LIN CHIEN HSIUNG v. LIN HSIU FEN
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HCCT 24/2021
[2022] HKCFI 1270
(redacted version)
IN THE HIGH COURT OF THE
HONG KONG SPECIAL ADMINISTRATIVE REGION
COURT OF FIRST INSTANCE
CONSTRUCTION AND ARBITRATION PROCEEDINGS
NO 24 OF 2021
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| IN THE MATTER of Enforcement of Arbitration Award | |
| and | |
| IN THE MATTER of section 92 of the Arbitration Ordinance, Cap 609 | |
| and | |
| IN THE MATTER of Order 73 rule 10(1) of the Rules of the High Court, Cap 4A |
____________________
| BETWEEN | ||
| LIN CHIEN-HSIUNG (林建雄) | Applicant | |
| and | ||
| LIN HSIU-FEN (林秀芬) | Respondent |
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Before: Hon Mimmie Chan J in Chambers
Dates of Written Submissions: 14, 15 and 16 February 2022
Date of Decision: 3 May 2022
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D E C I S I O N
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Background
1. On 31 March 2021, this Court made an order (“Enforcement Order”) granting leave to Lin Chien-Hsiung (“Applicant”) to enforce an arbitral award dated 18 August 2020 (“Award”) and issued by the Shanghai Arbitration Commission (“Commission”) in the arbitral proceedings (“Arbitration”) commenced by the Applicant against Madam Lin Hsiu-Fen (“Respondent”). Leave under the Enforcement Order was granted pursuant to the Applicant’s ex parte application made on 17 March 2021.
2. On 24 May 2021, the Respondent applied by her summons to set aside the Enforcement Order (“Summons”). The grounds set out in the Summons were that the Award had been suspended under the law of the Mainland, that the Respondent was unable to present her case, and/or that enforcement of the Award would be contrary to public policy. In the alternative, the Respondent sought an order that the proceedings for enforcement of the Award be adjourned pending an application made by Lin Ping-Sheng (“PS”), a third party to the Arbitration, to the Shanghai Intermediate People’s Court for the Award to be set aside.
3. The Applicant, the Respondent and PS are siblings, and the shareholders of Yong Ho International Development Century Limited (“YH HK”), a company incorporated in Hong Kong. The Respondent and PS were its two directors. YH HK was at the material time the holding company of Yong Ho Food (China) Co Ltd (“YH PRC”), a Mainland company.
4. On 9 November 2017, a share transfer agreement was made between the Applicant and the Respondent (“Transfer Agreement”), under which the Applicant agreed to purchase the Respondent’s 10% shareholding in YH HK (“Shares”). The sale and purchase was agreed at RMB 10 million, to be paid in 3 installments. RMB 1 million was payable on 10 November 2017 (“1st Stage Payment”). RMB 6 million was payable within 3 months after the signing of the Agreement, on 9 February 2018 (“2nd Stage Payment”). RMB 3 million was payable not more than 6 months after the signing of the Transfer Agreement, by 9 May 2018 (“3rd Stage Payment”), and in default of such payment, the Shares were to be held by the Respondent.
5. It is common ground that the 1st Stage Payment of RMB 1 million was duly paid, but disputes arose between the parties in relation to the 2nd Stage Payment. The Applicant only paid RMB 3 million of the 2nd Stage Payment on 6 February 2018, and it was only on 8 April 2019, after the date specified in the Transfer Agreement for the 2nd Stage Payment, that the Applicant made payment of the balance of RMB 3 million to the Respondent. The Applicant claimed that it was the Respondent who had failed to fulfill her obligation to effect the transfer of the Shares to him, which was a precondition for the payment of the 2nd Stage Payment due on 9 February 2018, but that he had made the payment in any event in April 2019, in order to enforce the Transfer Agreement. The very next day following the Applicant’s payment, on 9 April 2019, he commenced the Arbitration by submitting the case to the Commission, claiming that he had complied with his contractual obligations under the Transfer Agreement, but that the Respondent had failed to cooperate to arrange for the transfer of the Shares to him, and was in breach of the Transfer Agreement.
