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Hong Kong court considers interim relief in aid of foreign arbitration
Practical Law UK Legal Update 5-422-4838 (Approx. 2 pages)
Hong Kong court considers interim relief in aid of foreign arbitration
by Practical Law
| Published on 03 Sep 2009 • Hong Kong - PRC |
John Choong (Senior Associate), Freshfields Bruckhaus Deringer LLP
In Prema Birkdale Horticulture (Macau) Limited v Venetian Orient Limited and Anor HCMP905/2009, the Hong Kong Court of First Instance considered recent legislation granting the court the power to grant interim relief in relation to proceedings outside Hong Kong.
The legislation in question is set out (in somewhat different terms) in both the High Court Ordinance and in section 2GC(1A) of the Arbitration Ordinance. Section 2GC(1A) allows a court, in relation to arbitration proceedings that have been or are to be commenced in a place outside Hong Kong, to make an order granting an interim injunction or other interim measure, if the arbitration proceedings are capable of giving rise to an arbitral award which may be enforced in Hong Kong.
The case involved an application by the plaintiff to enjoin one of the defendants from, in effect, calling on a bond. The underlying dispute arose from a trade contract governed by Macau Law, with arbitration held in Macau. After considering various authorities, the court held that, on its proper construction, the bond in question was an "on demand" bond. The court accepted that such a bond has to be honoured unless there was knowledge on the part of the defendant of clear fraud. On the facts, there was no such knowledge; accordingly, the court declined to grant the interim relief sought.
As a result of this holding, the court did not have to consider the ambit of the new powers granted under the High Court Ordinance and the Arbitration Ordinance. Similarly, the court did not have to consider the relationship between the new legislation and previous authorities such as The Lady Muriel [1995] 2 HKC 320, which held that the Hong Kong courts' power to grant interim measures of protection in aid of foreign arbitral proceedings could be derived from the court's inherent jurisdiction.
Nonetheless, while the scope of the power of the Hong Kong courts to grant such relief in relation to foreign proceedings will no doubt be considered again in the future, it is clear that such a power exists under the new legislation. Hong Kong’s proposed Arbitration Bill also contains a similar provision (see Legal update, Arbitration Bill introduced before Legislative Council).