ReSolution Issue 12, Feb 2017 | Page 26

The CA also found the lower Court’s decision that First Media’s conduct was such that it should not be permitted to rely on section 44(2) of the Ordinance to resist enforcement of the awards because it had acted in breach of the good faith principle was incorrect. Section 44 provides that enforcement of a convention award is mandatory unless a ground is made out under the relevant subsections, in which case the court has discretion whether to permit or refuse enforcement.
The CA held that the lower Court had erred in ruling that the breach of the good faith principle precluded it from resisting enforcement pursuant to its discretion under s44(2). The CA held that the discretion was found in the word “may” which enables the enforcing court to enforce an award, notwithstanding that a s 44 ground might otherwise be established”. The CA held that once the fundamental defect of the awards sought to be enforced was taken into account, (that the awards were made without jurisdiction in favour of parties wrongly joined to the arbitration), the only conclusion was to exercise discretion and refuse enforcement. For these reasons, the CA concluded that the Court at first instance decision that First Media is precluded by the principle of good faith from relying on s 44(2) to resist enforcement could not be supported.
Despite the CA’s disagreement with the lower Court’s approach, the CA considered the conclusion was not plainly wrong, and the appeal was ultimately dismissed due to the significant time delay in First Media’s application for an extension of time. First Media’s application some 14 months after the Hong Kong Court’s enforcement orders was well outside the statutory 14-day time limit. However, the CA reflected its disagreement with the Court of first instance conclusion on good faith by awarding 60% costs against Astro.
Comment
The Hong Kong Court of Appeal’s decision brings Hong Kong law in line with already established Singaporean law on the “choice of remedies” principle to allow parties to choose active or passive remedies against awards. The decision brings some procedural certainty for parties involved in international arbitration seated in two of Asia’s most prominent arbitration destinations (Singapore and Hong Kong). While both the Singaporean and Hong Kong Courts have endorsed the choice of remedies principle and passive approach to challenging enforcement, this decision serves as a timely reminder to debtors who do not challenge enforcement orders for awards within specified timeframes. All debtors are encouraged to act quickly when challenging enforcement orders for awards against them, regardless of their asset liability in the relevant jurisdiction, or prepare to face the consequences as First Media did.

Sarah Redding

Brief by Sarah Redding, Kensington Swan Lawyers