In Navig8 Chemical Pools Inc v Inder Sharma, HCMP 2885/2016, 17 January 2017, the Hong Kong Court of First Instance issued a warrant for committal against a Defendant who repeatedly refused to appear before the court for examination relating to enforcement of an arbitral award. Because the Defendant had blatantly ignored prior court orders to appear, Anthony Chan J saw no other option than to find him in contempt of court and issue a warrant for committal to ensure his orders were obeyed.
The Defendant was the sole director of Nu Tek, an Indian Telecom company. On 4 June 2015, the Plaintiff obtained an Award against Nu Tek and subsequently started enforcement proceedings in Hong Kong. The enforcement court ordered the Defendant to attend court for an examination, but despite being properly served, the Defendant failed to appear on two separate occasions. On 5 December 2016, the Defendant was served for a third and final time, but refused to accept the documents. The process server then threw the documents on the ground before the Defendant.
Given the circumstances, Justice Chan considered this a proper notice of hearing and deduced that the Defendant had consciously chosen not to appear. In his consideration, Justice Chan took note of the fact there was already an order of an English Court from July 2016 committing the Defendant to 18 months of imprisonment for contempt, for failing to comply with an asset disclosure order in relation to enforcement of the same Award.
To establish contempt of court for breach of a court order, it is sufficient to prove that the defendant's conduct was intentional in the sense that it was conscious and voluntary. The court's order to attend for examination was straightforward and self-explanatory. There was no doubt as to what the Defendant was required to do; he had to attend court for examination. Thus the Defendant's failure to appear could only be intentional. In addition, the Defendant had backdated NuTek's records to make it appear that he was no longer a director of the company on the relevant dates, probably to insulate him from enforcement proceedings, thus demonstrating that he was a person of "low commercial morality".
Imprisonment for civil contempt is a remedy of last resort. However, in this case, the Defendant had demonstrated little respect for the law. In addition, a fine would be very difficult to enforce in India, because it would be a mere penalty imposed by the court as opposed to a judgement. Justice Chan thus had little option in terms of an appropriate penalty. In all the circumstances, an immediate custodial sentence measured in months would be appropriate. Taking into account the strong public interest in administration of justice, Justice Chan issued a warrant for committal to have the Defendant arrested and brought before the court as soon as possible. The Defendant was ordered to pay costs on the indemnity basis, to be taxed if not agreed.
This judgment is a reminder of the important role that national courts play in supervising arbitral proceedings, and of the fact that the Hong Kong courts take that role seriously. When necessary, the courts are willing to exercise their powers to the full, to ensure that parties to arbitration do not evade their obligations under the award.