THE EXTENSIVE JURISDICTION IN THE ACTION ON AN ARBITRAL AWARD
Samuel Yee Ching Leung*
and Matthew Suen†
Xiamen Xinjingdi Group v Eton Properties
Can a court enforcing an arbitral award grant any relief beyond the scope of the arbitral award if the award is not complied with? If so, would the court usurp the function of the arbitral tribunal? If not, why? What exactly is the role of the enforcing court therein and what should it do? These questions emerged in Xiamen Xinjingdi Group Co Ltd v Eton Properties Ltd
before the Hong Kong Court of Final Appeal (“CFA”).
This is an extraordinary case, the complexity of which gave rise to a 17-year marathon of litigation. In 2003, the plaintiff and two defendants, Eton Properties Ltd (“EP”) and Eton Properties (Holdings) Ltd (“EPHL”), entered into an agreement (“the Agreement”) for the purchase of a right to develop a piece of land (“the Land”) in the PRC. The arbitration clause provides that any dispute is to be submitted to the China International Economic and Trade Arbitration Commission (“CIETAC”) in Beijing. The defendants did not deliver the Land to the plaintiff but instead developed it themselves. The plaintiff commenced a CIETAC arbitration. Unbeknownst to the plaintiff, a BVI company was incorporated for corporate restructuring amongst the defendants to hold the Land.
In 2006, the CIETAC tribunal rendered its First Award, holding that performance of the Agreement was not impossible and that EP and EPHL had repudiated the Agreement. The plaintiff could not enforce the First Award in the PRC because the defendants were Hong Kong companies whose assets were outside the PRC. The plaintiff hence sought enforcement in Hong Kong under the Arbitration Ordinance2
and obtained a statutory judgment.
In 2008, EP and EPHL failed to set aside the statutory judgment on the basis that the corporate restructuring had made the performance impossible. The Court of Appeal (“CA”) noted that the impossibility was “self-inflicted”.3
EP and EPHL went back to the CIETAC, applying for a further order that the Agreement be terminated for impossibility. By its Second Award, the tribunal refused that and stated that it had “adjudicated the case fully” and “the [First] Award did not leave out any matter which would need to be further determined”.4
In the meantime, the plaintiff started a fresh common law action (“the Action”). The plaintiff claimed, inter alia, damages and interim injunctions restraining any further