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Hong Kong Court Refuses to Issue 'Interim-Interim' Injunction to Restrain Arbitrator

by May Tai, Simon Chapman, Kathryn Sanger, Briana Young

November 2020

This article was first published on Herbert Smith Freehills Arbitration Notes, here.

Hong Kong’s District Court has refused to grant an injunction to restrain an arbitrator from acting in an arbitration, on the grounds that there was already another identical application before the court scheduled for hearing and that there was no urgency for granting an “interim-interim” injunction.

FENN KAR BAK LILY v SO SHIU TSUNG THOMAS [2020] HKCU 3157

Background

Lily Fenn was one of the claimants in an arbitration in which Mr Thomas So was the arbitrator. After Mr So had handed down an award against the claimants, Fenn brought an action against Mr So in the Hong Kong Court, challenging his ability to continue to act as arbitrator on the ground of partiality. In the meantime, Fenn also applied by way of summons for an interlocutory injunction to restrain Mr So from acting as arbitrator.

By consent of the parties, the court adjourned the summons to April 2021 for substantive hearing. After that summons had been adjourned, Mr So made a cost award against the claimants. As a result of the cost award, Fenn took out a second summons, seeking to stop Mr So from further acting as arbitrator in the arbitration proceedings.

Issues before the court

HHJ Phoebe Man dealt with two main issues in her decision:

  • Whether the second summons was an abuse of process, in that there was already an outstanding substantially similar summons before the court; and
  • Whether the court should grant an “interim-interim” injunction (pending the outcome of the first summons i.e. the interim injunction).

Abuse of process

On the abuse of process point, Mr So relied on case law to the effect that where an applicant brings two interlocutory applications which are identical in substance, the second should not be entertained unless there is a material change of circumstances.

Fenn did not dispute the principle relied on by Mr So. However, she argued that the handing down of the cost award was a material change of circumstances. She alleged that before the parties agreed to the adjournment, the defendant had, in his capacity as arbitrator, represented to the parties in the arbitration that he would not take any further steps until the court has dealt with the injunction application against him. Therefore, the cost award constituted a material change of circumstances.

The judge rejected Fenn’s argument. In so concluding, she relied on the events that took place after Mr So allegedly made the above representation but before the parties entered into the consent summons. In gist, during that period, Mr So’s solicitors had expressly rejected Fenn’s request for an undertaking not to continue with the arbitration proceedings and pointed out to Fenn that the consent summons was without prejudice to the defendant’s right to continue acting as arbitrator. Mr So’s solicitors also wrote a separate letter to Fenn stating that Mr So had reserved his right to continue to act as arbitrator. In light of these facts, the judge held that Fenn should have been well aware that Mr So might continue to act as arbitrator before the court determined her injunction application. It followed that the cost award subsequently rendered by Mr So could not constitute a material change of circumstances.

Interim interim injunction

In light of the conclusion that the court did not need to consider the second summons, the judge held that it was unnecessary to consider the merits of the “interim-interim” injunction.

The judge added that, in any event, the second application was baseless because the only outstanding matter in the arbitration when the application was made was the question of taxation on costs. Even if Mr So were to hand down an order on that issue, there would be no injustice to Fenn which could not be compensated by damages.

Comment

The significance of this case lies not so much in the legal principles discussed in this interlocutory decision, but rather in the fact that it is a relatively rare example of an arbitrator getting sued. As the substantive hearing has yet to take place, it remains to be seen how the court will deal with the substantive complaint.

May Tai

May is Managing Partner of HSF Asia offices. She specialises in cross-border China-related and regional Asian disputes and contentious regulatory matters. May's practice covers a range of commercial disputes and regulatory issues. She has advised governments, government-owned entities and commercial clients (including financial institutions and energy companies) in Asia, Europe and the United States, including acting as counsel and advocate in arbitrations under various rules and court proceedings. 

Simon Chapman

Simon is an international arbitration specialist focusing on cross-border disputes in Asia. Simon leads the disputes practice in Greater China and focuses on international arbitration and arbitration-related litigation.  A specialist advocate, he appears regularly as lead counsel before tribunals in the world's foremost arbitration centres, including Hong Kong, Singapore and London. 

Having spent a number of years based in London and Paris, Simon relocated to Asia in 2011 and has acted on some of the largest and most complex cases in the region. 

Simon's practice covers investment treaty and commercial arbitration under all of the major arbitral rules, including ICC, SIAC, HKIAC, LCIA, ICSID and UNCITRAL.  He has particular expertise in complex and high-value disputes, notably claims in fraud and breach of warranty, as well as post-M&A, joint venture and shareholder disputes.  He has acted for governments, state-owned entities, sovereign wealth funds and corporations across a range of industries, including the energy, private equity, finance, hospitality and TMT sectors.  

Simon is dual-qualified in Hong Kong and England and Wales, with higher rights of audience in both jurisdictions. 

Simon is ranked as a leading individual in all of the key directories and is recommended as a global leader in international arbitration by Who's Who Legal.  In addition to his work as counsel, Simon also sits as arbitrator and has experience as presiding arbitrator, co-arbitrator and sole arbitrator across a range of institutional and ad hoc cases.

Kathryn Sanger

Kathryn advises clients on complex international arbitration proceedings in Asia Pacific. 

Kathryn has nearly 15 years' experience of advising clients on arbitration and litigation proceedings in Asia Pacific.

She has advised clients across a wide range of industries and locations, with particular strengths in financial services, energy and in China-related matters.

Her arbitration skills and reputation in China matters are enhanced by her ability to speak and read Mandarin Chinese. 

Kathryn has an impressive profile in the Asian international arbitration market. She has been a Council Member of the Hong Kong International Arbitration Centre (HKIAC) since 2008 and serves on the HKIAC Executive Committee. She is the current chair of the HKIAC appointments committee and has also served on its rules and proceedings committees.

Kathryn sits as an arbitrator, is listed on the HKIAC's List of Arbitrators, and is also a member of the Users Council of the Singapore International Arbitration Centre.

She is admitted to practice in England and Wales and Hong Kong.

Briana Young

Briana is a Professional Support Consultant and practice manager in the Greater China arbitration practice.

Briana has over 15 years' experience in international arbitration, first as counsel and now as a foreign legal consultant and professional support consultant in Herbert Smith Freehills' Greater China international arbitration team. She is also an experienced tribunal secretary, and sits as arbitrator.

Based in Hong Kong, Briana is a senior member of the Herbert Smith Freehills team and an expert in international arbitration law and procedure. She speaks and teaches on a range of arbitration topics, as well as writing articles, legal briefings and other publications.

Briana is Vice Chair of the Hong Kong International Arbitration Centre, and a member of the committee responsible for drafting the HKIAC Administered Arbitration Rules 2013 and 2018.

She is a member of the Editorial Boards of Practical Law and Practical Law China.

Briana co-chairs the Hong Kong Law Reform Commission's sub-committee on outcome-related fee structures in arbitration.

She also co-chaired HKIAC’s Task Force on Third Party Funding in Arbitration, and writes and speaks frequently on arbitration funding.

The views expressed by authors are their own and do not necessarily reflect the views of Resourceful Internet Solutions, Inc., Arbitrate.com or of reviewing editors.
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