U. K. PROLIFIC PETROLEUM GROUP COMPANY LTD v. 鑫都集團有限公司

HCMP 546/2024

[2025] HKCFI 4769

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 546 OF 2024

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BETWEEN

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AND

HCMP 630/2024

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. 630 OF 2024

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__________________

BETWEEN

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J U D G M E N T

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A. Introduction

1.  These proceedings raise (among others) a novel issue concerning the Court’s jurisdiction on stop notices and stop orders under O.50 rr.11-15 of the Rules of the High Court (“RHC”). On the facts here, such reliefs are pursued in effect as interim measures to hold the ring over shares and convertible bonds (“CBs”) of a listed company pending arbitration in the Shenzhen Court of International Arbitration (“SCIA”). On one view, it raises the question whether the Court has jurisdiction to grant relief under RHC O.50 rr.11-15 in the absence of substantive proceedings in Hong Kong. On another view, such question is simply not engaged as RHC O.50 rr.11-15 constitute a statutory regime of its own; alternatively the Court should in any event have jurisdiction under such regime to grant relief in aid of foreign proceedings and arbitrations, having regard to recent case law developments on the Court’s jurisdiction to grant injunctions. I will address this further in my judgment.

2.  The parties have also raised other issues and arguments. Whilst I will address them in my judgment, I will not go into them in details, bearing in mind that these proceedings are not the forum for substantive determination of the underlying dispute, which is pending arbitration in the SCIA.

3.  By way of procedural background, the following matters came before the Court during the hearings on 23 September and 2 October 2024:

(1) U.K. Prolific Petroleum Group Company Limited’s (“UKPPGC”) Originating Summons dated 2 April 2024 in HCMP 546/2024 (“Discharge OS”) issued under RHC O.50 r.14 seeking to discharge Stop Notice No.6 of 2023 (“Stop Notice”) issued by 鑫都集團有限公司 (“Xindu”) on 10 November 2023;

(2) Xindu’s Originating Summons and Summons both dated 16 April 2024 in HCMP 630/2024 (“Stop Order OS” and “Stop Order Summons”) seeking injunctive relief against the 1^st Defendant (“ListCo”) and the 2^nd Defendant (“Tricor”) under RHC O.50 r.15 to restrain them from:

(a) registering the transfers (“Transfers”) of (i) 1,860,000,000 (1.86 billion) shares in ListCo (“Subject Shares”) and (ii) CBs with a principal amount of HK$199,120,000 issued in January 2011 by ListCo (“Subject CBs”), standing in the name of UKPPGC; and

(b) issuing new share and bond certificates in respect of the above;

(3) UKPPGC’s Summons dated 31 July 2024 in HCMP 630/2024 (“Fortification Summons”) seeking fortification of Xindu’s undertaking as to damages as a condition to the making of any order under the Stop Order Summons and Stop Order OS.

4.  Xindu says that the Fortification Summons was merely listed on 23 September 2024 as a call-over hearing whilst UKPPGC invites the court to nevertheless deal with it. As I will explain, I eventually reach the view that the Fortification Summons should not be dealt with at this stage given (i) the need for further evidence and (ii) the potential impact by my ruling herein.

5.  After the hearings on 23 September and 2 October 2024, UKPPGC became aware of the following documents (“New Documents”):-

(1) First, 變更仲裁請求申請書 filed by Xindu with SCIA arbitral tribunal dated 12 October 2024 (“Amendment Application”);

(2) Second, 仲裁請求計算依據及明細 filed by Xindu dated 13 October 2024 (“Claim Breakdown”); and

(3) Third, (i) 山東省東營市中級人民法院執行裁定書(2024) 魯05 執保18 號 dated 13 November 2024 and (ii) 山東省東營市中級人民法院協助執行通知書 (2024) 魯05 執保18 號之二dated 15 November 2024 (“PRC Enforcement Documents”).

6.  On 25 November 2024, UKPPGC took out Summonses for leave to adduce the New Documents and to re-open the hearing (“Post-hearing Evidence Summonses”), together with affirmations in support.

7.  Thereafter, I ordered that the Post-hearing Evidence Summonses are to be heard together with the reopened hearing on the same occasion, should leave be granted for hearing to be reopened. Directions were also given for the filing of evidence. A further hearing was fixed for 29 May 2025.

8.  On 16 May 2025, UKPPGC took out Summonses (“EOT Summonses”) for leave to adduce further documents which show that the SCIA arbitration has been stayed (“Stay Documents”), namely:-

(1) First, 受理案件通知書 (“Notice of Case Acceptance”) issued by Shenzhen Intermediate People’s Court of Guangdong Province (廣東省深圳市中級人民法院) to Wong Yiu Kwan (formerly known as Wang Guoju) (“WYK”) dated 9 May 2025 whereby the People’s Court in Shenzhen accepted WYK’s application to confirm the validity of the 2015 Memorandum (as defined below) (“SZ Court Application”);

(2) Second, 中止仲裁程序申請書 (“Application for Suspension of Arbitration Proceedings”) issued by WYK to SCIA dated 9 May 2025, requesting the suspension of the SCIA arbitration; and

(3) Third, 中止仲裁程序的通知 (“Notice of Suspension of Arbitration Proceedings”) issued by SCIA dated 13 May 2025 whereby the SCIA decided to stay the SCIA arbitration pending the decision of the Shenzhen Court.

9.  On 21 May 2025, Xindu applies to this Court for an adjournment of the Post-hearing Evidence Summons sine die and the vacation of the hearing on 29 May 2025 pending the final determination of the SZ Court Application. Nevertheless, as such application cannot be dealt with prior to 29 May 2025, Xindu no longer pursued it. At the hearing on 29 May 2025, I ordered Xindu to pay to UKPPGC the costs thrown away, summarily assessed at HK$13,000.

10.  Xindu has made submissions on the New Documents and the Stay Documents. Save for that, Xindu did not oppose the Post-hearing Evidence Summonses and the EOT Summonses (which I would allow, with costs in the cause).

11.  Thus, the matters which require determination are (i) UKPPGC’s Discharge OS and (ii) Xindu’s Stop Order OS and Stop Order Summons, having regard to the New Documents and the Stay Documents.

B. Brief background and issues

12.  The present dispute arises out of a memorandum executed in January 2015 (“2015 Memorandum”) among (on its face) inter alia (i) Xindu, (ii) UKPPGC, (iii) WYK and (iv) Wong Hanning (“Hanning”), the son of WYK. Xindu relies on clause 四(二)2 thereof (“Clause 4(2)(2)”):

“鑫都對UK公司的股權擁有20%的權益（該權益指2011年1月最初中能控股交易完成獲得對價，而不是現時持有的股票和債劵），並有權按比例分配UK公司最初擁有的中能控股股票和可換股債劵的20%，UK公司的其他權益（如有）按現時的20%分配。”

13.  Xindu’s case is that, under the 2015 Memorandum, it agreed to give up certain claims and entitlements (pursued in litigation in 2014) and, in return, UKPPGC and its related parties agreed that Xindu is entitled to (1) 20% of the shareholding in UKPPGC as of January 2011, (2) 20% of the shares and CBs in China Energy Development Holdings Limited, the 1^st Defendant herein (i.e. ListCo), initially owned by UKPPGC, and (3) 20% of other rights and benefits owned by UKPPGC.

14.  Xindu contends that it may trace its 20% entitlement as at January 2011 (i.e. HK$511,600,000, being 20% of HK$2,558,000,000) by claiming (i) 1.86 billion shares in ListCo (being HK$312,480,000) (i.e. Subject Shares) in full and (ii) the remainder by way of CBs with a principal amount of HK$199,120,000 (being HK$511,600,000 – HK$312,480,000) issued by ListCo (i.e. Subject CBs) (collectively “Subject Securities”).

15.  In November 2023, Xindu applied for and obtained within HCSN 6/2023 a stop notice over the Subject Securities (i.e. the Stop Notice).

16.  On 2 April 2024, UKPPGC commenced HCMP 546/2024 to discharge the Stop Notice contending, inter alia, that Xindu is not beneficially entitled to the Subject Securities.

17.  By letter dated 10 April 2024, ListCo gave notice to Xindu that:

(1) On 10 April 2024, ListCo had instructed Tricor (its share registrar and transfer agent) to register the transfer of 1,500,000,000 shares in ListCo (“Cypress Shares”) from UKPPGC to Cypress Dragons Limited (“Cypress”) pursuant to a duly executed and stamped standard form of transfer dated 9 April 2024, and shall issue the new share certificate in respect of such shares, on 25 April 2024; and

(2) ListCo will also register the transfer of CBs with principal amount of HK$543,150,000 (“Cypress CBs”, and collectively “Cypress Transfers” and “Cypress Securities”) from UKPPGC to Cypress pursuant to a duly executed form of transfer dated 9 April 2024, and issue the new bond certificate, on 25 April 2024.

18.  On 16 April 2024, Xindu commenced HCMP 630/2024 pursuant to RHC O.50 r.15 and applied for urgent interim-interim relief to protect its interest in the Subject Securities. It should be noted that the scope of the Subject Securities exceeds the scope of the Cypress Securities.

19.  On 19 April 2024, DHCJ KC Chan heard Xindu’s application for interim-interim relief, which was opposed by UKPPGC. The Court granted relief in favour of Xindu, restraining the registration of the Transfers and the issuance of new shares and bond certificates pending substantive determination of the Stop Order OS/ Summons. Again, it should be noted that the scope of the Transfers is greater than that of the Cypress Transfers.

20.  On 13 May 2024, the Court ordered that the Discharge OS be adjourned for substantive argument to be heard together with the Stop Order OS on 23 September 2024.

21.  On 20 May 2024 (or 29 May 2024 as per UKPGCC), Xindu commenced arbitration in the SCIA (“Arbitration”) in compliance with the undertaking given to the Court on 19 April 2024, seeking inter alia (i) declaratory relief of Xindu’s entitlement to 20% of UKPPGC’s shareholding (inclusive of its interest in ListCo) and (ii) an order for the transfer of, among others, the shares in ListCo presently held by UKPPGC (including the Subject Shares) to Xindu.

22.  As mentioned, the matter came before this Court on 23 September 2024 and 2 October 2024. A further hearing took place on 29 May 2025.

