ISRAEL SORIN (IZZY) SHOHAT v. BALRAM CHAINRAI

HCCT 9/2016

[2021] HKCFI 655

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 9 OF 2016

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D E C I S I O N

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1.  On 15 September 2016, this Court granted leave to the Applicant to enforce an arbitral award in his favour of 31 October 2013 (“Award”) (“Enforcement Order”). The Award is for the Respondent’s payment to the Applicant of NIS 16,148,779 (“Principal”), interest on the Principal and its linkage to the Israeli consumer price index as of 20 June 2008 until full payment (“Interest and Linkage”), arbitration costs and fees and interest thereon.

2.  By his summons issued on 7 January 2021 (“Summons”), the Respondent applied for various orders including, first, a stay of execution of the Enforcement Order pending and before the conclusion of HCA 1462 of 2014 (“HCA 1462”) which had been brought by the Respondent against the Applicant on 31 July 2014 for a sum of NIS 29.5 million (equivalent to approximately HK$30.3 million), and for the setting aside of orders made by the Court on 7 July 2020 and 30 November 2020 (“Examination Orders”) in relation to the oral examination of the Respondent.  By Order made on 25 January 2021, this Court dismissed the application made by paragraphs 1 and 2 of the Summons, and directed that the application for interim stay of the Examination Orders to be determined on paper.

3.  First and foremost, the Award is valid, final and binding, for which leave has been granted since September 2016 for it to be enforced as a judgment of this Court.

4.  Second, the Examination Orders are for the oral examination of the Respondent as a debtor under the final and binding Award, as part of the enforcement of the Award in Hong Kong.  The Examination Orders are not contempt proceedings, and there is no justification to equate them as such, when the Respondent argued that the Examination Orders were the preliminary steps or prelude to contempt proceedings, which contempt proceedings should be a remedy of last resort.  The Examination Orders are distinct from and different in nature to contempt proceedings, and neither the Court nor the Applicant should presume that the Respondent would act in breach of the Court orders or be in contempt before he is even examined.

5.  There is dispute as to the Interest and Linkage payable on the Principal, when the Applicant by way of enforcement of the Award served a Statutory Demand on the Respondent, and in proceedings instituted by the Respondent in 2017 to set aside the Statutory Demand (“HCSD 14”), directions were made by the Court for the parties’ filing of expert evidence on the calculation and ascertainment of the Interest and Linkage.  The Statutory Demand has since been withdrawn by the Applicant, and HCSD 14 has not been pursued.

6.  There was no application ever made to set aside the Enforcement Order.  Unless and until the Enforcement Order is set aside, or an order is made by the Court to stay execution of the Award, the Applicant is and was at all material times entitled to take steps to enforce the Award and to seek recovery of the amounts due and payable under the Award.  As a judgment creditor, the Applicant is entitled to the fruits of the Award.  Whilst the Court has the discretion to order a stay of execution/enforcement of an award or judgment in “suitable cases”, such power will be exercised only when justice must require it, and there must be “very special circumstances” (Credit Lyonnais v SK Global Hong Kong Ltd [2003] 4 HKC 104).  In his judgment in Credit Lyonnais, Ma CJHC (as he then was) explained:

“By the term ‘suitable cases’ are meant those situations in which the inherent jurisdiction of the court is required to be exercised so as to avoid injustice, prevent abuse, preserve the dignity of the court or to facilitate the administration of justice.”

7.  It is pertinent that on 16 November 2016, the Respondent had in fact applied for a stay of execution of the Enforcement Order pending the outcome of his claim in HCA 1462.  By Order of the Court made on 1 December 2016, the Respondent was ordered to make payment into court of HK$33.5 million (the approximate Hong Kong dollar equivalent of the Principal), as a condition for an interim stay.  On 26 May 2017, Chow J dismissed the application for stay of execution, and the payment in court was released to the Applicant, in partial satisfaction of the Principal payable under the Award.  As the Applicant submitted, there is no evidence of any change of circumstances since the decision of Chow J in May 2017.

