Alstom v Insigma, the (in)famous SIAC arbitration administered under ICC rules, was recently up for yet another round of judicial sparring following years of proceedings in several fora, which left Alstom Technology Limited (“Alstom”) with a HK$261 million award but limited assets against which to execute. In an interesting strategic move, Alstom petitioned the Court of First Instance in Hong Kong (the “Court”) to wind up Insigma Technology Co Ltd (“Insigma”), even though Insigma is incorporated in the People’s Republic of China (“PRC” or “Mainland”). The Court, however, demonstrated that fortune does not always favour the brave and ultimately rejected the application.

History of the case

In an arbitration concerning the breach of a license agreement, Alstom obtained a partial and a final award (the “Awards”) in its favour in 2010. The Awards were subsequently recognised in England, and in 2012 Alstom obtained an order that the Awards could be enforced as a judgment by the Hong Kong courts. However, an attempt to have the Awards enforced in the PRC was unsuccessful, with the result that the debt is not recognised in the Mainland.

Petition to wind up Insigma

The latest action before the Court concerned a petition by Alstom to wind up Insigma on grounds of insolvency. Since Insigma is not incorporated in Hong Kong, the petition was based on Section 327(3)(b) and (c) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance (“CO”). This provision authorises the Court to wind up an unregistered company if it is unable to pay its debts or if the Court is satisfied that it is just and equitable to do so.

In support of its application, Alstom argued that it would be just and equitable to wind up the company in Hong Kong because the debt remained unpaid. Furthermore, it asserted that the appointment of liquidators would lead to a “reasonable possibility of benefit” for Alstom because the liquidators would effect the recovery of assets, especially in Hong Kong, the PRC, and the USA.

Findings of the Court

The Court first acknowledged the “highly unusual” nature of a request to wind up a company that is incorporated in another jurisdiction. The present situation was considered even more peculiar because the petition concerned a company incorporated in another part of the territory of the same sovereign (the PRC) in circumstances in which the Mainland Court will not order liquidation.

Subsequently, the Court determined that three core requirements must be satisfied before the Court was justified in exercising its discretion:

  1. There is sufficient connection with Hong Kong to justify setting in motion the Hong Kong insolvency regime;
  2. There is a reasonable possibility of a winding-up order benefiting those applying for it; and
  3. There must be a person subject to the Court’s jurisdiction (other than by being the petitioner or a creditor who will become subject to the Court’s jurisdiction if he submits a proof of debt) and having a material economic interest in winding up.

Furthermore, it held that the general principles applicable to such situations prescribe that the power under Section 327 of the CO is discretionary, and that the third core requirement may be excluded from the determination if the connection with Hong Kong is sufficiently strong and the benefit is sufficiently substantial.

The Court addressed these three elements in turn as follows:

  1. Based on an analysis of two cases involving similar petitions, the Court concluded that it would look at the overall scheme of the company’s activities to determine whether or not the connection to Hong Kong is sufficiently strong.

Accordingly, the Court examined Insigma as a business and concluded that the predominant part of its activities took place on the Mainland. Alstom had argued that Insigma’s shares in a Hong Kong incorporated company (“Innovation”) provided a substantial connection to Hong Kong, but the Court regarded this shareholding as a minor factor in a considerably sizable Mainland operation. Consequently, it was concluded that there was insufficient connection to Hong Kong to wind up Insigma.

This finding was sufficient to dismiss the petition as a whole, but the Court took the opportunity to address the remaining two core requirements.

  1. The Court commenced its analysis of the second requirement with the observation that it was clear from Alstom’s petition that the company was solely acting in its own interest and not for the benefit of creditors as a whole.

The benefits of liquidation argued by Alstom – that it would assist in the enforcement against assets in the Mainland and the USA – were dismissed by the Court. Regarding the former, the Court opined that there was “an air of complete unreality” about the idea that the Mainland courts would recognise a Hong Kong appointed liquidator after those courts had already refused to enforce the Awards. Regarding the latter, Alstom’s assertion that the appointment of a liquidator would help realise its interests in the USA was instantly rejected because Insigma was not found to have assets in the USA as a matter of fact.

  1. The Court emphasised that the third requirement is imposed upon petitioners to ensure that the liquidation benefits creditors in Hong Kong. Therefore, the creditor must be subject to the Court’s jurisdiction for additional reasons other than merely applying for the petition. Alstom had submitted that it satisfied this requirement because its awards had been recognised by the Hong Kong courts. It was, however, concluded by the Court that this connection was too insubstantial to satisfy the final criterion.


This latest instalment in the Alstom v Insigma story serves to highlight the potential difficulties successful parties can face realising arbitral awards against reluctant debtors, and the extraordinary and creative tactics creditor parties may deploy to try to satisfy those awards (Alstom’s petition to wind up Insigma was described by the Court to be ‘speculative’ at best).  Whilst the Hong Kong Court gave meaningful recognition to Alstom’s “understandable….deep sense of grievance”, by deviating from its usual practice of awarding costs on an indemnity basis in unsuccessful applications, this display of sympathy offers little solace to the aggrieved party.

Fortunately, these situations are (increasingly) rare. Parties who contemplate similar petitions are reminded that an understandably high threshold must be met for the Court to wind up companies in other jurisdictions. Nonetheless, the Insigma-petition demonstrates that parties are approaching enforcement situations creatively in order to locate and execute against assets. The development of these new routes to enforcement, even through trial and error, is relevant for successful parties in international arbitrations looking to recover their debt.

Insigma Technology Co Ltd  HCCW 224/2013 – Petition for winding up by Alstom Technology Limited – Court of First Instance  – 15/10/2014