Hong Kong Court Of Appeal Rules That Hearing Of Award Challenge Can Be Conditional On Compliance With Prior Anti-suit Injunction

The Hong Kong Court of Appeal has refused to review a first instance decision preventing an award debtor from proceeding with an application to set aside an HKIAC award until it cured its non-compliance with a prior anti-suit injunction (RusChemAlliance v. Linde [2026] HKCA 763).

The Court of Appeal rejected an argument that such an order impermissibly curtailed the award debtor's constitutional right of access to the courts, noting that this depended on the award debtor's compliance with the anti-suit injunction and therefore lay within its own power or control.

The decision is a reminder that the ability of dissatisfied award debtors to challenge awards before the Hong Kong courts is not necessarily unqualified and may be subject to limitations depending on circumstances (see "Comment" section below for further details).  It also illustrates the readiness of the Hong Kong courts to uphold not just arbitration agreements but also anti-suit injunctions granted in support of them.

Background

The underlying dispute arose from a project to build a gas processing complex in Russia.  The Russian complex owner and the German contractor concluded an EPC contract providing for HKIAC arbitration seated in Hong Kong.  Following the imposition of EU sanctions relating to Russia, the contractor suspended work on the project.

The owner purported to terminate the contract, obtained freezing relief in Russia, and commenced Russian court proceedings against the contractor and its parent company (which had guaranteed the contractor's obligations).  The contractor and its parent company commenced HKIAC arbitrations in Hong Kong (which were later consolidated) and obtained an interim anti-suit injunction from the Hong Kong court (reported here), which was subsequently made permanent.

The owner nevertheless obtained a Russian judgment against the contractor and its parent company for approximately EUR 693 million and RUB 44.5 billion.  The Russian appellate court later upheld that judgment.

The tribunal in the Hong Kong arbitration issued a partial award dismissing a jurisdictional challenge by the owner and declaring that the owner had breached the arbitration agreements by obtaining freezing relief and commencing proceedings in Russia. 

Subsequently, the HKIAC upheld a challenge by the owner to the presiding arbitrator on the basis that there were circumstances which ought to have been disclosed but were not disclosed which gave rise to justifiable doubts as to his independence and impartiality.  A substitute presiding arbitrator was therefore appointed. 

The owner then applied to the Hong Kong court to set aside the partial award under the public policy ground on the basis of bias or apparent bias.

The Hadkinson order

The contractor and its parent company applied to the Hong Kong Court of First Instance for an order that the owner's set-aside application should not be heard unless and until the owner had taken all reasonable and practical steps to fully comply with relevant paragraphs of the anti-suit injunction.  This is an example of a "Hadkinson" order, by which the court may refuse to hear a party that is in breach of a prior court order until that party has complied. 

The Court of First Instance applied the five conditions for a Hadkinson order identified in CCMJ v. SSM (formerly known as SKL) [2022] HKCA 173, being that: (i) the respondent to the application is in contempt of court; (ii) the contempt is deliberate and continuing; (iii) as a result, there is an impediment to the course of justice; (iv) there is no other realistic and effective remedy; and (v) the order is proportionate to the problem and goes no further than is necessary.

The judge held that those conditions were satisfied, and granted the Hadkinson order with indemnity costs against the owner.  He also provided the owner with an opportunity to file evidence demonstrating compliance with the anti-suit injunction.

Subsequently, the judge refused an application by the owner for leave to appeal and a stay of the Hadkinson order pending appeal.  The owner then renewed those applications before the Court of Appeal.

Decision of the Court of Appeal

The Court of Appeal dismissed the owner's renewed application for leave to appeal and its application for a stay of the Hadkinson order.  The Court of Appeal's reasoning reflected the following key propositions:

