CAPITAL WEALTH HOLDINGS LTD AND OTHERS v. 南通嘉禾科技投资开发有限公司

HCCT 66/2020

[2021] HKCFI 272

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 66 OF 2020

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D E C I S I O N

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A.  Introduction

1.  Upon the application of the plaintiffs (“P1” to “P6”, and collectively “Ps”), Deputy Judge Sit SC by Order dated 19 October 2020 (the “19 Oct Order”) granted[1] on an ex parte with notice basis an interim anti-suit injunction (the “Interim Injunction”) restraining the defendant (“D”) from starting, continuing, pursuing or taking further steps in 4 specified proceedings commenced by D in the Mainland before the Nantong Intermediate People’s Court (“NIPC”) against inter alios P3 to P6 (the “WFOEs”).  Those 3 of the 4 sets of proceedings which are against the WFOEs[2] have been referred by the parties as the WFOE Proceedings, which term I adopt.

2.  By summons of 1 December 2020 (the “Summons”), D seeks (1) the discharge of the Interim Injunction in respect of the WFOE Proceedings, (2) a limited variation of the same, and (3) fortification of the undertaking as to damages.

3.  On 4 December 2020, I dealt with the part of the Summons for variation.  I gave directions on the filing of evidence in relation to the application to discharge. I then adjourned it to 20 January 2020 for substantive hearing.  It now comes back before me.

4.  Ps sought the Interim Injunction on 2 grounds[3]. The first one was that the WFOE Proceedings were commenced in breach of the arbitration agreement contained in the joint venture agreements that parties had entered into (the “Contractual Ground”). Whether they indeed were is hence the main issue.  The law relating to the so-called “one-shop stop” presumption concerning the interpretation of dispute resolution clauses will need to be considered.  The second ground was that the WFOE Proceedings are unconscionable, vexatious and oppressive (the “Unconscionable Ground”), which is more factual.    

5.  In the meantime, Ps themselves on 24 December 2020 took out another summons for variation of §1 of the Interim Injunction (the “Ps’ Variation Summons”).  It is now also before me for substantive hearing. 

6.  Mr Anson Wong SC leading Mr Martin Kok appeared for D.  Mr Ernest Yang of Messrs DLA Piper Hong Kong appeared for Ps.

B.  The affirmations

7.  Placed before me are the following relevant affirmations:

(a)  For Ps:

(i)  the first affirmation of Wang Xiaolin (“Wang” and “Wang/Aff1”);

(ii)  the first affirmation of Zhang Jinying (“Zhang” and “Zhang/Aff1”);

(iii)  the second affirmation of Wang (“Wang/Aff2”);

(iv)  the second affirmation of Zhang (“Zhang/Aff2”); and

(v)  the first affirmation of Stephen Mark Saleen (“Saleen” and “Saleen/Aff”).

(b)  For D, the first and draft second affirmations of Zhao Lifeng (“Zhao”, “Zhao/Aff1” and “Zhao/Aff2”).

C.  The agreements between the parties

8.  Given the issues involved, it is important to first outline the relevant agreements that the parties[4] have entered into.

9.  P1 and P2 are companies registered in the BVI.  The WFOEs are companies incorporated in the Mainland.  P3, P4, and P5 are wholly owned by P1, and P6 by P2 (hence their WFOE status).

10.  On 28 January 2016, a joint venture agreement was entered into[5] (the “JVA”):

(a)  It has 3 parties, who are: P1 as甲方, D as乙方, and “如皋市高新技术创业服务有限公司” as丙方(“JSAT”).  JSAT is the intended vehicle for the joint venture.  The WFOEs are not parties to it;

(b)  D under the JVA has certain capital injection obligations.  Further, according to Clause 2.5 of the JVA, D agrees at certain specific stage “to provide a guarantee in favour of the Project Company for liquidity financing … of not more than RMB 4 billion”, and to“coordinate with the local financial department to provide the Project Company a subsidy for the interest payable over the RMB 4 billion loan when it exceeds the benchmark interest rate …”[6]. There is no mention of any provision of loan by D to JSAT.

