Overview of Five Recent Arbitration Cases

Hong Kong’s arbitration landscape saw significant developments over the past 12 months, with the courts delivering important rulings on key procedural and substantive issues. From challenges to awards to jurisdictional disputes, these decisions continue to shape the future of arbitration in the region.

We have analysed five important cases that offer critical insights—here’s what you need to know.

1) Arbitration agreement can bind or assist non-signatories

The Hong Kong Court has held that non-signatories to an arbitration agreement may be bound by – or may rely on – the agreement in certain circumstances.  In two decisions handed down by the Court of First Instance (in the same proceedings) on 11 and 24 February 2025, the Court ruled that the elements concerning a stay of legal proceedings in favour of arbitration were satisfied, even though the plaintiff (in the 1^st Decision) / defendant (in the 2^nd Decision) were non-signatories.

Facts:

TrueCoin was a cryptocurrency platform that allegedly developed “stablecoins” and had established escrow accounts with third-party banks allowing it to maintain sufficient reserves of USD fiat currency. In December 2020, Techteryx purchased the cryptocurrency business from TrueCoin. 

In November 2023, TrueCoin commenced arbitration proceedings in Singapore against Techteryx for the outstanding payments under the transaction agreements. 

Shortly thereafter, Techteryx commenced legal proceedings in Hong Kong alleging inter alia that it was induced into purchasing the business by fraudulent representations, including that sufficient reserves were maintained in the escrow accounts.  The defendants to the proceedings included TrueCoin, a financial adviser (Crossbridge) and an individual director of TrueCoin (Alex).  As Techteryx brought its claims as the beneficiary of a trust, the trustee (Legacy Trust, a signatory) was also joined as a defendant.

In December 2024, Techteryx consented to TrueCoin’s application to stay the Hong Kong proceedings in favour of the SIAC arbitration. 

In the 1^st Decision, Crossbridge and Legacy Trust were signatories to the subject arbitration agreement, whereas Techteryx was not.  Crossbridge nevertheless sought to rely on the arbitration agreement to stay the Hong Kong proceedings as between itself and Techteryx (albeit a non-signatory) in favour of arbitration. 

In the 2^nd Decision, Techteryx and TrueCoin were signatories to the subject arbitration agreement (which is different from that in the 1^st Decision), whereas Alex was not.  Alex nevertheless sought to rely on the arbitration agreement to stay the Hong Kong proceedings as between himself (albeit a non-signatory) and Techteryx in favour of arbitration.

1^st Decision – Techteryx Ltd v. Legacy Trust Company Limited & Others [2025] HKCFI 665

This concerns Crossbridge’s application for inter alia a declaration that the Hong Kong Court has no jurisdiction in respect of Techteryx’s claim, and alternatively that the proceedings as between Techteryx and Crossbridge should be stayed in favour of SIAC arbitration. 

Applying section 20 of the Arbitration Ordinance, the Court had to inter alia determine whether Techteryx (a non-signatory) was bound by the arbitration agreement as a matter of Singapore law (the governing law).  After considering the parties’ expert evidence on Singapore law, the Court reasoned that as Techteryx’s claims (as beneficiary) are in substance claims brought on behalf of Legacy Trust and to enforce a contract between Legacy Trust and Crossbridge, it arguably follows that Techteryx has stepped into the shoes of Legacy Trust and should accept that its claims are subject to the arbitration agreement.

Thus, the Court granted the declaratory relief sought and held that it would have granted Crossbridge’s stay application had this been the primary (instead of alternative) relief sought.

2^nd Decision – Techteryx Ltd v. Legacy Trust Company Limited & Others [2025] HKCFI 787

Alex sought to stay the proceedings on the basis that Techteryx’s claims against him arise from his capacity as agent of TrueCoin, in assisting TrueCoin to enter into the transaction documents with Techteryx. 

Upon considering the parties’ expert evidence on Delaware law (the governing law), the Court held that there was a prima facie case that Techteryx’s claims against Alex are “intimately founded and intertwined with” TrueCoin’s underlying contractual obligations under the transaction documents, and that there is a close relationship between Alex (non-signatory) and Techteryx and TrueCoin (signatories), such that Techteryx is bound to arbitrate its claims against Alex. 

