the determination of the CFA Stay Application.”

35.After the delivery of the CFA Order, when all appeal avenues have been exhausted, instead of complying with the Hong Kong Decisions, Angola, in bad faith and in a most defiant manner, deployed further tactics in trying to assert ownership over the Relevant Shares, to represent and act as an owner of Zhong Xin, and to challenge and frustrate the Hong Kong Decisions.

36.On 19 October 2021, Angola instituted the Xi’an Proceedings in the Xi’an Court to assert the validity of the Settlement Agreement and to claim for the Relevant Shares.

(1)  The cause of action and reliefs prayed for are as follows:

“案由：確認合同有效糾紛

訴訟請求：

1. 確認《和解協議書》有效；

2. 判令被告返還原告在中信礦業集團有限公司持有的50%股權”

(2)  Moreover, the body of the statement of claim, after detailed description of the litigation in Hong Kong, expressly stated that:

“但是，被告還是利用内地與香港法律制度的差異，誤導香港法院作出將原告在中信礦業股權無償轉讓給被告的錯誤判決，使原告在中信礦業的股權以及在常樂堡的投資權益喪失殆盡，合法權益遭受非法侵害。

……要求法院確認《和解協議書》的效力，並判令被告返還原告在中信礦業持有的50%股權。如不能返還，則被告應賠償原告因被告的上述行爲造成的損失。”

37.The reliefs sought in the Xi’an Proceedings are plainly a direct challenge to the Hong Kong Decisions and in particular to the CA Order.  Likewise, the allegations that the Hong Kong Courts had been misled is plainly scandalous as Angola had full participation in the trial of this action and on appeal and was represented by leading counsel who would no doubt not be slow to point out any misleading matter to the Courts.

38.Moreover, on 17 December 2021, Angola wrote letters to Changle I&T, the minority shareholder of CLB, claiming to be entitled as a shareholder of Zhong Xin, attempting to enforce the Settlement Agreement to interrupt and disturb the normal operation of CLB and Zhong Xin.

39.The Xi’an Proceedings instituted by the Angola camp asking for orders to directly challenge the binding and final orders and findings in the Hong Kong Decisions cannot be allowed as the issues are plainly res judicata, and Angola is bound also by issue estoppel and the commencement of the Xi’an Proceedings is an act of abuse of process.  (see Re GW Electronics Co Ltd[2021] HKCFI 1869 at §§22-25, 35 and China North Industries Investment Ltd v Chum [2010] 5 HKLRD 1 at Held Note (5)).

40.The bad faith in commencing the Xi’an Proceedings to frustrate the Hong Kong Decisions is plain and obvious from the statement of claim of the Xi’an Proceedings itself.

41.Further, there should be little dispute that the main purpose of the Xi’an Proceedings is to obtain the Relevant Shares which is the subject matter of the JV Agreement, which is subject to the exclusive jurisdiction of Hong Kong Courts^[1].

D3.   Angola’s Excuses

42.In this regard, the Angola camp does not and cannot deny that the purpose of the Xi’an Proceedings is to challenge the Hong Kong Decisions, but instead put forward some justification to claim that it was entitled to shares in Zhong Xin despite the Hong Kong Decisions.  It tried to explain the reason being that “there were conflicting findings”between the Hong Kong Decisions and the SPC Decisions “in relation to the authority of Wang Li to settle on behalf of Bai Jun at the material time”and “this could lead to the parties having conflicting obligations under Hong Kong law and PRC law”.

43.Bai Jun submits that, if anything, this only reconfirms the Angola camp’s determination to have a second bite at the cherry to challenge the final, binding and conclusive effect of the Hong Kong Decisions.

(1)  First, there is no such conflict, either conflict of findings or conflict of obligations;

(2)  Second, even if there is some partial conflict, this does not entitle Angola to subvert the Hong Kong Decisions.