1. Restricted ambit for appellate interference.  As a preliminary point, the Court of Appeal held there to be "no doubt" that a decision to make (or refuse to make) a Hadkinson order involved an exercise of the court's discretion.  The well-known principles governing an appeal against such a decision therefore applied.  The Court of Appeal would not intervene unless the appellant established that the judge had exercised his discretion under a mistake of law or misdirected himself with regard to the applicable legal principles, or had misapprehended material facts, or had taken into account irrelevant matters or failed to take relevant matters into account, such that the judge's conclusion was plainly wrong and outside the generous ambit within which reasonable disagreement was possible.
2. No positive duty of court to determine challenge on public policy ground.  The owner argued that the Hong Kong court had a positive duty under Article 34(2)(b)(ii) of the UNCITRAL Model Law to consider whether the partial award was tainted by bias and thus contrary to public policy, such that it should be set aside.  The Court of Appeal rejected both that proposition and the proposition that any such duty would override the court's power to make a Hadkinson order where the relevant conditions were satisfied, and emphasised that the power of the court to set aside an award under Article 34(2) of the Model Law was permissive rather than mandatory.
3. No disproportionate interference with right of access to court.  The owner contended that the "draconian" nature of a Hadkinson order in taking away a litigant's constitutional right of access to court meant that it should only be granted in cases of abuse of process and would only be justified by grave considerations of public policy.  In the present case, the owner said the order went further than necessary and disproportionately impaired its constitutional right of access to the court.  The Court of Appeal rejected that argument.  The owner's ability to gain access to the court and pursue the set-aside application depended on its compliance with the relevant paragraphs of the anti-suit injunction, which was within the owner's own power or control.
4. No requirement for "sufficient nexus or connection" or "direct link" between contempt and barred proceedings.  The owner contended that, for the purpose of showing an impediment to the course of justice, there must be a "sufficient nexus or connection" between the contempt and the barred proceedings, and further argued that there was "no direct link" between its non-compliance with the anti-suit injunction and the application to set aside the award.  The Court of Appeal rejected those arguments, holding that (i) a sufficient nexus or connection between the contempt and the barred proceedings is not a condition for a Hadkinson order, and (ii) whether there is a sufficient nexus or connection is only a factor to be taken into account in considering whether the contempt impedes the course of justice.
5. Impediment to course of justice as result of contempt established.  The Court of Appeal held that the contempt in the present case arose from the owner's continued pursuit of the Russian court proceedings, and the arbitration concerned the same substantive matter as those proceedings (namely, the right of the contractor to terminate the contract).  Moreover, it had been open to the judge to find (and there was no basis for the Court of Appeal to interfere with that finding) that there was a "sufficient nexus or connection" because the anti-suit injunction and the partial award being challenged were based on or closely related to the same subject matter, namely, findings as to an arbitration agreement covering the dispute.  The judge had also been entitled to take the view that the owner's breach of the anti-suit injunction was an impediment to the course of justice because it undermined the enforcement of the Hong Kong court's orders in the anti-suit proceedings and prejudiced the contractor and its parent company in a way which impeded the course of justice from the standpoint of Hong Kong law.
6. Indemnity costs upheld.  The Court of Appeal rejected an argument by the owner that the first instance judge had wrongly applied the default rule of indemnity costs in arbitration set-aside cases.  Rather, the judge had ordered indemnity costs because of the owner's deliberate and continuing contempt, for which the judge plainly did not accept there was any valid excuse.  It was open to the judge to take a serious view of that conduct and conclude that indemnity costs were justified, and there was no basis for the Court of Appeal to interfere with that exercise of discretion.

Comment

Dissatisfied award debtors do not have an absolute right to challenge awards before the Hong Kong courts at any time and in any circumstances.  The legal grounds for challenge are narrow and limited, there is a strict 3-month deadline for applications to set aside awards under Article 34 of the UNCITRAL Model Law, and an award debtor can (where the applicable conditions are met) be ordered to pay security for costs as a condition of proceeding with their challenge.

The power of the Hong Kong courts to make award challenges conditional upon the curing of prior breaches of court orders is consistent with that framework.

The Court of Appeal's decision confirms the ability and willingness of the Hong Kong courts to make such an order in set-aside applications, even where the challenge is advanced under the public policy ground on the basis of bias.  It would follow from the Court of Appeal's reasoning that the same would apply to other challenges based on the public policy ground.

Accordingly, a party seeking to challenge an award before the Hong Kong courts should not assume that it will necessarily have an unqualified right to a hearing if it remains in breach of an earlier court order.

It is notable that the set-aside application in the present case was mounted after the HKIAC upheld a challenge to the presiding arbitrator on the basis of apparent bias.  Successful arbitrator challenges in HKIAC arbitrations are rare, with only four challenges having been made in 2025, none of which were successful (as reported here).