Read the full judgment text of HCCT 73/2023, HCCT 16/2024 on BabelCite. This 高等法院原訟法庭 judgment was delivered on 24 September 2024 before Hon Mimmie Chan J in Chambers.
Construction and arbitration — Anti-suit injunction — Arbitration agreement — Jurisdiction — Article 19 Basic Law certificate requirement — EU sanctions — Act of state doctrine — Public policy — Enforcement of arbitration agreement — Russian litigation in breach of Hong Kong arbitration clause — Court’s jurisdiction affirmed despite foreign sanctions and foreign proceedings. The dispute involves Bank A (a licensed German bank under voluntary liquidation) and Bank B (a Russian bank majority-owned by the Russian government). The parties had an ISDA Master Agreement, terminated via a Termination and Settlement Agreement governed by English law and containing a Hong Kong arbitration clause. In 2022, EU imposed sanctions including on Bank B, complicating payment under the TSA. Bank B commenced proceedings in Russian courts for payment and obtained interim orders including freezing orders and anti-suit injunctions against Hong Kong proceedings and arbitrations. Bank A applied to Hong Kong High Court for anti-suit and anti-enforcement injunctions, asserting breach of arbitration agreement. Bank B challenged jurisdiction arguing acts of state and foreign affairs exemption under Article 19 Basic Law, requiring a Chief Executive certificate. The Court rejected the need for such certificate, finding no state or act of state involved, only contractual banking disputes. The Court held a valid dispute exists under the arbitration clause, rejecting argument of futility due to sanctions and possibility of enforcement. Public policy arguments by Bank B were refuted, emphasizing respect for the parties’ autonomy and arbitration agreement. The Court granted Plaintiff’s application, dismissing Defendant’s jurisdictional challenge and ordering Defendant to discontinue Russian proceedings, with costs on indemnity basis. The decision underscores the Hong Kong Court’s supportive role in enforcing valid arbitration agreements notwithstanding foreign sanctions and parallel foreign proceedings.
Legal issues: Jurisdiction and requirement for Art 19 Certificate · Whether there is a dispute for arbitration · Whether the HK Arbitration would be futile due to EU Sanction · Whether the grant of injunction would be contrary to public policy · Whether to grant final anti-suit injunction and mandatory relief
Outcome: Dismissal of Defendant's Jurisdiction Summons; grant of Plaintiff's 1st OS and 2nd OS; Defendant to pay Plaintiff's costs on indemnity basis with Certificate for Counsel
Cited by 1 case · Cites 2 cases