Nuoxi Capital Ltd (in Liquidation in the British Virgin Islands) v. Peking University Founder Group Co Ltd

CAMP 78-82/2022
(Heard together)

[2022] HKCA 1514

CAMP 78/2022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 78 OF 2022

(ON AN INTENDED APPEAL FROM HCA NO 778 OF 2021)

________________________

________________________

AND

CAMP 79/2022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 79 OF 2022

(ON AN INTENDED APPEAL FROM HCA NO 798 OF 2021)

________________________

________________________

AND

CAMP 80/2022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 80 OF 2022

(ON AN INTENDED APPEAL FROM HCA NO 1418 OF 2021)

________________________

________________________

AND

CAMP 81/2022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 81 OF 2022

(ON AN INTENDED APPEAL FROM HCA NO 1442 OF 2021)

________________________

________________________

AND

CAMP 82/2022

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

MISCELLANEOUS PROCEEDINGS NO 82 OF 2022

(ON AN INTENDED APPEAL FROM HCMP NO 1831 OF 2021)

________________________

______________________

(Heard Together)

______________________

Before:  Hon Kwan VP and Chow JA in Court

Date of Hearing:  27 September 2022

Date of Judgment:  11 October 2022

______________________

J U D G M E N T

______________________

Hon Kwan VP (giving the Judgment of the Court):

Introduction

1.Peking University Founder Group Company Limited (“the Company”) is the defendant in each of HCA 778, 798, 1418 and 1442 of 2021 (“the Actions”). In July 2021, the Company applied by summonses for, inter alia, orders that the Actions be stayed such that the relevant disputes with the plaintiffs in the Actions could be resolved in the reorganisation proceedings taking place before the Beijing No. 1 Intermediate People’s Court (“Beijing Court”).

2.Mr Zheng Zhibin and Ms Zhang Ting are among the members of a liquidation group (“the Administrator”) appointed by the Beijing Court to supervise the reorganisation of the Company. On 18 November 2021, they issued an originating summons in HCMP 1831 of 2021 (“HCMP 1831”) seeking recognition and assistance in the exercise of the powers of the Administrator in the restructuring. The assistance sought by them comprises, amongst other things, an order staying all proceedings against the Company, including but not limited to the Actions, save with the leave of the court and subject to such terms as the court may impose.

3.By a decision dated 17 December 2021 (“the Decision”)[1], Harris J recognised the Administrator and granted orders to assist them, including an order staying all proceedings against the Company for so long as it remains in restructuring in the Mainland. The general stay of proceedings does not apply to the Actions and the judge dismissed the Company’s summonses seeking a stay of the Actions.

4.Dissatisfied with the Decision, the Company and the Administrator applied for leave to appeal. The judge dismissed the application for leave to appeal on 22 February 2022 and handed down his reasons for decision on 4 March 2022 (“the Leave Decision”)[2].

5.By summonses dated 4 March 2022, the Company and the Administrator renewed their application before the Court of Appeal for leave to appeal. Further, by summonses dated 7 June 2022, the Company and the Administrator applied for leave to adduce new evidence for the purpose of the leave application, and, if leave is granted, for the appeal.

6.Having considered the written materials, we directed a rolled-up hearing of all the above summonses[3] with the view that if leave to appeal were to be granted, the hearing would be treated as that of the substantive appeal.

Background

7.The relevant background can be found in §§3 to 15 of the Decision. For present purposes, the following summary will suffice.

8.Nuoxi Capital Limited (“Nuoxi”) and Kunzhi Limited (“Kunzhi”) are the plaintiff in HCA 778 of 2021 and the plaintiff in HCA 1442 of 2021 respectively. Nuoxi and Kunzhi respectively issued bonds of US$900 million and US$800 million in 2017 and 2018. Hong Kong JHC Co Limited (“HKJHC”) and Founder Information (Hong Kong) Limited (“FIHK”), the plaintiff in HCA 1418 of 2021 and the plaintiff in HCA 798 of 2021 respectively, are the respective guarantors of the Nuoxi bonds and the Kunzhi bonds (collectively “the Bonds”).

