Read the full judgment text of HCCT 98/2022 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 18 May 2023 before Hon Mimmie Chan J.
Anti-arbitration injunction — arbitration clause — enforcement of Mainland arbitral award — breach of implied promise to perform award — res judicata and issue estoppel — abuse of process — PRC Civil Code Article 580 — jurisdiction — balancing of interests. The Plaintiff sought enforcement in Hong Kong of a Mainland arbitral award (the 1st Award) ordering Defendants to continue performance of a contractual Agreement and brought an action for damages for breach of the implied Promise to honour the Award. The Defendants started a New Arbitration on the Mainland seeking termination of the Agreement and claiming compensation under Article 580 of the PRC Civil Code, which allows either party to terminate in specified circumstances. The Defendants’ New Arbitration sought to relitigate matters definitively determined by the Hong Kong courts and arbitral tribunal, including the impossibility of performance and the governing law for the damages claim. The Court recognized the limited scope and need for exceptional circumstances to grant anti-arbitration injunctions, mindful of arbitration autonomy and minimal curial intervention. The Court held that claims attempting to recharacterize the Plaintiff’s damages claim as governed by PRC law or as breach of the Agreement fall outside the arbitration clause, are vexatious and oppressive, and constitute an abuse of process warranting an injunction. However, the Defendants have a legitimate right to arbitrate claims arising under the Agreement and should be allowed to pursue such claims, including under Article 580, before the tribunal. The injunction was granted in limited terms restraining claims attacking the Plaintiff’s damages claim but refused on broader terms. The Defendants were ordered to pay 50% of the Plaintiff’s costs of the injunction proceedings. This judgment highlights the careful balance courts must strike between enforcement of arbitration agreements and preventing vexatious relitigation that undermines final court rulings.
Legal issues: Anti-arbitration injunction application
Outcome: The injunction application is granted only in limited terms restraining the Defendants from pursuing claims in the New Arbitration that the Plaintiff’s damages claim in HCCL 13 is for breach of the Agreement or governed by PRC law, but refused in respect of the wider injunction sought.
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