Hong Kong Court Sets Aside Default Judgment And Refers Parties To Arbitration

The Hong Kong Court of First Instance has stayed proceedings under a loan agreement in favour of arbitration before the Guangzhou Arbitration Commission, setting aside a prior default judgment entered when the borrower failed to acknowledge service of the proceedings (楊佩玲 v. Super Best Investment Limited [2023] HKCFI 2494).

Key issues

The usual legal test for a stay of Hong Kong court proceedings in favour of arbitration is whether there is a "prima facie or plainly arguable case" that the parties are bound by an arbitration clause (PCCW Global Ltd v. Interactive Communications Service Ltd [2007] 1 HKLRD 309).

On the other hand, the test in applications to set aside a default judgment is whether the applicant has a "real prospect of success" in the action (O Mark Polyethylene Products Fty Ltd v. Reap Star Ltd [2000] 3 HKLRD 144).