6. In defence, the Respondent claimed in the Arbitration that she had no obligation to arrange for the transfer of the Shares to the Applicant, when he had failed to make the 2nd Stage Payment in full on or before 9 February 2018 in accordance with the Transfer Agreement. The Respondent claimed that it was the Applicant who had been in breach for non-payment. The Respondent also claimed that the Applicant had purported to convene a shareholders’ meeting of YH PRC, without the authorisation or knowledge of YH HK as the majority shareholder, and had purported to allot to himself over 16.8 million shares of YH PRC for no consideration.
7. The Respondent claimed in the Arbitration that PS, as a director of YH HK, had unequivocally declared that YH HK would refuse the registration of the transfer of the Shares to the Applicant, which event obstructed the performance of the Transfer Agreement and would render the Award sought by the Applicant in the Arbitration to be unenforceable.
8. There is no dispute that the Applicant had not made the 3rd Stage Payment under the Transfer Agreement. The Applicant’s case is that the obligation to make the 3rd Stage Payment only arises when the Award is enforced and the Respondent completes the transfer of the Shares, but that he would be able and willing to make the 3rd Stage Payment to the Respondent.
9. After a hearing on 16 December 2019, the Tribunal issued the Award, whereby the Respondent was ordered to transfer the Shares to the Applicant and to cooperate with the Applicant to handle the related procedures for the registration of the transfer of Shares, and to make payment to the Applicant of RMB 7 million and interest, with legal costs and the arbitration fees incurred by the Applicant.
10. The Respondent seeks to set aside the Enforcement Order on the grounds, firstly, that at the time of the Applicant’s ex parte application on 17 March 2021 for the Enforcement Order, there had been material non‑disclosure by the Applicant, in failing to disclose to the Court that the Respondent had, on 9 February 2021, applied to the Shanghai Court to set aside the Award, and that the Shanghai Court had accepted jurisdiction over the case (“Shanghai Setting Aside Application”). The Shanghai Setting Aside Application was heard by the Mainland Court on 15 March 2021, and judgment had been reserved. The Shanghai Setting Aside Application was known to the Applicant, but no explanation whatsoever has been given by him for failing to disclose this fact to the Hong Kong Court. It was argued that the Enforcement Order should be set aside by reason of the Applicant’s deliberate non-disclosure of the material fact, that an application had been made on the Mainland to set aside the Award sought to be enforced.
11. On the ground of material non-disclosure, Counsel for the Respondent also sought to argue that the Applicant had failed to disclose the fact that he had also applied for enforcement of the Award in Shanghai, and had misled the Court to believe, at the time of the ex parte application, that there were no parallel enforcement proceedings of the Award in Hong Kong and on the Mainland.
12. The Respondent further contends that by virtue of her Shanghai Setting Aside Application, the Award had already been suspended under Mainland law, such that enforcement of the Award should be refused by the Court under section 95(2)(f)(ii) of the Arbitration Ordinance (“Ordinance”).
13. Fourthly, the Respondent claimed that she had been unable to present her case in the Arbitration. This was as a result of the Applicant having ignored the timetable set by the Tribunal, for any supplemental evidence to be filed by 6 January 2020, by submitting new evidence to the Tribunal on 29 May 2020, and seeking new relief for the legal costs incurred by the Applicant in Hong Kong. The Respondent claimed that she had not been informed by the Tribunal that the Applicant’s new evidence was accepted, that no further hearing would be held to hear the Respondent on the new evidence and additional relief, and that the Award had been made by the Tribunal on the new evidence and the new relief, in circumstances when the Respondent had been deprived of the opportunity to present her case on the new materials submitted by the Applicant to the Tribunal, out of time.
14. Finally, the Respondent claimed that it would be contrary to the public policy of Hong Kong to enforce the Award which was made against notions of natural justice, and against fundamental conceptions of morality and justice, as she did not have the opportunity to make her submissions and present her case to object to the new evidence at a hearing.
