What is the effect of Guy Lam on winding up petitions involving an arbitration clause? A third voice

Where a winding up petition is based on a debt arising from a contract with a non-Hong Kong exclusive jurisdiction clause, the court will tend to dismiss or stay the winding up petition in favour of the parties’ agreed forum unless there are strong countervailing factors. The Court of Final Appeal confirmed this approach in its recent landmark decision in Re Guy Kwok Hung Lam [2023] HKCFA 9 (“Guy Lam“; which we discussed here). However, the Court of Final Appeal specifically left the question open for cases involving an arbitration clause.

Case law from lower courts since Guy Lam has not been consistent in approaching this open question. In Simplicity & Vogue Retailing (HK) Co., Limited [2023] HKCFI 1443 (“Simplicity“) where our firm successfully acted for the petitioning creditor, Linda Chan J took the view that the Guy Lam approach is limited to non-Hong Kong exclusive jurisdiction clauses, and therefore inapplicable where the underlying debt is subject to an arbitration clause (see our blogpost). In contrast, in Re Shandong Chenming Paper Holdings Limited [2023] HKCFI 2065 (“Shandong Chenming“), Harris J took the view that there was no difference in the applicable principles when the underlying dispute was subject to an arbitration clause (see our blogpost). Continue reading

Hong Kong Companies Court clarifies the applicability of Re Guy Kwok Hung Lam to cases involving an arbitration clause

In Simplicity & Vogue Retailing (HK) Co., Limited [2023] HKCFI 1443, the Hong Kong Companies Court (the “Court“) made a winding up order against the Company on the basis that it failed to pay security in time. In considering the Company’s opposition grounds, the Court commented that it retains discretion to wind up a company in cases involving an arbitration clause.

Herbert Smith Freehills’ Jojo Fan, Trevor Ho and Jody Luk represented the successful Petitioner.

This is the first case considering the Court of Final Appeal’s (“CFA“) landmark decision in Re Guy Kwok Hung Lam [2023] HKCFA 9 (“Guy Lam“; which we blogged here), which was handed down recently in May 2023 and involved a winding up petition based on a debt subject to a foreign exclusive jurisdiction clause. Continue reading