9.The Company was incorporated in the Mainland and is the holding company of a commercial group whose activities stretched across a wide range of businesses. It is majority owned by Peking University Asset Management Co Limited, a state-owned enterprise wholly owned by Peking University which is ultimately controlled by the Ministry of Education. The Company had entered into (i) two Keepwell Deeds[4] in relation to the Nuoxi bonds with, inter alios, Nuoxi and HKJHC dated 20 April 2017 and 24 January 2018, as well as (ii) two Keepwell Deeds in relation to the Kunzhi bonds with, inter alios, Kunzhi and FIHK dated 17 April 2018 and 21 May 2018.

10.The material terms of all four Keepwell Deeds (collectively “Keepwell Deeds”) are identical. They are governed by English law and contain Hong Kong exclusive jurisdiction clauses. The Keepwell Deeds required the Company to cause each of Nuoxi, Kunzhi, HKJHC and FIHK (i) to have a consolidated net worth of at least US$1 at all times and (ii) to have sufficient liquidity to ensure timely payment by each of Nuoxi, Kunzhi, HKJHC and FIHK of any amounts payable under the Bonds.

11.Nuoxi and Kunzhi defaulted on their payment obligations under their respective bonds, and the guarantees given by HKJHC and FIHK have not been honoured. Nuoxi, Kunzhi, HKJHC and FIHK are now in liquidation, and they contend that the Company have breached the Keepwell Deeds.

12.On 19 February 2020, the Beijing Court issued an order that the Company commence reorganisation pursuant to the Enterprise Bankruptcy Law (“EBL”). By its decision dated 19 February 2020, the Beijing Court appointed the Administrator to supervise the reorganisation and to carry out the functions described in that decision.

13.On 21 February 2020, the Beijing Court issued an announcement directing creditors of the Company to submit their claims to the Administrator.

14.Each of Nuoxi, Kunzhi, HKJHC and FIHK have submitted claims in the Company’s reorganisation based on the Company’s breach of the Keepwell Deeds. Except for HKJHC’s claim, which has yet to be adjudicated, the Administrator rejected each of the said claims without giving any reasons. On 7 June 2021, Nuoxi, Kunzhi and FIHK lodged their objections to the Administrator in accordance with the EBL. Should the Administrator overrule the objections, Nuoxi, Kunzhi and FIHK would have 15 days to appeal to the Beijing Court.

15.Against the above background, Nuoxi, Kunzhi, HKJHC and FIHK (together “the plaintiffs”) commenced the Actions. The plaintiffs sought expedition of the trials as they are concerned that the Administrator will not set aside funds to pay their claims if they are admitted in the reorganisation. In response, the Company applied to stay the Actions. And about ten days prior to the hearing before the judge, the Administrator issued the originating summons in HCMP 1831 seeking recognition and assistance. It was supported by a letter of request of the Beijing Court dated 5 November 2021 (“the Letter of Request”). Save for §4 of the originating summons, which sought a general stay of all proceedings, the orders sought by the Administrator were relatively uncontroversial.

The Decision

16.The dispute at the hearing in November 2021 centred on whether the Actions should be stayed. As stated above, the judge granted a general stay of proceedings against the Company but refused to stay the Actions. The judge’s reasoning, so far as is relevant for present purposes, is summarised below[5].

17.The Keepwell Deeds contain exclusive jurisdiction clauses in favour of the Hong Kong courts in the following terms:

“15.2 Jurisdiction

(a)  The courts of Hong Kong are to have exclusive jurisdiction to settle any disputes which may arise out of or in connection with this Deed and accordingly any legal action or proceedings arising out of or in connection with this Deed (Proceedings) may be brought in such courts. All of the parties to this Deed irrevocably submit to the jurisdiction of such courts and waives any objection to Proceedings in such courts whether on the ground of venue or on the ground that the Proceedings have been brought in an inconvenient forum.”

18.It is not in dispute that the court will enforce an exclusive jurisdiction clause unless it can be demonstrated that there are strong reasons for not doing so (Donohue v Armco Inc [2002] CLC 440 at §24; Noble Power Investments Ltd v Nissei Stomach Tokyo Co. Ltd [2008] 5 HKLRD 631 at §§35 to 36)[6]. The Company advanced two arguments to contend that the court should not give effect to the exclusive jurisdiction clauses.

19.Firstly, the plaintiffs have submitted claims in the reorganisation such that they have foregone the right to insist on the dispute being determined other than in accordance with the reorganisation process. Secondly, any decision of the Hong Kong court will not be recognised by the Beijing Court, and it is therefore pointless to permit the Actions to proceed. In any case, the Beijing Court is as well placed as the Hong Kong court to determine the claims[7].

