PLAINTIFF SEEKS CONTINUATION OF FREEZE ORDER IN AID OF PROSPECTIVE AWARD AND JUDGMENT PENDING ARBITRATION IN HONG KONG
Formerank Ltd v Luo [2020] NSWSC 1641 (18 November 2020)
Plaintiff seeks extension of the freeze order granted by the court in relation to the Australian Assets of the defendant in aid of prospective award and judgment in pending arbitration in Hong Kong.
Facts:
The plaintiff, Formerank Ltd, is a company incorporated in the Hong Kong Special Administrative Region of the People’s Republic of China. The defendant, Mr Luo, is a businessman based in Xiamen in the PRC as well as a permanent resident in Hong Kong.
Formerank entered into contracts with Tak Yun for the supply of electronic products (“the Agreements”). Mr Luo guaranteed Tak Yun’s obligations under the Agreements. Each of the Agreements is subject to the law of Hong Kong and each contains a submission to arbitration under the HKIAC Rules and under the laws of the Hong Kong Special Administrative Region.
Formerank claims that Tak Yun has defaulted under the Agreements and that Mr Luo is liable under his guarantees to pay to Formerank the amount owing by Tak Yun to Formerank.
On 15 October 2020, as Commercial Arbitration List Duty Judge, the court made an ex parte freezing order restraining Mr Luo from dealing with his Australian assets (which include two parcels of land in metropolitan Sydney) in aid of a “prospective judgment” that Formerank hopes to achieve were it to be successful in the Hong Kong arbitrations.
Issue: Should the freeze order be continued?
Law:
Analysis:
The question here is whether Formerank has a “good arguable case” in the sense of one where there are “sufficient prospects” of obtaining a favourable judgment to warrant the making of a freezing order.
Formerank relies on both these possibilities: direct enforcement in the Court of an award of the Hong Kong Arbitral Tribunal and registration in this Court of a judgment of the Hong Kong Court of First Instance referable to such an award.
However, there is no evidence before the court as to the provision made in the law of Hong Kong concerning the defences and causes of action Mr Luo seeks to agitate. Formerank had adduced no evidence from a Hong Kong lawyer to the effect that, assuming the truth of the factual matters for which Mr Luo contends, they could not lead to the legal consequences he alleges.
The court cannot predict what the outcome of that contest will be, and thus what prospects Formerank has of achieving a favourable award in the arbitration. For this reason, the court is not prepared to extend the freezing order that it made on 15 October 2020.
Conclusion: The court is not persuaded that the freezing orders should continue.