8.  Against the background of this case and having considered the matters relied upon by the Respondent in support of the Summons, I refuse to grant the interim stay.

9.  To set aside the Examination Orders, the Respondent relies on what he claims to be the Applicant’s failure to make full and frank disclosure in his affirmation filed in support of the ex parte application for the said orders.  In this regard, the Respondent claims that the Applicant had failed: (1) to refer to passages in the judgment of Lisa Wong J in HCA 1462 (“Judgment”), when Her Ladyship dismissed an application to strike out the action, which the Respondent claims supports his position; and (2) to disclose that directions had been given in HCSD 14 for the service of expert reports on the ascertainment of Interest and Linkage payable under the Award, and that a joint expert report had been completed but that the expert of the Applicant had failed to sign it in time.  The Respondent further claims that there was reprehensible and unexplained delay in the service of the Examination Order made on 7 July 2020.

10.  The Respondent claims that he has good prospects to set aside the Examination Orders on the above grounds for material non-disclosure, but I reject such contention.

11.  The matters which the Respondent claims had been withheld from the Court were not material to the ex parte application made in April 2020 for the Examination Orders.  That application was for the grant of orders to examine the Respondent debtor as to his assets, as part of the enforcement of the Award.  It was not an application for stay of execution or enforcement, which had been dismissed in May 2017 and there was no stay in force.  The Court in dealing with the ex parte application did not have to determine whether the Award is valid, or if the Applicant was entitled to the sums which were due under the Award.  Whether the Interest and Linkage was to be assessed by the experts in HCSD 14, pursuant to directions of the Court for exchange of expert evidence and for filing of a joint expert report which was not signed by the Applicant’s expert, was simply irrelevant.  As Counsel for the Applicant emphasized, the Statutory Demand was withdrawn and the proceedings to set it aside came to an end in January 2018, long before the application for the Examination Orders was made in April 2020.

12.  The Judgment on the merits of the Applicant’s application to strike out HCA 1462, and on the time when the Respondent had knowledge of the liquidation of Nachushtan Investment Company Limited, is likewise irrelevant to whether the Examination Orders should be made.  In any event, the Respondent has failed to explain what parts of the Judgment were relevant, how they were material to the Court’s determination and why they should have been disclosed to the Court at the ex parte application for the Examination Orders.

13.  As for the alleged delay in the service of the Examination Order of 7 July 2020, for the directions hearing on 30 November 2020, there is again little merit in the point.  The Examination Order was made on 7 July 2020.  A second draft of the relevant order was lodged in court on 14 July 2020, and following requisitions made by the Master on 5 August 2020, a further draft was produced on 12 August 2020, which was not approved until 7 October 2020 when the order was sealed.  There were then unsuccessful attempts made to effect personal service of the order on the Respondent, until arrangements were made with his lawyers and service was accepted on the Respondent’s behalf on 20 November 2020.  The call-over hearing was on 30 November 2020, which was duly attended by the Respondent’s lawyers, leading to the making of the order on the same day, when the examination was adjourned to a date to be fixed with directions for the production of documents.  I fail to see, and the Respondent has failed to allude to, any prejudice that he has sustained as a result of any delay.

14.  As for the claim that the Applicant has taken steps to enforce the Award and obtained injunctions or freezing orders over the Respondent’s property in Israel, the short point is that the Applicant is entitled to take such steps as may be open to him to enforce the Award in Hong Kong and elsewhere, unless and until the Award is set aside, or enforcement of the same is refused by the enforcement court, or a stay of enforcement is made by a competent court.  In the absence of such orders, there is nothing to prevent the Applicant from seeking the Examination Orders.  Nor is there any obligation on his part to take other steps before enforcing the Award by the Examination Orders in Hong Kong.  The Applicant has pointed out that no recovery has been made under the Award notwithstanding the freezing orders in Israel.

