22 Dec 2017

Winding Up on Grounds of Insolvency did not Constitute Enforcement of Either a Judgment or an Arbitral Award

In Re Lucky Resources (HK) Ltd [2016] 4 HKLRD 301, the petitioner presented a winding-up petition against Lucky Resources (HK) Ltd (“the Company”) on the ground of insolvency. On 5 February 2016, a final arbitration award was issued in favour of the petitioner. Based on the arbitration award, the petitioner issued a statutory demand on 24 February 2016 and a month later, issued the winding-up petition.

The Company opposed the petition on the ground that the petition had been improperly presented because the petitioner had not made an application pursuant to s.84 of the Arbitration Ordinance (Cap 609) to enforce the award. No dispute over the debt has been advanced by the Company.

The Court made the winding-up order, holding that the presentation of a winding up petition did not constitute enforcement of the award. Harris J said that it is clear from the authorities that Hong Kong courts and courts in other jurisdictions (e.g. the UK) have determined that the presentation of a petition to wind up a company on the grounds of insolvency was the exercise of a class right and did not constitute enforcement of either a judgment or an arbitration award. Therefore, s.84 of the Arbitration Ordinance (Cap 609) was irrelevant.

The decision has made the point clear that the presentation of a petition to wind up a company on the grounds of insolvency was the exercise of a class right. In fact, given that the Company did not dispute the debt, the court is likely to make a winding-up order even in the absence of a binding arbitration award (See Re Quiksilver Glorious Sun JV Ltd [2014] 4 HKLRD 759).