A COMPANY v THE BANK [2026] HKCFI 3169

The case arose from an LCIA award ordering a Canadian bank to pay more than EUR 30 million under three guarantees. The Applicant was a Russian company. After the award, Global Affairs Canada refused the Bank’s permit request, taking the view that the Applicant was deemed owned by a listed person under Canada’s Russia sanctions regime. The Bank then asked the Hong Kong court to set aside or stay enforcement, saying payment would expose it and its staff to Canadian criminal prosecution.

The Court approached the foreign criminal-law objection in two steps, relying on Bank Mellat v HM Treasury and O v C.

1. First, the Bank had to establish a real risk of prosecution.
2. Second, if that risk was established, the Court would balance the risk of prosecution against the importance of the relief sought by the enforcement order.

Threat of prosecution

In this sensitive matter, the Court’s reasoning appears to have turned on three points.

1. the prosecution-risk argument rested mainly on GAC’s letter. But the Court appears to have treated that letter as Canada’s current ministerial policy opinion on the proposed payment. It was not a Canadian court ruling on law, and it did not cite any judicial determination or precedent supporting GAC’s view.
2. the tribunal had already dealt with the illegality defence. It found that the Bank’s payment obligation was to be performed in Moscow, and that the Bank had no defence on the basis that giving instructions in Canada for payment in Moscow would be a Canadian criminal offence.
3. enforcement in Hong Kong did not necessarily require voluntary payment by the Bank. If the Applicant enforced by garnishee proceedings against the Bank’s Hong Kong accounts, without active assistance from the Bank, it was unclear why that would create criminal liability for the Bank or its staff in Canada.

The Court therefore found no real risk of prosecution.

The Bank had sought clarification from GAC, applied for a permit, and made genuine good-faith efforts to comply with Canadian law. The Court deemed these steps could be viewed as countervailing reasons why Canadian authorities might not prosecute.

Public Policy

As the second matter, the Court has turned to the issue of public policy.

Drawing on Hebei Import, the Courts central point was that Hong Kong public policy is not dictated by the foreign policy of another state. The reasoning and the conclusions were clearly laid out in the following paras:

84. I also accept the submissions of Counsel for the Applicant, that the content of Hong Kong public policy should not be dictated by the foreign policy of a particular foreign state, nor by foreign affairs, given the limits of the Court’s ability to adjudicate on matters of foreign affairs and foreign policy under Articles 13 and 19 of the Basic Law. The Court should be cautious to avoid any wrong use of excess of judicial powers. That is all that is necessary to be stated in this Decision.
85. Given the countervailing and important public policy of (1) recognizing and enforcing an arbitral award, which is final and binding on the Applicant and the Respondent; (2) upholding parties’ consensual arbitration agreement; and (3) what I have found against the real risk of the Respondent facing prosecution; I do not accept that enforcement of the Award should be refused on the ground of public policy. I do not consider that the Award, or enforcement thereof, violates any of the most basic notions of morality and justice of this forum.

The Setting Aside Summons was therefore dismissed, the stay was refused, and the Bank was ordered to pay the Applicant’s costs on an indemnity basis.