15.  HCA 1462 was commenced in July 2014, but on the evidence, pleadings have only just been closed.  From what is apparent as to the progress of those proceedings, they are unlikely to be concluded in the immediate future and there is nothing in the evidence adduced at this stage to justify the grant of a stay to avoid any prejudice which may be caused to the Respondent in the interim and before the outcome of HCA 1462 is known - even if HCA 1462 may be considered as a cross-claim.  As the Applicant emphasized, even on the Respondent’s case in HCSD 14, and according to the evidence of his expert as to the computation of the Interest and Linkage in that case, a sum of NIS 4,443,714 (which is roughly equivalent to HK $10.6 million) was assessed to be payable as at 11 May 2017 (and a more significant sum would have accrued by now).  On the evidence of the Applicant’s expert in HCSD 14, the Interest and Linkage was assessed at NIS 14,054,508.36, equivalent to HK$30.3 million, as at 29 January 2020.  These are substantial sums due and still outstanding from the Respondent under the Award, and the Applicant has already been denied the fruits of the Award since 2013.  In my view, it would be unjust to compel the Applicant to wait another 12 months, and likely longer, to obtain recovery when he currently has a valid, regular and enforceable Award in his favour, and when it is uncertain what the outcome of HCA 1462 would be, and whether there would be a judgment in favour of the Respondent.

16.  To stay the Examination Orders is effectively to stay enforcement of the Award.  By reason of all the above matters, I fail to see how it can be said that it would be just and equitable or that the presence of manifest injustice calls for enforcement of the Award to be stayed, and on that or any other basis to stay the Examination Orders.

17.  The order nisi is that the costs of the application (including costs reserved) for the interim stay are to be paid by the Respondent, with Certificate for Counsel.

HCCT 9/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS NO 9 OF 2016

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_______________

_______________

___________________

D E C I S I O N

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INTRODUCTION

1.  On 26 May 2017, I handed down a decision (“the Decision”) and made an order (“the Refusal to Stay Order”) dismissing the Award Debtor’s application for a stay of execution of the order of Madam Justice Mimmie Chan dated 15 September 2016 (“the Enforcement Order”) granting leave to the Award Creditor to enforce an arbitration award and an arbitration award on costs both dated 31 October 2013 (collectively “the Award”) made by an arbitrator, Dr Israel Leshern (“the Arbitrator”), in Israel, pending the outcome of the Award Debtor’s claim against the Award Creditor in HCA 1462 of 2014 (“the High Court Action”).

2.  I have now before me three applications:-

(1)   the Award Debtor’s summons dated 9 June 2017 seeking leave to appeal against the Refusal to Stay Order to the Court of Appeal (“the Leave Application”);

(2)   the Award Creditor’s summons dated 13 June 2017 seeking payment out of the sum of HK$33,549,765 paid into court by the Award Debtor pursuant to an order made by Madam Justice Mimmie Chan dated 1 December 2016 and all interest accrued on the said sum in court as partial satisfaction of the Award (“the Payment Out Application”); and

(3)   the Award Debtor’s summons dated 19 June 2017 seeking an interim stay of execution of the Award/Enforcement Order pending the outcome of the Leave Application (“the Interim Stay Application).

THE LEAVE APPLICATION

3.  The background facts of this matter have been set out in the Decision and I shall not repeat them in this decision.

4.  As mentioned in paragraph 1 of Mr Yau’s skeleton submissions on behalf of the Award Debtor dated 18 July 2017 and as amplified in his oral submissions this morning, the Leave Application is advanced on the basis that, in deciding whether to grant a stay of execution of the Enforcement Order pending the outcome of the High Court Action, I should not have rejected as irrelevant “the Award Debtor’s demand for appropriate security from the Award Creditor so as to protect the former’s interest in the Hong Kong proceedings brought against the latter”.

5.  I am not persuaded by this contention, for the following reasons.  First, a plaintiff in Hong Kong proceedings has no general right to seek any pre-trial security from the defendant whether in respect of the subject matter of his claim or the costs that he may incur in prosecuting his claim in Hong Kong. This is so regardless of the defendant’s place of residence or domicile, or his solvency, although the insolvency of the defendant may be a relevant consideration in deciding whether to grant a stay of execution of a judgment which the defendant has obtained against the plaintiff pending the resolution of the plaintiff’s cross-claim against the former (see FG Skerritt Ltd v Caledonian Building Systems Ltd [2013] EWHC 1898 (TCC)).

