Stay of Civil Proceedings Pending the Outcome of Another Action: Principles for the Use of the Court’s Discretion Based on Case Management
In civil proceedings in Hong Kong, it is not uncommon for a party to apply to the court for a temporary stay of civil proceedings pending the outcome of another civil action or arbitration in Hong Kong or pending the outcome of a related action or arbitration outside Hong Kong.
What are the principles on which the court will base its decision when considering whether to grant a stay of civil proceedings on case management grounds?
Stay of civil proceedings: source of the court’s power
Under section 16(3) of the High Court Ordinance, and RHC Order 1B, rule 1(2)(e) of the High Court Rules, the court has a discretionary power to suspend proceedings on the basis of its case management powers, knowing that a particular time or event has occurred. The court also has the power to make such orders based on its inherit jurisdiction.
Stay of Proceedings: General Principles of Law
When the plaintiff’s action is based on his or her rights, the court should grant a stay of proceedings only if there is ‘very good reason’ and ‘rare and compelling circumstances’. A stay of proceedings should be granted for ‘very good reason’ and ‘a few and compelling circumstances’, and the stay should not be unfair to the plaintiff, while the defendant needs to prove that the continuation of the proceedings would be unfair to the defendant, which is ultimately a matter of balancing convenience and fairness. (See: Zhang Xiuhong v Liu Wenchen & Ors (HCA 2118/2012, 20 July 2017), §34, per Au-Yeung J, citing Ng J’s judgment in AIG Europe Ltd & Ors v Fast- Link Express Ltd & Ors (HCAJ 114/2014, 10 January 2017), §§9-13. Poon Ka Man Jason v Cheng Wai To & Ors. [2018] HKCFI 771 at paragraph 37)
Once again, in exercising its discretion, the court needs to consider (1) the potential waste of the court’s time and the parties’ time and resources if there is no stay; and (2) the potential delay to the proceedings for a period of time if the proceedings are stayed. (see The Al Dhabiyyah [1999] 4 HKC 414, at p 420A-F).
Distinction between permanent and temporary stay of proceedings
Further, in Tam Man Kou & Ors v Chime Corporation Limited, HCMP 4146 of 2001, unreported, 11 March 2005 (at paragraph 13), the Tribunal distinguished between a permanent stay and a temporary stay of court proceedings and held that, in the case of a temporary stay of court proceedings, the Tribunal has to consider The balance of convenience and fairness between the parties to the proceedings, the need for the Tribunal to consider the need to ensure that the Tribunal’s discretion is exercised in a manner that ensures that the proceedings are logical, fair and efficient, is not a matter of total deprivation of a party’s right to litigate, but is a matter of case management. (HCMP 1432/2019 para 75).
The issue of commonality is not a necessary element
Finally, the fact that there are common issues in both proceedings is not a necessary element of the Tribunal’s decision to stay the proceedings. RHC Order 4, Rule 9(1) provides that the Tribunal may make a decision to stay the proceedings until the outcome of the other proceeding on other grounds. (HCMP 1432/2019 para 80)
Note: This article is a general briefing by solicitors in our Hong Kong litigation team on issues in Hong Kong litigation proceedings and is not intended to be legal advice on any specific case. For advice on any specific case relating to Hong Kong litigation legal matters, please contact a solicitor in our Hong Kong litigation team. For a general overview of the Hong Kong civil litigation process, please refer to the separate article ‘Overview of Civil Procedure in Hong Kong’.
(Bob Yan, principal solicitor of Yan Lawyers, solicitors. Email: [email protected], Tel: +852 31881995, +86 15018939249, WhatsApp: +852 5103 9249)