The Hong Kong Court of First Instance has granted anti-suit injunctions compelling a PRC company to withdraw PRC court proceedings held to have been commenced in an attempt to evade HKIAC arbitration clauses in two joint venture agreements (A and Others v Z [2026] HKCFI 5453). Notably, the relief extended to proceedings brought against several non-parties to the arbitration agreements.
Background
The injunctions were granted on the application of a Singapore company which was a member of a US-headquartered group operating in the glass substrates industry, and three of its affiliates. The joint venture agreements, which were governed by PRC law, provided for an exclusive supply arrangement whereby the joint venture companies would buy certain raw materials and services exclusively from entities related to the US group, and the PRC company and its affiliates would purchase LCD glass substrates exclusively from the joint venture companies. The Singapore company was party to the joint venture agreements and the arbitration agreements contained therein, whereas the three affiliates were not.
The PRC company subsequently commenced various actions before the PRC courts relating to the exclusive supply arrangement, comprising: (i) a derivative action said to have been brought in its capacity as a shareholder on behalf of one of the joint venture companies (advanced against the Singapore company and two affiliates); (ii) three actions in which it claimed that members of the US group had engaged in unfair competition and market monopoly activities and had disrupted market order (advanced exclusively against two affiliates of the Singapore company); and (iii) actions challenging the validity of the arbitration agreements in the joint venture agreements on grounds including duress and breach of public policy (advanced against the Singapore company alone).
Legal principles
The decision was handed down by the Honourable Madam Justice Mimmie Chan, the judge in charge of the Construction and Arbitration List of the Court of First Instance.
As a preliminary point, the court held that the appropriate threshold for granting an anti-suit injunction was a prima facie case, rather than a high degree of probability, that a valid arbitration agreement existed and that the relevant dispute fell within its scope. The grant of an anti-suit injunction was the mirror image of a stay of Hong Kong court proceedings in favour of arbitration under section 20 of the Hong Kong Arbitration Ordinance, to which the prima facie threshold also applied, and it would be a "strange result" if a higher threshold were required to restrain a violation of the parties' bargain outside Hong Kong compared with a violation within Hong Kong. The prima facie test also reflected the fact that the court was not called upon to make a final determination in the context of an application for an anti-suit injunction, because it was the arbitral tribunal that would decide on questions of its jurisdiction (subject to possible subsequent review by the court in its supervisory capacity).
The court also emphasised that the absence of an arbitration agreement between the PRC company and the Singapore company's affiliates did not mean that injunctive relief should not be granted to restrain proceedings brought against those affiliates. The authorities were clear that the court could restrain the PRC proceedings if they were vexatious, oppressive and an abuse of process. The court referred in this regard to English case law distinguishing between the "wholly contractual", "quasi-contractual" and "vexatious or oppressive" bases for granting anti-suit injunctions, and opined that:
"[I]t would not be conducive to Hong Kong public policy to find that parties can easily avoid the effect of a binding agreement whereby they had consented to the submission of all their disputes to arbitration, simply by joining or taking action against parties closely related to and associated with the contracting party, when the claim can be made against the contracting party in accordance with the arbitration clause. It may be said to be that the grant of an injunction in such circumstances is on the contractual ground that the arbitration clause must be reasonably construed to extend to such closely connected claims against closely connected parties. It may also be said that the injunction is granted in such cases on some wider quasi-contractual ground, or because the proceedings against the third parties are abusive."
Decision
Applying those principles, the judge held that both the derivative action and the unfair competition actions should be restrained on the basis that:
- There was a prima facie case that they fell within the scope of the arbitration clauses in the joint venture agreements and that the PRC company had agreed not to pursue such claims against the Singapore company and its relevant affiliates, other than in accordance with the arbitration agreements;
- The bringing of those proceedings against the Singapore company's affiliates was clearly a procedural manoeuvre designed merely for the purpose of evading the arbitration agreements, and there was no reason why the PRC company could not make those claims by way of arbitration in Hong Kong against the Singapore company. The Singapore company was alleged to be jointly liable with its affiliates in respect of the claims brought in the derivative action, and the unfair competition claims could have been advanced against the Singapore company under the joint venture agreements. In this regard, the court rejected an argument by the PRC company that the claims in the unfair competition actions were clearly not arbitrable as a matter of PRC law, finding on the basis of expert evidence that there was a prima facie case as to their arbitrability; and
- The only reason the actions had been brought before the PRC courts was to enable the PRC company to evade, and ignore its obligations under, the arbitration agreements. The actions should therefore be restrained on the additional ground that they were vexatious, oppressive and an abuse of process.
The court also had "no hesitation" in granting an injunction to restrain the PRC actions brought against the Singapore company challenging the validity of the arbitration agreements.
The primary basis for its decision was the doctrine of competence-competence, pursuant to which any attack by the PRC company on the validity of the arbitration agreements, whatever the grounds, was to be determined by the tribunal in the first instance, and then by the Hong Kong courts as the courts with supervisory jurisdiction over any arbitration. The fact that a mainland PRC court might also have jurisdiction made no difference, because the parties had covenanted in the arbitration agreements not to invoke that or any other jurisdiction in breach of the arbitration agreements.
The court characterised as "baseless" an argument by the PRC company that the arbitration agreements were contrary to mainland PRC public policy by purporting to exclude the parties' right of appeal or review, thereby excluding the supervision of the mainland PRC courts. It also noted that the PRC company was arguing in the PRC proceedings challenging the validity of the arbitration agreements that, by providing for the parties to recognise a Hong Kong arbitral award and for the Hong Kong award to be enforceable in the PRC courts, the arbitration agreements undermined the One China policy and were seditious. This was "such a novel contention" that the Hong Kong court had raised it with counsel for the PRC company, who had confirmed that the PRC company would not be pursuing it in the Hong Kong anti-suit proceedings to argue that the arbitration agreements had no effect.
Costs were awarded against the PRC company on the indemnity basis.
Comment
This is the second time in two weeks that a Hong Kong court has granted anti-suit injunctions to restrain mainland PRC court proceedings for the purpose of upholding arbitration agreements or supporting the enforcement of arbitral awards, following the recent decision of Deputy High Court Judge Gary CC Lam in 廈門新景地集團有限公司 v Eton Properties Ltd and Eton Properties (Holdings) Ltd [2026] HKCFI 5258 (reported here).
The latest decision is a powerful articulation by Hong Kong's most senior specialist arbitration judge of the public interest in upholding arbitration agreements and the duty of the courts to supervise and protect the arbitral process.
It is also a cogent expression and defence of the competence-competence principle, with the court emphasising that it was not making a final decision on the existence and scope of the arbitration agreements and that it would ultimately be for any arbitral tribunals appointed pursuant to them to decide on their own jurisdiction in the first instance.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
[View Source]
