Key takeaways
- The Hong Kong Court of First Instance in Re Mega Gold Holdings Limited [2024] HKCFI 2286 (30 August 2024) followed the approach in Re Lam Kwok Hung Guy (2023) 26 HKCFAR 119 (Guy Lam (CFA)) and Re Simplicity & Vogue Retailing (HK) Co Ltd [2024] 2 HKLRD 1064 (Re Simplicity (CA)), departing from the UK Privy Council’s judgment in Sian Participation Corp (in Liquidation) v Halimeda International Ltd [2024] UKPC 16 (Sian (UKPC)) for winding-up and bankruptcy petitions concerning arbitration agreements
- The combined effect of Guy Lam (CFA) and Re Simplicity (CA) is that, in exercising its discretion, the Hong Kong court will generally uphold an arbitration agreement and require that the dispute be referred to arbitration in the absence of “countervailing factors such as the risk of insolvency affecting third parties” and “a dispute that borders on the frivolous or abuse of process”
Recent court decisions in both Hong Kong and England have shown different approaches to handling disputes involving arbitration clauses, exclusive foreign court jurisdiction clauses, and insolvency matters.
In Guy Lam (CFA), the Court of Final Appeal decided that in the ordinary case of an exclusive jurisdiction clause, in the absence of “countervailing factors such as the risk of insolvency affecting third parties” and “a dispute that borders on the frivolous or abuse of process”, the effect of the foreign exclusive jurisdiction clause should be upheld. Re Simplicity (CA) followed and extended the Guy Lam (CFA) approach to arbitration clauses.