23.  As a preliminary point, UKPPGC says that the affidavit evidence filed by Xindu shall be inadmissible as they are unnotarized and in breach of the Court’s unless orders. By the deadline of the unless orders, Xindu filed affirmation by its solicitors which exhibited unnotarized (or even undated and unsigned) affirmations. According to UKPPGC, the defect cannot be subsequently cured. On the other hand, Xindu argues that it has not breached the unless orders as it did file affirmation by its solicitors within time, and that if necessary the Court has an inherent discretion to act in reliance upon the parties’ undertakings, treating what they have undertaken to do as done. On the whole, I find Xindu’s conduct unsatisfactory, particularly as there was substantial delay in respect of the signing and/or notarisation of the underlying affirmations after the expiry of the unless orders. However, I am not ultimately persuaded that I should disregard Xindu’s evidence altogether, although the Court would mark its disapproval of such conduct by appropriate costs order.

24.  Subject to that, UKPPGC’s key arguments (in support of the Discharge OS and in opposition to Stop Order OS/ Summons) are as follows:

(1) The Court has no jurisdiction, and Xindu cannot in principle avail itself of stop notice/ stop order regime under RHC O.50 rr.11-15.

(2) The circumstances of this case do not justify any discretion to be exercised in favour of Xindu.

(3) Xindu’s claim against UKPPGC under the 2015 Memorandum lacks merit because:

(a) The 2015 Memorandum is not binding on UKPPGC. It did not bear the seal of UKPPGC, and neither WYK nor Hanning had authority to sign it for UKPPGC.

(b) Xindu’s claim is time-barred.

(c) The 2015 Memorandum was procured by duress.

(4) Even if the 2015 Memorandum is valid and binding, Xindu has no beneficial or proprietary interest in the Subject Securities.

(5) Xindu’s computation of the Subject Securities is incorrect anyway.

(6) The New Documents lend support to UKPPGC’s case.

25.  I will consider the above in turn.

C. Analysis

C1. Jurisdiction

26.  UKPPGC contends that the Court has no jurisdiction to accept the filing of affidavit evidence or seal the Stop Notice under RHC O.50 r.11(2), nor to grant a stop order under RHC O.50 r.15 for the following reasons:

(1) The substantive effect of the Stop Notice, combined with the stop order sought, is tantamount to a Mareva / proprietary injunction operating against UKPPGC (a BVI company), despite that such notice/ order under RHC O.50 rr. 11-15 are directed against the ListCo and Tricor.

(2) The Court has no power to make orders against persons outside its territorial jurisdiction unless authorized by statute and except in protection or assertion of some legal or equitable right which it has jurisdiction to enforce by final judgment: Mercedes-Benz AG v Leiduck [1995] 3 HKC 1 at p.10C (per Lord Mustill); Siskina v Distos Compania Vaviera S.A. [1979] AC 210 at p.256E-H (per Lord Diplock); Compania Sud Americana de Vapores SA v Hin-Pro International Logistics Ltd (2016) 19 HKCFAR 586 at §§40-46 (per Lord Phillips).

(3) In Hong Kong, the Court only has jurisdiction to impose interim measures absent any existing domestic proceedings under s.21M of the High Court Ordinance (“HCO”) and/or s.45 of the Arbitration Ordinance (“AO”): Top Gains Minerals Macao Commercial Offshore Ltd v TL Resources Pte Ltd [2016] 3 HKC 44 at §§21-22.

(4) Neither of these provisions has been referred to and/or invoked by Xindu in HCSN 6/2023, HCMP 546/2024 or HCMP 630/2024.

(5) No originating summons was issued pursuant to s.21M of the HCO or s.45 of the AO in support of the issuance/ service of the Stop Notice and there is no basis for the court to waive any irregularity: Shi Hong & Ors v Chan Man Kit & Ors [2020] 4 HKC 191 at §§43-46.

(6) There is no authority which suggests that interim relief/ measure referred to in s.21M of the HCO or s.45 of the AO may include a stop notice under RHC O.50 r.11. In fact, the Final Report of the Chief Justice’s Working Party on Civil Justice Reform only intended that “Interim relief by way of Mareva injunctions and/or Anton Piller orders should be available in relation to proceedings which are taking place, or will take place, outside the jurisdiction (and where no such substantive proceedings are contemplated in Hong Kong)”: Compania Sud Americana de Vapores SA v Hin-Pro International Logistics Ltd (2016) 19 HKCFAR 586 at §44 (per Lord Phillips).

(7) Alternatively, even if s.21M of the HCO and/or s.45 of the AO may be read as encompassing the service of a stop notice or grant of a stop order, the relevant requirements under such provisions have not been satisfied here.

(8) In the premises, the Stop Notice ought to be discharged, and there is no basis to grant a stop order.

27.  With respect, I do not agree that the Court has no jurisdiction, or that the Court’s jurisdiction should be so limited as contended by UKPPGC.

28.  First and foremost, the statutory restrictions of the stop notice/ stop order regime are that (i) such regime applies to prescribed securities and (ii) the regime may be invoked by a person claiming to be entitled to an interest in prescribed securities. The statute does not impose a restriction by reference to the territorial jurisdiction over the person in whose name the prescribed securities are held. There is no proper basis for UKPPGC to superimpose an unwritten restriction as alleged.

29.  To begin with, s.55C of the HCO provides:

“55C. Rules as to stop orders and notices

(1) In this section—

stop order (停止令) means an order of the Court of First Instance prohibiting the taking, in respect of any of the securities specified in the order, of any of the steps mentioned in subsection (4);

stop notice (停止通知書) means a notice requiring any person on whom it is duly served to refrain from taking, in respect of any of the securities specified in the notice, any of the steps mentioned in subsection (4) without first notifying the person by whom, or on whose behalf, the notice was served; and

prescribed securities (訂明的保證物) means securities (including funds in court) of a kind prescribed by rules of court made by virtue of this section.

(2) The power to make rules of court under section 54 shall include power by any such rules to make provision—

(a) for the Court to make a stop order on the application of any person claiming to be entitled to an interest in prescribed securities; and

(b) for the service of a stop notice by any person claiming to be entitled to an interest in prescribed securities.

(3) Rules of court made by virtue of this section shall prescribe the person on whom a copy of any stop order or stop notice is to be served.

(4) The steps mentioned in subsection (1) are—

(a) the registration of any transfer of the securities;

(b) in the case of funds in court, the transfer, sale, delivery out, payment or other dealing with the funds, or of the income thereon;

(c) the making of any payment by way of dividend, interest or otherwise in respect of the securities; and

(d) in the case of a unit trust, any acquisition of or other dealing with the units by any person or body exercising functions under the trust.

(5) Any rules of court made by virtue of this section may include such incidental, supplemental and consequential provisions as the Rules Committee considers necessary or expedient, and may make different provision in relation to different cases or classes of case.”

30.  Section 55C of the HCO envisages rules to be made for the Court to make a stop order on the application of, and for the service of a stop notice by, “any person claiming to be entitled to an interest in prescribed securities”.

31.  In relation to stop notice, RHC O.50 r.11(1) provides:

“11. Securities not in court: stop notice (O. 50, r. 11)

(1) Any person claiming to be beneficially entitled to an interest in any securities of the kinds set out in section 20A(2)(b) of the Ordinance, other than securities in court, who wishes to be notified of any proposed transfer or payment of those securities may avail himself of the provisions of this rule.”

32.  In relation to stop order, RHC O.50 r.15(1) provides:

“15. Order prohibiting transfer, etc. of securities (O. 50, r. 15)

(1) The Court, on the application of any person claiming to be beneficially entitled to an interest in any securities of the kinds set out in section 20A(2)(b) of the Ordinance may by order prohibit the person or body concerned from registering any transfer of the securities or taking any other step to which section 55C(4) of the Ordinance applies.

The order shall specify the securities to which the prohibition relates, the name in which they stand and the steps which may not be taken, and shall state whether the prohibition applies to the securities only or to the dividends or interest as well.”

33.  Section 20A(2)(b) of the HCO in turn provides:

“20A. Property which may be charged

…

(2) The assets referred to in subsection (1) are—

…

(b) securities of any of the following kinds—

(i) Government stock;

(ii) stock of any body incorporated in Hong Kong;

(iii) stock of any body incorporated outside Hong Kong or of any state or territory outside Hong Kong, being stock registered in a register kept at any place within Hong Kong;

(iv) units of any unit trust in respect of which a register of the unit holders is kept at any place within Hong Kong; …”

34.  Therefore, the only restrictions imposed by the statute relate to (i) the type of securities and (ii) the locus of an applicant, being any person claiming to be entitled to an interest in such securities. It may be said that the restrictions on the type of securities did take into account territorial jurisdiction, such that the regime may only be invoked in relation to stock of any body incorporated in Hong Kong, stock of any body incorporated outside Hong Kong but registered in a register kept within Hong Kong, etc. As the legislature has seen fit to impose restrictions on territorial jurisdiction by reference to the type of securities (as opposed to other aspects), there is no proper basis to read in further unwritten restriction on territorial jurisdiction.

35.  Second, UKPPGC’s argument that the Court has no jurisdiction in respect of stop notice/ stop order pending resolution of claims or disputes as to entitlement to shares in foreign proceedings and arbitrations, would frustrate the rationale and purpose of such regime. As observed by Laffoy J in Lee v Buckle [2004] 3 IR 544 at §38:

“As to when the court should exercise its jurisdiction to cease the operation of the stop notice, I am satisfied that the core submission made by counsel for the applicant is correct: that once it is acknowledged that the ultimate outcome of the respondent’s claim, if he is successful, will be a monetary award and not the retention of the shares, the respondent is not entitled to have the stop notice continued. The procedure is designed to preserve the shares in specie while there is an unresolved claim or a dispute as to the entitlement to the shares in specie, so that they will be available to satisfy the claim, if successful. It operates until that claim or dispute is resolved or the court otherwise orders. The rationale for continuing the stop order no longer exists when the claimant ceases to be entitled to the shares in specie.” [Emphasis added]

36.  As the regime seeks to preserve the shares in specie while there is an unresolved claim or dispute as to the entitlement to the shares in specie, an applicant falling within the ambit of the regime (i.e. “any person claiming to be entitled to an interest in prescribed securities”) should be eligible to invoke the protection by the regime as long as there is an unresolved claim or a dispute as to the entitlement to the prescribed securities. In principle, such protection is needed regardless of where and how such claim or dispute is to be resolved.

37.  Notably, UKPPGC suggests in §10.4(2) of its submissions that “a stop notice must be supported by a claim/ dispute, although it does not have to be one pursued in litigation (e.g. arbitration or other forms of dispute resolution)”. As UKPPGC accepts that the regime is available pending the resolution of a claim or dispute in arbitration or other forms of dispute resolution, there is no good reason why such regime is not available simply because such arbitration or dispute resolution is conducted outside Hong Kong. Indeed, UKPPGC’s stance runs contrary to the adaptive flexibility inherent in the court’s equitable jurisdiction to grant injunctions (as examined below).

