K v. JX

HCCT 49/2024

[2026] HKCFI 4344

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 49 OF 2024

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D E C I S I O N

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1.  On 20 May 2026, this Court handed down Judgment on the application made by the Respondent to set aside an order granting leave to the Applicant to enforce an arbitral award in a Mainland arbitration. The application was allowed and the Enforcement Order was set aside.

2.  The nomenclature used in the Judgment is adopted below.

3.  K as Applicant now seeks leave to appeal against the Judgment. The detailed grounds were set out in the draft Notice of Appeal. In essence, it is claimed that the Court erred in law and on fundamental principles by reviewing the findings made by the Tribunal as to the validity and binding effect of the Settlement Agreement, and had substituted the Court’s own case on public policy for the case advanced by K, in deciding that it would be contrary to public policy to enforce the Award.

4.  The grounds of appeal are founded on various erroneous bases.

5.  The Set Aside Summons was on two separate grounds: that there was no valid arbitration agreement; and that it would be contrary to public policy to enforce the Award.

6.  K’s appeal and the submissions made on his behalf in seeking leave to appeal focus on the claim of collusion and/or bribery. However, it is important to bear in mind that the grounds stated in the Set Aside Summons include the claim that the arbitration agreement was not valid, and more importantly, the claim made and the evidence adduced by JX in the enforcement proceedings was that the Settlement Agreement which contained the arbitration clause had been signed by C without the knowledge and authority of JX, as a result of the collusion between C and K and the alleged bribery of C. The arguments made and evidence adduced on the authority of C (or the lack thereof) related to the validity and binding effect of the Settlement Agreement. The claim was that there was no valid and binding Settlement Agreement, and that in turn, there was no valid arbitration agreement.

7.  The invalidity of the Settlement Agreement, signed by C who had no authority and was acting in collusion with K after having been bribed, formed the basis of JX’s claim that it would be contrary to the public policy of Hong Kong to enforce such a Settlement Agreement, when it was tainted by collusion/bribery and made without authority.

8.  For that reason, the Court’s rejection of JX’s claim that the Tribunal did not have jurisdiction was not the end of the matter. JX’s evidence on C’s lack of authority and the invalidity of the Settlement Agreement is still relevant and forms an essential part of JX’s clam that enforcement of the Award is contrary to public policy.

9.  Secondly, it is erroneous for K to claim that the Court did not rely on or accept the evidence of Y in these proceedings, and to suggest that somehow only C’s evidence would be relevant, and that C’s evidence had been excluded by virtue of his non-appearance at the substantive hearing.

10.  At paragraph 43 of the Judgment, this Court clearly pointed out that after the exclusion of C’s affirmations: “What remains are Y’s own evidence, and that of K and WP, all of whom testified in Court, and were cross-examined.”

11.  At paragraph 53, it was further pointed out that the matter should be considered holistically, and that:

“the Court is able to and should examine the claims by Y in this case, that K had colluded with C in entering into the Settlement Agreement, in circumstances where K/WP acting on his behalf knew or had reason to believe that C in fact did not have the authority to enter into the Settlement Agreement on behalf of JX. If there was such a collusion, and K/WP did not have any reason to believe that C had the authority to act on behalf of JX, then it would be contrary to the public policy of Hong Kong to enforce the Award which gave effect to the Settlement Agreement, particularly in circumstances when the Settlement Agreement contained terms which were disadvantageous to JX.”

(Emphasis added)

12.  Even after C’s affirmations and admissions of his unauthorized dealings and his signing the Settlement Agreement for personal gain had been excluded, there was still remaining Y’s own evidence of what he had been told by C. The Court accepted (at paragraph 63) that Y’s evidence is hearsay, without corroboration from other witnesses, but that it was nevertheless evidence which can be considered and weighed by the Court.

13.  As to the basis of the Court’s findings on public policy, it is clear from paragraph 53 of the Judgment (quoted above) that the consideration of public policy included the question of whether it would be contrary to public policy to enforce the Settlement Agreement in the circumstances in which it was signed, without authority and in collusion as alleged. In this regard, JX in opposing the application for leave to appeal emphasized that Y’s case for setting aside the Enforcement Order had always been on the basis that it would be contrary to public policy to enforce the Award giving effect to the Settlement Agreement when (as claimed in Y’s affirmation) K had no reason to believe that C still had authority to bind JX, and when K knew full well that C had no such authority. C signing the Settlement Agreement without authority and K’s knowledge of C’s lack of authority was the basis of the “collusion” relied upon.

14.  Accordingly, there was no distortion of JX’s case on public policy, and no substitution of JX’s case by the Court’s, as contended by K.

15.  Thirdly, it is erroneous to contend that the Court had reopened findings of fact and law made by the Tribunal. The authorities relied on by K are distinguishable.

16.  In Betamax Ltd v State Trading Corporation (Mauritius) [2022] 1 All ER (Comm) 1, the tribunal had found that a contract was legal and was not in contravention of statute. The Privy Council held in such circumstances that the Supreme Court of Mauritius could not intervene to decide that the tribunal was wrong, and that the contract was illegal and should be set aside as being in conflict with public policy.

