The recent Hong Kong Court of First Instance decision of Re Shandong Chenming Paper Holdings Limited marks another intersection between the public domain of insolvency and the private realm of arbitration.

In this and previous decisions, the Hong Kong courts have grappled with the issue of which should take priority – a winding-up petition, or the contractual term in the relevant contract that states disputes are to be resolved through arbitration or litigation.

Two primary considerations fuel this debate:

In a recent Court of First Instance decision in Re Shandong Chenming Paper Holdings Ltd [2023] HKCFI 2065 (Shandong Chenming), Harris J addressed the following issues which are important factors to be considered by creditors in strategising whether to opt for commencing winding-up proceedings against a debtor in recovering a debt, as well as by debtors in potentially raising cross-claims to defend a winding-up petition:

The original version of this article was first published in the Trilegal Quarterly Roundup.

Key Developments

1. Supreme Court clarifies the scope of adjudicating authority’s power to decide on a financial creditor’s insolvency application when debt and default have been established

第１ はじめに 

国際契約を中心に、契約書に仲裁条項が設けられることは 珍しくありません。仲裁条項のある契約について紛争が生じた 場合、裁判所ではなく合意された仲裁機関での紛争解決が 試みられます。では、このような仲裁条項のある契約について、 一方当事者が倒産した場合、仲裁条項は引き続き有効でしょ うか。仲裁という当事者間の合意を重視する手続と、倒産とい う強行法規的に一律かつ集団的な調整を行う手続とは、相 互に相反するようにも見受けられます。仲裁と倒産の関係につ いては、国際的にも大きな議論があるところですが、以下で は、仲裁条項のある契約につき、海外の契約相手が破産した 場面を想定して、基本的な考え方を概観したいと思います。

第２ 仲裁合意は破産管財人を拘束するか

一般的な仲裁条項は、例えば、以下のような条項であり、契 約に関するあらゆる紛争は、合意された仲裁条項に基づき、 合意された仲裁機関（下記の例では、シンガポール国際仲裁 センター）で仲裁により最終解決されます。

The Federal Court of Australia recently determined an application brought by the administrators of a company in voluntary administration seeking judicial guidance on how to deal with claims for costs and interests resulting from two prior arbitrations. The key issue was whether the costs and interests awarded in the previous arbitrations were admissible to proof in the administration of the company, having regard to the fact that the relevant arbitral awards were made after the appointment of administrators.

The Court made a distinction between the two arbitrations as follows:

Duties and Implications of financial Information in s.214 claims

Introduction

This article follows Part 1 in which I set out the key issues we have recently seen and the case law arising in Misfeasance and Wrongful Trading claims. This Part 2 considers the duties and implications surrounding the financial information that is available to directors when faced with a s.214 wrongful trading claim.

Whether a dispute that is subject to arbitration can or must be referred to arbitration after one of the parties to a prepetition arbitration agreement files for bankruptcy has long been a source of disagreement among bankruptcy and appellate courts due to a perceived conflict between the Federal Arbitration Act and the Bankruptcy Code. The U.S. Bankruptcy Court for the Northern District of Illinois recently provided some useful guidance regarding this issue.

The National Company Law Appellate Tribunal at Chennai (“NCLAT”) has in M/s. KK Ropeways Limited v. M/s Billion Smiles Hospitality Private Limited¹inter alia held that an arbitral award cannot be enforced under Section 9 of the Insolvency and Bankruptcy Code, 2016 (“IBC”) when a challenge under Section 34 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) has been preferred against such an award.

Brief Facts

Contemporary Issues: Insolvency and Arbitration in Vietnam A bankruptcy proceeding often brings with it questions as to how creditors might be able to make their claims. For example, tension may arise between the unified dispute resolution procedures under a contract (such as an arbitration agreement) and bankruptcy regulations. By way of the parties’ arbitration agreement, the parties have ostensibly intended, at the outset, for all disputes arising from the underlying contract to be resolved through arbitration.

1.1 The overriding objective

(1) The overriding objective of these rules is to enable the court to deal with cases justly.

(2) Dealing justly with the case includes –

(a) ensuring, so far as is practicable, that the parties are on an equal footing;

(b) saving expense;

(c) dealing with cases in ways which are proportionate to the –

(i) amount of money involved;

(ii) importance of the case;

(iii) complexity of the issues; and (iv) financial position of each party;

(d) ensuring that it is dealt with expeditiously; and