38.  Third, the stop notice/ stop order regime is directed against a person who has power to register the transfer of the prescribed securities (i.e. ListCo or Tricor), as opposed to a person in whose name the prescribed securities are held (i.e. UKPPGC). The authorities cited by UKPPGC are not engaged, as the Court is not making orders against a person outside its territorial jurisdiction such as UKPPGC.

39.  Fourth, The Siskina and Leiduck (both considered by the Court of Final Appeal in Hin-Pro) are distinguishable. In Sir Elly Kadoorie & Sons Ltd v Samantha Jane Bradley [2024] 4 HKLRD 428, the defendant relied on The Siskina and Leiduck to contend that an injunction must be founded on a cause of action. The Court of Appeal rejected such argument at §§44-52, finding that they do not establish such a wide proposition:

“44. First, Mr Kirpalani argues that this Court is bound by the requirement that an injunction must be founded on a cause of action, and cites Siskina (Owners of Cargo Lately Laden on Board) v Distos Compania Naviera SA [1979] AC 210, Mercedes Benz AG v Leiduck [1996] AC 284 and Securities and Futures Commission v C [2009] 4 HKLRD 315 in support of this proposition.

45. As analysed below, none of the three cases establishes the wide proposition advanced by Mr Kirpalani.

46. In The Siskina, the House of Lords held that, to come within Order 11, rule 1(1)(i) of the Rules of the Supreme Court 1965, the “injunction” sought in the action had to be part of the substantive relief to which the plaintiff’s cause of action entitled him, and the thing that it was sought to restrain the foreign defendant from doing in England had to amount to an invasion of some legal or equitable right belonging to the plaintiff in England and enforceable by a final judgment for an injunction. Since the injunction sought against the shipowners in that case was a Mareva injunction, which was interlocutory in character, it did not come within Order 11, rule 1(1)(i).

47. At 256C-E, Lord Diplock stated that –

“The words used in sub-rule (i) are terms of art. The sub-rule speaks of ‘the action’, in which a particular kind of relief, ‘an injunction’ is sought. This pre-supposes the existence of a cause of action on which to found ‘the action.’ A right to obtain an interlocutory injunction is not a cause of action. It cannot stand on its own. It is dependent upon there being a pre-existing cause of action against the defendant arising out of an invasion, actual or threatened by him, of a legal or equitable right of the plaintiff for the enforcement of which the defendant is amenable to the jurisdiction of the court. The right to obtain an interlocutory injunction is merely ancillary and incidental to the pre-existing cause of action. It is granted to preserve the status quo pending the ascertainment by the court of the rights of the parties and the grant to the plaintiff of the relief to which his cause of action entitles him, which may or may not include a final injunction.”

48. This statement of Lord Diplock was later interpreted to mean that an interlocutory injunction must be founded on, or ancillary to, a pre-existing cause of action (in the sense of a claim for final, substantive relief which the court had jurisdiction to grant) vested in the plaintiff against the defendant to be enjoined. For the purpose of the decision in The Siskina, it was in fact not necessary for the House of Lords to come to any such view [See Broad Idea International Ltd v Convoy Collateral Ltd [2023] AC 389, at §10]. Indeed, Lord Diplock expressly stated that “… I do not think that the instant appeal provides an appropriate vehicle to carry your Lordships into a consideration of the wider question of what restrictions, whether discretional or jurisdictional, there may be upon the powers conferred upon the High Court by section 41(2) of the Supreme Court of Judicature (Consolidation) Act 1925 to ‘grant … an injunction … by an interlocutory order in all cases in which it appears to the court to be just or convenient so to do.’”

49. In any event, the rigid view tying the court’s power to grant an interlocutory injunction to the existence of an enforceable cause of action against the defendant at the suit of the plaintiff has since been rejected. The process by in which this was achieved has been traced in the judgment of Lord Leggatt (with whom Lord Briggs, Lord Sales and Lord Hamblem agreed) in Broad Idea (a decision of the Privy Council on appeal from the Court of Appeal of the Eastern Caribbean Supreme Court), at §§4-61, 75-100.

50. The next case relied upon by Mr Kirpalani is Leiduck. In that case, Lord Mustill (delivering the majority judgment of the Privy Council on appeal from Hong Kong) held that a claim for a Mareva injunction was not of a character within Order 11, rule 1(1) of the Rules of the Supreme Court, the purpose of which was to authorise the service on a person not otherwise compellable to appear before the local court of a document commencing an action designed to ascertain substantive rights and requiring him to submit to the adjudication of that claim (pp 301F-302F, 304F). Lord Nicholls of Birkenhead (dissenting) held that the court had jurisdiction, in the sense of legal power, to grant a Mareva injunction in aid of a judgment being sought in a foreign court, and that a claim for a Mareva injunction could stand on its own feet as the entirety of the relief sought (pp 305C-D, 310A and 313D). Lord Nicholls further held that a Mareva injunction in aid of a prospective judgment being sought from another court is an injunction within the meaning of Order 11, rule 1(1)(b), and thus leave for service out of the jurisdiction could be granted under that paragraph where the only substantive relief sought in the action is such Mareva injunction (p 313A-G).

51. The third case relied upon by Mr Kirpalani is C. There, the Hong Kong Court of Appeal accepted that (i) The Siskina was authority for the proposition that a Mareva injunction could not stand on its own but was dependant on there being a pre-existing cause of action against the defendant arising out of the invasion of a right of the plaintiff, and the right to such an injunction was necessarily ancillary and incidental to the pre-existing cause of action, and (ii) the ratio of Leiduck was that a Mareva injunction did not fall under Order 11, rule 1(1)(b) in the absence of an underlying claim for substantive relief, but distinguished The Siskina and Leiduck on the ground that an order under s 213(2)(c) of the Securities and Futures Ordinance, Cap 571, which empowered the court to make “an order restraining or prohibiting a person from acquiring, disposing of, or otherwise dealing in, any property specified in the order”, was free-standing and did not require an underlying claim.

52. In summary, all three cases relied upon by Mr Kirpalani are decisions on service out of the jurisdiction. The Siskina and Leiduck were decided on the basis of the true construction of Order 11, rule 1(1) of the Rules of the Supreme Court 1965, while C was decided on the basis of the true construction of s 213(2)(c) of the Securities and Futures Ordinance. None of the 3 cases relied upon by Mr Kirpalani held definitively that the court has no jurisdiction to grant a final injunction in the absence of a pre-existing cause of action vested in the plaintiff against the defendant.”

40.  As The Siskina and Leiduck were decided on the basis of the true construction of O.11 r.1(1) of the Rules of the Supreme Court 1965, they do not apply to the construction of the different statutory regime of stop notice/ stop order. Indeed, in Securities and Futures Commission v C [2009] 4 HKLRD 315, the Court of Appeal also distinguished The Siskina and Leiduck and decided on the basis of the true construction of s.213(2)(c) of the Securities and Futures Ordinance that an order under such section was free-standing and did not require an underlying claim. This dovetails my view which is based on the true construction of HCO s.55C and RHC O.50 rr.11-15.

41.  For the avoidance of doubt, following the Court of Appeal’s decision in Sir Elly Kadoorie & Sons Ltd, the Appeal Committee of the Court of Final Appeal has granted leave to appeal in [2025] HKCFA 13 on inter alia the question “Whether a “free-standing” injunction can be granted to a corporate plaintiff if it could not pursue a claim for the tort of harassment as a matter of law?” As explained by the Appeal Committee at §5:

“5. Though the matter comes before us at an interlocutory stage, the issues raised are not confined to procedural ones. There is room for examining whether the Court of Appeal was correct in holding that the Plaintiff could maintain the action by pursuing a “free-standing injunction” even if it actually had no cause of action in respect of the tort of harassment. The holding of the Court of Appeal, if correct, arguably extends the power of the court to grant injunctive relief beyond the principles affirmed in Wolverhampton City Council v London Gypsies and Travellers. It is a point of great general or public importance as such extension could have ramifications for the grant of injunctive relief in other areas of law as well.”

42.  For present purposes, I need only rely on the Court of Appeal’s reasoning that The Siskina and Leiduck were decided on the basis of the true construction of O.11 r.1(1) of the Rules of the Supreme Court 1965 and are thus distinguishable. I need not go so far to rely on any proposition that a plaintiff may pursue a “free-standing injunction” even if it actually had no cause of action (in respect of the underlying tort in that case).

43.  Fifth, insofar as it is necessary, it would appear that The Siskina and Leiduck are overtaken by case law and that, where the Court has personal jurisdiction over a party, the Court has power – and there is no principle or practice which prevents the exercise of the power – to grant a freezing injunction or other interim injunction against that party to assist enforcement through the court’s process of a prospective (or existing) foreign judgment (or arbitral award): Convoy Collateral Ltd v Broad Idea International Ltd [2023] AC 389 at §121 (also §§31, 76-120).

44.  Importantly, at §118, the majority of the Privy Council opined that there is no inconsistency between legislation such as s.25 of the 1982 Act (being a specific provision on injunction in aid of foreign proceedings akin to s.21M of the HCO) and their conclusion about the extent of the court’s power under s.37 of the 1981 Act (being a generic provision on injunction akin to s.21L of the HCO).

45.  By analogy, in the context of the stop notice/ stop order regime, where the Court has personal jurisdiction over the ListCo and Tricor, the Court has power to grant an interim injunction against them to assist enforcement through the Court’s process of a prospective foreign arbitral award. Such power exists independently and there is no inconsistency with s.21M of the HCO or s.45 of the AO.

46.  Sixth, my construction is reinforced by the jurisprudence on the wide and flexible powers of the Court to grant injunctions. In Wolverhampton City Council v London Gypsies and Travellers [2024] AC 983, the UK Supreme Court explained that the jurisdiction to grant injunctions is (i) rooted in equity, (ii) remains so despite its statutory confirmation (such as s.21L(1) of the HCO in Hong Kong) and (iii) subject to any relevant statutory restrictions, unlimited (at §17). Specifically, the UK Supreme Court referred to Broad Idea as rejecting the rigid doctrine that an injunction must be founded on an existing cause of action against the person enjoined, and said that “[i]t is now well established that the grant of injunctive relief is not always conditional on the existence of a cause of action” (§43). Examples cited included (i) an application by the Attorney General, acting either ex officio or through another person known as a relator, to ensure that the defendant obeys the law, (ii) a Mareva or freezing injunction, (iii) a Norwich Pharmacal order, (iv) a Bankers Trust order, and (v) an internet blocking order (at §§44-49).

