Read the full judgment text of HCCT 14/2022 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 17 October 2022 before Hon Mimmie Chan J in Chambers.
Arbitration — Enforcement of Awards — Commercial Reservation under New York Convention — Arbitrability — Public Policy — Security for Costs — Asset Dissipation Risk. The plaintiffs sought to enforce LCIA partial and final arbitral awards against the defendants arising from disputes under a Stock Purchase Agreement involving indemnities for tax liabilities. The defendants challenged enforcement on grounds that the awards were non-commercial under the commercial reservation by PRC, non-arbitrable as involving foreign tax matters, and enforcement would violate public policy. The court held the awards concerned purely commercial contractual rights under the SPA, did not usurp Mainland tax authority functions, and were arbitrable and enforceable within Hong Kong law. The court further found sufficient risk of dissipation of assets following partial and inconsistent disclosure by the defendants, including significant unexplained payments from Hong Kong bank accounts and adverse financial and corporate regulatory circumstances. Accordingly, the court ordered the defendants to provide security for 40% of the quantum awarded and for costs amounting to HK$750,000 pending the setting aside application hearing scheduled later. Costs of the interim application were ordered against the defendants, to be summarily assessed if not agreed.
Legal issues: Whether the awards are subject to enforcement under the Commercial Reservation · Whether the awards are arbitrable under Hong Kong law · Whether enforcement of the awards would contravene public policy · Appropriateness of ordering security pending enforcement proceedings
Outcome: The court ordered the defendants to provide security amounting to 40% of the sums specified in the Final Award on Quantum and security for costs of HK$750,000; the defendants ordered to pay the plaintiffs’ costs of the summons.
Cited by 1 case · Cites 3 cases