Hence, the Court was satisfied that Techteryx’s claims against Alex fall within the ambit of the arbitration clause and ordered to stay the action to arbitration.

Takeaway:

(1) Where a plaintiff (non-signatory) is acting in its capacity as a beneficiary to sue a third party (signatory) for damages on behalf of a trustee (signatory), the third party can consider applying to stay the proceedings in favour of arbitration.

(2) Similarly, where claims against a non-signatory defendant are inextricably related to and connected with the plaintiff’s (signatory) claims against a signatory defendant, the non-signatory defendant may ask the Court to stay the action to arbitration.

(3) However, it remains to be seen whether any restrictions or conditions may be imposed by the Court when faced with such a request for stay.

(4) As both the 1^st and 2^nd Decisions involve a respondent proactively seeking to rely upon the arbitration agreement, it will be interesting to note whether this can also be used as a double-edged sword, i.e. whether a non-signatory can be forced to arbitrate claims against it as respondent.

2) Tribunal’s description of an interim decision as an “award” does not make it an award

Section 6 of Schedule 2 to the Arbitration Ordinance (“Ordinance”) allows a party to appeal against an arbitral award on questions of law.  Leave to appeal is only granted if the Court is satisfied inter alia that the decision of the question will substantially affect the rights of one or more of the parties.  In W v Contractor [2024] HKCFI 1452, the Court needed to determine whether there was an “award” to appeal in the first instance.

Facts:

In November 2023, the tribunal granted an application for interim measures sought by the Defendant (as claimant in the arbitration) (“Main Contractor”), restraining the Plaintiff (as respondent in the arbitration) (“Employer”) from making any demand to a specified bank for payment under a Bond issued by the bank under the underlying construction contract between the Employer and the Main Contractor.  The Tribunal’s decision was titled “Award and Reasons In Respect of Applications for Interim Measures” (“Decision”).

The Employer’s appeal was based on the ground that the arbitrator erred in law in granting the Award. 

Decision:

The Court dismissed the application for leave to appeal as the Decision was not an “award” from which the Employer could seek leave to appeal to the Court.  The Court reached this conclusion after considering (i) the nature and substance of the issues decided in the Decision; (ii) the form of the Decision; and (iii) the fact that the injunction granted in the Decision is interim in nature.

Takeaway:

(1) Even though the arbitrator may decide to record his decision in the form of an “award”, and Article 17(2) of the UNCITRAL Model Law expressly empowers the tribunal to order interim measures “in the form of an award”, the Court is concerned with substance and not with the form (or any name or label which may be given to the arbitral decision).

(2) In W v Contractor, an application for interim measures was made (under Articles 17 and 17A of the Model Law) to maintain or restore the status quo between the parties pending the conclusion of the resolution of the substantive dispute (i.e. the validity of a demand made on the Bond) in the arbitration, or until further orders from the tribunal.  Thus, the Decision (on the application) could be varied and was subject to any further order which might be made by the arbitrator and was not final.  In any event, the arbitrator did not decide on the parties’ substantive rights or liabilities under the underlying construction contract.

(3) In summary, an interlocutory order (including an interim injunction) granted by the tribunal is not an “award” that can be subject to an appeal to the Court under sections 5 and 6 of Schedule 2 to the Ordinance.

3) Default judgment set aside despite 1.5-year delay so dispute could be stayed to arbitration

Pursuant to Section 20 of the Ordinance, a party to legal proceedings can apply for the proceedings to be stayed to arbitration if the dispute is the subject of an arbitration agreement.  Tongcheng Travel Holdings Limited v OOO Securities (HK) Group Limited [2024] HKCFI 2710 is a case where the Defendant successfully relied on Section 20 of the Ordinance to set aside a final judgment and stay the proceedings to arbitration.

Facts:

The Plaintiff commenced legal proceedings against the Defendant seeking, inter alia, a declaration that an investment management agreement between the parties (“IMA”, whereby the Defendant agreed to manage certain assets belonging to the Plaintiff) had been terminated, and that the assets should thereby be returned to the Plaintiff.

