Golden Meditech: Domestic Enforcement of Foreign Interim Awards

In a Nutshell

Foreign arbitral injunctive interim measures can be given domestic effect to preserve the status quo.

Background and Claim

The plaintiffs and the defendant were parties to arbitration proceedings in Beijing, administered by the China International Economic and Trade Arbitration Commission (“CIETAC”). The plaintiffs had transferred shares in a Cayman Islands company (“GCBC”) to the defendant but part of the purchase price remained outstanding. The subject matter of the arbitration included the parties’ rights and obligations under the agreements effecting the share transfer and the shares’ beneficial ownership.

During the arbitration, the CIETAC tribunal issued an interim measure restraining any dealings in the shares of GCBC or any change in its shareholder structure to preserve the status quo and avoid prejudice to the arbitral process and the enforceability of any final award (the “Interim Measure”). The Hong Kong Court granted leave to enforce the Interim Measure in Hong Kong, and the deadline for challenging that order had expired. The plaintiffs applied ex parte for leave to enforce the Interim Measure in the Cayman Islands as a judgment of the Grand Court (the “Court”).

As an added wrinkle, GCBC had been in provisional liquidation in the Cayman Islands for several years, and so the Court also had to consider the interaction between the Interim Measure and the powers of the joint provisional liquidators (the “JPLs”).

Legal Framework

The plaintiffs applied pursuant to both the Arbitration Act 2012 (the “Arbitration Act”) and the Foreign Arbitral Awards Enforcement Act (1997) (the “FAAEA”).
Under the Arbitration Act:

• Section 52 provides that interim measures issued by arbitral tribunals are to be recognised and enforced by the Court regardless of the issuing jurisdiction, subject to limited grounds for refusal. This section also empowers the Court to order the requesting party to provide appropriate security, if the arbitral tribunal has not already determined the issue or if necessary to protect the third party rights.
• Section 53 sets out the exclusive grounds on which enforcement may be refused. This includes grounds substantially mirroring those set out in the New York Convention (such as incapacity, invalidity of the arbitration agreement, lack of proper notice or inability to present one’s case, excess of mandate, irregularity in composition or procedure, subject matter is not arbitrable, or enforcement is against public policy), failure to provide security in connection with an interim measure, termination/suspension of an interim measure or incompatibility of an interim measure with the Court’s powers.
• Section 54 confirms the Court’s power to issue interim measures in support of both domestic and foreign-seated arbitrations.

The FAAEA similarly provides for the recognition of foreign arbitral awards, other than in limited specific circumstances – largely the same grounds as set out in the Arbitration Act.

In Al Haidar v Rao [2023] 1 CILR 170, the jurisdiction’s first decision on the enforceability of interim awards, Kawaley J considered the interplay between the FAAEA and section 52 of the Arbitration Act, finding that:

• The FAAEA is the “umbrella” statute governing the enforcement of foreign arbitration awards and that, following the introduction of the Arbitration Act, the FAAEA fell to be construed as implicitly extending to include foreign interim awards capable of enforcement as “awards” under the Arbitration Act.
• Alternatively, section 52 of the Arbitration Act creates a freestanding regime for recognition and enforcement of interim measures, irrespective of the jurisdiction in which they were issued.
• In any event, the Court has jurisdiction to grant leave to enforce a foreign interim measure, subject to the limited grounds for refusal (set out above).

Kawaley J also emphasised the pro-enforcement policy underlying the New York Convention and the Arbitration Act, and that the grounds for refusing enforcement should be construed narrowly.

Decision

In considering whether any of the limited grounds for refusal applied, the Court had to be satisfied on the evidence before it that there was no obvious basis to refuse recognition or enforcement (and the defendant would have an opportunity to resist recognition and enforcement on the return date).

In this case, there was no basis under section 53 of the Arbitration Act to refuse recognition or enforcement of the Interim Measure. Of note:

• In relation to the provision of security, the Interim Measure did not require the plaintiffs to provide security, but the tribunal noted that the questions of security might arise. The Court decided it was not necessary or appropriate to require security in circumstances where the Interim Measure only preserved the status quo (but without prejudice to any future on notice application for security).
• The Interim Measure was compatible with the Court’s powers, as asset-preservation and orders maintaining the status quo by restraining dealings in shares pending the determination of rights are familiar forms of relief to the Court, both in arbitration related and insolvency contexts.
• Recognition of the Interim Measure would not be incompatible with the prior appointment of JPLs. While the order appointing the JPLs partially disapplied section 99 of the Companies Act (avoiding dispositions of property and transfer of shares after commencement of winding up), the order did not confer a free-standing right to implement changes to GCBC’s share register in circumstances where beneficial ownership of the shares was disputed. Maintaining the status quo pending determination by CIETAC did not constrain the JPLs’ powers or conflict with their appointment order. The Court retained full supervisory jurisdiction over the JPLs.
• There was no issue of arbitrability or conflict with public policy – this was a contractual dispute, the Interim Measure was a standard form of relief, CIETAC was a reputable international arbitral institution, and the tribunal had granted the Interim Measure following contested proceedings in which the defendant fully participated.

As there was no basis to refuse recognition or enforcement, the Court concluded that, consistent with the pro-enforcement policy, the Interim Measure should be recognised and enforced in the Cayman Islands.

Key Takeaways

• The Cayman Islands has a pro-enforcement policy in relation to arbitration, and exceptions to enforcement are construed narrowly.
• Interim measures to preserve assets and maintain the status quo pending resolution of a dispute are entirely standard forms of relief in the Cayman Islands.
• The Court has the power to grant recognition and enforcement not only in relation to final arbitral awards, but also in relation to interim measures granted by a foreign tribunal.
• The Court has discretion to require the provision of security as a condition of any such order.
• Existing insolvency proceedings are not necessarily a bar to recognition and enforcement of interim measures.

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¹ [2025] CIGC (FSD) 114