Grand Court Sees Through “Specific Performance” Label And Stays Redemption Claim In Favour Of HKIAC Arbitration
In a judgment delivered on 25 September 2026 in TB Mgmt LLC and TB Executives Unity Holding v Taibang Biological [2026] CIGC (FSD) 83, Appleby obtained a stay of Grand Court proceedings in favour of an HKIAC arbitration, acting for the successful defendant.
The Issue
The plaintiffs commenced the Cayman proceeding claiming that their management redemption rights had been triggered, notwithstanding that an HKIAC arbitration was already underway concerning that issue. With a view to avoiding the effect of the arbitration clause in their shareholders’ agreement (SHA) – in which a clause headed “Specific Performance” excluded applications for “an injunction, temporary restraining order or other equitable relief” – they pleaded their claim as being for specific performance of the redemption obligations.
The defendant accordingly sought a stay of the Cayman proceeding pursuant to s.4 of the Foreign Arbitral Awards Enforcement Act (1997 Revision) (FAAEA); and, further or alternatively, in the exercise of the Court’s inherent jurisdiction on case management grounds.
The Decision
The Court considered itself obliged to grant a mandatory stay under s.4 of the FAAEA, for essentially the following reasons:
- Construction of the Arbitration Clause: The exclusion on which the plaintiffs relied covered only interlocutory “enjoining” relief. It did not extend to substantive claims for specific performance. The fact that the clause was headed “Specific Performance” made no difference, because the SHA provides that headings do not affect its proper interpretation.
- The Substance of the Claim: Moreover, the Court found that the specific performance claim was “entirely artificial and a mere device”, and “in reality all the Plaintiffs want are their shares redeemed and money paid to them”. Applying PT Thiess, the Court held that the substance of the controversy was not whether specific performance should be granted.
- No waiver: The Court also rejected the plaintiffs’ further (pleaded) argument that the defendant had waived its claim to an arbitration stay by raising the “cause” issue in a separate Cayman action (as plaintiff) against the former chairman. It found that argument to be “devoid of any merit”, including because that other action is against the former chairman personally, who is not a party to the SHA; and were not a step in the proceeding which the defendant sought to have stayed.
- The Court also held that a discretionary case management stay was justified, since the HKIAC arbitration concerned broadly the same factual and legal issues as the Cayman proceeding and might well resolve the real issues therein, or at the very least have an important effect on their further conduct.
Key takeaway
The judgment serves to confirm that the Cayman courts will not allow creative pleadings to undermine an arbitration agreement.
The Appleby team comprised John McCarroll SC, Damon Booth and Ray Leung (Hong Kong), and Andrew Jackson and Zuhair Farouki (Cayman). Andrew Ayres KC appeared as leading counsel.
