Hilary So and Anfield Tam on The Interface between Arbitration Clauses and Insolvency Proceedings (HKLJ)

"The Interface between Arbitration Clauses and Insolvency Proceedings"
Hilary So (PCLL graduate) and Anfield Tam (PCLL graduate)
Hong Kong Law Journal, Vol. 55, Part 2 of 2025, pp.321 - 340

Abstract: This article reviews the line of authorities laid down by the English, Singaporean and Hong Kong courts concerning the approach to stay or dismiss an insolvency petition where the underlying debt is subject to an arbitration clause. While the Hong Kong Approach exhibit logically inconsistencies with its policy preferences by requiring parties to take steps to arbitrate (ie the third Lasmos requirement) before the court’s discretion to stay insolvency proceedings is triggered, the English Approach is overly restrictive with excessive emphasis on the doctrinal mechanism of insolvency law. Accordingly, this article shows preference for the Singaporean Approach, which strikes a fair balance in integrating the policy and doctrinal concerns in relation to arbitration law in the insolvency context, as the basis for Hong Kong’s legal reform. This article concludes by suggesting that the court’s discretion to stay insolvency petitions should generally be exercised unless in so doing an abuse of process would be resulted. Meanwhile, it would be best practice for the parties to spell out in the arbitration clause whether they intend the clause to cover insolvency proceedings in any event.