(c)  Clause 12 of the JVA is a choice of law and arbitration clause[7], that:

「 對於本協議的任何爭議，三方友好協商解決，如協商不成，則交由香港仲裁委員會根據中華人民共和國的實體法和香港國際仲裁條例仲裁解決…」

11.  On 21 July 2016, a supplemental joint venture agreement[8] was entered into (the “SJVA”):

(a)  It has 3 parties, who are: 威蒙工业集团 (“WMI”) as “甲方”, P1 as “乙方” and D as “丙方”.  WMI, including its interest in JSAT, has subsequently been acquired by P2;

(b)  Clause 10.1[9] provides that:

「本合同適用中國法律，根據中國法律解釋。」

(c)  Clause 10.2[10] of the SJVA is an arbitration clause (together with Clause 12 of the JVA, collectively the “Arbitration Agreement”), that:-

「 因訂立、履行本合同而產生的任何爭議或糾紛，均應首先通過友好協商解決。雙方未能達成一致意見的，任何一方均有權將此爭議提交香港仲裁委員會根據中華人民共和國相關實體法和香港國際仲裁條例仲裁解決。」

(d)  The WFOEs are not parties to it, though they are mentioned in several clauses (eg 4 and 5).

12.  On 15 October 2016, a further supplemental agreement[11] (“SSJVA”, and together with the JVA and SJVA, collectively the “JV Agreements”).  Its four parties are WMI, P1, D and JSAT[12].  The WFOEs are again not parties to it.

13.  In 2019, D as “甲方 (出借方)” (ie the lender), JSAT as “乙方 (借款方)” (ie the borrower), and the WFOEs jointly as “丙方 (擔保方)” (ie the guarantors) entered into a number of loan agreements (“Loan Agreements”).  Save the amount of the loans, the terms of each of those Loan Agreements are materially the same.  Pursuant to those agreements, D lent to JSAT loans in the total sum of RMB 2 billion.

14.  The Loan Agreements do not contain any dispute resolution clause. 

15.  Each of the Loan Agreements bears a reference code.

16.  To ensure parties’ performance of their obligations under the Loan Agreements[13], each of the WFOEs as the “出質人” (ie the pledgor), D as the “質權人” (ie pledgee), and JSAT as the “債務人” (ie debtor) entered into a number of “股權質押擔保協議” (the “Share Pledge Agreements”).  Certain specified percentages of the WFOEs’ holding in JSAT were pledged thereby.  The reference codes of the Loan Agreements which the Share Pledge Agreements individually relate to are expressly referred to and specified. 

17.  Apart from the identities of the pledgors, the amount of the loans, the percentage of the pledged shares concerned and the reference codes, the terms of each of those Share Pledge Agreements are materially the same.  The following 2 terms are material:

(a)  Clause 3[14], that:

「 … 當[JSAT]的債務未按約定履行正常還本付息及其他相關費用時 ... [D]均有權直接要求[WFOEs]在其擔保範圍內承擔擔保責任」;

(b)  Clause 11 thereof (the “Mainland Jurisdiction Clause”), that:

「 如因本協議或有關本協議的任何爭議而產生爭議，雙方同意應盡力通過友好協商解決該爭議；協商不成的，任何一方有權將該爭議提交[D]所在地有管轄權的法院解決。」

18.  In addition to the Share Pledge Agreements, JSAT has also agreed to pledge as securities for the Loan Agreements inter alia its facilities, immovable properties and land rights (the “JSAT Pledge”).

19.  The aforesaid loan and security arrangements have, on the face of the resolutions adduced, been approved at the shareholder level by both JSAT[15] and each of the WFOEs[16].

D  Proceedings in the Mainland and Hong Kong

20.  On 8 June 2020, D commenced the WFOE Proceedings before the NIPC.  Three sets have been started, as a result of the way the loans were grouped amongst the Loan Agreements and Share Pledge Agreements.  Such details are not important, as each of the 3 sets are materially the same. 