D3.1  No Conflict

44.Regarding conflicting findings, the Angola camp alleged that because the SPC Decisions found that Wang Li and Lu Ying had authority of Bai Jun when signing the PRC Court Sanctioned Settlement, this was in conflict with the findings in the Hong Kong Decisions that Wang Li had no authority to act for Bai Jun in signing the Settlement Agreement, thus the Settlement Agreement was invalid and was not binding on Bai Jun.  This allegation is incorrect:

(1)  The Settlement Agreement and the PRC Court Sanctioned Settlement are two totally different documents entered into at different times, at different places, by different parties, for different purposes and under different circumstances:

(a)  The Settlement Agreement was fraudulently stated to be signed on 20 May 2009, but actually signed between 21 June 2009 and 6 July 2009, whereas the PRC Court Sanctioned Settlement was clearly signed on 29 June 2009.

(b)  The Settlement Agreement was not signed in the Mainland, contrary to the wording fraudulently stated on the face of the agreement, whereas the PRC Court Sanctioned Settlement was signed in Shaanxi.  The significance of the place of signing was that Angola relied on the place of signing of the instrument as the basis of the claim that the agreement was governed by the law and the court of the place where the agreement was signed.

(c)  The Settlement Agreement was purported to be between two of the parties to the present proceedings, ie Bai Jun and Angola only, whereas the PRC Court Sanctioned Settlement was entered into amongst all the parties to the PRC Proceedings including Changle I&T, Angola, Zhong Xin, Bai Jun and CLB.

(d)  The Settlement Agreement focuses on the settlement of the present proceedings in Hong Kong, with only an indication of intent that efforts would be made to settle the PRC Proceeding, whereas the PRC Court Sanctioned Settlement was dealing exclusively with the PRC Proceedings with no reference to or effect upon the present proceedings in Hong Kong whatsoever.

(e)  The Settlement Agreement was signed behind the back of relevant parties to the present proceedings, especially Clarigain and Zhong Xin and with the purported effect of prejudicing their interest, whereas the PRC Court Sanctioned Settlement (at least on the face of it) involved all the parties to the PRC Proceedings and was signed in front of the Shaanxi HPC.

(2)  The underlying subject matter of the two documents, ie the present action and the PRC Proceedings are fundamentally different, amongst different parties, in respect of different disputes, which arose out of different contractual arrangements:

(a)  Parties to the present action such as Clarigain, Achieve Goal, Zhao Bing and Ng Chi Kong are not parties to the PRC Proceedings, whereas key parties to the PRC proceedings such as Changle I&T and CLB are not parties to the present action;

(b)  This is only natural since the subject matters of the two proceedings are totally different.  The present action is concerned with the effect of the JV Agreement, the shareholding in Zhong Xin, whereas the PRC Proceedings were concerned with the effect of the SJV Agreement and the shareholding in CLB.

(c)  The present action arose out of the performance and breach of the JV Agreement whereas the PRC Proceedings arose out of the performance and breach of the SJV Agreement, two distinct contracts with different parties, different purposes, different liabilities and duties, different governing laws and governing jurisdictions.  The JV Agreement was governed by Hong Kong Law (clause 7).  The SJV Agreement was a joint venture agreement in the PRC and should be governed by PRC law.  Logically, an agreement to settle a Hong Kong Court proceeding involving the JV Agreement must be governed by Hong Kong law while a settlement of a court proceeding in the Mainland should be governed by the PRC law.

(d)  The Shaanxi HPC was never informed of the Settlement Agreement (which probably did not even exist) when the PRC Court Sanctioned Agreement was entered into.

(3)  Most importantly, it may be readily seen that even assuming the SPC Decisions to be correct, the basis of the SPC Decisions on the authority of Bai Jun is very different from the circumstances relating to the Settlement Agreement:

(a)  The basis of the SPC Decisions on the authority of those purported to act for Bai Jun in entering into the PRC Court Sanctioned Settlement is recorded at page 11 of the 2010 SPC Decision.  The SPC confirmed the authority because there was proper company search; both registered directors Wang Li and Lu Ying on record were present; and there was a notarized board meeting confirming their authority in respect of the PRC Proceedings with Lu Ying as the authorized representative.^[2] Whether this would be sufficient to found authority is a matter of PRC law for the PRC court.

(b)  In the same breath, page 8 of the 2019 SPC Decision discussed about the validity of the relevant board resolution (董事的決議) and focused on the only issue as to whether there was due authorisation at the time of signing of the PRC Court Sanctioned Settlement (簽訂案涉調解協議時意思表示).

