Arbitration — Hong Kong court affirms arbitral jurisdiction over contractual indemnity claim linked to put option
In XX, YY & Ors v ZZ [2025] HKCFI 3089 (reported in [2025] 4 HKLRD 301), the Honourable Madam Justice Mimmie Chan, the Arbitration Judge, dismissed an application to set aside a ruling by an arbitral tribunal (the “Tribunal”) that it has jurisdiction under the arbitration clause contained in a Share Purchase Agreement entered into in 2017 (the “2017 SPA”). The plaintiffs challenged the Tribunal’s ruling on the ground that the “centre of gravity” of the indemnity claim – which turns on the alleged failure to perform a put option – lay with a subsequent, tripartite share (re-)purchase agreement made in 2021, and thus fell outside the scope of the arbitration agreement in the 2017 SPA. The Defendant was awarded costs on indemnity basis, with certificate for two Counsel.
The Court recognises “the difficulties in the present case” which arise out of the fact the parties’ dispute may involve intertwined issues which might reasonably be regarded as falling within the ambit of two arbitration clauses. The Court held that the claim seeking indemnification for loss arising from the failure to perform the put option fell squarely within the arbitration clause of the 2017 SPA. While recognising that the 2017 SPA and the 2021 SPA were not “unrelated”, the Court found they dealt with different aspects of the parties’ overall relationship. The 2021 SPA, concluded 4 years after the 2017 SPA, was not a settlement agreement and did not supersede the earlier arbitration clause. Notably, the “PRC Entities” (i.e. the 3rd to 10th Plaintiffs) were not even parties to the 2021 SPA, and could not participate in the arbitration commenced under the 2021 SPA. Nor would they be bound by the findings made by the other arbitral tribunal constituted under the 2021 SPA. Bearing in mind the warranties from the PRC Entities can only be found in the 2017 SPA, the Court rejected the Plaintiffs’ unmeritorious argument that the formulation of the claim was “artificial” or “manipulated”, holding that there was “simply no other agreement to avoid”. The Court concluded that the tribunal has the requisite jurisdiction over the impugned claims, “whether as a matter of construction of the relevant arbitration clause in the 2017 SPA, or on the application of the centre of gravity test”.
Adrian Lai and Matthew Suen, instructed by Mun Lee Ming Law Firm, appeared for the Defendant.
Matthew Suen
Matthew is a Charles Ching Scholar. Matthew is developing a broad civil practice across the full range of commercial litigation, international arbitration and advisory work. He is comfortable being instructed as part of a counsel team or in his own right, and has appeared unled in the High Court.
Before coming to the Bar, Matthew had a stint at one of China’s top Red Circle Firms where he acquired a good understanding of the mainland Chinese market in the context of cross-border commercial disputes. As barrister, Matthew is regularly instructed to act – as junior or sole counsel – in high-stakes commercial arbitrations administered by major arbitral institutions in Asia, including HKIAC, SIAC and CIETAC (HK). He also acts as secretary to arbitral tribunals.
Matthew read law in Hong Kong and Chinese Mainland and holds a Master of Laws degree in PRC Civil and Commercial Law from Peking University. He served pupillage with Mr Hectar Pun SC, Mr Adrian Lai JP, Dr Benny Lo, Mr Randy Shek and Mr Richard Yip before commencing his full practice in 2022. He currently serves in the Standing Committee on Mainland Affairs and the Committee on Arbitration of HKBA.
Please see Matthew’s profile for more details.
This article was first published on 7 August 2025.
Disclaimer: This article does not constitute legal advice and seeks to set out the general principles of the law. Detailed advice should therefore be sought from a legal professional relating to the individual merits and facts of a particular case. The photographs which appear in this article are included for decorative purposes only and should not be taken as a depiction of any matter to which the case is related. The views and opinions expressed in this article/material are solely those of the members authoring it and do not necessarily reflect the official policy or position of Denis Chang’s Chambers, or of any other member or members of Denis Chang’s Chambers.