20.As to the first argument, the judge referred to the observations of the Privy Council in Stichting Shell Pensioenfonds v Krys [2015] AC 616 at §§39 to 40 and held that submission of a claim in foreign insolvency proceedings does not create an absolute bar to a creditor seeking adjudication of the claim in another jurisdiction, provided that the creditor does not use the proceedings in the other jurisdiction to achieve a result, which is inconsistent with that mandated by the foreign insolvency regime: at its most basic to try to obtain more than he would obtain if he proves in the insolvency proceedings. The judge concluded that the plaintiffs are not barred from commencing the Actions even though they have submitted to the jurisdiction of the Beijing Court when they submitted their claims in the reorganisation proceedings[8].

21.As to the second argument, the judge accepted that it is unclear any judgment the plaintiffs may obtain in Hong Kong would be recognised and enforced in the Mainland. However, he observed that the Company has not demonstrated that the Beijing Court will give no weight to a judgment of the Hong Kong court in the Actions. The plaintiffs accept that all they can obtain from the Hong Kong court is a declaration of their rights as a matter of English law and will not seek an order that the Company should pay them a sum of money. There are potentially complicated questions of English law, which will be central to the determination of the claim. The judge considered it would be extraordinary if the Beijing Court would not give weight to a decision of the Hong Kong court on a contractual dispute governed by English law and determined pursuant to an exclusive jurisdiction clause. He concluded that the plaintiffs should be allowed to have their claim tried in Hong Kong and, if successful, obtain the benefits of a judgment that they can use to support the claim they will then make in the reorganisation[9].

22.For completeness, the judge did not find the argument convincing that the Beijing Court is as well placed as the Hong Kong court to determine the claims under the Keepwell Deeds[10].

23.In the end, the judge granted an order recognising the appointment of the Administrator and granted them assistance. He ordered a general stay of all proceedings against the Company but allowed the Actions to proceed. He dismissed the Company’s stay applications made in the Actions.

24.As things stand, the pre-trial review of the Actions is scheduled to take place on 15 December 2022 and the trial of the Actions is scheduled to commence on 11 January 2023, with 7 days reserved.

The applications to adduce new evidence

25.The Company and the Administrator applied for leave to adduce new evidence by the summonses dated 7 June 2022. The new evidence which they seek to adduce are (i) the letter from the Administrator to the Beijing Court dated 24 April 2022, and (ii) the letter of reply from the Beijing Court dated 24 May 2022 (“the Reply Letter”).

26.Mr Maurellet SC[11] submitted for the Company and the Administrator that as the letters came into existence after the hearing in November 2021, the Ladd v Marshall requirements ([1954] 1 WLR 1489 at 1491) do not apply and this application is governed by the words in parenthesis in Order 59 rule 10(2) of the Rules of the High Court[12]. The new evidence, which are “matters which have occurred after the date of the trial or hearing”, is admissible regardless of whether there are special grounds or not.

27.For the plaintiffs, Mr William Wong SC[13] disputed whether the new evidence should qualify as evidence which “occurred after the date of the trial or hearing”, asserting that the “post-hearing” nature of the Reply Letter was “self-induced”, having regard to the procedural history of the proceedings before the judge between July 2021 to November 2021.

28.We do not think it necessary to express a view on Mr Wong’s contention. For the purpose of the present applications, we will treat the evidence as matters which have occurred after the hearing.

29.Although the Court of Appeal has a wide discretion to admit new evidence with regard to matters which have occurred after the hearing, this discretion is exercised sparingly with due regard to the need for finality in litigation. Whilst it is not possible to produce an exhaustive list of relevant considerations, among them are the extent to which the fresh evidence may affect the outcome, the time element and the conduct of the parties. The evidence should be admitted where it would be an affront to one’s sense of fairness not to admit it. And the new evidence must substantially affect a basic assumption made at the trial: the matter is one of degree[14].

30.The last consideration (that the new evidence must substantially affect a basic assumption made at the hearing or must have an important influence on the outcome of the appeal) is similar to the second requirement in Ladd v Marshall (that the evidence would probably have an important influence on the result of the case, although it need not be decisive).

31.The main contention between Mr Maurellet and Mr Wong is whether the above consideration is met for the discretion to be exercised in favour of admitting the new evidence.