Immediately after the Plaintiff’s commencement of legal proceedings (“HCA 1258”), the Defendant commenced legal proceedings in a separate action (“HCA 1266”) against the Plaintiff seeking, inter alia, declaratory relief that the IMA remained in full force and effect.  However, the Defendant never served the Writ in HCA 1266 on the Plaintiff and therefore the HCA 1266 matter did not progress.

As the Defendant did not take any steps to defend the proceedings in HCA 1258, the Plaintiff subsequently obtained default judgment against the Defendant. The Defendant only applied to set aside the default judgment and to stay the proceedings more than 1.5 years after the Plaintiff’s commencement of proceedings.  

As regards the relevant clauses of the IMA, the arbitration clause provides for the parties’ reference of disputes to “the relevant legally authorized body in Hong Kong for arbitration” (“Clause 11.3”).  Another – apparently conflicting – clause provides for the parties’ submission to the exclusive jurisdiction of the Hong Kong courts (“Clause 11.2”).

Decision:

The Court exercised its discretion to allow the Defendant to set aside the default judgment and to stay the proceedings to arbitration.

Takeaway:

(1) Where both an application to stay the action to arbitration and an application to set aside a default judgment have been filed, the Court’s approach is as follows: (i) if the stay application is successful, the default judgment should generally be set aside and the Court does not need to consider the merits of the defence; on the other hand (ii) if the Court refuses to grant the stay application, the defendant will need to show that its defence has a real prospect of success before the Court would consider setting aside the default judgment.

(2) When determining whether to grant a stay application, the Court should consider, inter alia, whether (i) the arbitration clause is an arbitration agreement; and (ii) the arbitration agreement is null and void, inoperative or incapable of being performed.  If the answer to (i) is “no” and/or the answer to (ii) is “yes”, no stay will be granted.

(3) On item 2(i), the Court in Tongcheng held that even if the HKIAC were not the “relevant and legally authorized body in Hong Kong” referred to in the IMA’s arbitration clause, the parties had clearly expressed the intention to arbitrate in Hong Kong, which was sufficient and adequate for there to be a valid arbitration agreement.  In short, the answer to item 2(i) is “yes”.

(4) As for item 2(ii), it was held that Clause 11.2 and Clause 11.3 could be reconciled to mean that the Hong Kong Court was to have supervisory jurisdiction over the arbitration in Hong Kong.  In short, the answer to item 2(ii) is “no”. 

(5) The Plaintiff also argued that the Defendant, by commencing separate legal proceedings against the Plaintiff, had already submitted its “first statement on the substance of the dispute” within the meaning of Article 8(1) of the UNCITRAL Model Law, such that a stay should not be granted by the Court.  However, the Court held that the Defendant’s commencement of separate proceedings could not be treated as the Defendant’s statement on the “substance” of the dispute, given that (i) the statement should be in the same (not a separate) action commenced by the Plaintiff; and (ii) the Defendant had not substantively pleaded inter alia why the Plaintiff was not entitled to terminate the IMA.

(6) For inter alia the reasons stated in paragraphs 3 to 5 above, the Court granted a mandatory stay of the action to arbitration. The Court then exercised its discretion to allow the application to set aside the default judgment notwithstanding a 1.5-year delay as (i) there had been a major change of control in the Defendant’s shareholding and management after the Plaintiff’s service of the Writ; and (ii) the Court considered that the Defendant had a defence with a real prospect of success.

(7) In summary, unless a defendant relying on Section 20 of the Ordinance has good reason for delay in filing a stay application and setting aside application, he should do so promptly.  It is reasonable for the party to expect that the Court will grant the applications, even if (i) the arbitration clause appears to refer to a non-existent organisation; (ii) there are apparently conflicting dispute resolution clauses in the arbitration agreement; and (iii) he has already responded (in a non-substantive manner) to the legal proceedings filed by the plaintiff.

4) CFI dismissed award debtors’ challenge on the basis of arbitrator’s alleged bias

Facts:

In TGL v SDC and LTH [2024] HKCFI 1796 the award debtors sought to set aside the enforcement order made by the Hong Kong Court in respect of the arbitral award issued by the Shenzhen Court of International Arbitration (“SCIA”). The primary ground relied on was that one of the arbitrators failed to disclose his relationship with the relevant companies associated with the award creditor and that there was apparent bias on the part of this arbitrator. 