21.  In relation to the WFOE Proceedings:

(a)  D is the claimant;

(b)  JSAT and the WFOEs are the defendants;

(c)  The 3 民事起訴狀 have been produced[17];

(d)  The contents of those 3 民事起訴狀 under the heading of “事實和理由” are noted.  D is suing on the Loan Agreements, the Share Pledge Agreements and the JSAT Pledge;

(e)  According to the “訴訟請求” therein, D is seeking repayment of the RMB 2 billion with interest, and should JSAT fail to, enforcement of the JSAT Pledge and the Share Pledge Agreements.

22.  By notice dated 28 August 2020, Ps, Saleen Motors International LLC, and SMS Supercars, Inc as claimants initiated ad hoc arbitration proceedings in Hong Kong against D.  The Arbitration Agreement is relied upon[18]. They claim[19](1) a declaration that D has breached the JV Agreements; (2) various forms of relief in relation to patents and confidential information; (3) D be ordered to purchase the claimants’ interest in JSAT at the amount of RMB 9.987 billion; (4) damages; (5) legal fees and interest. 

23.  On 5 October 2020, Ps issued the Originating Summons herein.  They seek thereby an anti-suit injunction against D in respect of inter alia the WFOE Proceedings.

24.  On 19 October 2020, Ps obtained the Interim Injunction.

25.  On 1 December 2020, D filed the Summons herein.

E.  Parties’ stances and main submissions

26.  Originally, there is dispute between the parties about the validity of the Arbitration Agreement.  It refers to “香港仲裁委員會”.  There is however no arbitral body in Hong Kong which bears that name.  Expert evidence has been called from both sides.  Opinions have been expressed as to whether the validity of the Arbitration Agreement should be governed by Mainland or Hong Kong Law, and whether it is according to the proper governing law valid.

27.  In the course of the hearing, Mr Wong informed me that for the purpose of the Summons and the hearing (and for such purposes only), and on a without admission basis, D is content to proceed on the basis that Hong Kong law applies, and that the Arbitration Agreement is valid.

28.  I therefore proceed on that basis.

29.  Mr Wong submits that even assuming for Ps’ benefit that the Arbitration Agreement is valid, the Interim Injunction should be discharged. He summarizes his submissions as follows[20] (emphasis omitted):

“ 3.  … there can be no basis for the WFOEs to seek and obtain the … Interim Injunction against D. This is because D’s claims against the WFOEs specifically arose out of the Share Pledge Agreements, which all contain jurisdiction clauses in favour of [NIPC].

4.  Unfortunately, when Ps applied for the ex parte order before DHCJ Sit SC, Ps heavily (and wrongly) relied upon the Fiona Trust approach to contend for ‘one-shop stop’ arbitration in Hong Kong . However, such an approach does not apply for cases such as the present, which involves more than one dispute resolution clause for different forums. The law, which is clear in this regard, was not brought to the attention of the learned DHCJ.

5.  In the present case, D’s claims against the WFOEs were properly commenced before the NIPC, in accordance with the contractually agreed dispute resolution mechanism.  There was no breach of the Arbitration Agreement, nor could D’s claims against the WFOEs be considered ‘vexatious’ or ‘oppressive’ at all.” 

30.  Mr Yang argues otherwise.  He summarizes his main submissions as follows:

“ 5.2.  … the … Interim Injunction should not be discharged on the basis that the [Share Pledge Agreements] have non-exclusive jurisdiction clauses in favour of D’s place of incorporation or seat. In particular:-

5.2.1.  The WFOE Proceedings cover disputes under the [Loan Agreements] first and foremost as well as the Share Pledge Agreements. It is only if debts are found to be due under the Loan Agreements before a resolution of the Share Pledge Agreements come into question …

5.2.2.  There was no dispute resolution clause contained in the Loan Agreements.

5.2.3.  The absence of any dispute resolution clause in the Loan Agreements, and that the jurisdiction clauses in the Share Pledge Agreements were of a non-exclusive nature, were all brought before DHCJ Sit SC … There was no material non-disclosure.

