Winding-up proceedings do not amount to enforcement of an arbitration award

In Re Lucky Resources (HK) Ltd [2016] 4 HKLRD 301, Hong Kong’s Court of First Instance had to consider the question of whether an arbitration award could be enforced by winding up the company against which the award had been made, without first applying for leave to enforce the award under section 84 of the Arbitration Ordinance (Cap 609).   The Court answered that question in the affirmative. 

The Petitioner had obtained an arbitration award against a company and then issued a statutory demand and petition to wind up the company on the grounds of insolvency. The company opposed the petition on the grounds that it had been improperly presented because the Petitioner had not made an application under section 84 of the Arbitration Ordinance (Cap 609) for leave to enforce the arbitral award. No grounds for disputing the debt were given by the company. 

The Court made the winding-up order, holding that the presentation of a winding-up petition does not constitute the enforcement of an award and section 84 of the Arbitration Ordinance (Cap 609) is therefore irrelevant. The Court said that it was clear from the authorities that the Hong Kong courts and those of other jurisdictions (such as the UK) had determined that the presentation of a petition to wind up a company on the grounds of insolvency is the exercise of a class right and does not constitute the enforcement of either a judgment, or as in this case, an arbitration award. 

The ruling of the Court is unsurprising. Even if no arbitral award had been obtained by the Petitioner, it is likely that a winding-up order would be granted given that no grounds for disputing the underlying debt were raised by the company.

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