Reed Smith Client Alerts

Key takeaways

  • On 29 September 2023, the Hong Kong Court of First Instance issued a judgment in 楊佩玲 v. Super Best Investment Ltd [2023] HKCFI 2494, holding that where an application to set aside a default judgment was premised on the ground, among others, that the action should be stayed for arbitration
  • The usual threshold applied; namely, the applicant was required to demonstrate that there was a prima facie case established by cogent, as opposed to dubious or fanciful, evidence that the parties were bound by an arbitration agreement.

Background facts

The plaintiff (Plaintiff) and the defendant company (Defendant) entered into a loan agreement in 2015 (2015 Loan Agreement), which was a rollover of an earlier loan agreement dated May 2013 (collectively, Loan Agreements).

The Defendant allegedly defaulted on repayment of the loans under the Loan Agreements. The Plaintiff issued a writ of summons and served it on the Defendant’s registered office in Hong Kong. The Defendant failed to file an acknowledgement of service. The Plaintiff therefore sought a default judgment against the Defendant, which the Plaintiff obtained on 28 December 2022.

The Defendant applied to set aside the default judgment and to stay the proceedings in favour of arbitration, relying on a written agreement said to be supplemental to the 2015 Loan Agreement (Supplemental Agreement), which contained an arbitration clause (Arbitration Clause). Alternatively, the Defendant applied to stay the proceedings on the ground of forum non conveniens, arguing that the dispute should be resolved by a mainland Chinese court (collectively, Application).

The Supplemental Agreement was allegedly signed by a third party agent on behalf of the Plaintiff. The Plaintiff denied signing or otherwise being privy to the Supplemental Agreement.