32.Mr Maurellet sought to demonstrate that the Reply Letter is relevant to each of the grounds of the intended appeal (that there are strong reasons not to give effect to the exclusive jurisdiction clauses; that the plaintiffs having submitted to jurisdiction in the PRC, the Beijing Court serves as the appropriate forum to hear all claims against the assets of the Company and the Hong Kong court would not grant declaratory judgment in vain; and that the Hong Kong court should stay the Actions to assist the restructuring in the PRC, which involves a centralised regime of determining alleged creditors’ claims, in view of Article 21 of the EBL[15] and the Letter of Request). He submitted that the Reply Letter would have an important influence on the above issues.

33.The relevant parts of the Reply Letter read as follows in translation:

“Pursuant to Article 21 of [the EBL], after a People’s Court accepts an application for bankruptcy, any civil lawsuit related to the debtor can only be filed with the People’s Court which has accepted the application for bankruptcy. In relation to the exercise of rights by a creditor in the bankruptcy proceedings, according to [the EBL], the creditor shall file its proof of debt with the Administrator within the time limit for the filing of proof of debts as designated by the People’s Court. Upon receiving the materials of the filing of the proof of debt, the Administrator shall review the claims and submit the Form of Claims to the creditors’ meeting for verification. If either the debtor or the creditor objects to a claim recorded in the Form of Claims, it shall specify the reasons and the legal basis. If the party raising objections remains dissatisfied after the Administrator gives explanations or makes adjustments, the party raising objections shall file a claim for confirmation of credit with the People’s Court within 15 days after the verification of claims by the creditors’ meeting is completed. …

… The lawsuits initiated by [Nuoxi], [FIHK], [HKJHC] and [Kunzhi] in relation to the Keepwell bonds are not claim-confirming lawsuits challenging the Administrator’s decision upon the review of the proof of debt, but legal proceedings commenced outside the bankruptcy proceedings, and thus, the outcome of such legal proceedings will not necessarily have the legal effect of confirming a claim in the bankruptcy proceedings. The creditors are still required to follow the statutory procedures in the bankruptcy proceedings in accordance with [the EBL], including, among others, the filing of the proof of debts, the review of the proof of debts, the confirmation of the proof of debts or bringing lawsuits or arbitrations after the claims are rejected, before their claims in the bankruptcy proceedings can be determined, following which they can then exercise their rights in the bankruptcy proceedings. The relevant judgment rendered by the High Court of Hong Kong following recognition by the courts of the PRC could be used as a basis by the Administrator when it reviews the proof of debt[16]. [The Company] is currently still at the stage of implementation of the reorganisation plan, and having this Court exercise centralised jurisdiction over civil lawsuits related to the debtor in accordance with [the EBL] would enable better and coordinated handling of substantive disputes of the cases involved in the bankruptcy proceedings, confirming the disputed credits and resolving the disputes in a relatively expeditious manner, promoting the smooth progression of the bankruptcy proceedings, and realising the rights of the creditors timely.

As for matters concerning the cooperation with the High Court of Hong Kong on hearing the lawsuits related to Keepwell bonds, as Hong Kong and the Mainland have not established a cooperation mechanism for hearing lawsuits deriving from the bankruptcy proceedings, it would be difficult to realise cooperation on the hearing of the relevant lawsuits, either on substantive or procedural issues, under the Civil Procedural Law of the PRC and other relevant existing laws, regulations and policies. Nevertheless, pursuant to the requirements and principles set forth in the Record of Meeting of the Supreme People’s Court and the Government of the Hong Kong SAR on Mutual Recognition of and Assistance to Bankruptcy (Insolvency) Proceedings between the Courts of the Mainland and of the Hong Kong SAR[17], i.e. to further improve the mechanism for judicial assistance between the Mainland and the Hong Kong SAR, to facilitate economic integration and development, and also to optimise the business environment underpinned by the rule of law, the Court can continue to communicate and exchange views with the High Court of Hong Kong on the relevant issues, and details and method of such communication can be discussed separately.”