Examples of such “relationship” included (i) the arbitrator speaking at a conference on the invitation of a company that is “loosely associated” with the award creditor; (ii) the arbitrator’s law firm acting for the award creditor’s sister company in Mainland proceedings; (iii) the arbitrator’s law firm securing a contract for conducting legal due diligence by the “corporate grandparent” of the award creditor (following the issue of the arbitral award); and (iv) the arbitrator’s former law firm representing the award creditor’s parent company in a construction dispute at an unspecified time. 

Decision:

In the Court of First Instance, the Honourable Madam Justice Mimmie Chan dismissed the award debtors’ application.  She held that there was no persuasive or reasonable link between the arbitrator’s possible ties to the award creditor and any risk of bias or undue influence on the arbitration outcome.

Takeaway:

(1) Test for determining apparent bias: whether an objective fair-minded and informed observer, having considered the relevant facts, would conclude that there was a “real possibility” that the tribunal/arbitrator was biased. 

(2) Her Ladyship also considered the earlier ruling of the Shenzhen Intermediate People’s Court (the supervisory court of the arbitration), which rejected the award debtors’ application to set aside the award.  The Shenzhen court found no evidence of conflict of interest that could have compromised the arbitrator’s impartiality or warranted disclosure under the SCIA Rules.

(3) The award debtors sought leave to appeal the CFI decision.  While not convinced that the award debtors have reasonable prospects of success, Mimmie Chan J nevertheless granted leave because the question of an arbitrator’s ongoing duty to make disclosure throughout an arbitration is of importance, and a decision from the Court of Appeal would benefit the arbitration community.

(4) With the release of the IBA Guidelines on Conflicts of Interest in International Arbitration in 2024, we believe that the issue of arbitrators’ conflicts and disclosure will continue to be addressed and scrutinised.

5) The Court is empowered to order security for costs against an award debtor who seeks to set aside the arbitral award

SA and Others v. BH and Another [2024] HKCFI 1357 concerns an application for security for costs.  This was the first occasion where a party challenged the Court’s jurisdiction to order such security from a party seeking to set aside a Hong Kong arbitration award (as opposed to situations where security is sought against a party opposing enforcement of a Hong Kong arbitral award when the other party has obtained leave to enforce the award). 

Facts:

The arbitration proceedings stemmed from a dispute regarding a joint venture project to develop and launch a communication satellite in Africa.  All parties involved are foreign companies and individuals residing overseas.

The Plaintiffs – the respondents in the arbitration – were found by the tribunal to have breached the shareholders’ agreement and deemed liable for damages.  They applied to the Hong Kong Court to set aside the arbitral award on several grounds, including that the subject matter of the arbitration falls within the scope of the then newly effected National Security Law, and therefore cannot be settled by arbitration.  The 1^st Defendant (an award creditor) applied for security for costs against the Plaintiffs (i.e. award debtors).

Decision:

The Court ordered security to be furnished by the Plaintiffs for the 1^st Defendant’s costs (the reasonable amount of costs for 2 days’ substantive hearing of the setting aside application would be HK$2 million), and that the proceedings be stayed pending payment into Court. 

Takeaway:

(1) The Court has power to order security for costs in setting-aside arbitral award cases – a matter that applicants in such applications should keep in mind. 

(2) Factors taken into account by the Court in granting security for costs in this context include:

• Assets: The Plaintiffs’ (being ordinarily resident outside of the jurisdiction) shareholding in the joint venture company (an offshore company) does not constitute assets within the jurisdiction of Hong Kong which are “readily realizable or transferable”.

• Merits: The merits of the award debtors’ claim that the subject matter of the arbitration is not arbitrable does not have “a high degree of probability of success”.  The award debtors had never raised the arbitrability issue before the tribunal during the arbitration.

• Conduct: The award debtors’ conduct was previously described by the arbitral tribunal as “dishonest and egregious”.

Sunny Hathiramani, Ling Meng and Daniel Li

If you would like to discuss any of the matters raised in this article, please contact:

Sunny Hathiramani

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The above is not intended to be relied on as legal advice and specific legal advice should be sought at all times in relation to the above.