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DMC/SandTArbnSandT/10/262 Hong Kong
'''Parakou Shipping Pte Ltd v Jinhui Shipping and Transportation Ltd and others'''
'''Summary'''
The Court held that its abuse of process jurisdiction can be extended to prevent a party from mounting in a subsequent litigation an illegitimate collateral attack against a previous arbitration decision. Courts will scrutinise the facts of each case carefully to see if there exists any manifest unfairness or the potential to bring the administration of justice into disrepute by allowing the litigation to proceed. In the present case, each of the defendants was the alter ego of the other. They were also related parties to Galsworthy, who took part in a previous arbitration London against the plaintiff. In this litigation, the plaintiff was essentially mounting a challenge against part of the arbitral decision. This constituted an illegitimate collateral attack on the arbitral decision, and thus an abuse of process. The plaintiff’s claim was accordingly struck out.[See now Update at the foot of this note.]
This note has been contributed by Ken Lee To-ching, LLB(Hons), PCLL (University of Hong Kong), BCL(Oxon) and pupil barrister in Hong Kong.
'''Update: '''
The Plaintiff’s action in this case was secured by a bank guarantee and by a payment into court. After the Plaintiff’s claim was struck out, the trial judge, Reyes J, refused to stay the payment to the Defendant of the money in court, subject to a retention of US$1.5 million in court and the Defendant’s undertaking to pay into court any sum recovered from the Plaintiff. On 17 November 2010, the Hong Kong Court of Appeal (Tang Ag CJHC and Andrew Cheung J; CACV225/2010) dismissed an appeal by the Plaintiffs of the refusal to stay. The Court was of the view that the order of Reyes J provided sufficient security protection for the Plaintiff when the case was under appeal. Further, it commented that so far, the Plaintiff had not shown a good prospect of success.
(KL 15 December 2010)
