GM1 v KC
Court of First Instance
Construction and Arbitration Proceedings No 60 of 2019)
Mimmie Chan J in Chambers
8, 14 November 2019

Arbitration — court-ordered interim measures — anti-suit injunction as interim measure under s. 45 — Arbitration Ordinance (Cap. 609)

There were pending arbitration proceedings in Hong Kong between P1 and D pursuant to a guarantee between them (“Guarantee”) and related arbitration proceedings between P1 and D’s wholly owned subsidiary. A challenge was made to the constitution of the Arbitral Tribunal. Ps, comprising P1 and P2, an affiliate of P1 which was not a party to the Guarantee, applied for an anti-suit injunction requiring, inter alia, D to withdraw legal proceedings commenced against Ps in a court in the PRC. D argued that where a party sought an anti-suit injunction to restrain foreign proceedings based on an arbitration agreement, the proper jurisdiction basis was s. 21L of the High Court Ordinance (Cap. 4) (HCO), not s. 45 of the Arbitration Ordinance (Cap. 609) (AO).

Held, granting an interim injunction pending the conclusion of the substantive hearing of the application, that:

  1. The injunction sought was within the scope of interim measures covered by s. 45 of the AO (Cap. 609). Section 45 should be read in light of the object and principles of the AO as set out in s. 3. The AO was based on the important principle that parties to a dispute should be free to agree on how the dispute should be resolved. An injunction to enforce the positive promise of a party to arbitrate disputes and the negative right not to be vexed by foreign proceedings could be viewed as an interim order which maintained the status quo of parties which had already commenced their arbitration, as here, in accordance with the rights conferred under their arbitration agreement (The Angelic Grace [1995] 1 Lloyd’s Rep 87, Donahue v Armco Inc [2002] CLC 440, Fiona Trust & Holding Corp v Privalov [2007] UKHL 40, AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC [2013] 1 WLR 1889, Ever Judger Holding Co Ltd v Kroman Celik [2015] 3 HKC 246, Compania Sud Americana de Vapores SA v Hin Po International Logistics Ltd (2016) 19 HKCFAR 586, Giorgio Armani SpA v Elan Clothes Co Ltd [2019] 2 HKLRD 313 considered). (See paras. 12–14.)
  2. Even if the injunction were exclusively covered by s. 21L of the HCO, the claim was within O. 11 r. 1(1)(d) of the Rules of the High Court (Cap. 4A, Sub.Leg.). Any arbitration in Hong Kong was governed by Hong Kong law. (See paras. 15–16.)
  3. The Hong Kong Court could and should grant the injunction to recognise and enforce Ps’ prima facie right not to be vexed by having to resist D’s proceedings in Mainland China. The Arbitral Tribunal should be allowed to rule on its own competence and jurisdiction and its decision could then be reviewed by the Hong Kong Court as the supervisory court. When an award was made by the Arbitral Tribunal and was sought to be enforced on the Mainland, it would be open to D to resist enforcement if the arbitration agreement could be challenged before the Mainland Court. The fact that the foreign court might insist on its own jurisdiction was irrelevant to the court of the seat of arbitration when it dealt with an arbitration provision governed by its own law (The Angelic Grace [1995] 1 Lloyd’s Rep 87, Tamil Nadu Electricity Board v ST-CMS Electric Company Private Ltd [2007] EWHC 1713 (Comm), Dallah Real Estate and Tourism Holding Co v Ministry of Religious Affairs of the Government of Pakistan [2011] 1 AC 763, S Co v B Co [2014] 6 HKC 421 applied). (See paras. 20–24.)
  4. Although P2 was not a party to the Guarantee and arbitration agreement, anti-suit relief might be granted in relation to proceedings commenced against a third party, if the arbitration agreement could be construed as covering claims against the contracting party’s non-contracting affiliates or associates. There was a serious question to be tried that D’s claims against P2 in the Mainland proceedings in relation to the existence, validity and binding effect of the Guarantee and the arbitration agreement contained therein should be dealt with by the same arbitral tribunal (Giorgio Armani SpA v Elan Clothes Co Ltd [2019] 2 HKLRD 313 applied). (See para. 25.)

Application

This was an application by the plaintiffs for an anti-suit injunction against the defendant based on an arbitration agreement, to inter alia, require the defendant to withdraw Mainland Chinese proceedings against them. The facts are set out in the judgment.

 

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