Court Of Appeal Determines On Principles Governing Interim Anti-Suit Injunctions Against Foreign Winding Up in Support of Arbitration in Hong Kong

In the recent decision of Hyalroute Communication Group Limited v Industrial and Commercial Bank of China (Asia) Limited [2025] HKCA 936, the Court of Appeal provided important clarification on principles governing interim anti-suit injunctions (ASI) pending determination of an appeal. This judgment represents the first time that the Court of Appeal has emphasised that merits of a debtor’s defence are a relevant consideration in an application for ASI to restrain foreign winding-up proceedings in favour of arbitration in Hong Kong.

Background to the Appeal

The present case follows from the first instance decision of Recorder William Wong SC in [2025] HKCFI 2417, which dismissed the Plaintiff’s application for an injunction to restrain Cayman winding up proceedings in support of a Hong Kong arbitration. The Recorder dismissed the application on both grounds that (a) the arbitration clause does not cover the winding-up proceedings intended to be commenced in the Cayman Islands by the Defendant (i.e. the Construction Issue) and (b) the underlying merits of the Plaintiff’s case was hopeless, frivolous, and an abuse of process (i.e. the Merits Issue). The Plaintiff subsequently appealed and sought an interim ASI against the Defendant pending appeal. The application was heard by Hon Chu VP and Hon Anthony Chan JA.

The Decision

The Court of Appeal dismissed the Plaintiff’s application and found that it failed at the first hurdle for the grant of an interim injunction pending appeal, as stated in Registrar of Hong Kong Institute of Certified Public Accountants v X [2017] 3 HKLRD 541 at [43]. The Court of Appeal determined that the Plaintiff’s appeal had no real prospect of success and that there was no arguable appeal in respect of the merits of the Plaintiff’s defence.

Key aspects of the decision are as follows:

1. The Merits Issue: The Court of Appeal dismissed the Plaintiff’s argument that merits of its defence are irrelevant to its ASI application. The Court of Appeal affirmed the principles in Guy Lam and Simplicity, in which the lack of a bona fide dispute on the petitioning debt may constitute an abuse of process and a strong reason to refuse an ASI. The Court of Appeal further rejected the Plaintiff’s argument that these principles were inapplicable because winding-up proceedings had not yet been instituted. It noted that the ASI application was a quia timet injunction to prevent the Defendant from instituting such winding-up proceedings.
2. Analysis of the Plaintiff’s defence: The Court of Appeal found the Plaintiff’s defence, which was based on an alleged estoppel argument concerning the termination of the MIGA Insurance Contract, unarguable. It noted that the Plaintiff was responsible for paying the insurance premium and had sought to have the premium reduced or waived. There was no evidence the premium was ever reduced or paid, which led the Court of Appeal to conclude that the insurance would naturally lapse. The Plaintiff could not have relied on any purported representation from the Defendant regarding its termination of insurance which might give rise to an estoppel. These findings fundamentally undermined the Plaintiff’s defence.

The Court of Appeal’s ruling also reinforced that a purported error on a legal point, namely the Construction Issue, will not assist the Plaintiff’s application for stay pending appeal unless there is a reasonably arguable appeal on the underlying merits of the case.

Conclusion

The Court of Appeal dismissed the Plaintiff’s application as it failed at the first hurdle for the grant of an interim injunction pending appeal. It determined that the Plaintiff’s appeal had no real prospect of success and that there was no arguable appeal in respect of the merits of the Plaintiff’s defence.

Full judgment can be found here: legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=173575&currpage=T.