47.  At §§147-153, the UK Supreme Court reaffirmed the following first principles concerning the exercise of the court’s jurisdiction to grant injunctions:

(1) The basic general principle by reference to which equity provides a discretionary remedy is that it intervenes to put right defects or inadequacies in the common law. That is frequently because equity perceives that the strict pursuit of a common law right would be contrary to conscience.

(2) The second relevant general equitable principle is that equity looks to the substance rather than the form.

(3) The third general equitable principle is equity’s essential flexibility. Not only is an injunction always discretionary, but its precise form, and the terms and conditions which may be attached to an injunction (recognised by s.37(2) of the Senior Courts Act 1981), are highly flexible.

(4) There is no supposed limiting rule or principle apart from justice and convenience which equity has regarded as sacrosanct over time.

48.  The above principles were cited with approval by the Hong Kong Court of Appeal in Secretary for Justice v Persons Conducting Themselves in Any of the Acts Prohibited under Paragraph 1(a), (b), (c) or (d) of the Indorsement of Claim [2024] 3 HKLRD 905 at §§20-21, and Sir Elly Kadoorie & Sons Ltd at §§34-37. As Poon CJHC put it in the former at §21, “the developments underscore the adaptive flexibility inherent in the equitable jurisdiction which enables the court, so long as it acts in accordance with established principles or any logical extension of them, to grant injunctions in new circumstances as justice and convenience dictate”.

49.  Similarly, the jurisdiction under s.55C of the HCO and RHC O.50 rr.11-15 is, subject to any relevant statutory restrictions, unlimited. In line with the adaptive flexibility inherent in its equitable jurisdiction, the Court should have wide and flexible powers over stop notice and stop order falling within the ambit of prescribed securities, without superimposing any further limitation on jurisdiction in the absence of statutory restriction to such effect.

50.  For all these reasons, I am satisfied that the Court has jurisdiction in the present case to accept the filing of affidavit evidence or seal the Stop Notice under RHC O.50 r.11(2), and to grant a stop order under RHC O.50 r.15. It follows that there is no need to consider the further questions whether (i) interim relief/ measure referred to in s.21M of the HCO or s.45 of the AO may include a stop notice under RHC O.50 r.11 and (ii) if so, whether the relevant requirements under such provisions have been satisfied here.

C2. Discretion

51.  Next, UKPPGC contends that the circumstances of this case do not justify any discretion to be exercised in favour of Xindu.

52.  UKPPGC’s submissions on exercise of discretion are interwoven with its submissions on jurisdiction. They boil down to the following points:

(1) First, the principles applicable to an application for a stop order should be based on the principles of a Mareva injunction. As Xindu does not assert that there is any risk that the Subject Securities would be disposed of/ dissipated, the Stop Notice (or any stop order/ injunction sought) is unjustified.

(2) Second, there is no utility to grant a stop order here. The purpose of Xindu’s application is to restrain the transfer of the Subject Securities transferred to Cypress, and Xindu has already obtained an interim-interim injunction in HCMP 666/2024 restraining Cypress to deal with the said securities ([2024] HKCFI 2234).

(3) Third, there are other alternatives open to Xindu. An injunction may be sought against a non-party to the 2015 Memorandum. There is no explanation by Xindu as to how the considerations in Motorola Credit Corpn v Uzan and Others [2004] 1 WLR 113 at §115 have been satisfied. In particular, there is sufficient recourse for Xindu to seek interim relief in aid of the Arbitration before the PRC courts/ SCIA (also demonstrated by the PRC Enforcement Documents), rendering it unnecessary and inappropriate for Xindu to do so in Hong Kong without a proper explanation.

(4) Fourth, injunctive relief is unnecessary. Xindu’s argument that it is difficult for it to acquire a controlling shareholding in ListCo in the open market is irrelevant because (i) the 2015 Memorandum was never intended to grant Xindu a controlling shareholding in ListCo and (ii) the low trading volume of the Subject Shares does not preclude Xindu from acquiring shares in the open market.

(5) Fifth, the Stop Order OS only seeks a stop order which should last until “the determination of the trial in High Court Miscellaneous Proceedings No. 546 of 2024 or further order of the Court”, as opposed to the determination of the Arbitration in the SCIA.

53.  On the first point, whether the principles of a Mareva injunction are applicable (or applicable in full) should depend on the nature of the claim or dispute. For instance, if an applicant’s case is that he would recover judgment for a certain sum and that steps might be taken to dissipate the assets (including prescribed securities) to frustrate the judgment, then this is akin to a Mareva injunction and those principles ought to apply. However, in the present case, Xindu claims a beneficial or proprietary interest in the Subject Securities and, as such, the stop order sought is akin to a proprietary injunction. Indeed, UKPPGC suggests in §12.3 of its submissions that “The substantive effect of the Stop Notice, combined with the stop order sought, is tantamount to a Mareva / proprietary injunction operating against UKPPGC”. As such, UKPPGC seems to accept that a stop order could, depending on the circumstances, operate like a proprietary injunction. It is well-established that, in the case of a proprietary injunction, it is not necessary to demonstrate a real risk of dissipation of assets.

54.  On the second point, I disagree that there is no utility here.

(1) Xindu issued the Stop Notice in November 2023 and obtained an interim-interim injunction against ListCo and Tricor in HCMP 630/2024 on 19 April 2024, before obtaining an interim-interim injunction against Cypress in HCMP 666/2024 on 31 May 2024. It is logically flawed to argue that there is no utility in Xindu’s application here due to subsequent interim relief in another action.

(2) Crucially, UKPPGC fails to appreciate that the stop order sought here and the interim-interim injunction in HCMP 666/2024 target different entities. The stop order is directed against the ListCo and Tricor, while the interim-interim injunction is directed against Cypress. They operate in tandem to protect Xindu’s interest.

(3) A stop order is not inconsistent or mutually exclusive with the interim-interim injunction against Cypress. It gives Xindu added layer of protection by preventing the completion of the Cypress Transfers, such that Cypress cannot deal with the securities at all.

(4) UKPPGC took out the Discharge OS on 2 April 2024. One week later, UKPPGC executed the Cypress Transfers on 9 April 2024. Despite knowledge of the Stop Notice (and hence Xindu’s claim), UKPPGC and Cypress (being an entity associated with UKPPGC then) went ahead with the Cypress Transfers. One cannot assume that Cypress would always comply with an injunction against it.

55.  On the third point, one must again appreciate the different nature and targets of the reliefs. A stop order is directed against the person who has power to register the transfer of the prescribed securities (such as ListCo and Tricor), whereas the interim measures alluded to by UKPPGC are primarily directed against the transferor (such as UKPPGC) and transferee (such as Cypress) of such securities. Given that one is concerned with securities of a company listed for trading in Hong Kong (which falls within the scope of prescribed securities), it is not at all surprising that Xindu would seek to invoke the readily available regime of stop notice/ stop order which apply to the same. In any event, as mentioned, these reliefs (including those covered by the PRC Enforcement Documents) are not inconsistent or mutually exclusive.

56.  On the fourth point, even assuming that Xindu could readily acquire shares in ListCo in the open market, it does not mean that injunctive relief is unnecessary. Xindu’s case is that it has beneficial or proprietary interest in the Subject Securities held in the name of UKPPGC and it is on such basis that Xindu seeks injunctive relief against ListCo and Tricor under RHC O.50 r.15 to preserve the status quo. This is akin to a proprietary injunction. I agree with Xindu’s submissions that, where an interim injunction is sought to protect a claim for trust property, irremediable damage need not necessarily be shown and the Court will readily find that the balance of convenience favours the preservation of the property pending trial: Pacific Rainbow International Inc v Shenzhen Wolverine Tech Ltd (Unrep., HCA 3023/2016, 2 May 2017) at §37 per DHCJ Douglas Lam SC.

57.  In any event, given the low trading volume of shares in the ListCo, there is at least a question whether damages are adequate relief (even putting aside the proprietary nature of Xindu’s claim).

58.  On the fifth point, I agree that the Stop Order OS is not properly framed as it seeks a stop order lasting until the determination of HCMP 546/2024 (i.e. Discharge OS) or further order, rather than determination of the Arbitration in the SCIA. Xindu recognises such deficiency and suggests in footnote 2 of its submissions that (i) at the time when the Stop Order OS was issued, Xindu had not yet commenced the Arbitration and (ii) Xindu will seek leave to amend the Stop Order OS accordingly. In response, UKPPGC says there is no reason why such amendment was not made earlier and reserves its right to make further submissions should such application be made.

59.  In my view, the Court should adopt a pragmatic approach. Despite the wording of the Stop Order OS, it seems fair to say that both sides have advanced arguments on the basis that Xindu’s claim is to be resolved by the Arbitration (subject to the SZ Court Application). Indeed, the Stop Order OS refers to “further order” which provides built-in flexibility where necessary. As such, I fail to see any material prejudice if the Court is to approach the matter on that basis. In any case and for the avoidance of doubt, I grant leave to Xindu to amend the Stop Order OS accordingly within 14 days of the date of this Judgment.

60.  On a separate note, Xindu argues that UKPPGC’s Discharge OS is academic because (i) the ListCo has given notice to Xindu for registration pursuant to RHC O.50 r.12 and (ii) the interim-interim relief has superseded the Stop Notice. UKPPGC disagrees and emphasises there is nothing to suggest that a stop notice would lose its effect and the ListCo may give a second notice to Xindu. In my view, it very much depends on the outcome of the Stop Order OS. If the Court grants a stop order which covers all the shares in the Stop Notice, the Discharge OS may be said to be academic. However, if a stop order is granted only in respect of some of the shares, then in the absence of any discharge (or variation) the Stop Notice would have a wider scope (and hence not academic in that sense). That said, nothing really turns on this because in practice, the Court would consider the Discharge OS and the Stop Order OS together and reach a consistent decision over the same.

61.  On the whole, I do not think that there is any material factor which militates against the exercise of discretion in favour of Xindu.

62.  The above is subject to UKPPGC’s further arguments below which primarily go to merits. In this regard, Xindu says that the requirements for the grant of an interlocutory injunction are applicable, namely there must be a serious issue to be tried, and the balance of convenience must lie in favour of granting the injunction. Such test is not seriously disputed by UKPPGC.

