Consider this situation: a dispute has arisen between two parties in relation to an agreement which is subject to an arbitration clause. Separately, a winding up application has been made against one of the parties to the arbitration in the jurisdiction in which it is incorporated. An arbitral award is obtained against the potentially insolvent company. That company has assets in Hong Kong, against which the creditor is now seeking to enforce their rights.

On 19 April 2013, the Federal Court of Australia handed down its judgment in Eopply New Energy Technology Co Ltd v EP Solar Pty Ltd [2013] FCA 356. The Court enforced a foreign award against a company in liquidation, in the latest evidence of Australia’s pro-arbitration environment. 

Background

In a comprehensive judgment published on 23 April 2020, the Cayman Islands Court of Appeal, comprising Moses JA, Martin JA and Rix JA, has provided welcome clarification of the interplay between a contractual agreement to arbitrate disputes arising between shareholders and the exclusive jurisdiction of the Court to determine whether a company should be wound up on the just and equitable ground.

The Royal Court in Jersey has a varied and challenging workload. The cases that have come before it this quarter certainly live up to that description. Here we discuss just a handful of cases that the Royal Court has determined, that, whilst in some respects are unremarkable, in other respects serve to illustrate the breadth of the experience that the Royal Court judiciary possesses.

Representation of Private Equity Fund Finance Limited [2018] JRC 194

The adoption of new international guidelines on cross-border insolvency matters by the BVI courts has been welcomed by Ogier insolvency law specialist Nicholas Brookes.

The Judicial Insolvency Network guidelines – drafted in 2016 by ten insolvency judges from international jurisdictions, including a BVI Commercial Court Judge – aim to create co-operation and communication between courts on cross-jurisdiction proceedings, and to minimise the time and expense involved in litigation.

Clients often raise questions concerning the enforceability of arbitration clauses in bankruptcy proceedings. While this topic has been hotly debated for many years, a recent Ninth Circuit opinion, In re Thorpe Insulation Co., 671 F.3d 1011 (9th Cir. 2012), reminds us that arbitration clauses are not sacrosanct and can be struck down by the court.

The current litigation landscape for professionals in Hong Kong is relatively benign: but is this the lull before the storm? Accurate records are kept of all actions commenced in the Hong Kong High Court, which deals with claims of over HK$1 million. The graph above shows the number of claims begun by writ each year over the last 15 years. This data covers all claims, not just those against professionals, but gives an indication of the general litigation trends.

In another case involving a winding-up petition, the petition was dismissed, after the court found there was a dispute as to whether the statutory payment scheme applied to the contract.  The contractual arrangements between the parties were not formally documented, but there was a basic agreement as to the scope and price of the works, which arose out of a subcontract between Ro-Bal and main contractor McAlpines to provide fabrication and erection of steelworks at two sites.  At one site the works were completed and paid for, but at the other there was a dispute regarding payment

Given the nature of their businesses, shipping companies may be involved as respondents in arbitration proceedings in different jurisdictions. As arbitrations tend to be lengthy procedures, a claimant to such proceedings may want to explore whether there are any quicker routes they can take to recover their losses. One such option they might consider is bringing a winding up petition against the company.

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: