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The Hong Kong Court in New Delta Trading Co., Ltd. v South China Development (H.K.) Limited [2026] HKCFI 2125 has reaffirmed its pro-enforcement stance on exclusive jurisdiction clauses in favour of non-Hong Kong courts. The Court dismissed the Plaintiff’s appeal and upheld a stay of Hong Kong proceedings in favour of the Shanghai No. 1 Intermediate People’s Court under an exclusive jurisdiction clause (“EJC”).
The decision confirms that proceedings brought in breach of an EJC will ordinarily be stayed unless “strong cause” is shown. In particular, allegations of fraud will not suffice unless directed specifically at the clause itself. The Court also reaffirmed the principle of separability.
Background
The dispute arose from a frozen seafood trading arrangement between the Plaintiff, a Japanese trading company, the Defendant, a Hong Kong company, and a PRC processor, Dalian Hualian. The Plaintiff relied on various sales documents and claimed it had paid for goods that were never delivered. It commenced proceedings in Hong Kong alleging unjust enrichment, breach of contract, conspiracy and misrepresentation, and contended that the agreements, including the EJC, were procured by fraud.
The Defendant denied any obligation to supply the goods and applied to stay the Hong Kong proceedings in favour of the Shanghai Court. A stay was granted, and the Plaintiff appealed.
Decision
The Court reaffirmed the strong policy in favour of enforcing EJCs. Where proceedings are brought in breach of an EJC in favour of a non-Hong Kong court, the Hong Kong Court should exercise its discretion to grant a stay, unless a “strong cause” for not doing so is shown. A lack of a credible defence, without more, will not amount to a “strong cause”. This strikes the balance between the policy of upholding the parties’ own jurisdiction agreements while retaining a discretion for exceptional cases.
Further, applying the principle of separability, an EJC is a separate agreement from the main agreement. Disputes about the validity of the main agreement must be resolved pursuant to the EJC, unless the EJC is itself under specific attack and a question arises as to whether it should be invoked. Here, the Plaintiff made no allegation nor provided any evidence of misrepresentation relating to the EJC.
The Plaintiff’s mistake argument also failed. The fact that its representative had not focused on the EJC at the time of entering the agreements cannot suggest that he was labouring under some induced mistake to enter the EJC.
While the Court expressed no definitive view on the Plaintiff’s wider fraud allegations, it observed that they could not be resolved at the interlocutory stage without a full trial or cross-examination of witnesses.
In any event, although unnecessary given its ruling on the EJC, the Court indicated it would have granted a stay on forum non conveniens grounds. Shanghai was the natural forum, given the place of performance, the location of the alleged misrepresentations, the governing law issues, and the location of witnesses. The Plaintiff would not be deprived of any juridical advantage by litigating there.
The appeal was dismissed.
Comments
This decision underscores the Hong Kong Court’s robust approach to enforcing EJCs, including in cross‑border disputes involving the Mainland. It highlights that parties seeking to resist a stay must target the clause itself, rather than rely on broader challenges to the main agreement. It also reflects the Court’s reluctance to engage in a merits assessment where the parties have agreed to litigate in another forum.
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