6.  Second, the Award Debtor’s demand for security from the Award Creditor in the present case is, as I understand Mr Yau’s submissions, linked to the fact that the Award Creditor is a resident in Israel and thus the Award Debtor will probably have to enforce any judgment that he may obtain in the High Court Action against the latter in Israel.  Mr Yau argues that the Award Debtor’s will, or may, face difficulties or inconvenience in seeking to enforce any such judgment because (i) there is no reciprocal arrangement between Hong Kong and Israel for the enforcement of judgments obtained in the other jurisdiction, and thus a fresh action will be have to be commenced in Israel in order to enforce a judgment obtained in Hong Kong, and (ii) the Award Creditor is of advanced age (75 as at 2016) and he may start to distribute his wealth as part of his estate planning.  On these matters, my views are as follows:-

(1)   As a matter of fact, in reaching the Decision, I took into account the inconvenience that the Award Debtor may face in having to enforce any judgment that he may obtain in the High Court Action against the Award Creditor in Israel, but I was persuaded by other more weighty factors in refusing to grant the stay of execution of the Enforcement Order sought by the Award Debtor (see paragraphs 22 to 24 of the Decision).

(2)   In so far as reliance is placed on the age of the Award Creditor and the possibility that he may start to distribute his wealth as part of his estate planning, these are just ordinary life events.  I am unable to see how they can constitute good grounds or reasons for granting the stay of execution sought by the Award Debtor.

(3)   Mr Yau says that the Award Creditor is a person of significant wealth.  There is nothing on the materials before me to suggest that he may start to dissipate his wealth to such an extent that the Award Debtor may not be able to obtain satisfaction of any judgment that he may obtain in the High Court Action against the Award Creditor in Israel.

7.  Third, at the last hearing on 25 April 2017, Mr Yau made, on behalf of the Award Debtor, an offer in open court to the Award Creditor that the Award Debtor would be agreeable not to pursue the original stay application if the Award Creditor was prepared to offer an appropriate security to the value of the amount paid into court by the Award Debtor so as to facilitate satisfaction of any judgment that he may eventually obtain against the Award Creditor in the High Court Action.  That offer was rejected by Mr Coleman SC on behalf of the Award Creditor, and was considered by me to be irrelevant to the question of whether I ought to grant a stay of execution of the Enforcement Order pending the outcome of the High Court Action (see paragraph 25 of the Decision).  I remain unable to see the relevance of this open offer.  The Award Debtor is applying for a stay of execution of the Enforcement Order and has to provide sufficient grounds or justification in support of his application.  He cannot, in my view, improve his position by putting forward certain condition, or demand on the Award Creditor, in return for not insisting on the stay sought by him.

8.  In all, I am not prepared to grant to the Award Debtor leave to appeal against the Refusal to Stay Order, because I am not satisfied that the proposed appeal has a reasonable prospect of success, or there is any other reason in the interests of justice why the proposed appeal should be heard.

DISPOSITION

9.  For the foregoing reasons, I dismiss the Leave Application.  The Interim Stay Application also falls to be dismissed in view of the fact that I have now ruled on the Leave Application.  In so far as the Payment Out Application is concerned, Mr Yau accepts that it would stand or fall together with the Leave Application.  I therefore make an order in terms of paragraph 1 of the Award Creditor’s summons dated 13 June 2017, save that no payment out should be made for a period of 14 days from the date of this decision so as to give the Award Debtor an opportunity (if so advised) to make a further application to the Court of Appeal for leave to appeal and interim stay pending appeal.

10.  I also order the Award Debtor to pay the Award Creditor’s costs of the three summonses, including all costs previously reserved, to be taxed on an indemnity basis (in accordance with the court’s usual practice regarding unsuccessful applications to challenge the enforcement of arbitration awards) if not agreed, with certificate for one counsel.

