Hong Kong Court Considers Anti-Suit Relief to Protect Arbitration Agreement in Cross-Border Insolvency Context

Case: Hyalroute Communication Group Limited v Industrial and Commercial Bank of China (Asia) Limited [2025] HKCFI 2417

Court: Court of First Instance, Hong Kong

Judgment Date: 1 August 2025

This decision arises from an unusual and legally significant application. The plaintiff, Hyalroute Communication Group Limited, a Cayman Islands-incorporated company, sought an anti-suit injunction from the Hong Kong courts to restrain its creditor, Industrial and Commercial Bank of China (Asia) Limited, from presenting a winding-up petition against it in the Cayman Islands.

The plaintiff relied on an arbitration clause in a term facility agreement which required disputes to be resolved by arbitration seated in Hong Kong and administered by the Hong Kong International Arbitration Centre (“HKIAC”). The application raised important questions about the extent to which the Hong Kong courts should intervene to protect arbitration agreements in the face of insolvency proceedings commenced in another common law jurisdiction.

Background

The dispute arose out of a Term Facility Agreement dated 27 July 2018, which contained an arbitration clause mandating arbitration under HKIAC rules. On 27 November 2024, the defendant served a statutory demand on the plaintiff claiming a total debt of US$ 95,506,631.05, comprising:

US$93,417,803.73 allegedly owed under the term facility agreement; and
US$2,088,827.32 allegedly owed under an associated interest rate swap arrangement.

Rather than waiting to respond to or seek a stay of any winding-up proceedings in the Cayman Islands, the plaintiff commenced proceedings in Hong Kong by an originating summons and a summons dated 16 December 2024. It sought an anti-suit injunction restraining the defendant from presenting any winding-up petition in the Cayman Islands on the basis that the alleged debts fell within the scope of the arbitration agreement.

Legal Context and Divergence in Authorities

The application was brought against the backdrop of a clear divergence between Hong Kong and English law on the relationship between arbitration and winding-up proceedings. Under Hong Kong law, following Re Guy Lam (2023) 26 HKCFAR 119, winding-up proceedings are generally stayed in favour of arbitration where the dispute falls within an arbitration agreement, unless there is an abuse of process.

By contrast, English law has taken a different path following the Privy Council’s decision in Sian Participation Corp v Halimeda International [2024] UKPC 16. Under that approach, a debtor must demonstrate a bona fide dispute on substantial grounds before a creditor can be compelled to arbitrate rather than pursue winding-up proceedings.

This divergence was central to the plaintiff’s strategy. Instead of contesting any future Cayman winding-up petition under Cayman or English-influenced principles, the plaintiff sought protective relief directly from the Hong Kong court to uphold the arbitration agreement.

Issues Before the Court

The case raised a novel issue: whether, and in what circumstances, the Hong Kong courts should grant an anti-suit injunction restraining winding-up proceedings in another common law jurisdiction which has adopted a different approach to arbitration-related insolvency disputes.

In particular, the Court was required to consider:

the extent of Hong Kong’s pro-arbitration policy in cross-border insolvency contexts;
whether the arbitration clause in the term facility agreement justified restraining foreign winding-up proceedings; and
how comity considerations should be balanced against the enforcement of arbitration agreements.

Significance

This appears to be the first case in which the Hong Kong court has been asked to restrain winding-up proceedings in another common law jurisdiction specifically because of divergent legal approaches to arbitration and insolvency.

The decision is of particular interest to creditors and debtors operating in multi-jurisdictional financing structures. It highlights the increasing strategic importance of arbitration clauses and the potential use of anti-suit relief as a tool to manage insolvency risk across borders.

Key Takeaway