Whether there was material non-disclosure
15. As this Court explained in G v X & others[2022] HKCFI 829, as important as the duty to make full and frank disclosure to the court in an ex parte application, is the need for a party seeking to discharge an order to state clearly in its application to discharge the ground of material non-disclosure and the matters relied upon for the discharge. This is in view of the reminders issued by the courts that applications to discharge for material non-disclosure should not be abused, to become a rambling and roving investigation of what should have been disclosed, but was not. Fairness and natural justice also require timely disclosure of the matters relied upon as alleged material non-disclosure, to give the opponent the fair and necessary opportunity to respond to the allegations of breach of duty owed to the court.
16. There is no reference whatsoever, in either the Respondent’s Summons to set aside, or in the affirmation of the Respondent made and served in support thereof, of the Applicant’s failure to make full and frank disclosure of the fact that he had applied on the Mainland for enforcement of the Award. It was only raised in Counsel’s submissions filed in support of the Summons.
17. I am not satisfied that the non-disclosure of the Applicant’s enforcement application on the Mainland is material to his application for enforcement in Hong Kong. Since the Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong SAR (“Supplemental Arrangement”) came into effect on 27 November 2020, parties are no longer precluded from filing applications for enforcement of arbitral awards with the courts of the Mainland and of Hong Kong respectively and simultaneously. The only restriction under the Supplemental Arrangement is against double recovery by virtue of the enforcement in the courts of Hong Kong and the Mainland. Thus, when the Applicant applied ex parte for enforcement of the Award in Hong Kong, his non-disclosure of the fact that he had already applied for enforcement of the Award in Shanghai is not material to whether leave should be granted by the Court in Hong Kong. The amount to be recovered under the enforcement proceedings, and whether there is double recovery, is to be determined later in the recovery proceedings, if necessary.
18. Material or not, however, the Applicant did mislead the Court, when the affirmation of XXXXXXXXX (“XX Affirmation”) was filed on 30 March 2021, in response to a requisition made by the Court, as to whether the Applicant had applied for enforcement of the Award on the Mainland and if yes, whether the Award had been satisfied in full or in part. In the So Affirmation, it was stated that based on the deponent’s own knowledge and on the Applicant’s instructions, the Applicant had not applied for enforcement of the Award on the Mainland. That is obviously a mis‑statement of the facts, when the Applicant had already made application to the Shanghai Court on 28 December 2020. Neither XX, nor the Respondent, has ever explained this mis-statement in the XX Affirmation.
19. The Court cannot condone any party, and in this case, a solicitor and officer of the Court, misleading the Court on any fact, even if this fact is not material to the outcome of the application. Hence, even though this matter was not stated, in the Summons and in the affirmation of the Respondent in support, as a matter of material non-disclosure relied upon by the Respondent, the Court cannot ignore the fact.
20. Moreover, there is no reason for the Applicant not to make disclosure of the fact that the Respondent had made the Shanghai Setting Aside Application in February 2021. This is material to whether the Court in Hong Kong would grant leave to enforce the Award, on ex parte basis without hearing the Respondent. In the usual course, on being informed of the fact that there is a setting aside application made to the supervisory Court, this Court would have directed a summons to be issued pursuant to Order 73 rule 10 (1) RHC, for the respondent to be heard on whether the enforcement order should be made.
21. The Applicant has not given any reason why the Shanghai Setting Aside Application was not disclosed in the ex parte application. Emphasis has only been made that the Shanghai Setting Aside Application had been dismissed, 16 days after the ex parte application made in Hong Kong. The Mainland Court found that there were no grounds to set aside the Award.
22. Whether or not the Shanghai Setting Aside Application was subsequently dismissed, and whether there were merits in the Shanghai Setting Aside Application, do not absolve the Applicant from his duty to make full and frank disclosure of the fact that the application had been made, which fact is material to whether the Enforcement Order would be granted by the Hong Kong Court.
23. In the absence of any reason given by the Applicant for his non‑disclosure, and to reflect the utmost importance of the duty of a party, firstly, to make full and frank disclosure on an ex parte application, and secondly, not to mislead the Court on any matter, I discharge the ex parte Enforcement Order.