11.  Lastly, it remains for me to thank counsel for their assistance rendered to the court.

HCCT 9/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS NO 9 OF 2016

_______________

_______________

___________________

D E C I S I O N

___________________

INTRODUCTION

1. I have before me the following two summonses taken out by the respondent (“the Award Debtor”):-

(1)  a summons dated 16 November 2016 seeking a stay of execution of the order of Madam Justice Mimmie Chan dated 15 September 2016 (“the Enforcement Order”) granting leave to the applicant (“the Award Creditor”) to enforce an arbitration award and an arbitration award on costs both dated 31 October 2013 (collectively “the Award”) made by an arbitrator, Dr Israel Leshern (“the Arbitrator”), in Israel, pending the outcome of the Award Debtor’s claim against the Award Creditor in HCA 1462 of 2014 (“the High Court Action”); and

(2)  a second summons also dated 16 November 2016 seeking leave to appeal against an earlier order made by me on 2 November 2016 refusing to extend the time for the Award Debtor to apply to set aside the Enforcement Order.

2. As indicated in the skeleton submissions of Mr Albert Yau (for the Award Debtor) dated 20 April 2017 and as confirmed by him at the hearing on 25 April 2017, the Award Debtor had decided not to pursue the second summons.

3. Accordingly, only the first summons requires the court’s determination.  Two issues arise for consideration under that summons:-

(1)  whether the court has jurisdiction to grant a stay of execution of the Enforcement Order; and

(2)  if the answer to (1) is “yes”, whether the execution of the Enforcement Order should be stayed in the circumstances of this case.

Basic facts

4. The following brief summary of facts is taken largely from the Award Debtor’s statement of claim in the High Court Action and the skeleton argument on behalf of the Award Debtor dated 8 September 2016 in relation to an application by the Award Creditor to strike out the Award Debtor’s claim in the High Court Action (more particularly described below).  I should make it clear, however, that these facts are not necessarily accepted by the Award Creditor.

5. The Award Debtor is a Hong Kong businessman, and the Award Creditor is an ethnic Hebrew businessman resident in Israel.  They were business partners since 1990s.

6. Since 2004, the Award Creditor started to introduce to the Award Debtor business ventures in Israel which were transacted in Hebrew.  According to the Award Debtor, he relied on the local business knowledge and investment advice given by the Award Creditor in deciding whether to enter into those business ventures, and if so, upon what terms, and he reposed trust and confidence in the Award Creditor.

7. One of such business ventures introduced by the Award Creditor related to a number of loans totalling NIS 29.5 million (collectively “the Loan”) advanced by the Award Debtor to a company called Kushnir Family (Holdings) Ltd (“the Borrower”) between June 2005 and February 2006 for its purchase of a 35% shareholding (“the Shares”) in Nachushtan Investment Company Limited (“the Company”).  The Loan was secured by a pledge of the Shares by the Borrower to the Award Debtor (“the Share Pledge”).

8. In December 2007, the Award Creditor commenced a legal action in Israel (“the Israeli Action”) against the Award Debtor for a declaration that he (the Award Creditor) was entitled to a half interest in the Loan and a lien of half of the Shares under the Share Pledge.  The Award Debtor counterclaimed against the Award Creditor for his breach of fiduciary duties as a trustee of the Award Debtor’s funds and investments regarding other joint ventures between them.

9. In May 2011, the Israeli Action was converted into an arbitration (“the Arbitration”) by consent.  The hearing of the Arbitration took place in August and December 2012.  On 31 October 2013, the Arbitrator delivered the Award, which upheld the Award Creditor’s claim and dismissed the Award Debtor’s counterclaim.  The Award Debtor’s subsequent appeals against the Award were dismissed by the Israeli courts.  I have been told by Mr Russell Coleman SC (for the Award Creditor) that the total amount due to the Award Creditor under the Award comes to about NIS25.6 million (equivalent to about HK$54.6 million).

10. According to the Award Debtor, it was only after November 2013 that he discovered, from his Israeli lawyers, that the Shares were valueless, and that the Award Creditor had concealed the true financial position of the Company from him at all relevant times.  In the High Court Action commenced by the Award Debtor against (inter alia) the Award Creditor (as the 3^rd defendant in that action) on 31 July 2014, the Award Debtor claims against the Award Creditor for damages for negligence and breach of fiduciary duties, including the principal sum of the Loan in the amount of NIS29.5 million.

