Back to basics - Hong Kong Court of Appeal queries approach to winding up petitions where arbitration is involved

The Hong Kong Court of Appeal has suggested that a previous court decision may have overstepped the mark by suggesting that an arbitration clause in a client agreement should generally take precedence over a creditor's right to present a winding up petition.

In But Ka Chon v. Interactive Brokers LLC (2019) HKCA 873, (an otherwise fairly routine financial product misrepresentation case), vice president of the Court of Appeal Madam Justice Kwan made obiter comments implying that the test previously set out by the Honourable Justice Harris last year in Lasmos Limited v. Southwest Pacific Bauxite (HK) Limited (2018) HKCFI 426, which followed recent English authority, appeared to be at odds with classical Hong Kong and Commonwealth authority whereby a winding up petition may only be dismissed by establishing a bona fide defense on substantial grounds to the claim for the underlying debt.

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