24. It is indisputable that the Court has discretion to re-grant the order discharged, after hearing the parties on inter-partes basis. Whether the Enforcement Order should be re-granted in the exercise of the Court’s discretion depends on whether the Respondent can satisfy the Court that there are grounds on which enforcement of the Award may be refused under section 95 of the Ordinance.
Whether the Award was suspended
25. In gist, the Respondent relies on Article 7 of the Provisions of the Supreme People’s Court On Several Issues concerning the Handling of Cases regarding Enforcement of Arbitral Awards by the People’s Courts 最高人民法院關於人民法院辦理仲裁裁決執行案件若干問題的規定 (“SPC Provisions”), to contend that since the Shanghai Court had accepted jurisdiction over the Respondent’s Shanghai Setting Aside Application, the Award had already been suspended at the time of the Applicant’s ex parte application.
26. I reject such a contention. Even on the face of Article 7 of the SPC Provisions relied upon by the Respondent, and on its natural and plain reading, what it provides for is for the court of enforcement to terminate the enforcement proceedings, in the event of an application made to the People’s Court for setting aside an award, which application has been accepted by the Court, or in the event of the respondent or a third-party applying for non‑enforcement and supplying appropriate security. Article 7 states that the enforcement court should, in the circumstances provided for, rule or decide on the termination of the enforcement proceedings (“執行法院應當裁定終止執行”).
27. I agree with Counsel for the Applicant, that Article 7 does not state that there is automatic suspension of the effect of the Award when an application to set aside is made by a party, or when such an application is accepted by the Mainland Court, or when a third-party applies for non‑enforcement of the award. Neither of the experts’ reports states this, and it is not necessary to refer to the decision in Guo Shun Kai v Wing Shing Chemical Co Ltd, unreported, HCCT 35/2012, 22 January 2014, as to the meaning or effect of Article 64 of the Arbitration Law of the PRC.
28. Even according to the Respondent’s expert (“Zhai”), the Award is rendered ineffective when the Mainland Court finally decides, on the application for non-enforcement, that the Award should not be enforced (at section 3.3, on page 9 of her report of 3 September 2021). This is totally consistent with the plain reading of Article 7.
29. Although the Respondent’s own Shanghai Setting Aside Application was already dismissed by the Shanghai Court, the Respondent relies on the separate application made by PS to the Mainland Court for non‑enforcement of the Award. However, as the same Article 7 of the SPC Provisions is relied upon, to argue that the Award has been suspended upon PS’ application, I make the same conclusion on the face of Article 7, that there is no automatic suspension of the Award by virtue of the making of PS’s application. There is no evidence that at the time of the Summons (which the Respondent contends is the relevant time for the consideration of this application), any Mainland Court had, on any application made on the Mainland to set aside, or otherwise to refuse enforcement of the Award, made or handed down any decision or order, that the enforcement proceedings should be terminated.
30. It is astounding that Counsel for the Respondent has submitted, that under Article 7 of the SPC Provisions, where PS has filed an application for non-enforcement of the Award and has provided security in accordance with Article 7, this Court as the “enforcement court” should rule to suspend enforcement. The SPC Provisions only apply to the Mainland Courts, and have no effect on the Hong Kong Court as a court of enforcement. The “common ground” of the experts in relation to Article 7 of the SPC Provisions is simply that the Mainland court should rule to terminate the enforcement when the conditions of Article 7 apply.
31. The Supplemental Arrangement, revising the Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong SAR which took effect on 1 February 2000, set out the arrangement which applies to the Hong Kong Court’s enforcement of Mainland awards. Their contents add nothing to the grounds for refusing enforcement of an award, which are set out in section 95 of the Ordinance. The relevant ground is where the award “has not yet become binding on the parties, or has been set aside or suspended by the court or in accordance with the law of the place where the arbitration took place”. There is no evidence in this case to support the contention that the Award has not become binding, or “has been set aside or suspended” by the Mainland Court or in accordance with Mainland law.
Whether the Respondent had the opportunity to present her case
32. Under section 95(2)(c)(ii) of the Ordinance, enforcement of a Mainland award may be refused if the person against whom it is invoked proves that the person was unable to present his case. The onus of proof is on the party seeking the Court’s exercise of its discretion, to refuse enforcement.