5.2.4.  The dispute under the Loan Agreements forms an integral part of the questions to be resolved under the Arbitration Agreement. This has been covered in detail with DHCJ Sit SC and forms a key part of the decision to grant the … Interim Injunction.

5.3.  Prejudice…”

Mr Yang also relies on the basis that the WFOE Proceedings are vexatious and oppressive, as counsel for Ps did before the learned Deputy Judge.

F.  The relevant legal principles

31.  The relevant principles applicable to the grant of anti-suit injunctions have recently been considered by Deputy Judge William Wong SC in Suen Kwai Kam v Central China Dragon Select Growth Fund [2020] HKCFI 69, at §25.  Suffice for this Court to highlight a number of points that are of particular relevance to the present application.

32.  The Courts have jurisdiction to grant anti-suit injunctions.  An application can be grounded upon a contractual right, or that the foreign proceedings have been commenced in bad faith[21]. 

33.  The principle of comity requires that the jurisdiction to grant anti-suit injunctions be exercised with caution and restraint.  The threshold for an applicant to meet is the enhanced one of “high degree of probability”.  As explained in Gee on Commercial Injunctions (6^th ed)at §14-027:

“ If the application is for an interim injunction and the applicant can show no more than an arguable case that there is a promise not to sue in the foreign forum then the injunction will usually be refused. It has been said that on an interlocutory application to enforce an alleged promise the applicant must show ‘to a high degree of probability that its case is right’; this reflects the fact that if there is not confidence that such an enforceable promise presently exists the principles of comity and restraint in interfering with foreign proceedings would weigh heavily against the granting of relief.”

34.  In Fiona Trust & Holding Corp v Privalov [2007] 2 CLC 553, Lord Hoffmann observed at [13] that:

“ … the construction of an arbitration clause should start from the assumption that the parties, as rational businessmen, are likely to have intended any dispute arising out of the relationship into which they have entered or purported to enter to be decided by the same tribunal. The clause should be construed in accordance with this presumption unless the language makes it clear that certain questions were intended to be excluded from the arbitrator’s jurisdiction.”

35.  Fiona Trust concerned the scope of a single arbitration clause.  When it is not, the approach to be adopted has been explained by Beatson LJ in Trust Risk Group SpA v AmTrust Europe Ltd [2017] 1 CLC 456, that:

“ 45. [Fiona Trust] concerned the scope of a single arbitration clause. This case concerns an overall agreement package which contains two express choice of law and jurisdiction clauses, one of English law and jurisdiction, the other of Italian law and arbitration ...

46. Where the overall contractual arrangements contain two or more differently expressed choices of jurisdiction and/or law in respect of different agreements, however, the position differs in that one does not approach the construction of those arrangements with a presumption. So, the 14^th edition of Dicey, Morris and Collins on the Conflict of Laws stated (para. 12-094):

‘ the decision in Fiona Trust has limited application to the questions which arise where parties are bound by several contracts which contain jurisdiction agreements for different countries. There is no presumption that a jurisdiction (or arbitration) agreement in contract A, even if expressed in wide language, was intended to capture disputes in contract B; the question is entirely one of construction …’

That reflects inter alia the statement of Rix J in Credit Suisse First Boston (Europe) Ltd v MLC (Bermuda) Ltd [1999] CLC 579 at 777 that:

‘ where different agreements are entered into for different aspects of an overall relationship, and those different agreements contain different terms as to jurisdiction, it would seem to be applying too broad and indiscriminate a brush simply to ignore the parties’ careful selection of palette.’

