The Hong Kong Court of First Instance has granted an anti-suit injunction to restrain two Hong Kong companies from pursuing mainland PRC litigation in what the court characterised as an abusive and bad faith attempt to interfere with the enforcement of a CIETAC award in Hong Kong (廈門新景地集團有限公司 v Eton Properties Ltd and Eton Properties (Holdings) Ltd [2026] HKCFI 5258).
The decision is the latest development in the long-running dispute between Xiamen Xinjingdi Group Co Ltd (the award creditor) and entities from the Eton Properties group (the award debtors), which arose out of a 2003 contract relating to the development of land in Xiamen and entailing the transfer of certain shares to the award creditor. A CIETAC tribunal rendered an award directing performance of the contract by the award debtors in 2006. Two decades of litigation in the Hong Kong and PRC courts followed (covered in our previous posts here).
After statutory enforcement of the award in Hong Kong was rendered ineffective by a corporate restructuring of the award debtors' group, the award creditor pursued a common law enforcement action for damages for breach of the implied promise to honour the award, and ultimately obtained judgments for damages and pre-judgment interest in the sum of approximately RMB343 million (equivalent to approximately US$51 million at current exchange rates) in 2024.
The award debtors then commenced proceedings before the Xiamen courts in which they essentially sought to negate the effect of those judgments by requesting orders for the "return" of sums alleged to have been "unlawfully appropriated" by the award creditor in the common law enforcement action, plus certain ancillary relief. The essence of the award debtors' case was that the common law enforcement action amounted to a claim for damages for breach of contract, and had been brought maliciously and in abuse of process for the purpose of evading the arbitration agreement and the application of PRC law.
This led the award creditor to apply to the Hong Kong courts for an anti-suit injunction restraining the award debtors from pursuing the Xiamen proceedings. Deputy High Court Judge Gary CC Lam granted the requested anti-suit relief in a robustly worded decision handed down just four days before the substantive hearing in the Xiamen proceedings was scheduled to take place.
The starting point for the court's analysis was the clear distinction between enforcement of the underlying contract (which was a matter for the arbitral tribunal) and enforcement of an award arising from it (which was a matter for the enforcing court), which had already been drawn by the Court of Final Appeal in a 2020 judgment relating to the common law enforcement action (reported here). The common law enforcement action was for the enforcement of the award and not the contract, it was the award creditor's right to pursue it, and the award creditor had only done so because the possibility of compelling performance of the award had been frustrated by the corporate restructuring. It was therefore disingenuous of the award debtors to allege that the common law enforcement action was malicious, especially when they had waited for more than 15 years before raising that allegation.
The court noted that it was for Hong Kong law to fashion a remedy for breach of the implied promise to honour the award, and it was for the Hong Kong courts to apply that law in assessing quantum in the common law enforcement action. The award debtors' pursuit of the Xiamen court proceedings was a blatant attempt to use foreign court proceedings to interfere with, undermine and frustrate the process of the Hong Kong courts and hamper the enforcement of the award in Hong Kong. The Xiamen court proceedings had been instituted in bad faith, and their commencement and pursuit by the award debtors was vexatious, oppressive, and an attempt to evade the judgments of the Hong Kong courts.
The court also made a finding of issue estoppel on the basis that the award debtors' pursuit of the Xiamen court proceedings was an improper attack upon the Hong Kong courts' repeated findings that the award creditor's damages claim was a common law action to enforce the award based on Hong Kong law, not a claim to enforce the underlying contract, and an attempt to relitigate both the underlying dispute determined by the tribunal and the issue determined by the Hong Kong courts, namely, how the award should be enforced.
Accordingly, the court granted an anti-suit injunction requiring the award debtors to discontinue the Xiamen court proceedings immediately and in any event by the date of the scheduled substantive hearing in those proceedings. The court awarded costs against the award debtors on the indemnity basis in light of the findings of vexatious and oppressive conduct and relitigation of previously determined issues.
From a comity perspective, the court emphasised that its findings concerned the award debtors' conduct in bringing and pursuing the Xiamen court proceedings, and the court was not expressing any view on those proceedings or PRC law themselves. It also observed that it was clearly conducive to comity for the Hong Kong court to stop a person over whom it had jurisdiction from misusing foreign court proceedings, especially when that person was acting with the improper motive of using the foreign proceedings in a manner contrary to comity in order to attack the Hong Kong court's judgments and proceedings.
The decision illustrates the readiness of the Hong Kong courts to act decisively in appropriate circumstances not only to uphold arbitration agreements but also to safeguard the enforcement of awards rendered pursuant to them. In addition to granting an anti-suit injunction to restrain the Xiamen court proceedings in the present case, the court had previously also granted an anti-arbitration injunction to restrain certain claims in relation to compensation and loss advanced by the award debtors in a new CIETAC arbitration, on the basis that they did not fall within the scope of the arbitration agreement and had already been determined by the Hong Kong courts in the context of the common law enforcement action (reported here).
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