Arbitration vs Insolvency: Hong Kong’s First Consideration of Restraining Foreign Winding-Up Proceedings in Cross-Border Arbitration Dispute

 (A) Introduction
 
In Hyalroute Communication Group Ltd v Industrial and Commercial Bank of China (Asia) Ltd, HCCT 155/2024,[1] date of judgment: 1 August 2025, the Hong Kong Court of First Instance dismissed the Plaintiff’s application for anti-suit injunction and interim relief.
 
The Court characterized the Plaintiff’s said application as “interesting and novel” , marking the first instance where the Hong Kong Court considered whether to restrain winding-up proceedings in a foreign common law jurisdiction applying divergent arbitration principles. 

This unprecedented conflict arose because the Plaintiff, a Cayman-incorporated company, sought anti-suit relief in Hong Kong to restrain winding-up proceedings in its home jurisdiction, directly challenging an emerging split between (1) Hong Kong's pro-arbitration approach (Re Guy Lam (2023) 26 HKCFAR 119 (in the CFA): winding-up proceedings will be stayed in favour of arbitration unless abuse is shown; and (2) England's creditor-protective stance (Sian Participation Corp v Halimeda International [2024] UKPC 16 (in the Privy Council)): the debtor must show the usual bona fide dispute on substantial grounds to justify the creditor going through arbitration.
 
(B) Facts
 
On 27 November 2024, the Defendant served a statutory demand on the Plaintiff for debts under the Term Facility Agreement dated 27 July 2018 (the “TFA”) and an interest rate swap arrangement. The TFA contained an arbitration clause (Clause 43.1) which mandates the parties to resolve such disputes by way of arbitration in the Hong Kong International Arbitration Centre. 
 
On 16 December 2024, the Plaintiff issued an originating summons (the “OS”) for an anti-suit injunction to restrain the Defendant from presenting any winding-up petition against it in the Cayman Islands and a summons (the “Summons”) for interim relief.
 
The Plaintiff claimed that the Defendant would be acting in breach of the arbitration agreement between them by presenting a winding-up petition in the Cayman Islands. 
 
The Defendant argued that winding-up proceedings in Cayman did not breach the arbitration agreement because the terms of the arbitration agreement did not cover winding-up proceedings. 

(C) Decision
 
The Court dismissed the Summons and the OS with costs to the Defendant on the following grounds:
 
(1) No Breach of Arbitration Clause
 
The Court considered whether the Cayman winding-up proceedings breach Clause 43.1 depends on its proper construction under Hong Kong law (i.e. the governing law of the clause). Clause 43.1 requires disputes to be “finally resolved” by arbitration.
 
The Cayman winding-up proceedings would only breach Clause 43.1 if they (a) constituted res judicata; and (b) gave rise to issue estoppel under Hong Kong law. This depends entirely on Cayman law’s treatment of its own winding-up proceedings.

 
Under Cayman law, winding-up petitions are regarded as provisional assessments (threshold inquiry into whether there was a genuine dispute on substantial grounds), rather than final determinations of substantive rights. Thus, Cayman proceedings cannot “finally resolve” disputes under Clause 43.1.
 
In light of the above, there was no breach of arbitration agreement.
 
(2) Additional Grounds Against Granting an Injunction
 
The Court also found compelling reasons to deny the anti-suit injunction:

(1) The effect of such an anti-suit injunction would impede the Plaintiff’s “home court” from exercising its discretion to consider public policy considerations under its own laws, which the Plaintiff voluntarily chose to generally govern it. Hong Kong Courts should be reluctant to intervene in another jurisdiction’s exercise of discretion;
 
(2) Following the principles established in Guy Lam, the merits of the debtor’s defence is relevant when exercising discretion over anti-suit relief. In the present case, the Plaintiff’s defence was hopeless and frivolous for the following reasons:
 
(i) The “Covered Risk Application” required formal documentation justifying the claim, which the Plaintiff failed to provide.

(ii) The Plaintiff could not identify when the Cover Risk Application was made.

(iii) Suspension lapsed automatically under Clause 19.1(c)(iii) when the Multilateral Investment Guarantee Agency terminated coverage due to the Plaintiff’s default on premiums. The cause of termination was irrelevant. Cessation alone triggered this outcome.

(iv) The Defendant, being the Agent as defined in the TFA, was entitled to terminate the suspension by rejecting any application under Clause 19.1(c)(i).
 
(D) Key Takeaways
 
In conclusion, the decision underscores the Hong Kong Court’s cautious approach in granting anti-suit relief in cross-border disputes. The Court found no breach of the arbitration agreement because Cayman winding-up proceedings are considered provisional under Cayman law and do not constitute final resolution of disputes under Hong Kong law. Further, the Court declined to grant the anti-suit injunction, emphasizing respect for Hong Kong’s judicial discretion and its reluctance to interfere with another jurisdiction’s exercise of public policy discretion.