Arbitration and Disclosure: A Practical Guide for Hong Kong-Listed Companies

The Boardroom Dilemma

A Hong Kong-listed company receives a notice of arbitration involving a substantial claim that could be material to its financial position. Across town, another listed issuer is preparing to commence arbitration to recover a substantial sum from a defaulting counterparty. In both boardrooms, the company secretary turns to the general counsel and asks: “Do we need to announce this?”

The question sounds simple. The answer is not. Two legal regimes pull in opposite directions. Under the Securities and Futures Ordinance (Cap. 571) (SFO) and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the Listing Rules), a listed corporation must disclose inside information to the public as soon as reasonably practicable after it comes to the corporation’s knowledge. Under section 18 of the Arbitration Ordinance (Cap. 609) (the Arbitration Ordinance), no party to an arbitration seated in Hong Kong may publish, disclose or communicate any information relating to the arbitral proceedings or an award – unless an exception applies.

Getting this balance wrong carries real consequences: regulatory sanction for late or inadequate disclosure on the one hand; breach of statutory confidentiality, injunctive relief and potential prejudice to the arbitration on the other. This article examines how the two regimes interact, draws on recent case law, and offers a practical framework for boards and their advisers.

 

Two Competing Obligations

The Disclosure Framework

Part XIVA of the SFO requires a listed corporation to disclose inside information to the public as soon as reasonably practicable after it comes to the corporation’s knowledge. “Inside information” is defined as specific information about a listed corporation that is not generally known to persons who are accustomed or would be likely to deal in the listed securities, but which would, if generally known, be likely to materially affect the price of those securities (section 307A, SFO).

The Listing Rules reinforce and extend this obligation. Rule 13.09(2)(a) requires a simultaneous announcement where the inside information provisions are triggered. Rule 13.09(1) imposes a broader duty to announce where there is, or is likely to be, a false market in the issuer’s securities. Rule 2.13 requires information in announcements to be accurate and complete in all material respects; issuers must not omit unfavourable material facts. For IPO applicants, Appendix D1A paragraph 40 specifically requires particulars of any litigation or claims of material importance – including arbitration claims – or an appropriate negative statement.

Importantly, the SFC’s Guidelines on Disclosure of Inside Information clarify that “specific information” need not be precise. Preliminary negotiations or a contemplated transaction can constitute specific information if there is “substantial commercial reality” going beyond merely exploratory discussions (paragraph 17). Whether an arbitration constitutes inside information is therefore a fact-specific question that may be answered differently at different stages of the same dispute.

Arbitral Confidentiality under Hong Kong Law

Hong Kong is one of few jurisdictions that imposes a statutory duty of arbitral confidentiality. Section 18(1) of the Arbitration Ordinance provides that, unless the parties agree otherwise, no party may publish, disclose or communicate any information relating to the arbitral proceedings or an award. The duty applies where the seat of the arbitration is in Hong Kong (section 5).

Section 18(2) sets out three categories of exception. For listed companies, the most important is section 18(2)(b): a party may disclose information to any government body, regulatory body, court or tribunal where the party is obliged by law to make the disclosure. The inside information regime under Part XIVA of the SFO, and the Listing Rules, are widely understood to constitute such a legal obligation, so that disclosure made in genuine compliance with those requirements will generally fall within the statutory exception.

In Housing Authority v Sui Chong Construction & Engineering Co Ltd [2008] 1 HKLRD 84, the Hong Kong Court of First Instance confirmed that arbitral confidentiality is not absolute. Drawing on the English Court of Appeal’s decision in Ali Shipping Corporation v Shipyard Trogir [1998] 1 Lloyd’s Rep 643, the Court held that an arbitrating party could disclose confidential information where it was "reasonably necessary" for the protection of the party’s legitimate interest.

The statutory framework therefore contemplates that a listed company subject to mandatory disclosure obligations will be permitted – indeed expected – to make appropriate disclosure. The difficulty lies not in whether disclosure is permissible, but in determining what may be disclosed, when, and how much.

 

When Can an Arbitration Become Inside Information?

