Navigating Cross-Border Enforcement: Hong Kong Court Reaffirms Pro-Arbitration Stance Amidst Foreign Sanctions

In a significant decision for international commerce, the Hong Kong Court of First Instance recently dismissed a global bank’s attempt to resist the enforcement of a €30M+ arbitral award on the basis of potential exposure to foreign sanctions.

Our team at Georgiou Partnership successfully represented the applicant in A Company v The Bank [2026] HKCFI 3169, securing the dismissal of an application to set aside or stay the order for leave to enforce the award with indemnity costs.

In deciding whether to set aside or stay the order, the Court said its task was “to identify whether a real risk of prosecution [by virtue of the foreign sanctions] has been established, and if yes, a balancing exercise then follows to consider the risk of prosecution and the importance of the relief sought by the order.” In this instance the Court held that the bank had not, on the evidence, shown that there is a real risk of prosecution, and on balance it could not accede to the bank’s application to set aside the order.

For business leaders and multinational corporations navigating complex geopolitical landscapes, this judgment offers three critical takeaways regarding commercial risk and choice of forum for enforcing judgments and arbitral awards:

1.   Foreign Sanctions Do Not Dictate Local Public Policy

The Court reaffirmed that Hong Kong's public policy is not determined by the foreign policy or sanctions regime of another jurisdiction. A foreign regulatory environment cannot generally be used as a shield to avoid honouring a valid arbitral award in Hong Kong.

2.   Conflicting Obligations are a Commercial Risk

The Court noted that global financial institutions operating across borders naturally face contradictory legal obligations. However, the Court viewed this as a commercial reality and an inherent risk of international business, rather than a valid ground to deprive a successful party of the fruits of their award.

3.   High Threshold for Refusing Enforcement of Arbitral Awards

The decision underscores Hong Kong’s commitment to the New York Convention and its pro-enforcement ethos. The threshold to refuse enforcement on “public policy” grounds remains exceptionally high and must “shock the conscience” of the court or violate Hong Kong’s most basic notions of morality and justice.

This ruling provides welcome clarification for parties engaging in cross-border business and reinforces the efficacy of enforcing judgments and arbitral awards in Hong Kong.

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