A recent judgment of Mimmie Chan J provides useful guidance on the Hong Kong Court’s discretion to order security as a condition for proceeding with an application to set aside an order enforcing an arbitral award. Such security differs from security for costs in ordinary court proceedings (such as an action begun by writ) and may cover the awarded amount itself or a percentage that the Court considers appropriate.
Background
In SIC v WI and Another [2026] HKCFI 1795, the Court considered an application by SIC for security of approximately US$25 million, representing the full amount of an arbitral award rendered by an ICC tribunal seated in Paris. In default of providing security, SIC sought the dismissal of WI’s application to set aside an order granting leave for SIC to enforce the award in Hong Kong.
The arbitration arose from WI’s termination of distribution agreements under which WI granted SIC rights to distribute and sell certain “H” branded goods in Egypt. The Tribunal issued the award on 19 October 2021, finding that WI had wrongfully terminated the agreements and ordering WI to pay SIC damages and costs. WI applied to set aside the award in France. Having failed before the first instance court, WI appealed to the French Supreme Court.
In the meantime, on 15 August 2025, SIC obtained leave to enforce the award in Hong Kong. WI applied to set aside the enforcement order, or alternatively to stay its execution pending the outcome of the appeal before the French Supreme Court and in response, SIC sought security pursuant to Order 73, rule 10A of the Rules of the High Court of Hong Kong.
WI resisted enforcement in Hong Kong on the ground that new evidence had emerged after the award was rendered showing that SIC had misrepresented the integrity and thoroughness of its document production exercise to the Tribunal and had dishonestly concealed documents material to assessing the quantum of damages in the arbitration. WI argued that SIC’s conduct amounted to procedural fraud, such that enforcement of the award would be contrary to Hong Kong public policy. WI relied on a similar ground in its set-aside application in France.
The Soleh Boneh framework
The Court reaffirmed that the leading authority concerning security as a condition of the further conduct of an application to set aside an enforcement order is the decision of the English Court of Appeal in Soleh Boneh v Government of Uganda [1993] 2 Lloyd’s Rep 208. Under Soleh, the Court will determine, following brief consideration, whether the award is manifestly valid or invalid. If the award is manifestly valid, the Court may order immediate enforcement or substantial security. If the award is manifestly invalid, there should be an adjournment and no order for security. Moreover, between those two extremes, there may be varying degrees of plausibility in the argument for invalidity, and each case must be considered in its own context. Following brief consideration of merits, the Court will then consider whether enforcement of the award will be rendered more difficult if enforcement is delayed.
Applying the framework
On the merits of WI’s challenge, the Court accepted that the decision of the supervisory court at the seat would be given due weight by the enforcement court. The Court also placed weight on the fact that the evidence said to establish SIC’s concealment of documents had only been discovered after the award and was thus not a matter considered by the Tribunal. Whether and how the award was affected, whether it could be set aside as a result, and whether there was dishonesty involved were for further argument at the substantive hearing on WI’s set-aside application. On a brief review, and having regard to that fresh evidence, the Court concluded that it could not readily be seen at this stage that the award was either manifestly invalid or manifestly valid so as to justify immediate enforcement or the award of substantial security.
As to whether enforcement would be rendered more difficult as a consequence of delay, the Court emphasised that the focus is on whether the award creditor’s position would deteriorate if enforcement were delayed. The Court considered the overall circumstances, including the absence of evidence of dissipation, uncertainty over WI’s Hong Kong assets, the size of the award, and the likely further delay pending the French proceedings. Weighing the potential injustice to both parties, the Court ordered partial security of US$600,000, around 2.4 per cent of the amount sought by SIC.
Takeaway
The decision confirms that security applications in award enforcement proceedings are highly fact sensitive. While the Hong Kong Court continues to support arbitral enforcement, substantial security will not be ordered as a matter of course. In particular, where a public policy challenge is supported by materials requiring consideration, the Court may preserve the challenge while imposing a more limited security order. The result illustrates a calibrated approach that protects the award creditor’s position without depriving the award debtor of the opportunity to pursue a challenge with genuine merit.
For more information, please contact Stella Hu, Partner; Francesca Ip, Special Counsel; Tim Chu, Senior Associate; or your usual contact at Karas So LLP or Mishcon de Reya.