34.It does not appear to us that the Reply Letter would probably have an important influence on the outcome of the intended appeals, which are against the exercise of discretion of the judge. The matters referred to in the Reply Letter – Article 21 of the EBL, the statutory requirements and procedures to be complied with in submitting a claim in bankruptcy proceedings in the Mainland – are no different from the expert evidence placed before the judge at the hearing and have been taken into consideration in the Decision. The judge has taken on board that the Beijing Court has jurisdiction over the claims based on the Company’s breach of the Keepwell Deeds, and that the outcome of the Actions “will not necessarily have the legal effect of confirming a claim in the bankruptcy proceedings” in the Mainland. We agree with Mr Wong that the Reply Letter does not add anything of significance to the judge’s assessment in the exercise of his discretion. Nor does it appear to us that the basis of the judge’s reasoning would be altered by anything in the Reply Letter. To the contrary, the Reply Letter stated that the judgment of the High Court of Hong Kong “following recognition by the courts of the PRC could be used as a basis by the Administrator when it reviews the proof of debt”[18]. This does not support any contention that the Beijing Court would give no weight to the rulings of the Hong Kong court in the Actions.

35.As for the response to the potential cooperation between the two jurisdictions in the last paragraph of the Reply Letter, we do not think this should have any or any direct impact on the judge’s reasoning for refusing to stay the Actions. As pointed out by Mr Wong, the potential cooperation suggested by the judge is a forward-looking exercise, and would not have a bearing in weighing up various factors as to how the discretion of granting or refusing a stay should be exercised.

36.For the above reasons, we decline to exercise our discretion to admit the new evidence as sought and dismiss the summonses of the Company and the Administrator filed on 7 June 2022.

Whether leave is required for the appeal in HCMP 1831

37.Mr Maurellet accepted that the Company needs leave to appeal against the judge’s orders in the Actions refusing a stay of proceedings as these orders are interlocutory in nature. He argued however that the Administrator could appeal against the order made in HCMP 1831 as of right as this is an order “determining in a summary way the substantive rights of a party to an action” under Order 59, rule 21(1)(a), and therefore can be appealed against as of right even if it may be regarded as interlocutory in nature. The “substantive right” that was determined in this instance was the right of the office-holders (the Administrator) to assistance substantively, including the right to a stay, and the existence or extent of this right has been finally determined by the Decision. Mr Maurellet distinguished this from the situation in the Actions which is concerned with the alleged right of the bond-holders against the defendant for payment. He submitted that in rejecting this contention in the Leave Decision, the judge has conflated the position of the Administrator with the position of the defendant-debtor.

38.We are not persuaded by his submissions.

39.By §4 of the originating summons, the Administrator sought a general stay of proceedings against the Company, which was a direction that had been routinely granted by the court when making orders for recognition and assistance until Re FDG Electric Vehicles Limited [2020] 5 HKLRD 701. See for example Re Agritrade Resources Limited [2020] 4 HKLRD 616; Re Joint Official Liquidators of Centaur Litigation SPC, HCMP 3389/2015, 10 March 2016.

40.The direction sought by the Administrator at §4 of the originating summons also contained what was then the standard proviso,[19] which allows creditors to apply for leave to proceed with any actions or proceedings against the company, notwithstanding the general stay of proceedings.

41.As we see it, by including the proviso in §4 of the originating summons, the Administrator were not asserting any substantive right, whether against the plaintiffs or the general creditors of the Company at large, to stay all proceedings against the Company. The Administrator have no right to stay the Actions, being a mere agent of the Company. Rather, they were seeking a case management direction, the purpose of which was to ensure that (i) any action against the Company would not take place in Hong Kong without the relevant parties being aware of the impact of the foreign insolvency proceedings, and (ii) the court could oversee creditor action in Hong Kong, with a view to promoting an orderly liquidation or restructuring as is achieved in the case of a domestic liquidation (Re FDG Electric Vehicles Limited at §7; Re CEFC Shanghai International Group Limited (Mainland liquidation) [2020] 1 HKLRD 676 at §15).

42.Accordingly, we do not think it is apt to describe the Administrator as asserting any “right” for proceedings against the Company to be stayed, or to characterise the Decision, which allowed the plaintiffs to proceed with the Actions against the Company, as one which determined the substantive rights of the Administrator to a stay of all proceedings against the Company.

43.In the premises, we are of the view that Order 59, rule 21(1)(a) is not engaged, and that leave is necessary before the Administrator can appeal the judge’s order in HCMP 1831 refusing to stay the Actions.

Whether leave to appeal should be granted

44.The granting (or the refusal) of a stay of proceedings involves an exercise of discretion. It is well established that an appellate court will only interfere (i) where the judge has misdirected himself with regard to the principles in accordance with which his discretion had to be exercised; (ii) where the judge, in exercising his discretion, has taken into account matters which he ought not to have done or failed to take into account matters which he ought to have done; or (iii) where his decision is plainly wrong (Bright Shipping Ltd v Changhong Group (HK) Ltd (No 2) [2019] 5 HKLRD 30 at §§5 to 7).

