ISRAEL SORIN (IZZY) SHOHAT v. BALRAM CHAINRAI

HCCT 9/2016

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS NO 9 OF 2016

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D E C I S I O N

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INTRODUCTION

1.  On 26 May 2017, I handed down a decision (“the Decision”) and made an order (“the Refusal to Stay Order”) dismissing the Award Debtor’s application for a stay of execution of the order of Madam Justice Mimmie Chan dated 15 September 2016 (“the Enforcement Order”) granting leave to the Award Creditor to enforce an arbitration award and an arbitration award on costs both dated 31 October 2013 (collectively “the Award”) made by an arbitrator, Dr Israel Leshern (“the Arbitrator”), in Israel, pending the outcome of the Award Debtor’s claim against the Award Creditor in HCA 1462 of 2014 (“the High Court Action”).

2.  I have now before me three applications:-

(1)   the Award Debtor’s summons dated 9 June 2017 seeking leave to appeal against the Refusal to Stay Order to the Court of Appeal (“the Leave Application”);

(2)   the Award Creditor’s summons dated 13 June 2017 seeking payment out of the sum of HK$33,549,765 paid into court by the Award Debtor pursuant to an order made by Madam Justice Mimmie Chan dated 1 December 2016 and all interest accrued on the said sum in court as partial satisfaction of the Award (“the Payment Out Application”); and

(3)   the Award Debtor’s summons dated 19 June 2017 seeking an interim stay of execution of the Award/Enforcement Order pending the outcome of the Leave Application (“the Interim Stay Application).

THE LEAVE APPLICATION

3.  The background facts of this matter have been set out in the Decision and I shall not repeat them in this decision.

4.  As mentioned in paragraph 1 of Mr Yau’s skeleton submissions on behalf of the Award Debtor dated 18 July 2017 and as amplified in his oral submissions this morning, the Leave Application is advanced on the basis that, in deciding whether to grant a stay of execution of the Enforcement Order pending the outcome of the High Court Action, I should not have rejected as irrelevant “the Award Debtor’s demand for appropriate security from the Award Creditor so as to protect the former’s interest in the Hong Kong proceedings brought against the latter”.

5.  I am not persuaded by this contention, for the following reasons.  First, a plaintiff in Hong Kong proceedings has no general right to seek any pre-trial security from the defendant whether in respect of the subject matter of his claim or the costs that he may incur in prosecuting his claim in Hong Kong. This is so regardless of the defendant’s place of residence or domicile, or his solvency, although the insolvency of the defendant may be a relevant consideration in deciding whether to grant a stay of execution of a judgment which the defendant has obtained against the plaintiff pending the resolution of the plaintiff’s cross-claim against the former (see FG Skerritt Ltd v Caledonian Building Systems Ltd [2013] EWHC 1898 (TCC)).

6.  Second, the Award Debtor’s demand for security from the Award Creditor in the present case is, as I understand Mr Yau’s submissions, linked to the fact that the Award Creditor is a resident in Israel and thus the Award Debtor will probably have to enforce any judgment that he may obtain in the High Court Action against the latter in Israel.  Mr Yau argues that the Award Debtor’s will, or may, face difficulties or inconvenience in seeking to enforce any such judgment because (i) there is no reciprocal arrangement between Hong Kong and Israel for the enforcement of judgments obtained in the other jurisdiction, and thus a fresh action will be have to be commenced in Israel in order to enforce a judgment obtained in Hong Kong, and (ii) the Award Creditor is of advanced age (75 as at 2016) and he may start to distribute his wealth as part of his estate planning.  On these matters, my views are as follows:-

(1)   As a matter of fact, in reaching the Decision, I took into account the inconvenience that the Award Debtor may face in having to enforce any judgment that he may obtain in the High Court Action against the Award Creditor in Israel, but I was persuaded by other more weighty factors in refusing to grant the stay of execution of the Enforcement Order sought by the Award Debtor (see paragraphs 22 to 24 of the Decision).

(2)   In so far as reliance is placed on the age of the Award Creditor and the possibility that he may start to distribute his wealth as part of his estate planning, these are just ordinary life events.  I am unable to see how they can constitute good grounds or reasons for granting the stay of execution sought by the Award Debtor.

(3)   Mr Yau says that the Award Creditor is a person of significant wealth.  There is nothing on the materials before me to suggest that he may start to dissipate his wealth to such an extent that the Award Debtor may not be able to obtain satisfaction of any judgment that he may obtain in the High Court Action against the Award Creditor in Israel.

7.  Third, at the last hearing on 25 April 2017, Mr Yau made, on behalf of the Award Debtor, an offer in open court to the Award Creditor that the Award Debtor would be agreeable not to pursue the original stay application if the Award Creditor was prepared to offer an appropriate security to the value of the amount paid into court by the Award Debtor so as to facilitate satisfaction of any judgment that he may eventually obtain against the Award Creditor in the High Court Action.  That offer was rejected by Mr Coleman SC on behalf of the Award Creditor, and was considered by me to be irrelevant to the question of whether I ought to grant a stay of execution of the Enforcement Order pending the outcome of the High Court Action (see paragraph 25 of the Decision).  I remain unable to see the relevance of this open offer.  The Award Debtor is applying for a stay of execution of the Enforcement Order and has to provide sufficient grounds or justification in support of his application.  He cannot, in my view, improve his position by putting forward certain condition, or demand on the Award Creditor, in return for not insisting on the stay sought by him.

8.  In all, I am not prepared to grant to the Award Debtor leave to appeal against the Refusal to Stay Order, because I am not satisfied that the proposed appeal has a reasonable prospect of success, or there is any other reason in the interests of justice why the proposed appeal should be heard.

DISPOSITION

9.  For the foregoing reasons, I dismiss the Leave Application.  The Interim Stay Application also falls to be dismissed in view of the fact that I have now ruled on the Leave Application.  In so far as the Payment Out Application is concerned, Mr Yau accepts that it would stand or fall together with the Leave Application.  I therefore make an order in terms of paragraph 1 of the Award Creditor’s summons dated 13 June 2017, save that no payment out should be made for a period of 14 days from the date of this decision so as to give the Award Debtor an opportunity (if so advised) to make a further application to the Court of Appeal for leave to appeal and interim stay pending appeal.

10.  I also order the Award Debtor to pay the Award Creditor’s costs of the three summonses, including all costs previously reserved, to be taxed on an indemnity basis (in accordance with the court’s usual practice regarding unsuccessful applications to challenge the enforcement of arbitration awards) if not agreed, with certificate for one counsel.

11.  Lastly, it remains for me to thank counsel for their assistance rendered to the court.