C3. Whether 2015 Memorandum binding on UKPPGC

63.  UKPPGC contends that the 2015 Memorandum is not binding on it for lack of any valid affixation of its seal and/or signature by its authorized representative(s) (at Section E1 of its submissions). In gist:

(1) The 2015 Memorandum is governed by Mainland laws.

(2) Under Mainland laws, UKPPGC has to sign the same and UKPPGC also has to affix its seal on the same.

(3) Whilst the 2015 Memorandum identifies UKPPGC as a purported party, UKPPGC’s seal has not been affixed on it.

(4) Although WYK signed the 2015 Memorandum, he did not sign it for UKPPGC and he had no authority to do so.

(5) Although Hanning signed the 2015 Memorandum, he was described as “former shareholder of UKPPGC” (UK公司前股東). Such capacity does not give him authority to bind UKPPGC.

64.  In response, Xindu argues inter alia that:

(1) First, WYK (as “UK公司唯一股東和實際控制人”) and/or Hanning (as “UK公司名義股東”) have power to sign the 2015 Memorandum as de facto controller on behalf of UKPPGC and thereby bind UKPPGC in respect of the same under Mainland law.

(2) Second, (i) the two “委託協議書” dated 4 November 2014 in respect of UKPPGC and Giant Crystal Limited (“Giant Crystal”) (signed by Hanning and WYK respectively) (“Custodial Agreements”) and (ii) the two “委託協議書解除協議” dated 16 August 2017 in respect of UKPPGC and Giant Crystal (signed by Hanning and WYK respectively) (“Discharge Agreements”) show that WYK and Hanning had the right to represent UKPPGC in signing the 2015 Memorandum.

(3) Third, UKPPGC has ratified the 2015 Memorandum by virtue of a “一致行動協議” in January 2015 (“Concert Agreement”).

65.  UKPPGC has made detailed submissions why Xindu’s arguments are invalid. Nevertheless, having considered the arguments, I am satisfied there is a serious issue to be tried. As the matter will be determined by the Arbitration in the SCIA, I would set out my key observations without going into all the details or otherwise deciding the matter.

66.  First, UKPPGC argues that there is nothing to show that WYK was the beneficial owner and controller of UKPPGC at the time when the 2015 Memorandum was signed. Yet, it would appear that:

(1) Hanning held shares in UKPPGC for WYK as nominee owner (名義擁有人) up to at least 4 November 2014, as per the party clause in the Custodial Agreement in respect of UKPPGC.

(2) WYK has been the sole shareholder and director of UKPPGC since at least 25 January 2018, as per his Affirmation in HCMP 630/2024.

67.  If WYK has been beneficial owner of UKPPGC pre-November 2014 and post-January 2018, there is at least a triable issue whether WYK (by himself or through his son, Hanning) remained as beneficial owner and de facto controller of UKPPGC during the period in between (including January 2015 when the 2015 Memorandum was executed by WYK and Hanning). Notably:

(1) At §9(3) of his Affirmation in HCMP 546/2024, WYK merely complained that he was forced by the police to sign the 2015 Memorandum. There was no suggestion then that neither WYK nor Hanning had authority to sign the 2015 Memorandum for UKPPGC. Such allegation was only advanced later.

(2) Crucially, WYK stated at §9(4) of such Affirmation that Hanning controlled UKPPGC “at that time”, i.e. January 2015.

68.  There is thus at least a triable issue as to the actual beneficial ownership and control over UKPPGC. This is particularly so as Hanning has not made any affirmation in support of UKPPGC’s case herein.

69.  Further, UKPPGC says that WYK signed the 2015 Memorandum in his personal capacity only. UKPPGC distinguished the Mainland cases cited by Xindu’s expert on the ground that in those cases, the de facto controller signed the relevant documents on behalf of the companies in question.

70.  In my view, whether WYK and/or Hanning signed the 2015 Memorandum in his personal capacity only is a question for trial. Notably, both WYK and Hanning signed the 2015 Memorandum with full knowledge that UKPPGC was (purportedly) a party to the 2015 Memorandum. None of them questioned at the time if UKPPGC is bound, or whether they (or either of them) had authority to bind UKPPGC. Nor did they suggest at the time that somebody else should sign the 2015 Memorandum on behalf of UKPPGC.

71.  Second, as regards the Custodial Agreements and the Discharge Agreements, UKPPGC argues that it is not a party to any of these agreements and there is no basis to suggest that UKPPGC is bound by the same. Further, UKPPGC says that in any event, these agreements do not alter the fact that Hanning was neither a shareholder nor director of UKPPGC at the time when the 2015 Memorandum was signed. Yet, the position is far from clear. Indeed:

(1) The suggestion that UKPPGC is not a party to these agreements begs the question why Hanning is a party to the same (in respect of UKPPGC). This tends to suggest that Hanning (and/or WYK through Hanning) was de facto controller of UKPPGC and thus able to conclude agreements affecting it.

(2) Hanning executed the Custodial Agreement and the Discharge Agreement in respect of UKPPGC. It seems reasonable to infer that he would not have done so unless he was (or at least he considered himself) in a position during 2014 to 2017 to conclude binding agreements affecting UKPPGC.

(3) Xindu’s evidence (via the 2^nd Affirmation of Zhang Yanjun, Vice-President of Xindu) is that, when the 2015 Memorandum was executed in January 2015, WYK and Hanning were detained due to criminal charges laid against them. Their assets were placed into custodianship and held under trust arrangements (i.e. Custodial Agreements) with the Chinese authorities to prevent unauthorised dissipation of assets. There is force in Xindu’s contention that WYK and Hanning’s ultimate ownership over their assets, including the 100% shareholding in UKPPGC owned by WYK, remained intact. In any event that ought to go to trial.

(4) Echoing the above, the party clause of the Custodial Agreement in respect of UKPPGC (signed by Hanning) describes Hanning as the legal or nominee owner (“名義擁有人”) of UKPPGC who holds the same on behalf of his father WYK (“是代甲方父親王國巨持有”). Clause 1 thereof went on to provide that a family trust would be set up to manage (“管理”) the assets of UKPPGC. This tends to suggest that such Custodial Agreement merely seeks to manage or ringfence such assets without divesting WYK’s ultimate ownership of UKPPGC (let alone for value).

(5) Importantly, Clause (一)(4) of each of the Discharge Agreements in respect of UKPPGC and Giant Crystal (signed by Hanning and WYK respectively) recites that, on 14 January 2015, the 2015 Memorandum was executed by inter alia UKPPGC, thereby affirming Xindu’s relevant interests or rights. It seems reasonable to infer that WYK and/or Hanning agreed with the same by executing the Discharge Agreements. This bolsters Xindu’s case that UKPPGC did enter into the 2015 Memorandum, and WYK and/or Hanning had authority to execute it on behalf of UKPPGC.

72.  Third, UKPPGC argues that the Concert Agreement is undated and has not been signed, as Xindu is still trying to locate the signed copy. Further, even if signed, the confirmation by UKPPGC/ its shareholder(s) under Clause (一)(2)(c) of the Concert Agreement is limited to the authority of signing the Concert Agreement rather than the 2015 Memorandum. However:

(1) Whilst Xindu has not yet located the signed copy of the Concert Agreement, Clause (一)(5) of each of the Discharge Agreements (signed by Hanning and WYK respectively) provides that, on the premise of the 2015 Memorandum, UKPPGC, Xindu and others had signed the Concert Agreement in January 2015. This is itself evidence that the Concert Agreement was executed.

(2) In the unsigned version of the Concert Agreement, there is a signature block for authorized representative of UKPPGC. It is at least a matter for trial whether UKPPGC duly executed the same.

(3) It is not a sufficient answer to say that Clause (一)(2)(c) of the Concert Agreement only confirms the authority of signing the Concert Agreement rather than the 2015 Memorandum. This ignores the fact that the Concert Agreement has itself confirmed the validity of the 2015 Memorandum under (i) the recital, (ii) Clause (二)(1), (iii) Clause (二)(2) and (iv) Clause (二)(6) thereof.

(4) Crucially, Clause (二)(6) of the Concert Agreement provides that if any previous agreement, document or evidence kept by the parties (including inter alia UKPPGC) conflict with the Concert Agreement and the 2015 Memorandum, the contractually agreed contents of the Concert Agreement and the 2015 Memorandum should prevail and have final legal effect.

73.  All in all, I am satisfied that there is at least a serious issue to be tried as to whether the 2015 Memorandum is binding on UKPPGC.

C4. Whether Xindu’s claim is time-barred

74.  UKPPGC contends that Xindu’s claim is time barred under Mainland laws. UKPPGC’s expert opinion relies on Article 188 of the Civil Code of the People’s Republic of China（《中華人民共和國民法典》）(“Civil Code”) which provides for a limitation period of 3 years as follows:

“向人民法院請求保設民事權利的訴訟時效期間為三年”

75.  UKPPGC’s expert opinion further prays in aid Article 195 of the Civil Code which provides for events (such as requests for enforcement) which could enable time to run afresh:

“有下列情形之一的，訴訟時效中斷，從中斷、有關程序終結時起，訴訟時效期間重新計算：（－）權利人向義務人提出履行請求；（二）義務人同意履行義務；（三）權利人提起訴訟或者申請仲裁；（四）與提起訴訟或者申請仲裁具有同等效力的其他情形。”

76.  Under Mainland laws, the above is applicable to arbitration in the absence of stipulations to the contrary. Hence, UKPPGC argues that time started to run when the 2015 Memorandum was signed and lapsed in January 2018. As there is no (credible) evidence that Xindu had sought to enforce the 2015 Memorandum against UKPPGC before the expiry of such limitation period (such that time can run afresh), Xindu’s claim is time-barred.

77.  Whilst there is force in UKPPGC’s argument, I must take note of Xindu’s expert opinion on Mainland laws. In essence, Xindu contends that its property claim (物權請求) is not subject to any limitation period. Xindu further suggests that only claims for debt are subject to the issue of limitation. UKPPGC disagrees and says that Articles 188 and 195 of the Civil Code stipulate that limitation period applies to all types of civil claims.

78.  With respect, the position is far from clear. Whilst limitation period may apply to all types of civil claims under Mainland laws, it may be said that time would only start to run for a property claim when a request is made for the transfer of the property. On one view, the 2015 Memorandum merely set out the parties’ agreement as to Xindu’s interests without any immediate request for transfer. That may find support from Clause (一)(4) of the Discharge Agreements (signed by WYK and Hanning respectively) which recites that, on 14 January 2015, the parties (as specified there) had executed the 2015 Memorandum which affirms Xindu’s relevant interests or rights (“確認了鑫都集團有限公司的相關權益”).

