Hong Kong Court grants injunction, holds tortious claim unaffected by arbitration agreement

In Castlemil Infant (HK) Supplies Co Ltd v Care N Love Development Ltd [2018] HKDC 1419, the Hong Kong District Court granted a mandatory injunction, having found that the plaintiff’s underlying tort claims did not fall within the scope of the parties’ arbitration agreement.

Background

The defendant was engaged as the plaintiff’s marketing consultant or sales agent under a Marketing & Sales Agency Agreement. The defendant set up a Facebook account for the plaintiff which became of central importance, being the only platform where clients and potential clients could access information about events, promotions and sales of the plaintiff’s business. When their relationship broke down, the plaintiff served a termination notice on the defendant. The defendant requested HK$200,000 in return for the Facebook account, later reducing this amount to HK$50,000. The plaintiff then applied to the court for an injunction directing the defendant hand over the Facebook account. The defendant was not represented at the injunction hearing and did not appear.

Decision

Judge MK Liu of the Hong Kong District Court granted the injunction, being satisfied that the plaintiff may succeed in a claim against the defendant in the proceedings because:

  • the Agreement came to an end in late September as a result of the termination notice;
  • the plaintiff was the owner of the Facebook account and, after September 2018, the defendant refused the plaintiff access to the Facebook account and deleted contents without consent. In the court’s view, this could amount to the torts of conversion and wrongful interference; and
  • the arbitration agreement which referred “any dispute, controversy or claim arising out of or relating to [the] Agreement” to arbitration did not affect the plaintiff’s claim in tort.

The court granted the injunction and directed the defendant to disclose the password e within 24 hours after the service of the injunction order.

Discussion

Ultimately, the Hong Kong court had power to grant this injunction whether the plaintiff’s claim fell within the arbitration agreement (in which case the court’s power would be derived from s.20 Arbitration Ordinance (Cap. 609) or not (in which case it was an exercise of its inherent jurisdiction). However, we might have expected a fuller discussion of the scope of the arbitration clause. The judge did not explain why this arbitration agreement did not affect a tortious claim, nor engage in a close analysis of its wording with reference to cases such as Fiona Trust & Holding Corporation v Privalov [2007] UKHL 40. That case advocates a broad interpretation of arbitration clauses, on the basis that commercial parties generally intend all their disputes to be determined in a single forum.

 

Simon Chapman
Simon Chapman
Partner, Hong Kong
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+852 2101 4217
May Tai
May Tai
Managing Partner-Greater China
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Kathryn Sanger
Kathryn Sanger
Partner, Hong Kong
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+852 2101 4029
Briana Young
Briana Young
Foreign Legal Consultant, Hong Kong
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+852 2101 4214

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Filed under Arbitration clauses, Hong Kong & China, Interim relief

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