What the English Court of Appeal’s Guidance on Providing Adequate Judicial Reasoning Could Mean for Hong Kong Courts and its Implications for Hong Kong International Arbitration

On 24th July 2025, in GLAS SAS (London Branch) v European Topsoho Sarl et al¹ (“GLAS SAS”), the English Court of Appeal clarified what counts as “adequate judicial reasoning” in case management and interim decisions. This ruling reaffirms and refines a judge’s duty to explain the rationale behind their rulings—guidance with significant implications for common law courts, including potentially Hong Kong. Key points include:

• The English Court of Appeal confirmed that insufficient reasoning in judgments can be a valid ground for appeal, stressing that judges must record the critical elements of their decisions;
• The standard of “adequate reasoning” is context dependent; even brief decisions must clearly explain the judge’s process, especially when rejecting key arguments or evidence;
• Counsel should raise concerns promptly about inadequate reasoning;
• The decision aligns with established Hong Kong case law and is expected to reenforce that judgments must clarify how key issues were resolved; and
• While GLAS SAS has not been cited in Hong Kong cases and sets no new threshold for challenging arbitral awards in Hong Kong, it may bolster arguments for setting aside awards when judgements lack sufficient explanation of critical points.

Background

The case revolves around a dispute involving complex multi-jurisdictional arrangements tied to a Chinese textile conglomerate, Shandong Ruyi group. The dispute arose after European Topsoho Sarl defaulted on bonds and then transferred shares held by it for a nominal sum to Dynamic, a BVI company indirectly majority-owned by Wuhu Ruyi Xinbo Investment Partnership Enterprise (Limited Partnership) (“Xinbo”), which is ultimately controlled by Shandong Ruyi. GLAS SAS, representing the bondholders, seeks to recover the shares through litigation.

A High Court order imposed certain conditions on Xinbo including procuring the transfer of shares by Dynamic and paying €10 million into court. In this appeal, Xinbo argued that the conditions were unfair and that he High Court judge’s reasons were not explained (not adequate)².

Key holdings in GLAS SAS

The Court of Appeal reaffirmed the position in Flannery v Halifax Estate Agencies Ltd (trading as Colleys Professional Services)³, that a failure to give any, or adequate, reasons may itself be a ground for appeal⁴.

The core principle is that judicial reasoning must be adequate but not exhaustive. “The critical elements of the judge’s decision-making must be recorded”⁵ such that the parties and the appellate court can understand the essential reasoning. The judge does not have to address every argument or evidence but must identify the key issues how they were resolved.

For example, although the High Court judge noted Xinbo’s delays and defaults, he failed to provide a clear explanation for requiring payment into court, or for the imposition of conditions on Xinbo.

The Court of Appeal held a full rehearing and ultimately upheld the order. However, the concept of “adequate reasoning” may have implications in future cases.

Test for “adequate reasoning”

Not a Context dependent – not a fixed standard.

• Clarity of essential reasoning – The judgment should clearly explain the essential reasoning behind the decision. In busy interim applications, the reasoning may be brief, but it must clearly document the key aspects of the judge’s decision-making process, especially the reasons for rejecting the losing party’s argument.
• Resolution of key issues & application of evidence – The reasoning must show how the main contentious issues were resolved, which includes identifying the issues to be decided, presenting the relevant evidence, and explaining why the relevant evidence was either accepted or rejected as unreliable”.
• Preference of evidence – The judgment must address seemingly compelling evidence and provide reasons for its rejection.

Practical Guidance for Practitioners

• Counsel are advised to immediately point out if they consider that reasoning is inadequate. A failure to do so cannot prevent an appeal, but the appellate court may consider it.
• The preferred remedy is to give the judge an opportunity to provide additional reasons if challenged, either at the permission to appeal stage or by direction of the appellate court. Counsel may ask the judge to supplement and perfect their reasoning when approving the transcript.

Relevance to Hong Kong’s Legal Framework

Though GLAS SAS has not been cited in any judgment in Hong Kong to-date, its key rulings followed English v Emery Reimbold & Strick Ltd⁶(“English v Emery”),which has been the well-established authority in Hong Kong on the requirement for courts to provide adequate reasons for their decisions. The principles from English v Emery have been applied in various Hong Kong cases, for example:

• Leung Wing Yi Asther v Kwok Yu Wah⁷followed English v Emery that “the judgment should identify issues that were vital to the judge’s conclusion and explain the manner in which the judge resolved such issues”⁸.
• 厦門新景地集團有限公司 v Eton Properties Ltd⁹ followed the position in English v Emery that interlocutory decisions are “where fairness does not demand that the parties should be informed of the reasoning underlying them”. Judges must provide sufficient, but not necessarily detailed, reasons for interim decisions. The duty to give reasons is context-dependent – not every argument or piece of evidence must be addressed, but rather that the judgment must explain the resolution of issues that are central to the outcome.

GLAS SAS further reiterates that while detailed reasons are not always required for interlocutory or case management decisions, a minimum threshold of reasoning must be met. Given Hong Kong’s common law tradition and the continuing relevance of English precedents in Hong Kong law, the principles in GLAS SAS are highly likely to be persuasive in Hong Kong.

In the arbitration context, Hong Kong courts will intervene to set aside or refuse enforcement of an award on natural justice grounds only in exceptional circumstances, as established in Grand Pacific Holdings v Pacific China Holdings Ltd¹⁰. While the threshold remains high, recent cases demonstrate its application – for example, in the more recent A v B & Ors¹¹, enforcement of an award was refused where the arbitrator failed to adequately explain the reasons on key issues. GLAS SAS may be cited as persuasive authority affirming the general principle of the need for adequate reasoning in arbitration, but it does not lower or raise the threshold for setting aside or refusing enforcement of arbitral awards in Hong Kong. What is not required is prolix “Reasons for Award” in straightforward arbitrations, lacking complexity; this English authority may give guidance as to that which is reasonable, necessary and proportionate.

According to the official caseload statistics published in the Hong Kong Judiciary Annual Report 2024¹², the Hong Kong courts continue to grapple with heavy caseloads to handle interlocutory hearings (being 19,114, 20,938 and 24,236 cases in 2022, 2023 and 2024, respectively). This guidance provides welcome clarity on the standards that such judgments must meet.

¹ [2025] EWCA Civ 933.
² GLAS SAS at 2.
³ [2000] 1 WLR 377.
⁴ GLAS SAS at 21.
⁵ GLAS SAS at 29.
⁶ [2002] 1 W.L.R 2409.
⁷ [2015] HKEC 2732.
⁸ Leung Wing Yi Asther at 607.
⁹ [2012] HKEX 216.
¹⁰ [2012] 4 HKLRD 1.
¹¹ [2024] HKCFI 751.
¹² See section headed “Caseload and Case Disposal of the High Court” in the Hong Kong Judiciary Annual Report 2024.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Denis Brock, an O’Melveny partner licensed to practice law in Hong Kong (Solicitor-Advocate), England & Wales (Solicitor-Advocate), Ireland, Australia, New Zealand, and New York; Cherry Ma, an O’Melveny associate licensed to practice law in Hong Kong; Ella Li, an O’Melveny trainee solicitor in the firm’s Hong Kong office, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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