Huaxintong International Investment Management Limited v. Hongkun USA…

Background

Huaxintong International Investment Management Limited and New Asia (China) International Group Company Limited entered into four loan agreements with Hongkun USA Investment LLC between February 2019 and January 2020. Hongkun USA Real Estate Holdings LLC guaranteed the loans. The loans funded land-development projects in the United States and totaled $15 million in principal: $3 million from New Asia and $12 million from Huaxintong. The agreements required disputes to be resolved through arbitration administered by the Hong Kong International Arbitration Centre (HKIAC).

After demands for repayment were unsuccessful, the lenders began arbitration. The three-member tribunal held a hearing and, on March 4, 2024, issued an award accepting the lenders’ requests for relief. The tribunal later issued a corrected award. It ordered Hongkun USA Investment LLC to pay New Asia $3,985,610.96 for the February 2019 loan, plus $3,857.76 per day from October 30, 2020, until repayment. It ordered Hongkun USA Investment LLC to pay Huaxintong $6,389,315.07 for the April 2019 loan, plus $6,221.53 per day from October 18, 2020; $5,356,164.38 for the May 2019 loan, plus $5,282.79 per day from October 5, 2019; and $2,133,698.63 for the January 2020 loan, plus $2,104.47 per day from June 1, 2020. The corrected award made Hongkun USA Real Estate Holdings LLC jointly and severally liable for payments under all four loans. The tribunal also awarded arbitration costs and interest.

Federal-court proceedings

The lenders asked the court to confirm the awards under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, commonly called the New York Convention, as applied through the Federal Arbitration Act. Confirmation gives an arbitration award the force of a court judgment. The court treated the request like a motion for summary judgment, meaning it considered whether the undisputed record required judgment for the lenders.

The court found that it had jurisdiction because the agreements were written, provided for arbitration in Hong Kong, involved commercial transactions, and were international rather than entirely domestic. The request was also filed within the three-year deadline. The defendants were served but did not appear or file opposition.

Under the New York Convention, a court generally must confirm an award unless the opposing party proves one of the Convention’s limited defenses, such as an invalid arbitration agreement, inadequate notice, an award beyond the arbitrators’ authority, improper arbitration procedures, or a conflict with public policy. Judge Cronan reviewed the submitted record despite the defendants’ failure to respond and found no basis for any of those defenses. He also found that the tribunal acted within the authority granted by the loan agreements, and that the awards’ damages, fees, and costs were supported by those agreements and the tribunal’s findings.

Ruling

Judge John P. Cronan granted the petition and confirmed the HKIAC’s Original Award as modified by the Corrected Award, in its entirety. The clerk was directed to enter judgment in favor of New Asia and Huaxintong for the amounts listed above, including the continuing daily sums, with the defendants jointly and severally liable. The court also directed the clerk to close the case.