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31 Jul 2018

Application to resist enforcement of award out of time allowed: Astro v First Media

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In Astro Nusantara International BV and others v PT First Media TBK [2018] HKCFA 12; FACV 14/2017, the Hong Kong Court of Final Appeal (“CFA”) has recently considered the test for deciding whether to grant an extension of time in an application to resist the enforcement of an arbitral award. In its judgment, the CFA held that First Media was entitled to the extension of time sought.

After decisions of both the Court of First Instance and then the Hong Kong Court of Appeal, the CFA considered First Media’s appeal to extend the time to apply to set aside earlier Hong Kong orders, which had granted leave to enforce a Singapore arbitration award in Hong Kong.

First Media is part of the Lippo conglomerate of companies. Certain Lippo entities, but not First Media, had entered into a joint venture agreement with Astro. The joint venture failed and disputes arose. Astro commenced SIAC arbitration proceedings and applied to join First Media (and other Lippo entities) to the arbitration pursuant to Rule 24(b) of the 2007 SIAC Rules. The tribunal allowed the application. First Media did not challenge that ruling and participated in the arbitration.

Astro prevailed in the arbitration and Lippo and First Media became subject to awards in excess of US$ 130 million. Astro sought to enforce the award in both Singapore and Hong Kong. In Singapore, First Media successfully resisted the enforcement application on the basis that the arbitral tribunal had erred in finding that Rule 24(b) of the SIAC Rules permitted it to join non-parties such as First Media to the arbitration and assume jurisdiction over those parties.

In Hong Kong, Astro enjoyed some initial success in their enforcement of the award in the lower courts. First Media did not at first resist Astro’s enforcement application, because it believed it did not have assets in Hong Kong. When First Media realised this was erroneous, it applied out of time to set aside orders for enforcement. That application went all the way to the CFA, which was therefore concerned with the proper test for determining an application to extend time to resist enforcement of an arbitration award.

The CFA found that the lower courts had wrongly exercised their discretion to extend time. In particular, the CFA found that the lower courts had not accorded proper weight to the lack of a valid arbitration agreement which, if recognised, would have undermined the arguments made by Astro in favour of enforcement. Furthermore, in exercising their discretion not to grant an extension of time, the CFA found that the lower courts had given too much weight to the fact that the awards had not been set aside in Singapore. Since First Media enjoyed both active and passive remedies when challenging an award (in other words,  First Media  could have taken the active step of applying to set aside the award at the seat, or the passive and later remedy of resisting an award creditor’s application to enforce an award), the CFA also found that the lower courts should not have taken into account the fact the award had not been set aside at the seat.

The CFA also found that to refuse First Media’s application for an extension would effectively and wrongly preclude a hearing where First Media’s application to resist enforcement had “decisively strong merits”, and would penalise First Media for a delay which, the CFA considered, caused Astro no “uncompensable prejudice”. Accordingly, the CFA granted the extension of time to resist enforcement.

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