Not every arbitration involving a listed company will constitute inside information requiring immediate disclosure. Whether a particular arbitration crosses the threshold depends on a fact-specific and evolving analysis.

The SFC’s Guidelines indicate that information must be “specific” and must, if generally known, be likely to “materially affect” the share price. A claim of modest value relative to the issuer’s revenues and assets may not meet either test. Equally, a letter before action or a preliminary indication of a dispute may be too uncertain to qualify – it may still be in the realm of what the SFC calls “unsubstantiated conjecture” rather than information with “substantial commercial reality”.

However, the analysis is not static. An arbitration may not be inside information at the time a notice of arbitration is received, but may become inside information once the quantum crystallises, once a significant interim award is made, or once the company concludes that the claim presents a material contingent liability. The obligation to assess and reassess is continuous.

There is no prescribed quantitative materiality test in Hong Kong law for these purposes. The question is whether a reasonable person, acting as an officer of the corporation, would consider the information to be inside information (section 307B(2), SFO). This is an objective standard that necessarily involves a degree of judgement.

Importantly, the inside information obligation applies equally to claimants and respondents. A listed company that is preparing to commence an arbitration may hold inside information from the moment the board resolves to pursue the claim – potentially before any notice of arbitration is filed. The same staged, fact-specific analysis applies regardless of which side of the dispute the company is on.

 

Disclosure Does Not Necessarily Mean Disclosing Everything

The tension between confidentiality and disclosure is often framed as binary: either you announce the arbitration or you do not. In practice, the analysis is considerably more nuanced. Even where disclosure of the existence of an arbitration is required, the scope of what must be disclosed can – and should – be carefully calibrated.

In Emmott v Michael Wilson & Partners Ltd [2008] EWCA Civ 184, the English Court of Appeal recognised that arbitral confidentiality is not all-or-nothing. Its content may depend on the context and the nature of the information at issue. The Court acknowledged that the existence and details of an arbitration may need to be disclosed to shareholders or regulatory authorities. Where disclosure is required—for example, because a party is compelled by law to report to a regulator or in its annual accounts – the Court held that it need not extend to the entire arbitral record. Redaction and limited disclosure should be used where possible, and disclosure should be proportionate to the obligation that triggers it.

In A Corporation v Firm B and Mr W [2025] EWHC 1092 (Comm), Foxton J went further, articulating a ‘sliding scale’ of arbitral confidentiality. Not all arbitration-related information is equally sensitive. At one end, the bare fact that an arbitration exists and a party’s own filings attract relatively modest protection. At the other, documents produced by the opposing party under compulsion—such as material disclosed in the arbitration – come at or near the most sensitive end. The English courts have also suggested that disclosing the mere existence or outcome of an arbitration requires less justification than disclosing its detailed content.

Foxton J also drew a practical distinction that is directly relevant to listed companies. A company’s own documents and information do not become confidential simply because they are used in an arbitration. Similarly, the underlying commercial dispute and the events giving rise to it do not become confidential merely because arbitration proceedings are commenced. This means that a listed company describing its own assessment of the dispute, its financial exposure or its intended next steps in a market announcement is not, without more, disclosing the most highly protected category of arbitral material.

This sliding-scale analysis is particularly useful for listed companies. It suggests that a company can – consistently with its arbitral confidentiality obligations – disclose:

• the existence of the arbitration and the institution administering it;
• the general nature of the underlying dispute (without reproducing pleadings);
• the quantum claimed or awarded (where material);
• the company’s own assessment of its position and any financial impact;

while exercising greater caution before disclosing the opposing party’s submissions, evidence or privileged material, or the tribunal’s detailed reasoning. It remains important to note that this analysis draws primarily on English authority. The Hong Kong courts have not yet had occasion to adopt or apply a sliding-scale approach, and the position under Hong Kong law remains to be fully tested.

 

Disclosure in Practice

A review of inside information announcements made by Hong Kong-listed issuers confirms that companies do routinely disclose arbitration-related matters – and at different stages. Some announce upon receiving a notice of arbitration; others upon receiving a final award. The triggering event depends on when the information becomes material, not on a fixed procedural milestone. The level of detail varies considerably, from concise early-stage notifications to detailed post-award summaries.