11. On 2 February 2016, the Award Creditor applied to the Hong Kong court, pursuant to Section 87 of the Arbitration Ordinance, Cap 609 (“the Ordinance”) and Order 73, rule 10(1) of the Rules of the High Court, Cap 4A (“the RHC”), to enforce the Award as a judgment of the court.

12. On 3 May 2016, the Award Creditor applied to strike out the High Court Action against him on (inter alia) the ground it was an abuse of process for the Award Debtor to seek to re-litigate the “same issues and subject matter” in the Arbitration.  The strike out application was heard by Recorder L Wong SC (as she then was) on 12 September 2016 and 22 February 2017.  I am given to understand that the court’s decision on the Award Creditor’s strike out application is currently pending.

13. In the meantime, on 15 September 2016, Madam Justice Mimmie Chan made the Enforcement Order granting leave to the Award Creditor to enforce the Award in the same manner as a judgment of the court.  The Enforcement Order provided that the Award Debtor might, within 14 days after the service thereof on him, apply to set aside the Enforcement Order.  This the Award Debtor failed to do. As earlier mentioned, the Award Debtor’s subsequent application for an extension of time to apply to set aside the Enforcement Order was dismissed by me on 2 November 2016.  In view of the Award Debtor’s decision not to pursue his proposed appeal against my decision, the Enforcement Order must now be regarded as being valid and binding on the Award Debtor.

Court has jurisdiction to stay the execution of the Enforcement Order

14. The effect of the Enforcement Order is to enable the Award to be enforced in Hong Kong in the same manner as a judgment of the court.  It is not in dispute that the court has a discretion to grant a stay of execution of an ordinary judgment where the circumstances would justify execution of the judgment being stayed.  As a matter of principle, I am unable to see why the Enforcement Order should be accorded a higher status than an ordinary judgment of the court, or why the court would lack jurisdiction, in the strict sense, to stay the execution of the Enforcement Order in an appropriate case.  There are some conflicting English authorities at first instance on the issue of the existence of the court’s jurisdiction to stay the execution of an arbitration award which has been permitted by the court to be enforced as a judgment of the court, but none of them is conclusive or binding on me (see Far Eastern Shipping Co v AKP Sovcomflot [1995] 1 Lloyd’s Rep 520 and Air India v Caribjet [2002] 1 Lloyd’s Rep 314 upholding or implicitly recognising the existence of the court’s jurisdiction, and Arab Business Consortium International Finance and Investment Co v Banque Franco-Tunisienne [1996] 1 Lloyd’s Rep 485 to the contrary).

15. Mr Coleman submits that without a proper application to set aside the Enforcement Order under Order 73, rule 10(6) of the RHC, an application for stay is misconceived.  I do not accept this submission.  It seems to me that “setting aside” and “stay” are two different matters, although I can see that a failure to apply to set aside or a failed application to set aside can be relevant to the question of whether the court should grant a stay of execution.

16. Mr Coleman further argues that the whole ethos of enforcement of arbitration awards is that they should be readily enforced, and if the award itself is not under challenge, there is simply no basis for delaying enforcement.  I accept that the general policy of the law is to facilitate enforcement of arbitration awards.  That is given effect by the rules which enable an award creditor to obtain the court’s leave to enforce the award as a judgment of the court by an inexpensive and expeditious procedure, and the limited and narrow grounds on which enforcement of arbitration awards may be refused by the court.  However, once the court has made an ordering granting leave to permit an arbitration award to enforced as a judgment of the court, the question of whether execution of the order should be stayed is a separate matter.  The arbitration award is given the same effect as a judgment and its enforcement must, in my view, be subject to the same regime governing the stay of execution of an ordinary judgment.