79.  All in all, I am satisfied that there is at least a serious issue to be tried as to whether Xindu’s claim is time-barred.

C5. Whether 2015 Memorandum procured by duress

80.  UKPPGC argues that the 2015 Memorandum is invalid under Mainland laws as it was procured by duress. In gist:

(1) In or around 2013, the authorities brought a charge against WYK in Yichang, Hubei. Since then, he was held in custody and controlled by police until July 2017 when he was released.

(2) The 2015 Memorandum was presented to WYK while he was in custody. He was compelled to sign the same by the police who threatened serious consequences for him and his family otherwise.

(3) The police also forced Hanning to sign under threat of “serious consequences” for both him and WYK otherwise.

(4) Since WYK was under the control of the police, he had no choice but to comply with their demands. This is a clear case of duress, rendering the 2015 Memorandum null and void.

81.  Having considered the arguments, I am satisfied there is a serious issue to be tried. Again, as the matter will be determined by the Arbitration before the SCIA, I would set out my key observations without going into all the details or otherwise deciding the matter.

82.  First and foremost, UKPPGC’s allegation of duress does not sit well with contemporaneous documentary evidence.

83.  Under the Concert Agreement supposedly executed in January 2015 (although Xindu has not yet located a signed copy), UKPPGC expressly acknowledged and confirmed the validity of the 2015 Memorandum. In particular, the recital of the Concert Agreement provides as follows:

“鑒於鑫都及鑫都關聯人與UK前股東王漢寧等達成《關於鑫都集團有限公司在鉅晶公司和UK公司中權益的備忘錄》… 對鑫都及關聯人在UK公司重點權益予以確認 …”

84.  Further, the Discharge Agreements in respect of UKPPGC and Giant Crystal were executed by Hanning and WYK respectively on 16 August 2017. There is no suggestion by UKPPGC that the Discharge Agreements were procured by duress. Importantly, Clause (一)(4) of each of the Discharge Agreements recites that (among others) Xindu, WYK, Hanning and UKPPGC executed the 2015 Memorandum on 14 January 2015 which affirms Xindu’s relevant rights and interests (“確認了鑫都集團有限公司的相關權益”):

“4、2015年1月14日，王國巨與鑫都集團有限公司、鑫都關聯人 … 鉅晶有限公司 (Giant Crystal Limited) 前股東劉燃及鉅晶有限公司、U.K公司前股東王漢寧及U.K公司，簽署了《關於鑫都集團有限公司在鉅晶公司和UK公司中權益等備忘錄》，確認了鑫都集團有限公司的相關權益。”

85.  The fact that both WYK and Hanning executed the Discharge Agreements (reaffirming Xindu’s relevant rights and interests under the 2015 Memorandum) on 16 August 2017 (after WYK was released in July 2017), militates against UKPPGC’s case of duress.

86.  Second, it is not in dispute that Xindu had pursued litigation in 2014 which culminated in orders by the BVI court in Xindu’s favour. Against such context, there is force in Xindu’s argument that the 2015 Memorandum is a settlement agreement whereby all parties simultaneously gave up and received certain rights, claims and/or assets, and its terms were fair to both sides. UKPPGC disagrees and says that the issue is whether the 2015 Memorandum was procured by duress, and hence the fairness or reasonableness of the terms is irrelevant. However, whilst this may be so in terms of strict legal analysis, the factual analysis is more nuanced. If the terms were objectively fair, it tends to undermine UKPPGC’s factual assertion that the 2015 Memorandum was procured by duress. Put simply, if the terms were objectively fair, the chance is that WYK and/or Hanning did agree to sign it, and there was no need for one party to coerce another into executing the same.

87.  Third, WYK signed the 2015 Memorandum on 14 January 2015 in the presence of two members of the Hubei Province, Yichang City Notary Office. Xindu submits that the 2015 Memorandum would not be notarised if WYK had executed it under duress. Whilst this may be putting Xindu’s case too high, depending on the role played by the notary public, this could well undermine UKPPGC’s case of duress.

88.  Fourth, it appears that WYK was put in custody for matters unrelated to Xindu’s claim in the Subject Securities. There is force in Xindu’s contention that the Mainland police had nothing to gain from the 2015 Memorandum, and thus there is no plausible reason for them to have coerced WYK and Hanning into signing it. UKPPGC argues that this is irrelevant, as it is not required to prove the police’s motive. Again, whilst this may be so in terms of strict legal analysis, the factual analysis is more nuanced. If there is no obvious motive, or if there is nothing to suggest that the police colluded with Xindu, it tends to undermine UKPPGC’s factual assertion that WYK and Hanning were compelled by the police to sign.

89.  Fifth, UKPPGC says there is no positive evidence from Xindu rebutting the case of duress. I am not sure this is a fair way of putting it. Xindu relies upon circumstantial evidence which may undermine UKPPGC’s case. It may be right to say that Xindu has not put forth positive evidence to prove the negative but one should bear in mind that:

(1) UKPPGC has not condescended into particulars as to the identity of police officer(s) who allegedly coerced WYK and Hanning;

(2) UKPPGC gave relatively little particulars of the coercion;

(3) Hanning has not come forward to make any affirmation in support;

(4) UKPPGC alleges duress in 2024, more than 9 years after the execution of the 2015 Memorandum, making it more difficult for Xindu to adduce positive evidence to prove otherwise; and

(5) Even if the relevant police officer(s) can be identified, they may well be reluctant to take (or be perceived to take) any active role to give evidence in commercial disputes between private parties.

90.  For all these reasons, I am satisfied that there is at least a serious issue to be tried as to whether the 2015 Memorandum was procured by duress.

C6. Whether Xindu has proprietary or beneficial interest in the Subject Securities

91.  UKPPGC contends that the 2015 Memorandum does not give Xindu any proprietary or beneficial interest in the Subject Securities anyway:-

(1) Based on Articles 37 and 41 of the PRC Law on Foreign-Related Civil Relations, Mainland laws apply to the interpretation of the 20% interest;

(2) Under Mainland laws, property rights allow the right-holder to assert claims against anyone. However, Clause 4(2)(2) of the 2015 Memorandum only provides Xindu with a contractual right to ask for the transfer of securities. It provides for a proportional allocation of 20% of the shares and CBs initially held by UKPPGC (or “a personal right to compel [UKPPGC] to distribute to [Xindu] the shares and [CBs] in the ListCo owned by [UKPPGC]”: §10(2) of WYK’s Affirmation in Discharge OS), not a direct proprietary interest. As such, Xindu can only assert a claim against UKPPGC, not a general property right;

(3) Even if the BVI Court had ordered UKPPGC in 2014 to transfer certain shares in the ListCo to Xindu (presumably by way of specific performance), this is consistent with the proposition that Xindu only has a contractual right to claim those shares;

(4) Xindu has breached the 2015 Memorandum by failing to honour its promise under Clause 4(1)(3) of the 2015 Memorandum which provides at p.6 of the 2015 Memorandum that it had to deliver/ return a form signed by the Registrar of the BVI Court to UKPPCG. In the premises, Xindu has repudiated the 2015 Memorandum or, alternatively, Xindu is no longer entitled to enforce any of its rights under the 2015 Memorandum.

(5) In addition, UKPPGC relies on the New Documents and contends that they bolster’s UKPPGC’s position.

92.  Having considered the arguments, I am of the view that there is a serious issue to be tried as to whether Xindu has proprietary or beneficial interest in the Subject Securities, although the New Documents do have impact on the computation of shares (which I will examine under the next point).

93.  First, it is open to argument whether Xindu’s claim for the Subject Securities is governed by Mainland law (alone) as alleged by UKPPGC. It is reasonably arguable that such issue should be governed by the lex situs of the Subject Securities, with benefit of the construction of the 2015 Memorandum under Mainland laws, which is in essence Xindu’s stance.

94.  Xindu submits that, pursuant to Hong Kong conflict of laws rules, the principles laid down by Lord Sumption NPJ in Xiamen Xinjingdi Group Co Ltd v Eton Properties Ltd (2020) 23 HKCFAR 348 at §175 should apply to the Court’s determination of the beneficial interest in the Subject Securities:

(1) As a starting point, the existence and incidents of an interest in property, including the question whether an equitable proprietary interest in such property is legally capable of existing, are governed by the lex situs (law of the place where property is located). In the case of shares, the lex situs is the law of the jurisdiction in which the company is incorporated;

(2) Assuming that an equitable proprietary interest is legally capable of existing under the lex situs, the next question is whether such an interest has actually been created. Where this is said to be the effect of a contract, the lex situs refers to the proper law of the contract to determine what it means; and

(3) The question in such a case is not whether its proper law of the contract recognises constructive or indeed any trusts. The question is whether the characteristics which the proper law of the contract treats it as having, are such as the lex situs would regard as giving rise to a proprietary interest in equity.

95.  On the one hand, it seems open to UKPPGC to contend that the Hong Kong conflict of laws rule should not apply, as one is concerned with the Arbitration in the SCIA in the Mainland. On the other hand, one must not forget that both the Discharge OS and the Stop Order OS are to be determined by the Hong Kong Court. In my view, it is at least arguable that Hong Kong Court should adopt Hong Kong conflict of laws rule to determine, for the purpose of the Discharge OS and the Stop Order OS, whether there is a serious issue to be tried on Xindu’s beneficial entitlement to the Subject Securities.

96.  Second, assuming that Hong Kong conflict of laws rule should apply, it is at least arguable that Xindu has a proprietary interest in the Subject Securities.

97.  The lex situs here is the law of Cayman Islands, being the place of incorporation of ListCo. Xindu submits that (i) Hong Kong law recognises the existence of equitable proprietary interests if a contract is specifically enforceable and (ii) as there is no expert evidence on Cayman law, it is assumed to be the same as Hong Kong law. It follows that an equitable proprietary interest is legally capable of existing under the lex situs (Cayman law) which would, in turn, refer to the proper law of the contract (Mainland law) for the proper interpretation of Clause 4(2)(2) of the 2015 Memorandum.