45.Mr Maurellet has put forward three proposed grounds of appeal in support of the contention that the judge erred in not staying the Actions. For the reasons set out below, we are not satisfied that any of the intended grounds of appeal have any reasonable prospects of success.

46.Firstly, it was submitted that the judge erred in giving effect to the relevant exclusive jurisdiction clauses when there are “strong reasons” not to do so, namely: (a) the need to avoid duplicity of proceedings; and (b) judgments given by the Hong Kong court in the Actions will be futile as they cannot be meaningfully recognised or enforced in the Mainland. They make up the key contentions in the intended appeal.

47.We do not accept this submission.

48.On point (a), Mr Maurellet relied on this statement of Lord Bingham of Cornhill in Donohue v Armco Inc at §27:

“The authorities show that the English court may well decline to grant an injunction or a stay, as the case may be, where the interests of parties other than the parties bound by the exclusive jurisdiction clause are involved or grounds of claim not the subject of the clause are part of the relevant dispute so that there is a risk of parallel proceedings and inconsistent decisions.”

49.We do not think Lord Bingham intended to suggest that whenever there is a risk of parallel proceedings and inconsistent decisions, the court would invariably refuse to give effect to an exclusive jurisdiction clause. The exercise of discretion must be based on all relevant circumstances, and how the discretion should be exercised must depend on the facts of each case.

50.Depending on the circumstances, a stay may well be appropriate where there are proceedings on foot against multiple parties, with only some of the parties bound by a jurisdictional agreement. This is different from the position where a party is seeking to assert his right to have his claim dealt with before the contractually agreed court against the very parties bound by the relevant jurisdiction agreement.

51.In the present case, it is understandable that the Company and the Administrator may find it more straightforward to have the plaintiffs’ claims dealt with entirely by the Beijing Court. However, like the judge, we do not think that this is of itself a sufficiently strong reason to deprive the plaintiffs of the right to have their claims dealt with before the contractually agreed court, especially when the Administrator have not demonstrated that the Hong Kong judgment will have no utility, which we will now address.

52.On point (b), the judge was plainly aware and took into account the uncertainty whether a Hong Kong judgment in the Actions may be recognised or enforced in the Mainland. Nevertheless, he did not consider that a judgment given by the Hong Kong court in the Actions would necessarily be futile. He opined that the Company/Administrator failed to show that no weight will be given to a judgment of the Hong Kong court in the reorganisation proceedings. And this point was not addressed in the report of the Company’s expert, Professor Shi Jingxia[20].

53.Mr Maurellet made two further objections in connection with point (b). Firstly, he relied on S v G [2020] HKCFI 2201 at §45 and Equis v George Cowan [2021] HKCFI 768 at §45 and submitted that a declaration which is sought solely for the benefit of foreign courts will rarely be justified. Secondly, he submitted that the Company would be prejudiced as it would not be able to enforce a judgment granted by the Hong Kong court in its favour and that the plaintiffs may have “a second bite of the cherry”.

54.We are not persuaded by these submissions.

55.As regards the first objection, neither S v G nor Equis decided that it would never be appropriate for a Hong Kong court to grant a declaration solely for the benefit of foreign proceedings. Instead, they stress the importance of adopting a careful approach where such a declaration is sought, with an important question being whether the declaration sought would serve any practical utility (Equis at §§45 and 50). In the present case, the Actions and the declarations sought cannot be said to have no utility. It was open to the judge to conclude that the Company/Administrator have failed to show that the Beijing Court will give no weight to a judgment of the Hong Kong court and that any judgment obtained by the plaintiffs in the Actions may be used as evidence to support their claims before the Beijing Court.

56.As regards the second objection, whilst it is fair to say there may be some prejudice to the Company in that it is uncertain whether it could enforce a judgment granted by the Hong Kong court in its favour, such prejudice is mitigated by the fact that the Company and the Administrator could utilise such judgment as evidence to support their position before the Beijing Court. All in all, we do not think this is a sufficiently strong reason to deprive the plaintiffs of their right to have their claims determined in the contractually agreed forum.

57.For the above reasons, we consider it was open to the judge to conclude that a judgment given by the Hong Kong court in the Actions would have some utility, and there is no basis for us to interfere with the judge’s conclusion.

