The Hong Kong Court of Appeal handed down judgment in Guy Kwok-Hung Lam v Tor Asia Credit Master Fund LP  HKCA 1297 on the question of whether a bankruptcy petition should be dismissed on the basis of an exclusive jurisdiction clause in favour of a foreign court. The Court of Appeal held that since the petition fell within the scope of the clause, the petition ought to be dismissed. The same analysis would by analogy apply to winding-up petitions. While a decision at the Court of Appeal level is helpful in bringing certainty to understanding the interaction between an exclusive jurisdiction clause and insolvency proceedings, the question of whether the same approach should apply to arbitration clauses was deliberately left open and remains unsettled.
The story begins with an English Court of Appeal decision – Salford – where the court held that insolvency proceedings should generally be stayed save “wholly exceptional circumstances” in favour of the parties settling the dispute in an arbitration clause. The approach eventually found its way into Hong Kong through a First Instance decision but the Hong Kong courts have since doubted the correctness of the Salford approach. The Salford approach has, however, been followed in various common law jurisdictions and has nonetheless been adopted (albeit with some modification) by the Singapore Court of Appeal. Given parties commonly include arbitration clauses in agreements, an answer by the HK courts at a higher level is long-awaited.
This seminar discusses the Court of Appeal’s reasoning in Guy Kwok-Hung Lam and its implication for the approach to arbitration clauses in the future. The seminar will also touch upon the instructive guidance provided by the Singapore Court of Appeal in approaching the issue, and judgments from other common law jurisdictions.
About the speaker:
Ernest Leung graduated with a law degree from the University of Oxford and proceeded to complete the BCL there. As a guest teacher, he formerly taught the Trusts component of Property II part-time at the London School of Economics. He is a co-author of the article “To Stay or Not to Stay – Asking the Right Questions: Re Guy Kwok-Hung Lam”  JBL 653. The article comments on the HKCFI’s treatment of applications to stay insolvency proceedings in favour of exclusive jurisdiction and arbitration clauses. He has previously also co-authored another article published in the Journal of Business Law on the proper approach for awarding damages for wrongful allotment of shares. He is currently a pupil at Wilberforce Chambers, London.
The Law Society of Hong Kong has awarded this seminar 1.5 Continuing Professional Development (CPD) points.