(c)  This is fundamentally different from the Settlement Agreement whereby only one of the directors Wang Li purportedly signed the Settlement Agreement; no board resolution on Wang Li’s authorization could be produced; and it was expressly found by the CFI that Wang Li was never duly authorized by any board resolution of Bai Jun, but was instructed by Zhang personally only to the full and dishonest knowledge of Angola.  The CFI made the finding after full examination of the relevant evidence including that produced by the Angola camp.  Even if one were to adopt the same approach of the PRC court to examine the document said to be conferring the authority there was still the conspicuous absence of proper board resolution and due authorization in respect of the Settlement Agreement.

(d)  It is not open for the Angola camp to try to make any inference that the supposed authorization which authorized Lu Ying in respect of the PRC Proceedings only, could be evidence of due authorization of Wang Li about a totally different set of proceedings in Hong Kong.

(4)  It is important to see that the Hong Kong proceedings were not mentioned in the PRC Court Sanctioned Settlement or any of the SPC Decisions at all.  It is clear that the SPC Decisions never touched upon any issue decided under the Hong Kong Decisions but are limited to the PRC Proceedings and the underlying dispute about the injection of capital into CLB.

(5)  In short, I agree the SPC Decisions are limited to the PRC Proceedings on the dispute which arose out of the injection of capital under the SJV Agreement only and does not touch upon the breaches of the JV Agreement and its consequences, or any issue decided by the Hong Kong Decisions.  There is simply no conflict.

45.The Angola camp has failed to particularize what the “conflicting obligation” is, apparently because there is none.  None of the obligations of Angola under the Hong Kong Decisions, whether to pay damages, to transfer the Relevant Shares back to Bai Jun, or not to deal with the Relevant Shares or hold out as shareholder of Zhong Xin would in any way conflict with any obligation under the PRC Court Sanctioned Settlement.  In particular, it is specifically stated in the PRC Court Sanctioned Settlement §1 that the re-injection may be done after consultation between shareholders of Zhong Xin (經由中信礦業集團公司股東協商后), without any indication who the shareholders are, specifically avoiding any conflict with the issue as to who the shareholders really are.

46.If there is any accidental overlap of factual findings between the Hong Kong Decisions and the SPC Decisions they only concern the obligations or issues under the SPC Decisions, and do not concern any obligations or issues under the Hong Kong Decisions.

47.Such alleged conflict is particularly illusive when the PRC Court Sanctioned Settlement is, as a matter of fact, no longer enforceable after the further settlement agreement signed between Change I&T and Zhong Xin upon expiry of the limitation period for enforcement on 26 May 2012. It is not disputed that this agreement has never been enforced up to now, 13 years after its signing.

D3.2  Close and Exclusive Connection with Hong Kong

48.Further or alternatively, the limited overlap of factual background has been duly considered by the Hong Kong Courts which were fully aware of the PRC Proceedings and the SPC Decisions (except for the 2019 SPC Decision which does not make any difference) before delivering the Hong Kong Decisions and concluded that they are of little assistance to the issue of the effect of the Settlement Agreement.  Such overlap certainly cannot be an excuse to defy the final and conclusive effect of the Hong Kong Decisions.

49.This is particularly so when those issues decided in the present proceedings, especially on the authority of Wang Li, have been properly decided in Hong Kong, being matters either subject to the exclusive jurisdiction of Hong Kong Court or governed by Hong Kong law, or both:

(1)  The underlying dispute is over the breaches of the JV Agreement, an agreement that is governed by Hong Kong law and subject to the exclusive jurisdiction of Hong Kong Court.  Clause 7 expressly stated:

“本協議應受香港法律管轄，並根據香港法律加以詮釋，如發生異議將於香港法庭訴訟。”

(2)  The signing parties and the JV company itself Zhong Xin are either incorporated in Hong Kong (for Bai Jun), or BVI companies that operated in Hong Kong (for Angola and Zhong Xin).

(3)  The Settlement Agreement is:

(a)  Governed by Hong Kong law (including its validity and enforceability against Bai Jun) which is a consensus that has never been disputed amongst the parties in the present proceedings.

(b)  For the purpose of settling a set of Hong Kong proceedings.

(c)  Subject to the exclusive jurisdiction and governing law clause of the JV Agreement attempting to deal with the operation of the JV Agreement.