33. It is trite, that what has to be established is that there was a serious, even egregious, error to have undermined due process, and that even if this can be established, the court may refuse to set aside the award if it is satisfied that the tribunal could not have reached a different conclusion (Grand Pacific Holdings Ltd v Pacific China Holdings Ltd (in liq) (No 1) [2012] 4 HKLRD 1 (CA) at paras 94 and 105).
34. The Respondent’s case is that the Tribunal ruled at the hearing on 16 December 2019 that supplemental evidence of the parties may be submitted within 3 weeks of the hearing, ie by 6 January 2020. The Applicant did not adduce any supplemental evidence, and no further hearing was scheduled. However, the Tribunal informed the Respondent on 29 May 2020 that the Applicant had adduced new evidence, including a legal opinion on Hong Kong law. The Respondent’s claim is that since the Tribunal did not give further directions or orders for any further hearing, or for further submissions from the parties, it was reasonable for her to expect that the Tribunal would either refuse to accept the Applicant’s new evidence or, if the new evidence was to be accepted, to direct a further hearing for both parties to present their case and to call and cross-examine the experts on Hong Kong law. Instead, the Tribunal handed down the Award, accepting the Applicant’s new evidence, and allowed the Applicant’s claims of breach including his claim for additional relief in respect of the legal costs incurred in Hong Kong.
35. On the above basis, it was argued for the Respondent that there was serious and egregious irregularity, in that the Tribunal had kept the Respondent in the dark as to whether the Applicant’s new evidence would be accepted, and whether there would be a further hearing. The Respondent further claimed that the Tribunal had carried out its own investigation as to whether, under Hong Kong law, the Transfer Agreement was invalid under the Companies Ordinance, and as to the validity of the Respondent’s arguments concerning the effect of YH HK’s refusal to register the transfer of the Shares from the Respondent to the Applicant, when there was no dispute between the parties that PRC law, and not Hong Kong law, was the governing law of the Transfer Agreement.
36. It is within the management powers of the Tribunal, to impose timetables for the filing of evidence, to extend such time, and decide whether to conduct a hearing. As Counsel pointed out, the Arbitration was conducted in accordance with the Rules of the Commission (“Rules”). Article 35 (3) of the Rules, on which the Respondent relies, only states that if the Tribunal decides to accept new evidence without a further hearing, the Tribunal has the power to require a party to submit written submissions within a specified time. As Counsel for the Applicant correctly pointed out, the rule is simply permissive, without stating that the written submissions, or a hearing, are mandatory.
37. Further, it is apparent from the Award that after the Applicant had submitted the “new evidence” on 29 May 2020, the Respondent had filed submissions in reply on 10 June 2020 (“10/6Submissions”). The Tribunal referred to these submissions at page 16 of the Award. In the 10/6 Submissions, the Respondent stated her objection to the Applicant’s claim for additional relief, on the basis that it was out of time, that the application did not relate to any new fact or new evidence, and that the claim for legal costs incurred in Hong Kong did not fall within the scope or ambit of the dispute submitted to the Arbitration. The Respondent further stated her views on the Hong Kong law opinion submitted, as to whether the Award sought was enforceable in Hong Kong, whether the refusal of the board to register the transfer of the Shares would constitute an obstacle to the transfer sought by the Applicant, and further, as to whether the Transfer Agreement was uncertain and hence invalid.
38. The matters raised by the Respondent in the 10/6 Submissions had been considered by the Tribunal in the Award.
39. In the context of whether a party was unable to present his case in an arbitration, what section 46 of the Ordinance requires of a tribunal is to give equal treatment to the parties, and to give them “a reasonable opportunity” to present their cases and to deal with the cases of their opponents. This is also relevant when the Court considers whether enforcement of an award should be refused on the ground of public policy.
