BAOSTEEL ENGINEERING & TECHNOLOGY GROUP CO LTD v. CHINA ZENITH CHEMICAL GROUP LTD

HCCT 7/2018

[2019] HKCFI 120

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTRUCTION AND ARBITRATION PROCEEDINGS

NO 7 OF 2018

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D E C I S I O N

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1.  The intended appeal is against the exercise of the court’s discretion and as appellant, CZ has a high threshold to surmount.

2.  CZ is severally liable under the Award, and BS is entitled to enforce the Award against any available assets of CZ in HK. I cannot see how it can be said that BS is thereby seeking to evade any exchange control in the Mainland. 

3.  The set-off sought to be asserted against CZ on the Mainland is not asserted by CZ, but by HH a separate legal entity, albeit an indirect subsidiary of CZ.  CZ is itself severally liable to pay BS under the Award.

4.  The Court is entitled, in deciding whether to grant the stay of execution, to consider the likely overall delay that may be occasioned if the further stay is granted and what may be the likely consequences if a stay is granted. This includes the likelihood of a judgment being issued in the foreseeable future and the likelihood and effect of an appeal against such judgment.  I do not agree these are irrelevant considerations.  They are particularly relevant when CZ’s stance appears to be that the grant of an initial stay by the Court makes it appropriate to grant further stays (as indicated in Counsel’s skeleton arguments for today), such that the application for stay is likely to be repeated.

5.  There is no evidence that CZ would not be able to recover from BS any amount required to be repaid by it to CZ from the Award. 

6.  The matters referred to in the Notice of Appeal as being relevant to the exercise of the Court’s discretion have all been argued at the hearing, and taken into consideration in the dismissal of CZ’s application for the stay.

7.  I cannot see how it can be just and equitable for a stay of execution to be granted and for enforcement of the judgment award to be further delayed in the circumstances of this case. Nor can I see that there are reasonable prospects of success in the intended appeal, to grant leave to appeal.  The summonses for leave to appeal and for the interim stay are dismissed, with costs.