Several practical patterns are observable. Most issuers identify the counterparty, though some describe the opposing party generically where confidentiality obligations require it. Financial impact statements tend to be conservative at early stages, with more detail following an award – including the amount, any provisions in the accounts and the company’s intended response. None of these announcements should be treated as a template; each reflects the issuer’s own circumstances and legal advice.

 

A Practical Framework for Listed Companies

Given the complexity and fact-specific nature of the analysis, boards and their advisers may find it helpful to adopt a structured approach. The following staged checklist is offered as a practical starting point—not as a substitute for legal advice on the particular circumstances.

Stage 1: Commencement or Receipt of a Claim

• Assess materiality: Whether the company is commencing or responding to an arbitration, consider whether the claim – by reference to its value, the identity of the counterparty or the nature of the dispute – is likely to be price-sensitive. Apply the section 307A test. For a claimant, the trigger may arise as early as the board’s decision to pursue the claim.
• Check the arbitration agreement: Does it modify the default confidentiality position under section 18? Are there additional contractual confidentiality obligations?
• If commencing an arbitration: Consider whether the decision to file, and the quantum to be claimed, may themselves constitute inside information. Coordinate the timing of the notice of arbitration with any required market announcement.
• Maintain confidentiality internally: Restrict the circle of knowledge. Rule 13.06A requires all reasonable steps to maintain strict confidentiality of inside information until it is announced.
• Convene the disclosure committee: If the claim may constitute inside information, begin preparing a draft announcement.

Stage 2: Preparation for Disclosure

• Determine the scope of disclosure: Disclose what the market needs to make an informed assessment. This will typically include the existence of the arbitration, the institution, the general nature of the dispute, the quantum claimed and the company’s assessment of its position.
• Consider the counterparty’s interests: Avoid unnecessarily disclosing the other party’s privileged or confidential material. The sliding-scale approach suggests that a party’s own position carries less sensitivity than the opposing party’s submissions or evidence.
• Apply the proportionality principle: Disclosure should be limited to what is reasonably necessary to meet the issuer’s legal obligations. Where in doubt, consult legal advisers experienced in both securities regulation and arbitration.

Stage 3: During the Arbitration

• Reassess continuously: Materiality may change as the arbitration progresses. Significant interim awards, settlement offers or changes in the likely quantum may trigger fresh disclosure obligations.
• Coordinate with legal counsel: Arbitration counsel should be aware of the company’s disclosure obligations; corporate and securities counsel should understand the confidentiality constraints.

Stage 4: Award and Post-Award

• Announce the award if material: Disclose the outcome, the quantum, any financial provisions and the company’s response (e.g., whether it intends to comply, challenge or enforce).
• Update financial statements: Ensure that any provisions, contingent liabilities or changes are reflected in the issuer’s accounts and, where necessary, discussed with auditors.
• Consider ongoing obligations: Set-aside or enforcement proceedings may themselves generate further inside information.

 

Conclusion

The tension between arbitral confidentiality and listed-company disclosure obligations is not new, but it remains a live and evolving area. What is clear is that the two regimes can be reconciled: the Arbitration Ordinance itself contemplates disclosure where the law requires it, and the developing case law – particularly the sliding-scale analysis articulated in A Corporation v Firm B [2025] EWHC 1092 (Comm) – supports a proportionate, fact-specific approach to determining both the timing and scope of disclosure.

The practical experience of Hong Kong-listed issuers confirms that companies are routinely navigating this terrain, with announcements ranging from concise early-stage notifications to detailed post-award summaries depending on the circumstances. There is no single template, but there is a clear principle: disclose what the market needs to make informed decisions, and no more.

Companies involved in, or contemplating, arbitration should integrate their disclosure strategy into their overall dispute management from the outset. Early coordination between arbitration counsel, corporate counsel and the company secretary can help ensure that the company meets its disclosure obligations while preserving legitimate confidentiality to the greatest extent possible.