Hong Kong Court refuses to grant an antisuit injunction to stay a winding-up petition where an arbitration agreement existed

19 August 2020

The Hong Kong Court of First Instance has dismissed an application by a British Virgin Islands (BVI) company (C) for an interim anti-suit injunction against proceedings commenced by a Cayman Islands company (D) for the winding-up of the BVI company in the High Court of the BVI.

In a recent judgment, the Hong Kong Court reiterated the principles outlined in Kam Leung Sui Kwan v. Kam Kwan Lai [2015] 18 HKCFAR 501 (Yung Kee), the case concerning the famous roastgoose restaurant in the heart of Hong Kong's Central district, when determining whether to exercise its discretion to wind up a foreign-incorporated company. In this case, the court also refused to grant a stay of the petition in favor of arbitration.

Florida escape

Introduction

An arbitral award is sufficient evidence to commence an insolvency involuntary proceeding against a debtor.^[1]

With this case law a door has been opened to an alternative remedy: securing the debt recognized under an arbitration award through insolvency proceedings, and use this course of action to push the debtor to eventually settle.

In this article, we will address:

Enforcement options in England & Wales – recent High Court judgment provides rare guidance on Orders for Questioning

Once the litigation or arbitration has been fought and you obtain a judgment in your favour, if your opponent does not pay up, a new process will begin in attempting to enforce that judgment.

The increasing number of high-profile bankruptcies across a number of commercial hubs has brought renewed focus on important questions of jurisdiction arising out of the tension between local insolvency regimes on the one hand, and parties’ arbitration agreements on the other.

Does an arbitration agreement protect a

debtor from the threat of liquidation?

27 July 2020

No two commercial mediations are the same.

However, there are three elements common to most cases:

1. Legal – in the absence of a consensual settlement, the law will decide the issue.

2. Commercial – all by definition have a commercial component – usually money.

3. Emotional – to a greater or less extent, where people are involved, emotions will play a part. The dispute may be a business dispute, but businesses are run by people, each of whom has his/her own drivers.

Re Patrick Cowley and Lui Yee Man, Joint and Several Liquidators of the Company [2020] HKCFI 922(date of judgment: 27 May 2020)

The relationship between arbitration clauses and winding up proceedings is a contentious issue in many jurisdictions and the debate shows no sign of abating. In the BVI, a recent case has further clarified the effect of an arbitration agreement on creditor's winding up proceedings pursued on the basis of a company's insolvency.

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