(4)  The key issue about the authority of Bai Jun (a Hong Kong company) and hence binding effect of the Settlement Agreement on Bai Jun is another Hong Kong law issue.

50.In view of the fact that the JV Agreement and the Settlement Agreement must be governed by Hong Kong Law and the Hong Kong Courts had been seized with the matters in dispute, even if (which is not the case) the Hong Kong Courts had not reached any decisions on the construction of the JV Agreement, whether the same had been terminated and whether Angola still had any shares in Zhong Xin and whether the Settlement Agreement was valid, the commencement of the Xi’an Proceedings in clearly an abuse and was a transparent attempt for forum shopping.  This itself is a sufficient ground for the grant of the anti-suit injunction.

D3.3  Angola’s Counter-arguments are not valid

51.In paragraph 44 of Angola’s Skeleton Submissions, the Angola camp tries to argue that the purpose of the Xi’an Proceedings “is not to re-litigate any matter under Hong Kong law, but to clarify Angola’s obligations under PRC law in light of the SPC’s decisions”.  However, from the reliefs claimed in the Xi’an Proceedings (see: paragraph 36 above), plainly, the Angola camp is saying that it is not satisfied with the Hong Kong Decisions on the issues of validity of the Settlement Agreement and the ownership of the Relevant Shares in Zhong Xin, but instead wants to overturn such findings praying aid of the Xi’an Court under PRC law that in fact governs neither the Settlement Agreement, nor the JV Agreement under which the Relevant Shares were transferred, still less the Hong Kong proceedings that the Settlement Agreement intended to settle.

52.As submitted by Bai Jun, the excuses put forward by Angola simply cannot stand:

(1)  Up to now, no particulars could be offered as to what the alleged “conflicting legal obligations”really are.

(2)  The Angola camp conspicuously failed to explain how the authority to effect the PRC Court Sanctioned Settlement could be equated with authority to enter into the Settlement Agreement to settle the Hong Kong proceedings and to uphold the legal validity of the Settlement Agreement, a totally different document signed at a different time, at a different place, amongst different parties, for different purposes, under different circumstances, in respect of different subject matters and disputes arising out of different contracts and litigated before different courts in different jurisdictions.

(3)  It is abusive and issue-estoppel if not res judicata, for the Angola camp even to raise this alleged “logic” that since there was authority from Bai Jun to sign the PRC Court Sanctioned Settlement in the eyes of the PRC court, there was sufficient authority from Bai Jun to sign the Settlement Agreement, when the same issue of the binding effect of the Settlement Agreement has already been conclusively decided under the Hong Kong Decisions.

(4)  Angola further sought to rely on the fact that in seeking to challenge the validity of the PRC Court Sanctioned Settlement, the Bai Jun camp had sought to argue that Wang Li in fact did not have the authority to settle on behalf of Bai Jun at all and the argument was not accepted by the PRC court.  This is totally irrelevant.  It must be noted that the authority of Wang Li to enter into the PRC Court Sanctioned Agreement and the validity of the PRC Court Sanctioned Agreement were being considered by the PRC court who had no doubt applied the PRC law which was obviously the governing law of the PRC Court Sanctioned Settlement.  On the other hand, the validity of the Settlement Agreement was plainly governed by Hong Kong law and the Angola camp had never contended before the Hong Kong Courts to the contrary.  The fact that the PRC courts took the view that the persons purporting to act for Bai Jun had the authority from Bai Jun in entering into the PRC Court Sanctioned Settlement was a point available for Angola to rely on and was in fact fully and exhaustively litigated and brought to the attention of the Hong Kong Courts in the Hong Kong Proceedings.  Despite that the Hong Kong Courts held against Angola.

53.There are two further arguments raised by the Angola camp, both of which are rejected by this Court.  First, it says that the present application should be adjourned waiting for the decision of the Xi’an Court because the case has been “accepted” by the Xi’an Court and a jurisdiction challenge has already been mounted in Xi’an, following the approach of The Sumitomo Bank Ltd v Xin Hua Estate Ltd & Ors, HCCL 256/1998 (unrep, 5/02/1999).  Secondly, it is argued that jurisprudence on contractual anti-suit injunction is not applicable as the Settlement Agreement does not contain any jurisdiction clause.