17.  The deciding factor in resolving whether the question of illegality, or corruption, or other serious wrongdoing universally recognized as abhorrent, can be “re-opened” by a court at the enforcement stage is whether the question had been put to, considered and determined by the tribunal. The courts recognize that what is involved is an exercise of balancing the public policy in favor of finality and the public policy against illegality. In Alexander Bros Ltd (Hong Kong SAR) v Alstom Transport SA [2020] Bus LR 2197, the Court observed (at para 134) that the approach in determining whether the issue had been decided by the tribunal should be based on the estoppel authorities deriving from Henderson v Henderson (1843) 3 Hare 100. In Alexander Bros itself, the court considered that it was unrealistic to conclude from the evidence that the issue of illegality/bribery had been determined by the tribunal on the facts, and at the enforcement stage, it was open to the court to consider whether public policy was engaged by reason of the illegality or wrongdoing.

18.  As should be clear from the Judgment, and as the setting aside application was argued before the Court in June and December 2025, JX’s case had always been that the evidence of collusion and bribery only surfaced after the making of the Award, and that it had never been claimed before the Tribunal that the Settlement Agreement had been procured by bribery of C, in circumstances amounting to collusion between C and K, as this was not even known to Y until after the Arbitration and JX’s receipt of the Award. The Tribunal therefore never considered, and was never asked to consider, and to make findings on the evidence of the alleged bribery and collusion in the circumstances of the execution of the Settlement Agreement. The only evidence presented to the Tribunal was the use of an old chop of JX when the Settlement Agreement was signed. There was no determination by the Tribunal on collusion, and on the illegality of the Settlement Agreement.

19.  The Judgment and the findings on K and WP having knowledge of, or their having reason to believe, C’s lack of authority were made on the new evidence available and presented to the Court at the hearing of the Set Aside Summons. As the Court pointed out at paragraph 41 of the Judgment, the nature of the claims made by JX in the Set Aside Summons, of bribery and collusion, is serious. Having considered that the affirmations filed disclosed a prima facie case of collusion, cross-examination of the witnesses was ordered so that the claims can be properly considered by the Court, before any finding on public policy can be made. This reflects the serious approach taken by the Court, before setting aside or refusing enforcement of any award on the ground of public policy.

20.  Whilst the Court never condones attempts by parties to reargue a case, and to reopen findings made by a Tribunal on issues presented to and decided by the Tribunal in the arbitration under the guise of public policy, the Court does not turn a blind eye when serious claims of fraud, corruption and bribery of witnesses are made. The Court should at least consider the merits of such a claim made, on a preliminary inquiry, before allowing or dismissing it. In this peculiar case, when admissions of collusion and bribery were made by the protagonist, witnesses were called and heard on the issue which had never been raised before the Tribunal.  

21.  In Stati v The Republic of Kazakhstan [2017] 2 Lloyd’s Rep 201 the English Court held that the party in question was entitled to rely on evidence obtained since the award, to claim that enforcement should be refused on the ground that fraud was involved and that it would be contrary to public policy to enforce the award. The court explained that the conditions are that the evidence to establish the fraud complained of was not available at the time of the hearing before the tribunal, and there was a prima facie case of fraud which was sufficient to overcome the extreme caution of the court when invited to set aside an award on the ground of public policy. I respectfully agree with the observations of Knowles J at paragraph 93 of his judgment, which are set out below:

“It will do nothing for the integrity of arbitration as a process or its supervision by the courts, or the New York Convention, or for the enforcement of arbitration awards in various countries, if the fraud allegations in the present case are not examined at a trial and decided on their merits, including the question of the effect of the fraud when found. The interests of justice require that examination.”

22.  In the present case, the evidence on the collusion and bribery had not been available at the time of the Arbitration, and was not raised before the Tribunal for its consideration and determination. There was no finding made by the Tribunal on such evidence, and accordingly no finding to be “overturned” by the Court.

23.  After the substantive hearing of the Set Aside Summons, the Court found, having heard the witnesses and considered the totality of the new evidence, that the circumstances of the execution of the Settlement Agreement rendered enforcement of the Award which was founded on the Settlement Agreement to be contrary to public policy, to warrant the exercise of the Court’s discretion to refuse enforcement of the Award.

24.  As for the claim that the Judgment made no finding of collusion, that is open to argument and interpretation. Read as a whole, it should be understood that the Court had accepted JX’s case. The Court had accepted Y’s hearsay evidence of what C had confessed to him, found that K and WP had at least turned a blind eye to the question of whether C had any authority, and pointed out at paragraphs 75 and 76 of the Judgment that the recorded telephone conversation appeared to lend support to JX’s case. In any event, I do not agree that the absence of an express finding on collusion would affect the overall conclusion reached in this case on the public policy ground.

25.  There is no basis for K to argue that the burden of proof has been shifted to him “to disprove every potential public policy concern”. In this case, the validity of the Settlement Agreement and C’s lack of authority to sign same has from inception been the substance and focus of the setting aside application. K knew the case he had to meet on the execution of the Settlement Agreement, and had the full opportunity to adduce his evidence and to present his case thereon. There was no question of the Court deciding the Set Aside Summons on a basis which was novel or surprising to K.

26.  In my judgment, the grounds of appeal have no reasonable prospect of success.

27.  However, the exercise of the Court’s discretion to refuse enforcement of an award on the ground of public policy is a matter in the public interest. In the interests of justice, I will grant leave to K to appeal in this case, so that the Court of Appeal can consider the question and the approach of the Court to the Award.

28.  The costs of the application for leave to appeal will be in the cause of the appeal.