40. It is pertinent to bear in mind the oft-cited observations made by Popplewell J in Reliance Industries Ltd v Union of India [2018] EWHC 822:
“It is always important to keep in mind the distinction between a lack of opportunity to deal with the case and the failure to recognize or take such opportunity. It is commonplace in judicial decisions on points of construction that a judge may fashion his or her reasoning and analysis from the material upon which argument has been addressed without it necessarily being in terms which reflect those fully expressed by the winning party. There is not perceived to be, and is not, anything which is unfair in taking such a course. It is enough if the point is “in play” or “the arena” in the proceedings, even if it is not precisely articulated. To use the language of Tomlinson J, as he then was, in ABB AG v Hochtief Airport [2006] 2 Lloyd’s Rep 1 at 72, a party will usually have had a sufficient opportunity if the “essential building blocks” of the Tribunal’s analysis and reasoning were in play in relation to an issue, even when the argument was not articulated in the way adopted by the tribunal. Ultimately the question which arises under s 33 (a), whether there has been a reasonable opportunity to present or meet a case, is one of fairness and will always be one of fact and degree which is sensitive to the specific circumstances of each individual case. That applies to points of construction as much as to other points in dispute.” (Emphases added)
41. The observations made by His Lordship in Terna Bahrain Holding Company WLL v Bin Kamil Shamsi and Others [2012] EWHC 3283 (Comm) are equally applicable:
“ … whilst s 33 requires a party to be given a reasonable opportunity of addressing his opponent’s case, that does not mean that the tribunal is acting unfairly in deciding the case on the point to which the party raising it does not give any great emphasis, or which is not the subject matter of any great exposition. If the point is raised only briefly, that is in accordance with the ideal of speedy resolution which is an objective of the arbitral procedure (whether or not in a given case the objective is achieved). It is nonetheless so if a host of what turned out to be bad points are also raised and it is on those other points that the party raising the issues concentrates his exposition. Provided that the issue is raised, however briefly, the opposing party has an opportunity to address it at whatever length and in whatever detail he chooses.”
42. On the facts of this case, bearing in mind the issues already raised in the Arbitration and which were in place and argued at the hearing on 16 December 2019, and the materials submitted by the Applicant on 29 May 2020, I do not accept the Respondent’s argument that the 10/6 Submissions were only her “brief” objections. However briefly, the Respondent had (through her lawyer) stated her objections and submitted her case on the Applicant’s “new” evidence. If the Respondent and those advising her had the opportunity to make submissions, but decided only to deal with the “new” evidence briefly, it was their own choice. Pertinently, the Respondent did not in the “brief” 10/6 Submissions ask for a further hearing to be held by the Tribunal, nor did the Respondent seek further time to adduce any evidence in reply, or to make further, detailed submissions. She could easily have done so.
43. Even in these proceedings, the Respondent did not explain or adduce any evidence to show that if she had been given the opportunity by the Tribunal, she would be able to establish a defence to the claims made against her in the Arbitration, whether under Hong Kong law, or as to the points raised in the “new” evidence adduced by the Applicant, and how the Transfer Agreement can be said to be invalid, or unenforceable, such that she was not in breach of contract.
44. Any complaint made by the Respondent, that the Tribunal had wrongly decided on the validity of the Transfer Agreement, or had wrongly taken into consideration questions of Hong Kong law in reaching such a decision, is a claim that the Tribunal had made an error in law or on the facts, or had acted beyond the scope of the submission to the Arbitration. The former is not a ground to set aside the Enforcement Order, and the latter is not the ground relied upon by the Respondent in this case.
45. Nor do I accept the Respondent’s claim, that the Tribunal had conducted its own investigations into Hong Kong law, and had not given the Respondent the opportunity to deal with the Tribunal’s investigations. The Respondent relies on the statement in the Award “并經仲裁庭查明” (after the Tribunal’s ascertainment). As pointed out on behalf of the Applicant, this statement has to be read in its proper context.
