In L v. B (HCCT 41/2015), the Hong Kong Court of First Instance (CFI) adjourned enforcement proceedings, on condition that security in the sum of the unpaid award, plus costs, be furnished by the losing party. Click here for a copy of the judgment.


The Applicant commenced arbitration proceedings against the Respondent in the Bahamas in October 2012, claiming breach of a Non-Recourse Loan Agreement (the Agreement). Under the Agreement, the Respondent agreed to advance a loan to the Applicant against the transfer of Applicant's shares in a Hong Kong listed company, as collateral and security for the loan to be advanced. The Applicant transferred 800 million shares to the Respondent, but the Respondent only advanced loans in relation to 200 million shares transferred. The Tribunal found the Respondent liable and awarded to the Applicant damages in the total sum of approximately US$41.8 million (the Award).

On 22 June 2015, the Respondent applied in the Bahamian court to challenge the Award. The application was made under s.90 of the Bahamian Arbitration Act 2009 (the Act), to set aside the Award on the ground of serious irregularity, and under s.91 of the Act, to appeal on a question of law. On 22 September 2015, the CFI granted the Applicant leave to enforce the Award in Hong Kong. One month later, the Respondent applied to set aside the order and to stay the enforcement proceedings pending determination of the challenge to the Award. The Applicant requested dismissal of the application or, in the alternative, provision of security by the Respondent.


The CFI first reiterated the Court's wide discretionary powers under O.73, r.10A of the Rules of the High Court to stay enforcement pending challenge of the award in another jurisdiction and order suitable security. When determining an application for security under s.89(5) of the Arbitration Ordinance and O.73, r.10A, the CFI applied a two-prong test set out in Dana Shipping and Trading SA v Sino Channel Asia Ltd [2016] HKEC 599 (See our previous blog post for a detailed discussion of the case), looking at the strength of the argument that the award is invalid and the ease or difficulty of enforcement of the award.

Concluding that the Respondent was unlikely to succeed in challenging the Award, the Court dismissed several grounds the Respondent had advanced to resist enforcement. The Court found the claim as to serious procedural irregularities unpersuasive, because the Tribunal's refusal of the Respondent's application for further discovery and rejection of the Respondent's expert evidence "all appear to be case management decisions" within the Tribunal's authority. In addition, the Court held that the Award had become binding, despite the challenge made in the supervisory court. The Court reasoned that s.90 of the Bahamian Arbitration Act subjects the right of appeal to the parties' contrary agreement and, under the arbitration clause contained in the Agreement, the parties had agreed that "the decision of the Arbitrators shall be final, conclusive, and binding upon the parties."

The CFI noted that the Respondent was seeking to adjourn enforcement of a binding award until after the determination of proceedings in another seat for an indefinite time. Drawing an analogy with court proceedings, the Court recalled that execution and enforcement is not, as a general rule, delayed or postponed, even when there is an appeal against a judgment. The Court rejected the Respondent's concerns about possible inconsistent decisions, noting that, if the Award is ultimately set aside by the Bahamian court, the Bahamian court can order the Applicant to repay any amount recovered under the Award and such order will be enforced and recognised by the Hong Kong courts in accordance with principles of international comity, or as a foreign judgment. In reaching a decision in favour of the Applicant, the CFI also considered the Respondent's deliberate delaying tactics in the arbitration proceedings.

Exercising its "unfettered discretion", the CFI ordered adjournment of the enforcement proceedings for four months, on condition that security of HK$41 million, representing the amount outstanding under the award, and HK$600,000, in respect of the Applicant's costs, be provided by the Respondent within 21 days.

Costs of the application for security were awarded on the indemnity basis.