Herbert Smith Freehills review the Hong Kong Court of Appeal’s decision in the long-running proceedings in Xiamen Xinjingdi Group Co Ltd v Eton Properties Ltd [2016] 2 HKLRD 1106 and Xiamen Xinjingdi Group Co Ltd v Eton Properties [2018] HKCFI 910. CA has held that, when parties enter into an arbitration agreement, they make an implied promise that they will honour the terms of any subsequent arbitral award.
The authors observe that if parties fail to honour the terms of an arbitral award, they may breach their implied promise at common law and that this breach constitutes a cause of action for which the Hong Kong courts may grant a range of remedies, even though these remedies may differ from those provided in the original arbitral award. This common law action therefore provides aggrieved parties with an alternative avenue, when enforcement of the original award (through the traditional statutory process) becomes impossible. These proceedings also confirm the Court’s statutory power to stay proceedings before it, provided the stay is fair and just in all the circumstances.