Sumitomo Approach

54.Contrary to Angola’s submission, the Sumitomo case did not adopt the wait and see approach in Amchem Products Inc v British Columbia (Workers’ Compensation Board) (1993) 102 DLR (4^th) 96 as a matter of general principle, but was decided “with the very particular factual situation” of its own:

(1)  In that case, the jurisdiction challenge had already been mounted in the PRC court, fully argued both orally and in writing and the PRC court was already “deliberating upon the jurisdiction issue” before the anti-suit injunction was issued (pp 2, 6).

(2)  The Hong Kong action issued was at its most embryonic stage started together with the anti-suit injunction and long after the PRC proceedings had been started and the jurisdiction challenge had been raised and argued in PRC for the deliberation of the PRC court (p 2).

55.In contrast, that is totally distinguishable from the present case whereby:

(1)  The jurisdiction challenge in the Xi’an Proceedings is only at the very initial stage:

(a)  with the challenge application only being issued and served by the Bai Jun camp on 14 February 2022 shortly before the Summons was issued;

(b)  without any response from the Angola camp;

(c)  with no submissions being exchanged by the parties;

(d)  with no oral hearing either held, or scheduled; and

(e)  ordered to be suspended according to the Interim Injunction.

Other than the mere fact that the action was commenced, and the application was made to challenge jurisdiction which has not been considered or heard, there is no step taken in the Xi’an Proceedings.

(2)  On the other hand, the present Hong Kong action has progressed to the concluded stage, where the relevant issues have been finally decided with all appeal avenues exhausted and the key order, ie the transfer of the Relevant Shares, already executed.

56.In Choi Sai-yiu and Ors v Widepower Ltd and Ors [1995] 1 HKLR 186 at 190, Deputy High Court Judge Cheung (as he then was), expressly refused to follow the Amchem approach as a matter of general rule, being an additional step that is not enunciated in the binding Privy Council decision of Societe Nationale Industrielle Aerospatiale v Lee Kui-jak and Anor [1987] 1 AC 871.

57.In The “Angelic Grace”[1995] 1 Lloyd’s Rep 87 at 95, Leggatt LJ most forcefully pointed out the irony that such proposed general approach may lead to a greater affront to comity:

“I can think of nothing more patronising than for the English Court to adopt the attitude that if the Italian Court declines jurisdiction, that would meet with the approval of the English Court, whereas if the Italian Court assumed jurisdiction, the English Court would then consider whether at that stage to intervene by injunction. That would be not only invidious but the reverse of comity. …”

58.This is further supported by Dicey, Morris & Collins, The Conflict of Laws (15^th ed 2012) §12-090 commenting that such practice is particularly inapt “if the court has already ascertained that England is clearly the natural forum for the resolution of the dispute.”

59.The case of Charterers Mutual Assurance Association Limited v British & Foreign[1998] I L Pr 838 cited by Angola was decided under various special EU treaties that do not apply to Hong Kong at all.

60.If whenever an action has commenced in a foreign court on an issue which should be decided in Hong Kong, or worse still which has already been decided in Hong Kong, the Hong Kong Court must wait for the result of a challenge to the jurisdiction in the foreign court before considering any anti-suit injunction, that would make the whole anti-suit injunction jurisdiction pointless.

Jurisdiction Clause

61.Moreover, the Angola camp accepts that in any event, the Amchem approach does not apply to anti-suit injunction based on exclusive jurisdiction clause.  Angola argues that the Settlement Agreement itself does not have an exclusive jurisdiction clause.  However, that is missing the point.  The governing jurisdiction clause is found in the JV Agreement (clause 7).  It applies to disputes arising out of the interpretation and performance of the JV Agreement.  That is exactly how the dispute over the ownership of the Relevant Shares arose, the very dispute that the Settlement Agreement intended to settle.

62.By virtue of Ever Judger Holding Co Ltd v Kroman Celik Sanayii Anonim Sirketi [2015] 2 HKLRD 866§45, it is clear that when there is an exclusive jurisdiction clause, the Hong Kong Court should ordinarily grant an anti-suit injunction to restrain the pursuit of foreign proceedings brought in breach of such jurisdiction clause “at any rate where the injunction has been sought without delay and the foreign proceedings are not too far advanced, unless the defendant can demonstrate strong reason to the contrary.”  The reason being that “It seeks simply to uphold the parties’ contract to resolve any dispute within the scope of the clause by arbitration.”(§79).

