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China Shanshui: Principles concerning declaratory relief at interlocutory hearings

Within the context of winding up proceedings concerning China Shanshui Cement Group Limited, the petitioner, Tianrui, issued a summons seeking a declaration from the Court as to the specific date on which its winding up petition had been presented.

Tianrui’s summons was contested by the Company on two bases: firstly, the issue of the date of the presentation was premature, dealt with a question which is currently hypothetical, and would in fact never be an issue arising on the winding up petition itself; and secondly, that upon a proper construction of the CWR, the winding up presentation had in fact been presented later than Tianrui contended (for more on that aspect of the judgment, please see here).

Tianrui’s summons was ultimately dismissed. In so doing, the Court had close regard to the Company’s submissions concerning the legal principles that apply in relation to declarations sought at interlocutory hearings, including:

  • Firstly, that any declaration made at an interlocutory hearing must necessarily be a final order (interim declarations being unknown to Cayman Islands law), res judicata as between the Company and Tianrui (but not as regards anybody else) and only challengeable by way of appeal.
  • Secondly, that when the Court is asked to make a final order at an interlocutory hearing, the Court should approach the question as if it were being asked to rule on a preliminary issue. In this regard, the Court should heed the stark warnings given in the House of Lords (followed in the Cayman Islands by the Chief Justice in TMSF v Wisteria Bay regarding the making of preliminary determinations on points of law, which is apt to cause delay, anxiety and expense and should be confined to cases where they might resolve discrete issues, thereby allowing for the more efficient disposal of the case.
  • Thirdly, that the Court ought not to make declarations in connection with questions that are hypothetical or theoretical, or where the relevant dispute has yet to arise.
  • Fourthly, and relatedly, that a declaration made by the Court must have some utility.

On the facts, the Judge agreed with the Company that the declaration sought would not assist with the efficient disposal of the petition, because the sole question arising on the petition was whether it would be just and equitable to wind up the Company (not, if the petition was successful, the date on which it had been presented). Further, the Judge agreed that the issue as to the date of presentation was at this stage purely hypothetical. On the issue of utility, the Judge held that whilst a declaration might be convenient and useful, it was not absolutely essential. The Court was mindful of the warnings given regarding the exercise of its discretion to grant what amounts to a final declaration on an interlocutory basis.

China Shanshui: Principles concerning declaratory relief at interlocutory hearings

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