HK Court Confirms Position on Impact of Time Bars on Award Enforcement

In an earlier post, we reported the judgment in CL v SCG [2019] HKCFI 398, where the Court considered that there was no provision in the Arrangement Concerning Mutual Enforcement of Arbitral Awards or the Limitation Ordinance that the limitation period should not run while a successful party seeks to enforce an award in China.

A subsequent judgment confirmed the position.

In Wang Peiji v Wei Zhiyong [2019] HKCFI 2593 (24 October 2019), the Court set aside an order enforcing a Mainland award on the ground that the application to enforce was time barred. The Court held that it was immaterial that the Mainland award was under seal; what was important was that the underlying contract was not under seal, and as such, a limitations period of 6 years applied pursuant to s.4(1)(c) of the Limitations Ordinance (rather than 12 years under s.4(3)).

The Court upheld the decision in CL v SCG, stating [24]:

“As to the plaintiff’s submission that time limits should be suspended, I am not persuaded by Ms Yeung’s efforts to distinguish CL v SCG. The passage cited above from that case (see §13), is entirely clear and correct in my view, namely, that Hong Kong law (including the Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region) does not provide for time limits to be suspended while the successful party attempts enforcement on the Mainland. I note that both this case and the case of CL v SCG were based upon the provisions of the Arbitration Ordinance (Cap. 341) and there is nothing in that Ordinance (including sections 2GG and 40C) that would lead me to conclude otherwise.”

See the review of this case by Herbert Smith Freehills, who conclude that:

“The case serves as a reminder to pay close attention to limitation periods. In deciding where to bring enforcement proceedings, parties should consider not only the value of the defendant’s assets in a particular jurisdiction, but also the effect that the length of enforcement proceedings could have on their ability to enforce in other jurisdictions. Parties and their legal advisers must consider all relevant factors when assessing where to enforce.”

About Phillip Rompotis

Phillip practices as a barrister and arbitrator in Hong Kong. He has over 25 years’ litigation and arbitration experience in commercial disputes relating to construction & engineering, financial services, joint venture & shareholders agreements, technology, trusts, property and landlord & tenant. He is a Fellow of the Chartered Institute of Arbitrators, the Singapore Institute of Arbitrators, the Malaysian Institute of Arbitrators, and a member of various lists/panels of arbitrators.

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