ASTRO NUSANTARA INTERNATIONAL B.V. AND OTHERS v. PT AYUNDA PRIMA MITRA AND OTHERS

HCCT 45/2010

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO. 45 OF 2010

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REASONS FOR DECISION

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1.  In the hearing on 11 March 2013, I dismissed Astro’s summons dated 8 March 2013 requiring FM and AAL to take certain actions: (i) in relation to the bankruptcy order made by the Indonesian court against AAL on 5 March 2013 (“the Bankruptcy Order”); and (ii) to comply with the payment into court order I made on 4 February 2013 (“the Payment into Court Order”).  I now give my reasons.

2.  The background leading to the present application has been fully set out in my Reasons for Decisions dated 7 March 2013, and I do not want to repeat the same here.  For the purpose of these Reasons, I would adopt the same abbreviations that I have used earlier in the Reasons dated 7 March 2013.

3.  Despite that FM had no objection for the extension of the SOP Period, the Indonesian court granted the Bankruptcy Order against AAL on 5 March 2013.

4.  In the summons taken out by Astro on 8 March 2013, Astro ask the court to make the following order:

(i)    AAL shall file an appeal to the Supreme Court through the Commercial Court in Indonesia against the Bankruptcy Order and submit a memorandum of appeal by 13 March 2013;

(ii)   FM shall submit a counter-memorandum of appeal to support AAL’s memorandum of appeal; indicating that it supported AAL’s application for extension of time, and that it had informed the Hong Kong court that they had no objection to the same;

(iii)  AAL shall submit a composition plan to put forward a proposal to enable a transfer into Hong Kong sufficient funds to comply with the Payment into Court Order (“the Composition Plan”); and

(iv)  FM shall forthwith, in its capacity as the holder of decisive votes of the creditors of AAL for the purposes of the Indonesian proceedings, insofar as a vote is required, vote in favour of the Composition Plan and shall forthwith inform AAL and the Indonesian court that it has approved the Composition Plan.

5.  I dismissed the application for the following reasons.

6.  Firstly, this is a most unusual application. What Astro are actually asking for is an order of the Hong Kong court with the purported effect of interfering with an order made in the Indonesian proceedings.  The application is premised on the basis that the decision of the Indonesian court in granting the Bankruptcy Order is wrong, and as a result the Hong Kong court is ordering FM and AAL to take certain actions with a view to set aside the Bankruptcy Order.

7.  Although I have certain reservation as to why the Indonesian court proceeded to make the Bankruptcy Order against AAL in view of the fact that FM, being in substance the only creditor of AAL, had no objection for an extension of the SOP Period pending the result of the Hong Kong garnishee proceedings, there is a certain limit as to what Hong Kong court can do in relation to the foreign proceedings.  If the court were to make the order as sought by Astro, it would send a very wrong message that the Hong Kong court is trying to interfere with the Indonesian bankruptcy proceedings.  This simply cannot be right.  For myself, I am not aware of any precedent that the court is prepared to go that far in interfering with a decision of a foreign court.  Neither am I aware of any juridical basis upon which the court can made such kind of order.

8.  Secondly, AAL has already indicated to the court that it intends to lodge an appeal against the Bankruptcy Order.  AAL has also issued a public announcement to that effect.  Such assurance should be adequate for our present purposes.  After all, AAL is only being sued as a garnishee and the court has to trust that AAL would take the appropriate steps to protect its own interest.

9.  Astro’s concern is that AAL and FM would be acting together to defeat Astro’s interests in the garnisheed debt.  If that is the case, there are many ways that they can do in the Indonesian proceedings to sabotage Astro’s interests.  In such case, how far should the Hong Kong court go?  Should the Hong Kong court micro-manage the various steps to be taken in the Indonesian proceedings so as to protect Astro’s interests in the garnisheed debt?  In my judgment, there is a limit as to what the Hong Kong court can do to protect its own process.  If AAL and FM are prepared to go that far to defeat Astro’s interest in the garnisheed debt, to the extent of sacrificing AAL as it would be declared bankrupt by the Indonesian court, I do not think that the Hong Kong court should interfere with the decision made by the Indonesian court.  After all, the Hong Kong court is only offering legal assistance to foreign legal proceedings, and there is nothing to prevent Astro from taking appropriate measures in other jurisdictions including Indonesia to protect their interests.  Hence, it is not appropriate for the Hong Kong court to grant such kind of order.

10.  Thirdly, there are costs implications if the court were to grant the application as sought by Astro.  As the order requires AAL and FM to take certain steps in the Indonesian proceedings, there are serious issues as to who should be responsible for funding these actions, and who should be liable for the costs that may be ordered by the Indonesian court as a result of these actions.  Without clarifying these serious issues, it would be very dangerous for the court to make the order as sought by Astro.

11.  Fourthly, as the Hong Kong court is not familiar with rules and practice in the Indonesian court, it would not be appropriate for the Hong Kong court to make any order which has the effect of micro-managing the steps to be taken in the Indonesian proceedings.  For example, I am not sure whether there is something known as counter-memorandum in the appeal proceedings in Indonesia, and so ordering FM to file such document may not be appropriate.

12.  Finally, I have already made the Payment into Court Order on 4 February 2013 requiring AAL to pay the garnisheed debt into the Hong Kong court pursuant to the order of the Court of Appeal on 10 August 2012.   The Administrators have rejected AAL’s proposal to make such payment into the Hong Kong court.  In the judgment dated 5 March 2013, the Panel of Judges of the Indonesian court, in granting the Bankruptcy Order against AAL, have taken the view that “[AAL]’s plan to make payment of its obligation through the High Court of Hong Kong” is not one showing good faith.  Hence, the hard fact is that the Composition Plan suggested in Astro’s summons has been rejected by the Indonesian court and the Administrators.  As I have pointed out in §54 of the Reasons for Decisions dated 7 March 2013, the Board of Directors and the Administrators of AAL owe a duty to the Hong Kong court to give an explanation as to why they do not comply with the timetable in making the payment into court.  In such circumstances, the Hong Kong court should just leave the matter at that without making further order which has the effect of interfering with the legal process of the foreign proceedings.

13.  Based on the aforesaid reasons, I dismissed Astro’s summons dated 8 March 2013.  Since AAL and FM are successful in resisting Astro’s application, they should get the costs of the application provided that they succeed in the garnishee order absolute application.  I therefore ordered that the costs of such application be FM’s and AAL’s costs in the cause of the garnishee order absolute application with certificate for 2 counsel.

14.  In the hearing, the parties have also agreed for the following applications to be adjourned sine die with liberty to restore:

(i)     AAL’s application dated 18 February 2013 for leave to appeal against the orders I made on 4 and 6 February 2013; and

(ii)    Astro’s application dated 7 March 2013 for amendment of the order I made on 6 February 2013.

Hence, it is not necessary for me to deal with such applications in these Reasons.