In the latest instalment of the long-running dispute between Astro and Lippo, the Hong Kong Court of Appeal (CA) has dismissed Lippo’s appeal against a 2015 first instance decision allowing the enforcement of five arbitral awards, despite a ruling of the Singaporean courts refusing enforcement on the basis that the arbitral tribunal had acted outside its jurisdiction in making the awards. Although it upheld the first instance decision, the CA notably disagreed with the High Court’s finding that Lippo did not act in good faith and reflected this in its award of 60% costs to Astro.
At first instance the judge found that First Media had not acted in good faith because it had not challenged the tribunal’s ruling on its jurisdictional objection in the Singapore courts at the time of the arbitration, but had proceeded with it and only decided to revisit this point to challenge the enforcement of the award in Hong Kong. The CA disagreed, and found that First Media had acted in good faith as it had made an objection contemporaneously and had subsequently acted in accordance with the law of the seat of arbitration without waiving its rights. The first instance judge had also erred in failing to place sufficient weight on the findings of the supervisory court of the seat of arbitration (the Singapore courts). First Media was entitled to proceed with the arbitration and reserve its rights to resist enforcement despite not challenging the jurisdictional ruling pursuant to the ‘choice of remedies’ principle underlying the relevant Singaporean statute. Good faith and the ‘choice of remedies’ principle were not mutually exclusive but complementary. The CA also criticized the first instance judge’s approach to considering good faith in the exercise of his discretion under section 44(2) of the Arbitration Ordinance (Cap 341).
However the CA dismissed the appeal due to the “very substantial” delay in First Media’s application for an extension of time for its setting-aside application (14 months where the statutory limit was 14 days) and because the judge at first instance had not impropertly exercised his discretion by taking into account irrelevant matters, nor had he reached a “plainly wrong” conclusion.
Consequently, this decision makes clear that Hong Kong courts will generally respect decisions made by courts exercising supervisory jurisdiction at the seat of an arbitration. However, the impact of the ruling remains a cautionary tale for award debtors who do not challenge orders to enforce awards in time.
To read the full briefing, please click here.