The Hong Kong Court of Appeal has issued twin decisions applying the seminal 2023 CFA decision in Re Lam Kwok Hung Guy ([2023] HKFCA 9) to applications to stay winding up petitions involving claims subject to arbitration. In Guy Lam, the CFA applied a “multi factorial approach” when staying a bankruptcy petition subject to a New York exclusive jurisdiction clause (ECJ). Parties are generally to be held to their contracts and agreed dispute resolution, and no summary judgment exercise should be undertaken. But an ECJ cannot exclude the courts’ jurisdiction and the public element in insolvency situations is taken into account. In Re Simplicity [2024] HKCA 299 the HKCA applied Guy Lam to the winding up petition claim, calling it an even stronger case given the statutory footing of the (pro) arbitration regime. Any requirement for the debtor to show a genuine intention to arbitration is applied flexibly. Applying that to the facts, the appeal against the winding up order was dismissed, given a history of delay and non compliance with conditions. In Arjowiggins v Shandong Chenming [2024] HKCA 352 the HKCA applied Guy Lam to the more complex situation where the debtor does not dispute the petition debt but raises a set-off or cross claim seeks to stay to that to arbitration, affirming the stay.

Re Simplicity https://lnkd.in/dsb2CgNz
Shandong Chenming https://lnkd.in/dSb4Rw9E

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