47. In Deutsche Bank AG v Sebastian Holdings Inc [2010] EWCA Civ 998; [2010] 2 CLC 300, a case involving a complex series of eight agreements, Thomas LJ referred with approval (at [42] and [49]) to the passages from Dicey, Morris and Collins and the judgment of Rix J I have set out. He summed up the position as follows:

‘ … [I]n construing a jurisdiction clause, a broad and purposive construction must be followed’: see [39];

‘ … [A]n agreement which [is] part of a series of agreements [should be construed] by taking into account the overall scheme of the agreements and reading sentences and phrases in the context of that overall scheme’: see [40];

‘ It is generally to be assumed … that just as parties to a single agreement do not intend as rational businessmen that disputes under the same agreement be determined by different tribunals, parties to an arrangement between them set out in multiple related agreements do not generally intend a dispute to be litigated in two different tribunals’: see [41]; but

‘ … [W]here there are multiple related agreements, the task of the court in determining whether the dispute falls within the jurisdiction clauses of one or more related agreements depends upon the intention of the parties as revealed by the agreements as against these general principles’: see [42].

48. …

In short, what is required is a careful and commercially-minded construction of the agreements providing for the resolution of disputes.  This may include enquiring under which of a number of inter-related contractual agreements a dispute actually arises, and seeking to do so by locating its centre of gravity and thus which jurisdiction clause is ‘closer to the claim’.  In determining the intention of the parties and construing the agreement, some weight may also be given to the fact that the terms are standard forms plainly drafted by one of the parties.”

36.  Trust Risk Group was considered and applied by Mimmie Chan J in X v Y [2020] HKCFI 2782, wherein Her Ladyship observed at §46 that:

“ … where the parties had entered into multiple related commercial agreements, which deal with different aspects of their relationship and dealings, the proper test in ascertaining the parties’ intention on how their disputes should be dealt with is to identify the nature of the claim, and the agreement which has the closest connection with such dispute and claim (the agreement ‘at the centre of gravity of the dispute’, as referred to in Trust Risk Group SpA v AmTrust Europe Ltd [2017] 1 CLC 456, or at the ‘commercial centre of the transaction’ in question, as referred to in para 4.59 in Joseph on Jurisdiction And Arbitration Agreements And Their Enforcement, 6^th edition).”

37.  The position is summarised in Lewison, The Interpretation of Contracts (6^th ed) at pp [881]-[882] as follows:

“ … where different but related agreements contain overlapping and inconsistent dispute resolution clauses, the nature of the claim and the particular agreement out of which the claim arose ought to be considered. Where a claim arose out of or was more closely connected with one agreement than the other, the claim ought to be subject to the dispute resolution regime contained in the former agreement, even if the latter was, on a literal reading, wide enough to cover the claim.”[22] (emphasis added)

38.  There are two further points that are relevant to that “careful and commercially-minded” construction exercise which the court is required to undertake:

(a)  the canon of construction that the general should give way to the specific — Transocean Offshore at §§25-26, and Credit Suisse First Boston, per Rix J at 251e; and

(b)  the focus being the cause of action as opposed to the remedy or defence:

(i)  per Walker J in the first instance decision in Deutsche Bank v Sebastian Holdings [2009] 2 CLC 908 at §45, citing the Court of Appeal decision in UBS AG v HSH Nordbank AG [2009] EWCA Civ 585, [2009] 1 CLC 934 at §55, that:

“ The focus must be on the cause of action rather than the remedy flowing from that cause of action.”

(ii)  per Thomas J at §63 of the Court of Appeal decision in Deutsche Bank v Sebastian Holdings [2010] EWCA Civ 998, that:

“ Businessmen agreeing to different jurisdiction clauses in a series of related contracts cannot have been taken to have intended that the entitlement to bring that claim in the chosen forum in respect of one contract should depend on whether a defence had been raised prior to the bringing of the claim and that the defence to that claim might place the centre of gravity of the dispute as being related to a different contract with a different jurisdiction clause. Not only would it give rise to a complete lack of certainty, but could seriously prejudice an institution such as a bank bringing a claim, if there was a limitation period about to expire or there was otherwise a need to bring a claim urgently.”

