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1955 Capital Fund I GP LLC v. Global Industrial Investment Ltd. [2020] HKCFI 956: A timely reminder of the award creditor’s duty of “full and frank disclosure”

17 Aug 2020

The Hong Kong Court of First Instance recently set aside its own ex parte leave to enforce a Convention award for the award creditors’ failure to make full and frank disclosure.

In 1955 Capital Fund [2020] HKCFI 956, the award creditors, in their ex parte application for leave to enforce a USA award, failed to draw the court’s attention to the fact that pursuant to the operative part of the award, the award debtor’s duty to perform the award was conditional upon “[absence of] the filing of an application to correct or vacate the arbitration award under the applicable law”. The failure was held to be deliberate and the judge accordingly set aside the ex parte leave previously granted to enforce the award.

The decision is a timely reminder of an award creditor’s duty to the court if it chooses to enforce an arbitration award through the summary process under Part 10 of the Arbitration Ordinance (Cap. 609). Applications made under that Part may be done ex parte. Where ex parte leave is granted, the leave is suspended for a period of 14 days (or any other period fixed by the court), within which the award debtor may apply to the court for setting aside the leave.

Although it has been observed, as obiter, that an ex parte application for leave to enforce an award is not completely the same as an ordinary ex parte application,[1] recent authorities have consistently confirmed that an award creditor seeking ex parte leave to enforce an award, like other ex parte applications, owes a duty to make a full and frank disclosure in “the highest good faith”: e.g. Shenzhen Honeycomb System Co Ltd. v HCT Technologies (HK) Co. Ltd;[2] Grant Thornton International Ltd. v JPBP & Co (a partnership);[3] and the 1995 Capital Fund I GP LLC. The fact that the 14-day suspension window attached to an ex parte leave to enforce an award does not in anyway reduce the onus of the award creditor’s duty of disclosure: Grant Thornton International Ltd.; and the 1995 Capital Fund I GP LLC.

Insofar as the content of the duty is concerned, the award creditor is obliged to disclose all facts which are material to the court’s exercise of its discretion. Such facts include not only facts already known to the award creditor but also additional facts which it would have known upon proper inquiries. The award creditor must also bring to the attention of the court any points which the award debtor may make in relation to the enforcement application. Materiality is to be judged from the court’s perspective, not that of the parties or their legal advisers. The duty is continuing (as long as the application remains ex parte), including a duty to correct any misinformation or incomplete information previously given to the court. The duty is not discharged simply by burying the relevant and material information in a pile of exhibits.[4]

Failure to discharge the duty may result in the leave being set aside (e.g. the 1995 Capital Fund case) and/or deprivation of award creditor’s costs (e.g. Leidos Inc. v The Hellenic Republic [2019] EWHC 2738 (Comm)).


[1] Shenzhen Kai Long Investment and Development Co. Ltd. v. CEC Electrical Manufacturing (International) Co Ltd. [2001-2003] HKCLRT 649 §84

[2] [2018] HKCFI 1877

[3] HCCT 13/2012, unreported, 5 April 2013

[4] Case law suggests that the duty of disclosure does not, for instance, include disclosure of (1) partial performance of the award: U v. A, HCCT 34/2016, unreported, 23 February 2017 (however, partial performance is relevant and material in enforcing a Mainland award for only the unsatisfied part of the award is capable of being enforced: s.93(2) of the Arbitration Ordinance); and (b) the defences which the award debtor might have argued had it attended the arbitral proceedings: Medison Co Ltd v Victor (Far East) Ltd. [2000] 2 HKC 502.

José-Antonio Maurellet SC and Connie Lee acted on behalf of the applicants

Adrian Lai and Connie Lee co-authored this Case Report.