98.  There is force in Xindu’s argument, which may also find support in the latter part of §175 of Xiamen Xinjingdi Group as follows:

“… As applied to the present case, the result of these principles is that the law of Hong Kong, as the situs of the shares, determines whether an equitable interest in shares of a Hong Kong company is capable of subsisting. The answer to that question is that it is, if the contract is specifically enforceable. It is then necessary to refer to the law of the PRC, as the proper law of the Agreement, to determine whether the contract has the characteristics which make it specifically enforceable in the law of Hong Kong. For this purpose, the arbitration award is a decisive source. D3 was not party to the arbitration agreement. But the D3’s liability as a constructive trustee depends on the position as between D1–D2 and the plaintiff, all of whom are bound by the arbitration agreement.” [Emphasis added]

99.  The crux of the matter turns on whether the 2015 Memorandum (upon its proper interpretation under Mainland law) has the characteristics which make it specifically enforceable in the lex situs (which is presumed to be the same as the law of Hong Kong). In this regard, it is UKPPGC’s own submissions that Clause 4(2)(2) of the 2015 Memorandum provides Xindu with a contractual right to ask for the transfer of securities, and that Xindu can assert a claim against UKPPGC for a proportional allocation of 20% of the shares and CBs initially held by UKPPGC. As UKPPGC says that Xindu has a contractual right to ask for the transfer of securities, it appears that UKPPGC accepts that the 2015 Memorandum has characteristics which enable Xindu to seek specific performance. At the very least, there is a serious issue to be tried on the same.

100.  For completeness, I should mention that Xindu has argued, based on its expert opinion on Mainland laws, that the proper interpretation of Clause 4(2)(2) is that UKPPGC has already transferred 20% of its ListCo shares and CBs to Xindu, such that Xindu enjoys all the substantive rights and interests in the shares and CBs. I must confess that I have some difficulties in understanding such argument. On the face of it, the Subject Securities remain held in the name of UKPPGC. Moreover, UKPPGC had transferred some of them (i.e. Cypress Securities) to Cypress, even though such transfers have not yet been registered. Indeed, it seems inconsistent to suggest that UKPPGC has already transferred the interests to Xindu, when it remains Xindu’s case that it is seeking relief in the Arbitration for the transfer of the Subject Securities. Therefore, it seems to me that the better argument which may be deployed by Xindu is that the 2015 Memorandum has characteristics which enable Xindu to seek specific performance (as examined above).

101.  Third, as regards UKPPGC’s contention that Xindu has breached the 2015 Memorandum by failing to honour its promise under Clause 4(1)(3) thereof to deliver/ return a form signed by the Registrar of the BVI Court, Xindu has provided a response in the 2^nd Affirmation of Zhang Yanjun, Vice-President of Xindu, at §26(2):- “For completeness, since the BVI Proceedings have been withdrawn by [Xindu] following their settlement pursuant to the 2015 Memorandum, [Xindu] has given up its rights to pursue the same and is not required and is not under any obligation to submit any form pursuant to clause 4(1)(3) of the 2015 Memorandum”. Given that the apparent objective of Clause 4(1)(3) is to ensure that Xindu cannot invoke or enforce the order for transfer of shares granted by BVI Court in Xindu’s favour, there is force in Xindu’s argument that there is no point to insist on this once Xindu has withdrawn the BVI proceedings. Further, there is also a question whether a breach (if any) is repudiatory, and whether repudiation (if any) was accepted by UKPPGC. There is thus at least a serious issue to be tried on this.

102.  Fourth, Xindu contends that its proprietary interest in 20% of UKPPGC’s interest in ListCo is in turn traceable into shares subsequently issued to UKPPGC as a result of its conversion of CBs and that, in the tracing process, Xindu has the right to choose whichever presumption produces the best result for it and trace in the manner which is most advantageous to it: Americhip Inc v Zhu Hongling [2021] 4 HKLRD 490 at §19 per M Chan J (which should also apply under Mainland law in the absence of expert evidence on Mainland law showing to the contrary: Wang Qian Wei v 郭文雨 and Anor [2018] HKCFI 2253 at §§37-39).

103.  On the facts, Xindu claims to be entitled to 20% of the shares in and CBs issued by ListCo “initially” owned by UKPPGC (“UK公司最初擁有的”). Since UKPPGC was initially interested in 15,226,190,476 shares (both issued and underlying) in ListCo with a principal amount of HK$2,558,000,000 as of 3 January 2011, Xindu’s 20% interest amounts to 3,045,238,095 shares with a principal amount of HK$511,600,000.

104.  Applying the principle above, Xindu says it is at liberty to choose how best it wishes to trace its interest in these 3,045,238,095 shares in ListCo. As UKPPGC was issued 1.86 billion shares in ListCo on 5 January 2011 after converting part of its CBs into ListCo shares, Xindu claims to be entitled to trace its interest into:

(1) 1.86 billion issued shares in ListCo (i.e. the entirety of the Subject Shares) with a principal amount of HK$312,480,000; and

(2) 1,185,238,095 underlying shares in ListCo, arising from CBs with a principal amount of HK$199,120,000, convertible at HK$0.168/share into 1,185,238,095 shares in ListCo (i.e. the Subject CBs).

(aggregating 3,045,238,095 shares in ListCo with a principal amount of HK$511,600,000)

105.  There is force in Xindu’s argument on tracing. It is supported by case law, and UKPPGC has not adduced evidence on Mainland law pointing to the contrary.

106.  Accordingly, subject to the New Documents and UKPPGC’s submissions on computation, I agree with Xindu’s submissions that there is at least a serious issue to be tried that its initial interest is traceable to the Subject Securities, i.e. 1.86 billion issued shares in ListCo and CBs in the principal amount of HK$199,120,000 (convertible into 1,185,238,095 shares).

C7. Xindu’s Computation of Subject Securities and the New Documents

107.  It is not in dispute that:

(1) On 3 January 2011, UKPPGC acquired 15,226,190,476 shares (both issued and underlying) in ListCo through the issuance of CBs with a principal amount of HK$2,558,000,000, convertible to ListCo shares at $0.168/share;

(2) On 5 January 2011, UKPPGC was issued 1.86 billion shares in ListCo, through the conversion of CBs with a principal amount of HK$312,480,000;

(3) Thus, as at January 2011, UKPPGC held (i) 1.86 billion issued shares in ListCo with a principal amount of HK$312,480,000, and (ii) 13,366,190,476 underlying shares in ListCo arising from CBs with a principal amount of HK$2,245,520,000;

(4) In May 2015, CBs with a principal amount of HK$1,279,000,000 were cancelled;

(5) On 9 April 2024, 1.5 billion issued shares and CBs with principal amount of HK$543,150,000 were transferred from UKPPGC to Cypress (but not yet registered);

(6) In June 2024, CBs with a principal amount of HK$446,880,000 were transferred by UKPPGC to 佳鷹有限公司, a wholly-owned subsidiary of 新疆鑫泰天然氣股份有限公司 (apparently not yet registered) (“Xinjiang Transaction”).

108.  Xindu’s computation of its entitlement is premised on 20% of the initial interests held by UKPPGC, i.e. 20% of HK$2,558,000,000, being the principal amount of Tranche 1 Convertible Bonds initially issued to UKPPGC in January 2011. Xindu’s case has not taken into account developments after January 2011.

109.  On the other hand, UKPPGC relies on subsequent events and says that Xindu’s computation is wrong. However, it is fair to say that UKPPGC only relies on the cancellation of CBs (but not the Cypress Transfer or the Xinjiang Transaction) during the hearings on 23 September and 2 October 2024. In a nutshell:

(1) As UKPPGC failed to issue a written certificate issued by a competent evaluator on or before 31 May 2015 to the ListCo, CBs in the principal amount of HK$1,279,000,000 had been cancelled. The cancellation was recorded in the ListCo’s announcement dated 17 June 2015.

(2) On this basis, Xindu only has an interest in CBs in the principal amount of HK$255,800,000 (HK$1,279,000,000 x 20%), which should consist (i) 372 million shares in the ListCo (1.86 billion x 20%) and (ii) CBs with the principal amount of HK$193,304,000 (HK$966,520,000 x 20%).

110.  Whilst there is force in UKPPGC’s argument, one cannot ignore Xindu’s argument, which is premised on Clause 4(2)(2) whose language makes specific reference to UKPPGC’s initial entitlement as at January 2011.

111.  Moreover, UKPPGC’s calculation has not taken into account Xindu’s tracing argument. As mentioned above, Xindu argues that it has the right to choose whichever presumption produces the best result for it and trace in the manner which is most advantageous to it. Hence, it is Xindu’s case that its 20% interest is traceable to the Subject Securities, being (i) 1.86 billion issued shares in ListCo in full and (ii) CBs in the principal amount of HK$199,120,000 (convertible into 1,185,238,095 shares) making up the remainder of its entitlement.

112.  At the time of the hearings on 23 September and 2 October 2024, the original relief no.2 in Xindu’s Notice of Arbitration is not inconsistent with Xindu’s case. It provides generically as follows:

“請求確認申請人對第一被申請人持有的中國能源開發控股有限公司的股權享有20%份額(2011 年1 月最初中能控股交易完成獲得對價時， 含股票及可轉股債權），並裁決第一被申請人將現持有的股票按完成獲得對價時的20%權益內股票變更登記至申請人名下；對於第一被申請人持有的中國能源開發控股有限公司的其他股權，同等條件下申請人享有優先購買權”

113.  Whilst it may be said that the original relief no.2 has not given much particulars of the precise relief sought, one can hardly suggest that it is inherently inconsistent with the tracing argument advanced by Xindu herein. Had the matter rested there, I may well come to the view that it is at least arguable that Xindu can claim entitlement to the Subject Securities in full based on its tracing argument.

114.  Nevertheless, the landscape has changed as a result of the New Documents. One of them is the Amendment Application (“變更仲裁請求申請書”) filed by Xindu with the arbitral tribunal dated 12 October 2024, shortly after the hearings on 23 September and 2 October 2024. Whilst Xindu argues that they remain proposed amendments and the arbitral tribunal may or may not approve the same, I agree with UKPPGC’s submissions that the Court should approach the matter on the basis of the proposed amendments put forth by Xindu itself. There is no sound reason why the Court should grant any relief herein which goes beyond what is sought (or proposed to be sought) before the arbitral tribunal. It is neither here nor there that the arbitral tribunal may or may not approve the proposed amendments, or that Xindu may or may not seek to further amend its case in the Arbitration in future. The Court simply should not speculate. Instead, the Court should approach the matter based on the latest position before it.

115.  UKPPGC has made detailed submissions on the New Documents, including the Amendment Application, the Claim Breakdown and the PRC Enforcement Documents. Whilst I have considered them, I do not think it is necessary to deal with each and every argument in details.

116.  In particular, I do not think one can gain much mileage from the quantification of the claim or the valuation of the shares or CBs, whether in the Amendment Application or the Claim Breakdown. Such quantification or valuation may be done for various legitimate reasons in an arbitration (as contended by Xindu), and are thus far from conclusive.

