The English High Court has re-affirmed its jurisdiction where a disputed petition debt arises from a contract with an exclusive jurisdiction clause (EJC) in favour of a foreign court.

Background

City Gardens Limited brought a winding up petition against Dok 82 Limited for sums claimed under a contract governed by Hong Kong law and with an EJC for determining disputes in favour of the Hong Kong court. At first instance, the Court held that the EJC meant that the winding up petition could not be pursued as the question of whether the sums were owed was a matter for the Hong Kong court. City Gardens appealed. 

Decision

The High Court allowed City Gardens’ appeal.

The court could determine the existence (or not) of the debt governed by Hong Kong law and concluded that there was no genuine or substantial dispute as to the existence of a debt that exceeded the winding up threshold. The court affirmed that where no evidence is presented as to the application of foreign law (as was the case here), there is a presumption that it will be the same as English law. 

Good news for creditors 

The position may be different in other jurisdictions (see our alert from Hong Kong here), creditors are not prevented from proceeding with a winding up petition in the English court based on a debt arising under a contract that contains an EJC in favour of a foreign court. It is not enough for a debtor to point to an EJC in favour of a foreign court – they must show that the debt is genuinely disputed on substantial grounds.     

Find out more

To discuss the issues raised in this article in more detail, please contact a member of our Restructuring & Insolvency team

City Gardens Limited v DOK82 Limited [2023] EWHC 1149 (Ch)