In <span class="news-text_italic-underline">Company A and another v Company C [2024] HKCFI 3505</span>, the Hong Kong Court of First Instance grante a worldwide <span class="news-text_italic-underline">Mareva</span> injunction and related relief to support an ongoing AAA-ICDR arbitration. The ruling followed delays and resistance by one of the respondents in complying with tribunal orders regarding an escrow arrangement to prevent asset dissipation.
The arbitration involved two offshore companies pursuing claims against a Hong Kong company and its parent, a Shanghai Stock Exchange-listed entity (“<span class="news-text_medium">Shanghai Parent</span>”). The dispute centered on a settlement agreement under which the Hong Kong company had committed to facilitating the IPO of one of the claimants, in which it held a 44% stake. The claimants sought damages of approximately USD55.5 million, while the Hong Kong company and Shanghai Parent counterclaimed for USD2 million.
During the arbitration, the Shanghai Parent disclosed plans to sell 51% of its shares in the Hong Kong company, including its business operations and assets. Concerned that this could frustrate enforcement of any eventual award, the claimants sought an order from the tribunal requiring the Hong Kong company to deposit USD55.5 million into escrow. While the tribunal allowed the claimants to seek emergency relief from Hong Kong courts, it did not impose interim measures itself.
The claimants then applied under section 45 of the <span class="news-text_italic-underline">Arbitration Ordinance</span> (Cap. 609) for an injunction preventing the Hong Kong company from transferring assets to the Shanghai Parent or related entities, along with a worldwide <span class="news-text_italic-underline">Mareva</span> injunction restraining asset disposal up to USD55.5 million. The court initially granted interim injunctions pending a full hearing, after which the Hong Kong company provided undertakings not to transfer or remove assets. However, ongoing negotiations regarding the escrow arrangement remained unresolved.
Under section 45 of the <span class="news-text_italic-underline">Arbitration Ordinance</span>, Hong Kong courts may grant interim relief in support of arbitration, including foreign proceedings, provided the relief is necessary to facilitate the arbitration process. The Hong Kong company opposed the injunctions, arguing:
Justice Mimmie Chan ruled in favor of the claimants, emphasizing Hong Kong courts should exercise their power to grant interim measures sparingly. However, given the respondent’s delays and lack of compliance, judicial intervention was warranted. The tribunal had yet to finalise the escrow arrangement, and the Hong Kong company's conduct—characterized as "procrastination and obstruction"—threatened the effectiveness of the arbitration process.
The court also noted that even if the tribunal had granted interim relief, enforcement of its directions had been frustrated by the Hong Kong company's inaction. Granting the injunctions aligned with the objectives of the <span class="news-text_italic-underline">Arbitration Ordinance</span>, which aims to ensure efficient dispute resolution without unnecessary delay or cost. Additionally, the court authorised enforcement of any interim measures issued by the tribunal under section 61 of the <span class="news-text_italic-underline">Arbitration Ordinance</span>.
This decision reaffirms the Hong Kong courts’ willingness to grant interim relief in support of foreign arbitrations, particularly when:
While Hong Kong courts generally defer to the tribunal and the courts of the seat, they will intervene in cases where it is necessary to uphold the integrity of the arbitral process. This ruling also highlights the court’s approach to enforcing tribunal-ordered interim relief under section 61, adding to recent jurisprudence on the subject.