39.  In the course of the hearing, Mr Yang submitted to the effect that if there is an overarching dispute resolution agreement (and he submitted that the Arbitration Agreement is one), and if it is wide enough to cover certain disputes arising from a related subsequent agreement between the parties, then unless the subsequent agreement has been “carved out” and is completely different from the overarching agreement, then those disputes should still be resolved in accordance with the overarching agreement, even though that subsequent agreement contains a different dispute resolution clause.

40.  Mr Yang relies on Transocean and L v M, HCCT 16/2016.

41.  In Transocean, the issue was which of the 2 different dispute resolution clauses contained separately in the Drilling Contract and the subsequently Escrow Agreement should be applied.  On the facts before him, Andrew Ang J held that the one in the Escrow Agreement was applicable.  One reason for that was his view, upon a reading of the Escrow Agreement and the Drilling Contract, that the parties had intentionally carved the former out from the latter.  In my view, that aspect of Transocean is a factual one decided on the facts before the Court. The fact that there has been such “carving out” supports the disapplication of the earlier dispute resolution clause.  It is however not a prerequisite. It simply does not follow.

42.  In respect of L v M, I agree with Mr Wong that it does not assist Mr Yang. In that case, the relevant agreements were the Master Agreement, the Memorandum of Understanding, the Guarantee, and the Mutual Claims Settlement Agreement.  The Master Agreement was silent as to the mode of dispute resolution.  The other agreements all contained an arbitration clause providing for arbitration at the Hong Kong International Arbitration Centre.  It is not a case with multiple forum clauses.

43.  The proposition and the rigid approach put forward by Mr Yang is also inconsistent with the principles discussed above which explain that a broad and purposive construction should be undertaken.

44.  I do not accept Mr Yang’s submission in this regard.

G.  The Contractual Ground — discussion

45.  To establish a case for the Interim Injunction, WFOEs were and are required to show to a high degree of probability that the initiation by D of the WFOE Proceedings constituted a breach of the Arbitration Agreement.  It is a question of interpretation of the agreements concerned.

46.  The WFOEs would also have to be able to show to a high degree of probability that they were able to rely on the Arbitration Agreement and to enforce it.

47.  During the hearings before Deputy Judge Sit SC, Ps relied on the Fiona Trust approach.  Those cases and authorities discussed above dealing with multiple forum clauses were not brought to her attention.

48.  One important consideration, put in a nutshell, should have been whether the WFOE Proceedings arose out of or were more closely connected with the Share Pledge Agreements than the JV Agreements.

49.  The WFOEs were however not parties to the JV Agreements.

50.  At section III.1 of his submissions, Mr Yang argues that the coverage of the Arbitration was wide, that the WFOEs have been mentioned in the JV Agreements, and that the Loan Agreements were the result of D’s failure to honour its obligation to provide the guarantee.

51.  One difficulty the WFOEs face is what Rix J described in Credit Suisse First Boston as “axiomatic”, and he described that in the context of non-parties’ position regarding a dispute resolution clause, that:

“ … in the absence of plain language to the contrary, a contract seeks neither to benefit nor to prejudice non-parties: even where such plain language is used, it is black-letter law that the non-party can himself neither take the benefit nor suffer the burden of the contract. In the present case there is nothing in the language of cl 5.2 to suggest that it is intended to have an ambit beyond the parties to the purchase agreements themselves.”

52.  Similar observations can be made in the present case.

53.  There is further nothing on the face of the JV Agreements which provide for the provision of any direct loan from D to the JSAT, or the pledging of any shares the WFOEs had in it in favour of D in exchange.

54.  In my view, there is great force in Mr Wong’s argument that the JV Agreements in fact did not envisage any direct loan from D, that the WFOEs are not parties to it, and that they are not entitled to enforce the Arbitration Agreement[23].