17. In all, I conclude that the court has jurisdiction to grant a stay of execution of the Enforcement Order.

Execution of the enforcement order should not be stayed

18. In the absence of any specific statutory provision listing out the factors which are relevant and should be taken into account when deciding whether to stay the execution of an order granting leave to enforce an arbitration award in the same manner as a judgment of the court, the matter resolves itself into one of general principle.  In paragraph 53 of his judgment in Air India v Caribjet, Judge Chambers QC referred to the following factors mentioned by Bingham LJ (as he then was) in Burnett v Francis Industries plc [1987] 1 WLR 802 as being potentially relevant for the present purpose:-

(1)  nature of the claim (the subject matter of the arbitration award) - although the judge said he was a little unsure as to the significance of this factor;

(2)  strength of the cross-claim;

(3)  the size of the claim relative to the size of the cross-claim;

(4)  any delay before the cross-claim will be disposed of;

(5)  the extent of prejudice to the award creditor if it is denied the fruits of its award/judgment until the cross-claim is determined; and

(6)  the risk of prejudice to the award debtor if it makes payment under the award/judgment.

19. In the present case, Mr Yau made it clear at the hearing that he was not advancing any contention that the Award Debtor had a strong claim, or such a strong claim, against the Award Creditor in the High Court Action that the merits of the claim alone would justify imposing a stay of execution of the Enforcement Order pending the resolution of that claim.  On the basis of the materials before me, I consider that the Award Debtor has at most an arguable claim against the Award Creditor, assuming that the strike out application will be decided in his favour (on which I express no view).

20. It is relevant that, notwithstanding the fact that the High Court Action was commenced in July 2014, the defence has not yet been filed.  Thus, even if the Award Debtor should succeed in resisting the strike out application, it will be a long time before the High Court Action can be finally disposed of.

21. On behalf of the Award Debtor, Mr Yau strongly relies on the fact that the Award Debtor has paid the sum of NIS16.59 million (equivalent to about HK$33.5 million) into court pursuant to paragraph 1 of the order of Madam Justice Mimmie Chan dated 1 December 2016 as a condition for granting an interim stay of execution of the Enforcement Order pending the determination of the two summonses mentioned at the beginning of this decision.

22. He also refers to and relies on the fact that the Award Debtor will probably have to enforce any judgment that he may obtain in the High Court Action against the Award Creditor in a foreign jurisdiction (ie Israel).

23. In deciding whether to grant a stay of execution of the Enforcement Order in the present case, I consider the following factors to be most significant:-

(1)  the Award Creditor has now got an unimpeachable award against the Award Debtor for a substantial sum of money;

(2)  the Award Debtor has at most an arguable claim against the Award Creditor; and

(3)  there will be significant delay before the Award Debtor’s action against the Award Creditor can finally be disposed of, assuming that it can survive the strike out application.

24. The above factors persuade me to refuse to grant the stay of execution sought by the Award Debtor, notwithstanding the matters relied upon by Mr Yau in support of the stay application (in particular, those mentioned in paragraphs 21 and 22 above).

25. In passing, I should mention that Mr Yau made, on behalf of the Award Debtor, an offer in open court to the Award Creditor that the Award Debtor (i) would be agreeable to the interim stay of execution being lifted and, I understand, (ii) would not pursue the stay application if the Award Creditor was prepared to offer an appropriate security to the value of the amount paid into court by the Award Debtor so as to facilitate satisfaction of any judgment that he may eventually obtain against the Award Creditor in the High Court Action.  This offer was rejected by Mr Coleman on behalf of the Award Creditor.  I do not consider this offer to be relevant to the question that I have to decide, namely, whether execution of the Enforcement Order ought to be stayed pending the outcome of the High Court Action.

Disposition

26. The Award Debtor’s two summonses both dated 16 November 2016 are dismissed.

27. I also order the Award Debtor to shall pay the Award Creditor’s costs of the two summonses, including all costs previously reserved, to be taxed on an indemnity basis (in accordance with the court’s usual practice regarding unsuccessful applications to challenge the enforcement of arbitration awards) if not agreed, with certificate for one counsel.

28. Lastly, it remains for me to thank counsel for their assistance rendered to the court.