117.  Nor can one rely too much on the PRC Enforcement Documents. UKPPGC says they show that Xindu has only sought and obtained injunctive reliefs before the Mainland Courts against Hanning and WYK, evidencing that Xindu does not pursue any proprietary relief. With respect, this does not necessarily follow; in any event this could well be due to the fact that Xindu has obtained other interim reliefs in Hong Kong.

118.  Instead, the real issue is the relief sought (or proposed to be sought) by Xindu in the Arbitration. For such purpose, the Court should adopt a holistic approach, and focus on the relevant proposed amended relief, namely:

(1) Amended Relief No.2: “ 請求裁決申請人有權分配第一被申請人在“中能控股控制權收購”交易中的收購對價人民幣41112.96萬元的20%, 即第一被申請人應向申請人支付人民幣8222.59 萬元”;

(2) Amended Relief No.5: “ 請求裁決第一被申請人將持有的中能控股的37200 萬股股份 （價值人民幣2464.128萬元，暫按2024年9 月9 日的股價港幣0.072 元每股計算，以“中能控股控制權收購”交易中使用的匯率0.92 折算）變更過戶至申請人名下”;

(3) Amended Relief No.6: “ 請求裁決第一被申請人將面值港幣10392.8 萬元的可換股債券（價值人民幣9561. 376 萬元，以匯率0.92 折算）變更過戶至申請人名下”;

(4) Amended Relief No.7: “ 請求裁決被申請人賠償申請人中能控股可換股債券註銷的損失港幣25580萬元（折合人民幣23533. 6萬元，以匯率0.92折算）”; and

(5) Amended Relief No.8: “ 請求裁決申請人對第一被申請人持有的中能控股的股份 【1,860,000,000股】的80% （即1,488,000,000股），以及剩餘可換股債券的80% （即面值港幣4157 1. 2 萬元可換股債券），享有優先購買權”.

119.  I will deal with the above in turn.

120.  First, as explained by Xindu (particularly in oral submissions on 29 May 2025), Amended Relief No.2 relates to the Xinjiang Transaction, whereby UKPPGC transferred CBs with a principal amount of HK$446,880,000 to another entity. The consideration of RMB411,129,600 stated in Amended Relief No.2 was computed by applying the conversion rate of 0.92 to HK$446,880,000.

121.  It is clear from Amended Relief No.2 that Xindu claims to be entitled to 20% of such consideration received by UKPPGC in the Xinjiang Transaction, with the specific relief that UKPPGC should pay RMB82,225,900 to Xindu (“第一被申請人應向申請人支付人民幣8222.59 萬元”). This is a monetary relief premised on 20% of the consideration received by UKPPGC. As such, Xindu is no longer seeking proprietary relief in respect of its 20% entitlement for such portion. Adjustment should be made accordingly.

122.  Second, Amended Relief No.5 relates to 20% of the 1.86 billion issued shares in ListCo held by UKPPGC, which is equivalent to 372,000,000 shares. Contrary to its position on tracing herein, Xindu is not claiming entitlement to the 1.86 billion issued shares in full in the Arbitration. Instead, Xindu only seeks relief for the transfer of 20% thereof, namely 372,000,000 shares. As such, Xindu’s proprietary relief in relation to the 1.86 billion issues shares is now limited to 20% thereof. Adjustment should be made accordingly.

123.  Third, Amended Relief No.6 seeks the transfer of CBs in the principal amount of HK$103,928,000 (being 20% of HK$519,640,000). It would appear that such amount is derived as follows:

“HK$2,558,000,000 [initial entitlement in January 2011]

– HK$312,480,000 [1.86 billion issued shares – covered by Amended Relief No.5]

– HK$1,279,000,000 [cancellation of CBs in May 2015 – covered by Amended Relief No.7]

– HK$446,880,000 [Xinjiang Transaction – covered by Amended Relief No.2]

= HK$519,640,000

x 20%

= HK$103,928,000”

124.  As such, other than 372,000,000 issued shares sought to be transferred under Amended Relief No.5, Xindu seeks proprietary relief in respect of CBs in the principal amount of HK$103,928,000 only. Adjustment should be made accordingly.

125.  Fourth, Amended Relief No.7 seeks compensation for the cancellation of CBs in the sum of HK$255,800,000, which is equivalent to 20% of the cancellation of CBs in the principal amount of HK$1,279,000,000 in May 2015. As Xindu seeks monetary compensation attributable to 20% of its entitlement, it is clear that Xindu is not seeking proprietary relief of the same. Adjustment should be made accordingly.

126.  Fifth, Amended Relief No.8 seeks a ruling that Xindu should enjoy a pre-emptive right (“優先購買權”) in respect of (i) 80% of the 1.86 billion issued shares and (ii) 80% of the remaining CBs in the principal amount of HK$415,712,000, i.e. HK$519,640,000 – HK$103,928,000 (covered by Amended Relief No.6). Xindu has not seriously argued that it is entitled to proprietary relief by reason of such pre-emptive right. Indeed, Xindu’s case herein has always focused on 20% of UKPPGC’s entitlement (without extending to the remaining 80%, however the latter is computed). Moreover, given that Xindu has not positively confirmed or otherwise adduced evidence as to its willingness and ability to purchase such 80% stake, it would seem lucrative to suggest that Xindu can assert a proprietary claim and obtain a Stop Order in respect of such 80% stake.

127.  All in all, whilst Xindu maintains in its submissions for the reopened hearing that it has not abandoned any part of its proprietary claim in respect of the Subject Securities, Xindu has to accept (albeit in the alternative) that it has given up part of its proprietary claim. The reality is that, by the Amendment Application, Xindu is now asserting proprietary claim in respect of (i) 372,000,000 issued shares held by UKPPGC and (ii) CBs in the principal amount of HK$103,928,000 held by UKPPGC only. In view of the above, there should be adjustments made to the computation of the Subject Securities.

C8. Fortification Summons

128.  In my view, the Fortification Summons should be adjourned sine die for two reasons.

129.  First, given that the Fortification Summons was only taken out by UKPPGC on 31 July 2024 (less than 2 months before the hearing on 23 September 2024), the parties have not had a chance to file full evidence.

130.  Second, I have decided that the Stop Notice and the stop order to be granted should be limited to (i) 372,000,000 issued shares held by UKPPGC and (ii) CBs in the principal amount of HK$103,928,000 held by UKPPGC. As the scope has narrowed down substantially, the alleged prejudice suffered by UKPPGC would not be the same. Further or different evidence may have to be adduced accordingly.

D. Disposition

131.  For all these reasons, I am of the view that:

(1) The Stop Notice should not be discharged under RHC O.50 r.14;

(2) The Court should grant a stop order in favour of Xindu under RHC O.50 r.15 (“Stop Order”); and

(3) Both the Stop Notice and the Stop Order should only have effect up to (i) 372,000,000 issued shares held by UKPPGC and (ii) CBs in the principal amount of HK$103,928,000 held by UKPPGC.

132.  In terms of disposition, I have considered whether the Court has power under RHC O.50 r.14 to discharge the Stop Notice in part or vary the same. On balance, such avenue does not appear to be available:

(1) RHC O.50 r.14(3) provides for the discharge simpliciter of a stop notice with nothing in between:- “The Court, on the application of any person claiming to be beneficially entitled to an interest in the securities to which a notice under rule 11 relates, may by order discharge the notice.” Further, it does not say that the Court may vary a stop notice.

(2) In contrast, RHC O.50 r.15(3) expressly provides that a stop order may be varied or discharged:- “The Court, on the application of any person claiming to be entitled to an interest in any securities to which an order under this rule relates, may vary or discharge the order on such terms (if any) as to costs or otherwise as it thinks fit.”

133.  Instead, RHC O.50 r.13 provides as follows:

“13. Amendment of stop notice (O. 50, r. 13)

If any securities are incorrectly described in a stop notice which has been filed and of which a sealed copy has been served in accordance with rule 11, an amended stop notice may be filed and served in accordance with the same procedure and shall take effect as a stop notice on the day on which the sealed copy of the amended notice is served.”

134.  Accordingly, if the securities are incorrectly stated in the Stop Notice, the proper remedy is for an amended stop notice to be filed and served.

135.  In the premises, I will make the following orders.

136.  First, under the Discharge OS, I would order that:

(1) Leave be granted to Xindu to file and serve within 14 days hereof an amended stop notice stating the securities as (i) 372,000,000 issued shares held by UKPPGC and (ii) CBs in the principal amount of HK$103,928,000 held by UKPPGC;

(2) Subject to compliance with the foregoing, the Discharge OS be dismissed.

137.  Second, under the Stop Order OS, I would grant the Stop Order, limited to (i) 372,000,000 issued shares held by UKPPGC and (ii) CBs in the principal amount of HK$103,928,000 held by UKPPGC. In this regard, Xindu has submitted a draft Order for HCMP 630/2024 (i.e. Stop Order OS) at the hearing on 29 May 2025. Subject to amending the introductory phrase of paragraphs 1 and 2 of the draft Order to read “Until the substantive determination of the dispute in the [Arbitration] or the [SZ Court Application] (as the case may be) or until further order of the Court …”, I make an order in terms of the following paragraphs of such draft Order:

(1) paragraph 1(a), with 372,000,000 shares;

(2) paragraph 1(b), with HK$103,928,000;

(3) paragraph 1(c);

(4) paragraph 2(a), with 372,000,000 shares;

(5) paragraph 2(b), with HK$103,928,000; and

(6) paragraph 2(c).

138.  Third, I adjourn the Fortification Summons sine die, with liberty to restore.

139.  Fourth, as regards costs, I take the view that Xindu should be deprived of part of its costs to mark the Court’s disapproval of its conduct in exhibiting unnotarized (or even undated and/or unsigned) affirmations to the affirmations of Xindu’s solicitors. Accordingly, I make a costs order nisi (which should become absolute within 14 days) as follows:

(1) One quarter (25%) of the costs incurred by Xindu in preparing the unnotarized affidavits should be disallowed (for the avoidance of doubt, the remaining 75% of the costs is still subject to taxation as may be appropriate);

(2) Subject to the foregoing, the costs of the Discharge OS and the Stop Order OS (including the costs of the Stop Order Summons) should be in the cause of the determination of the dispute over the 2015 Memorandum in the Arbitration or the SZ Court Application (as the case may be).

140.  Last but not least, it remains for me to thank Mr Chen and Ms Wong for Xindu and Mr Yau for UKPPGC for the helpful assistance given to the Court.