The latest development in the dispute over a failed joint venture between Astro, a Malaysian media group (“Astro“), and companies which are part of the Indonesian giant Lippo, including PT First Media TBK (“First Media“) (Astro Nusantara International B.V. and others v PT First Media TBK and others, HCCT 45/2010), saw the Hong Kong High Court allowing enforcement of arbitral awards made in favour of Astro, despite the Singapore Court of Appeal’s (“Singapore CA“) ruling in October 2013 refusing enforcement.
The arbitration proceedings commenced at SIAC in 2008, during which Astro were successful in joining to the arbitration a number of Astro companies that were not parties to the arbitration agreement (“Additional Parties“). Between 2009 and 2010, the tribunal made a number of awards, totalling a monetary award exceeding US$130 million primarily in favour of the Additional Parties (the “Awards“).
Astro sought enforcement of the Awards in various jurisdictions, including Singapore and Hong Kong. When the Awards were initially recognized by the Hong Kong court in 2010, First Media did not resist the enforcement proceedings, because it believed it did not have assets in the jurisdiction. However, subsequently Astro obtained a garnishee order in Hong Kong against a debt of US$44 million due to First Media. First Media therefore sought to set aside the garnishee order and judgment.
The application was made some 14 months out of time. It was heard in early 2015 following the judgment of the Singapore CA in October 2013 that the tribunal had improperly exercised its power to join the Additional Parties and therefore lacked jurisdiction to award sums to the Additional Parties (the “Jurisdictional Issue“).
Mr Justice A Chow of the High Court gave his judgement on 17 February 2015, refusing to allow an extension of time on the following grounds:
- serious delay –14 months late as opposed to the 14-day deadline under Order 73 of the Rules of the High Court (“RHC“);
- lack of good faith; and
- the Awards have not been set aside and therefore were still valid and created legally binding obligations.
The Court considered it had a discretion to allow enforcement even if a ground for refusal might otherwise be made out, in circumstances where there has been a breach of good faith. Referring to previous decisions of the Hong Kong courts including Hebei Import & Export Corp v Polytek Engineering Co Ltd (1999) 2 HKCFAR 111, the learned judge considered that this was a breach of good faith on the part of First Media, and that the 14-month delay was the result of a “deliberate and calculated decision not to take action in Hong Kong”.
The Hong Kong judgment has attracted some comment not least because it did not follow the decision of the Singapore Court to refuse enforcement. In this respect it was noted that the award had not been set aside in Singapore.
Conclusion – lessons learned
The writers believe the Hong Kong judgment confirms the “pro-enforcement”/ “non-interference” approach generally adopted by Hong Kong courts towards enforcement. Further, parties should bear in mind the following “lessons learned” from the decision:
- the time limit for challenge of enforcement of an award under the RHC or the Arbitration Ordinance should be strictly adhered to; and
- the Court will apply the principle of good faith in proceedings brought to resist enforcement, taking into account the conduct of the parties throughout the proceedings.
The learned judge himself anticipated that the matter would go to a higher court, and if so, it remains to be seen whether this decision will be upheld.