The Court of Appeal (CA) recently dismissed an appeal to set aside a statutory demand arising out of the failure to pay margin calls in But Ka Chon v. Interactive Brokers LLC (02/08/2019, CACV 611/2018) [2019] HKCA 873, despite the presence of a mandatory arbitration clause. Obiter comments of the CA put into question the recent case law in Re Southwest Pacific Bauxite (HK) Ltd [2018] 2 HKLRD 449 (the “Lasmos case“) that a petition should “generally be dismissed” in the face of a mandatory arbitration clause.
Some key points
Hong Kong Court Addresses Interplay Between Arbitration and Insolvency
After reluctantly issuing an initial stay of enforcement in July 2018, the Hong Kong Court of First Instance recently dismissed an application by China Zenith Chemical Group Ltd (CZ) to further delay the enforcement of an arbitral award in favour of Baosteel Engineering & Technology Group Co Ltd (BS).
Baosteel Engineering & Technology Group Co Ltd v China Zenith Chemical Group Ltd [2019] HKFCI 68
In a highly international cross-border restructuring, the High Court of Hong Kong has refused to assist the New York-based Chapter 11 trustee of a Singaporean subsidiary of the Cayman-incorporated Peruvian business China Fishery Group (“CFG”).
On Friday 18 January 2019, Hong Kong and the Mainland reached a milestone by signing the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters between the Courts of the Mainland and of the Hong Kong Special Administrative Region (“Arrangement“). When taken together with other similar arrangements that are in train, the Mainland Supreme People’s Court envisages that approximately 90% of judgments of a civil and commercial nature will soon be reciprocally recognised and enforced between Hong Kong and the Mainland.
In Swiss Cosmeceutics (Asia) Ltd [2019] HKCFI 336, Mr Justice Harris of the Hong Kong Court of First Instance declined to wind up a company despite it failing to establish a bona fide defence on substantial grounds. Mr Justice Harris commented on the difficulties presented by sporadic record keeping, and reiterated the principle that the burden of proof lies with the company to demonstrate a bona fide defence on substantial grounds, despite the existence of anomalies in the petitioner’s claim.
Facts
In Re Kaoru Takamatsu [2019] HKCFI 802, [2019] HKEC 906, the Hong Kong Court of First Instance has recognised Japanese insolvency proceedings and granted assistance to a trustee in bankruptcy appointed by the Japanese Court.
In the past couple of decades, jurisdictions all over the world have been required to grapple with problems arising out of corporate insolvencies with cross-border elements. Solving these problems has required considerable judicial flexibility and innovation, but judges in some jurisdictions have been helped by the enactment of legislation designed to deal with cross-border status.