A v. B

At a glance

Parties

A (applicant, award creditor) v. B (respondent, award debtor)

Case no.

HCCT 35/2021; [2022] HKCFI 607

Court

Court of First Instance, High Court of the Hong Kong SAR (Mimmie Chan J, in Chambers)

Underlying award(s)

Netherlands Arbitration Institute: Jurisdiction Award of 7 November 2017 and Award of 20 December 2019

Forum and rules

Enforcement under the Arbitration Ordinance (Cap 609), s. 87 and RHC Order 73 r. 10(1)(d); New York Convention

Treaty

None. Arbitration clause (clause 12.2) of the 2014 Licence, governed by Dutch law

Sector

Technology; software licensing

Outcome

Enforcement proceedings adjourned until the Dutch setting-aside proceedings are decided; no security ordered; the claim of material non-disclosure rejected.

Amount

Award: US$115,618,213 in damages, excluding interest and costs (valued at about US$130 million). Security sought: refused. Costs of both summonses in the cause of the set-aside application, with certificate for 2 counsel.

The dispute

A, a Dutch technology company and a subsidiary of ANV, licensed its OEx location-based services platform to JV for use on the Mainland. B, a Hong Kong company in the Mainland B Group, held 60% of JV. A 2014 Licence between A and JV contained a clause for Netherlands Arbitration Institute arbitration. B and ANV signed the Licence under the words "Acknowledged and Agreed". In an arbitration begun by A and ANV in January 2016, the tribunal held that B was a party to the Licence and its arbitration agreement. It held B liable for breaching negative duties under the Licence and in tort for facilitating BSub's unlicensed use of the software, and awarded A US$115,618,213. B applied to the Amsterdam Court of Appeal to set aside both awards. When A obtained leave to enforce in Hong Kong, B applied to set aside the enforcement order, arguing that it was never a party to the arbitration agreement, or alternatively for an adjournment. A asked for security as a condition of any adjournment.

Key holdings

1. The Court cannot conclude that the Jurisdiction Award's finding of an arbitration agreement binding B is "manifestly valid". This applies both to the tribunal's plain-meaning reading of the "Acknowledged and Agreed" signature block and to its treatment of the Licence's bilateral wording as "artifacts" of the 2011 Licence. B's Dutch setting-aside application has realistic prospects of success and is not fanciful. ¶ 46
2. Nor is the jurisdiction decision "manifestly invalid", so immediate setting aside of the enforcement order is not justified. The Licence is governed by Dutch law, and the Dutch courts are the more competent forum to decide whether B consented to arbitration and waived its right of access to the courts. ¶ 47
3. The enforcement proceedings are adjourned until the Dutch Setting Aside Proceedings are decided. Following NJSC Naftogaz v PJSC Gazprom, the Court did not take into account any delay from further appeals to the Netherlands Supreme Court. ¶¶ 48, 53
4. No security is ordered. The claimed risk of dissipation or restructuring after B Corp's delisting from NASDAQ is speculative. B's Hong Kong assets stayed stable. A already holds a BVI provisional charging order over shares worth more than the award. B's Confirmation (28 days' notice before any dealing in its shares in BBVI, BHK or I Listco) adequately protects A. The focus is on preserving assets within the enforcement jurisdiction. ¶¶ 57–68
5. No material non-disclosure. A's US fraud and racketeering action against B was not material to the ex parte grant of leave to enforce. That decision is mechanistic and turns on the exhaustive grounds in section 86 of the Arbitration Ordinance. ¶ 70
6. The Confirmation is to be included in the Order on A's summons, recording that no security was ordered on that basis. Costs order nisi: costs of both summonses in the cause of the set-aside application, with certificate for 2 counsel. ¶¶ 72–73

Procedural history

1. January 2016A and ANV commence NAI arbitration against JV and B under the 2014 Licence.
2. 7 November 2017Jurisdiction Award: the tribunal holds that it has jurisdiction over B and JV, but not over B Corp.
3. 20 December 2019Final Award: B is ordered to pay A US$115,618,213 in damages, excluding interest and costs.
4. 20 March 2020B applies to the Amsterdam Court of Appeal to set aside both awards.
5. 14 April 2021The Hong Kong Court grants A leave to enforce the Award (application filed on 1 April 2021).
6. 29 April 2021B applies to set aside the Enforcement Order or, alternatively, for an adjournment. A seeks security by summons of 3 June 2021.
7. 6 December 2021The BVI Court grants A a provisional charging order over B's shares in BBVI.
8. 15–16 December 2021Hearing before Mimmie Chan J.
9. 1 March 2022Decision: enforcement adjourned pending the Dutch proceedings; security refused. The published documents do not show the outcome of the Dutch proceedings. A 2007 Italian Corte di Cassazione judgment listed with this case concerns unrelated parties.

Tribunal, counsel and experts

Decided by

• Mimmie Chan Judge, Court of First Instance, High Court of the Hong Kong SAR

For the claimant

Reynolds Porter Chamberlain

For the respondent

Stevenson, Wong & Co

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Keywords

• enforcement
• adjournment pending set-aside
• security for adjournment
• New York Convention
• Hong Kong Arbitration Ordinance
• Netherlands Arbitration Institute
• non-signatory
• Acknowledged and Agreed
• existence of arbitration agreement
• Soleh Boneh
• Naftogaz v Gazprom
• dissipation of assets
• material non-disclosure
• software licence
• VIE structure
• Dutch law
• Amsterdam Court of Appeal

Summary generated with AI from the published documents — refer to the award for the authoritative text.