Summary of facts giving rise to the dispute
The dispute arose out of an agreement between D1-D2 (as sellers) and P (as purchaser) in 2003 (the Agreement) for the sale and purchase of all issued shares (the D4 Shares) in D4, which indirectly owned the right to develop and use a piece of land in Xiamen (Lot 22) through a wholly-owned subsidiary, D5. Under the Agreement, Lot 22 was to be delivered to P within six months of the date of the Agreement.
Shortly after the Agreement was entered into, D1-D2 sought to repudiate the Agreement, alleging issues of illegality, and Lot 22 was not delivered to P. Later on, a corporate restructuring took place such that D1-D2 effectively divested themselves of ownership of the D4 Shares to D3 (the Restructuring), and D5 developed Lot 22 and sold most of the units developed on it. D1-D2 thus later argued that it would be impossible to perform the Agreement.
Arbitral awards and enforcement actions in Hong Kong
The Mainland arbitral awards
P commenced CIETAC arbitration in Beijing in 2005 against D1-D2 under the Agreement. In 2006, the tribunal awarded P damages for breach of contract (in respect of late delivery of Lot 22) and ordered that D1-D2 “shall continue to perform the Agreement” (the First Award). D1-D2 later sought a second ruling from the tribunal for a determination that the Agreement could no longer be performed and that the parties be discharged from the Agreement. This application was dismissed by the tribunal in 2009.