55.  Further, and more importantly in my mind:

(a)  the general should give way to the specific;

(b)  whilst the JV Agreements may at best be described as related to the WFOE Proceedings given the fact that they all related to the joint venture between the parties, the WFOE Proceedings in comparison arose directly from the Loan Agreements and the Share Pledge Agreements, and are much more closely connected to them in terms of (1) the parties, (2) the causes of action in the WFOE Proceedings, and (3) the relief sought;

(c)  The Loan Agreements and the Share Pledge Agreements form the centre of gravity of the WFOE Proceedings.

56.  Mr Yang relies on the fact that the Loan Agreements contain no dispute resolution clause, and that the Mainland Jurisdiction Clause is a non-exclusive one.

57.  Those facts do not advance WFOEs’ case far:

(a)  the Loan Agreements and the Share Pledge Agreements are, and are clearly intended by the parties to be, related.  I have made reference to the reference codes that appear on the face of the documents;

(b)  the scope of the Mainland Jurisdiction Clause is wide, covering “本協議或有關本協議的任何爭議而產生爭議”;

(c)  viewed objectively, the Mainland Jurisdiction Clause covers, and is intended to cover, any dispute that arises from the Loan Agreements.

58.  In relation further to Mr Yang’s submission[24] that the Loan Agreements were the result of D’s failure to honour its obligation, I accept Mr Wong’s submissions that that at best gives the WFOEs a defence in the WFOE Proceedings.  But according to Deutsche Bank v Sebastian Holdings (both first instance and on appeal), the focus of the interpretation exercise should be the cause of action, but not the defence or the relief sought.

59.  I note further these.  On scope, the JV Agreements are wide; in comparison with the Loan Agreements and the Share Pledge Agreements are specific, focusing upon only the provision of loans and securities.  On parties, the Loan Agreements and the Share Pledge Agreements are between D (a state-owned company), JSAT (the joint venture vehicle), and the WFOEs, which are all companies incorporated in the Mainland.  The Loan Agreements and the Share Pledge Agreements have been, on the face of the resolutions adduced, subject to separate shareholder approvals.  Viewed objectively and in a commercially-minded way, the parties could reasonably have intended that any dispute arising from the specific loans and securities provided pursuant to the Loan Agreements and the Share Pledge Agreements should be dealt with by the NIPC pursuant to the Mainland Jurisdiction Clause, but not by the “香港仲裁委員會” under the Arbitration Agreement in the JV Agreements.

60.  For completeness, I record P’s contention that the Mainland Jurisdiction Clause may be too vague to be enforceable under Mainland law because it refers to “雙方” when there are three parties to each of the Share Pledge Agreements.  I reject that contention.  I accept the expert evidence adduced by D in this regard, that “雙方” merely refers to the two parties that may be in dispute, but is not referable to all 3 parties to each of those agreements.

61.  On the basis of the above authorities and discussions which were not raised before Deputy Judge Sit SC, I form the view that the WFOEs have not been able to show to a high degree of probability that the initiation by D of the WFOE Proceedings constituted a breach of the Arbitration Agreement.

H.  The Unconscionable Ground — discussion

62.  Given my views above, I fail to see how it could be argued that the initiation of the WFOE Proceedings pursuant to a contractual clause agreed amongst the parties (ie the Mainland Jurisdiction Clause) could be regarded as unconscionable, vexatious or oppressive.

I.  Conclusion on the application for discharge

63.  For the reasons set out above, I discharge the part of the Interim Injunction at §§1(b) to (d) of the 19 Oct Order relating to the WFOE Proceedings.

J.  The part of the Summons for fortification, and Ps’ Variation Summons

64.  Given my decision to discharge the part of the Interim Injunction at §§1(b) to (d) of the 19 Oct Order, the part of the Summons for fortification and Ps’ Variation Summons are no longer engaged.  I make no order in respect of the former, and dismiss the latter.

K.  Costs

65.  I make a costs order nisi that D shall have the costs of the Summons and Ps’ Variation Summons, with certificate for 2 counsel, to be assessed summarily.  The order will become absolute within 14 days from the date hereof unless any party seeks any variation thereof in the meantime, in which case I will give further direction on the further conduct of the same.