46. In the part of the Award setting out the Tribunal’s determination, under section 2 and the heading on the legal effect of the Transfer Agreement, the Tribunal considered the Transfer Agreement, and the submissions made by the parties as to whether it lacked certainty (as contended by the Respondent). The Tribunal concluded (at page 20) that the Transfer Agreement complied with the Contract Law of the PRC and was effective under PRC law. The Tribunal then considered the submissions made by the parties on the Companies Ordinance of the laws of Hong Kong, and stated its finding, or the result of its “investigation”, that it cannot find that clause 4 of the Transfer Agreement would be invalid under the Companies Ordinance. I cannot read this to mean, as the Respondent contended, that the Tribunal had conducted its own investigations on Hong Kong law. The relevant part of the Award only stated the conclusion made by the Tribunal on the basis of the submissions made and evidence presented by the parties on the Companies Ordinance and its alleged effect on the Transfer Agreement. The parties had the reasonable opportunity to make their submissions in that regard.
47. For all the above reasons, I reject the claim that the Tribunal was in any serious or egregious error by deciding to accept the Applicant’s evidence without a further hearing, or that the Respondent had been deprived of the reasonable opportunity to present her case. Nor am I satisfied that the Respondent had been prejudiced as a result in that the Tribunal could have reached a different conclusion in the Award as to the binding effect of the Transfer Agreement and as to the Respondent’s breach, by virtue of any evidence that the Respondent might have produced.
Whether Award contrary to public policy
48. From Counsel’s written submissions, the Respondent’s claim made under section 95(3)(b) is based on the same matters argued under section 95(2)(c)(ii) of the Ordinance. As I have found that the Respondent had been given the reasonable opportunity to present her case, and that there was no breach of the rules of natural justice, there is no basis to refuse enforcement of the Award on the ground that it would be contrary to the public policy of Hong Kong.
Whether enforcement of the Award should be adjourned pending the determination of PS’ application on the Mainland
49. I accept the submissions made on behalf of the Applicant, that the onus is on the Respondent to show that there are good reasons for these proceedings and for enforcement of the Award to be delayed and adjourned, until the final determination of PS’s application on the Mainland for non‑enforcement, made on 12 May 2021, and then for review made on 30 October 2021.
50. PS’ application to the Shanghai Court on 12 May 2021, that the Award should not be enforced, was dismissed by the Court by its judgment of 18 October 2021. PS applied on 30 October 2021 for review of the said judgment by the higher Court of the Shanghai Municipality. The Respondent highlighted the fact that the Applicant’s own expert accepted that if and when PS’ review is successful, the Award will not be enforced by the Mainland Court.
51. On the evidence available, I have found that the Award has not been suspended. The facts relied upon by PS and by the Respondent for setting aside and non-enforcement of the Award on the Mainland have already been considered by the Mainland Courts, in the Respondent’s own application, and in PS’ application, and have been rejected by the Mainland Courts on the merits and under Mainland law. Due weight should be given by this Court to the findings made by the supervisory Mainland Courts (Gao Haiyan v Keeneye Holdings Ltd [2012] 1 HKLRD 627), which are obviously more familiar with Mainland law than the Courts of Hong Kong. I see no ground to delay enforcement of the Award in Hong Kong, pending the review by the Shanghai Intermediate People’s Court, at a time uncertain, when no evidence whatsoever has been adduced as to the grounds of the review and the merits of such a review. The principles set out in section 3 of the Ordinance, to facilitate speedy resolution of disputes by arbitration, and the object to enforce arbitral awards agreed by the parties to be final, must be borne in mind.
52. The Respondent has failed to show good reasons for an adjournment, and such application is refused.
Disposition of Summons
53. Since there are no grounds to refuse enforcement of the Award, I exercise my discretion to re-grant the Enforcement Order, for leave to enforce the Award in Hong Kong.
54. The application made under section 95 is in my judgment baseless. Costs of the application to set aside should be paid by the Respondent to the Applicant on an indemnity basis, but in view of the fact that I have set aside the ex parte Enforcement Order on the ground of the Applicant’s material non-disclosure, the order nisi I make is that the Respondent should only pay 75% of the costs of the Summons, on indemnity basis, with certificate for counsel.
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(Mimmie Chan) Judge of the Court of First Instance High Court |
Mr Ian Chau, instructed by Cheung & Liu, for the applicant
Mr Esmond Wong, instructed by Wan Yeung Hau & Co, for the respondent