58.For completeness, we note that Professor Shi Jingxia, who was also the expert witness on PRC law for the administrator appointed by the Beijing Court in the restructuring of the company in Citicorp International Limited v Tsinghua Unigroup Co. Ltd [2022] HKCFI 1558, explained in her oral testimony in that case as stated in §10 that a judgment of the Hong Kong court in the Actions could be adduced as evidence before the Beijing Court. This again goes to show that a Hong Kong judgment in the Actions is not necessarily, as the Company and the Administrators put it, of no relevance or utility in the PRC insolvency proceedings, even though it is entirely a matter for the Beijing Court to decide what weight should be given to such a judgment.

59.Secondly, it was submitted that the Actions should be stayed because the Plaintiffs have submitted to the jurisdiction of the Beijing Court by submitting claims in the reorganisation. The judge dealt with this point in the Decision at §§28 to 42. We could not detect any error in the judge’s approach and in the conclusion that he reached.

60.Although the plaintiffs may have submitted to the jurisdiction of the Beijing Court by putting in claims in the reorganisation, it does not follow from this that they are barred from commencing the Actions against the Company in Hong Kong. Stichting Shell, the authority cited by the Company, does not support this proposition.

61.The judge made these observations in §31 of the Decision after referring to §40 of Stichting Shell:

“31. …a claim in foreign insolvency proceedings does not create an absolute bar to a creditor seeking adjudication of the claim in another jurisdiction, which the creditor may take the view is more appropriate for its resolution. This is consistent with the well-established English position that a liquidation stay has no extra-territorial effect. What the creditor cannot do is to attempt to use proceedings outside the foreign insolvency jurisdiction to achieve a result, which is inconsistent with that mandated by the foreign insolvency regime: at its most basic to try and obtain more than he would obtain if he proves in the insolvency proceedings.”

62.We agree with his observations. We accept as a general proposition where there is already pending a process of universal distribution of an insolvent estate in a foreign jurisdiction, the Hong Kong court should not allow steps to be taken within its jurisdiction which would interfere with that process (Galbraith v Grimshaw [1910] AC 508 at 513). However, we do not think that the commencement of proceedings per se by a creditor in Hong Kong would constitute an interference with the process mandated by the foreign insolvency regime if those proceedings would not result in any prior access to any part of the insolvent estate by that creditor.

63.There is no merit in the second proposed ground of appeal.

64.Thirdly, it was submitted that the judge should have stayed all Hong Kong proceedings to assist the PRC process in view of the centralized regime of determining alleged creditors’ claim in the PRC and the futility (and wastefulness) of the Actions. This ground is essentially a repetition of the arguments made in support of the first proposed ground of appeal, which have been dealt with and rejected.

65.Lastly, Mr Maurellet contended that leave to appeal should be granted on the basis that the question raised in the intended appeal is one of general principle and of importance and the applications brought by the Company are the first of their sort in Hong Kong. He submitted that it would be in the public interest for the appeal court to consider the issues arising. This contention was rejected in the Leave Decision.

66.As we see it, the applications turn on the consideration of well-established principles in relation to exclusive jurisdiction clauses, and whether strong reasons have been demonstrated not to enforce the exclusive jurisdiction clauses. We do not think the interest of justice requires that question to be re-argued before this court.

67.In the premises, we do not consider any of the proposed grounds of appeal advanced by the Company or the Administrator have any reasonable prospects of success. Nor do we see any other reason in the interest of justice why the appeal should be heard. We therefore dismiss the applications for leave to appeal of the Company and the Administrator.

Costs

68.There is no dispute that costs of the summonses issued on 4 March 2022 and 7 June 2022 should follow the event, with a certificate for two counsel. We order the Company to pay the plaintiffs’ costs of those summonses in CAMP 78 to 81 of 2022, and the Administrator to pay the plaintiffs’ costs of those summonses in CAMP 82 of 2022, to be taxed if not agreed.

Mr William Wong SC, Mr Look-Chan Ho and Mr Tommy Cheung, instructed by Howse Williams, for the Plaintiffs in CAMP 78-81/2022 and the Respondent in CAMP 82/2022 (Respondents)

Mr José-Antonio Maurellet SC and Mr Tom Ng, instructed by Freshfields Bruckhaus Deringer, for the Defendant in CAMP 78-81/2022 and the Applicants in CAMP 82/2022 (Applicants)