63.With the exclusive jurisdiction clause ie clause 7 of the JV Agreement being operative, this principle is squarely applicable to the present situation.

64.The present case is even stronger than the usual jurisdiction clause cases.  As not only is there a jurisdiction clause, the Angola camp has specifically and voluntarily submitted to the exclusive jurisdiction of Hong Kong Court by contending that it owned the shares in pursuance of the JV Agreement in 2005, and raising the Settlement Agreement in Hong Kong and strenuously arguing its effect, without ever raising any issue that its right should be considered by the PRC court.

The Present Case

65.It is thus clear that both by virtue of Ever Judger (Supra) and Choi Sai-yiu (Supra), the Amchem approach is only applicable in special circumstances and not as a matter of general rule or starting point.

66.In any event, considering all the circumstances, including (1) that the points sought to be raised in the Xi’an Proceedings had been litigated and conclusively decided in the Hong Kong proceedings; (2) the indisputable closest connection with Hong Kong; (3) the oppressive and abusive conduct of re-litigating the same issues already conclusively decided in Hong Kong; (4) the undeniable bad faith and repeated defiance of the Hong Kong Decisions already exhibited by the Angola camp; (5) the embryonic stage of the belated Xi’an Proceedings; (6) the exclusive jurisdiction and governing law clause in favour of Hong Kong in the JV Agreement; and (7) the express submission to the exclusive jurisdiction of the Hong Kong Court by the Angola camp, the necessity in the interest of justice to stop the Angola camp from any further oppressive and vexatious conduct here and now is most evident, whether or not the Amchem approach is to be adopted as a starting point.

E.      CONCLUSION

67.Despite the fact that this dispute over the operation of the JV Agreement had been litigated in the jurisdiction that the Angola camp chose by expressly choosing Hong Kong as the exclusive jurisdiction under the JV Agreement; and despite initiating the present proceedings in the way that the Angola camp designed by causing Achieve Goal to issue the present proceedings; and despite producing the Settlement Agreement and amending the pleadings accordingly on 22 July 2009, when the litigation is finally concluded after a marathon lasting over 15 years, the Angola camp is making all kinds of attempts to deny its effect, to further claim to be the owner of the Relevant Shares and to prevent the Bai Jun camp from properly exercising its rights as the rightful owner of the Relevant Shares and hence the 70% majority shareholder of CLB, in defiance of the CA Order.

68.It is plainly in the interest of justice that the Angola camp be restrained from further vexing the Bai Jun camp or interfering with its entitlement to the Relevant Shares and ownership of Zhong Xin.

69.Accordingly, I make an order in terms of paragraph 1 of the Summons.

70.I further order that Angola do pay Bai Jun the costs of and occasioned by the Summons, such costs are to be taxed on the indemnity basis if not agreed.

71.The above direction regarding the basis of taxation of the costs to be on the “indemnity” basis is nisi and shall become absolute in the absence of any application within 21 days to vary the same.

72.At the hearing, Bai Jun indicated that if it is successful on the Summons, it will apply for the costs awarded in its favour to be paid personally by Zeng Wei, the sole owner of Angola since October or November 2009, pursuant to Order 62, rule 6A of the Rules of the High Court.

73.For that purpose, I direct that Bai Jun be entitled to serve a summons on Zeng Wei (i) at his address in Hong Kong at 401-402 Chung Ying Mansion, 20 Connaught Road West, Hong Kong; and (ii) by serving the same on the solicitors acting for Angola, on the question of whether Zeng Wei should be joined as a party to these proceedings for the purposes of costs only.

74.Lastly, I express my gratitude to counsel on both sides for their helpful assistance in this matter.

Mr Edward Chan, SC, leading Mr Clark Wang, instructed by Messrs Kwok, Ng & Chan, for the 2^nd plaintiff (by Counterclaim)

Mr Geoffrey Yeung, instructed by Messrs Ince & Co, for the 2^nd defendant (by Counterclaim)