Hong Kong High Court Appoints Receivers As Interim Measure In Support Of Arbitration Proceedings In Mainland
S.Chapman, S.Hu & J. Eschment
A recent judgment from the Hong Kong High Court (Chen Hongqing v Mi Jingtian) illustrates the manner in which parties may seek interim relief in Hong Kong to support arbitral proceedings being conducted elsewhere – in this case, the appointment of receivers in connection with a CIETAC arbitration in Mainland China. The decision illustrates the wide-ranging power of the Hong Kong courts to grant measures to preserve assets or evidence (or simply to preserve the status quo between parties) in support of foreign arbitral proceedings, which will be of particular interest to parties arbitrating in Mainland China given the relatively limited powers of the PRC Courts to grant equivalent interim relief.
Background The dispute concerned shares held in China Shanshui Investment Company Limited ("CSI") by an individual named Mr Zhang. Proceedings had been commenced against Mr Zhang in the Hong Kong courts by certain individuals who claimed that his shares were merely held on trust and that he had sought to deprive them of an alleged beneficial interest. That litigation resulted in the appointment of receivers over 45.63% of the shares in CSI. CIETAC arbitration proceedings were commenced in respect of a remaining portion of the shares held by the Defendants. The CIETAC arbitration had been filed under a share pledge and guarantee agreement that had been signed in 2015. In support of those proceedings, the Claimant filed an application to the Hong Kong Court requesting the appointment of receivers in respect of the Defendants' shares in CSI; and an order restraining the Defendants from taking any steps to cause or procure the transfer, charge or assignment of their shares, or from otherwise encumbering or dealing with the shares, save for complying with the requests of the receivers to be appointed. In response, the Defendants argued (amongst other things) that receivership was a drastic and draconian form of interim relief which should not be granted lightly, and that in any event the Hong Kong court was not the proper forum for the Claimant to seek such relief, which should instead have been sought from the CIETAC tribunal or from a PRC court.