Sovereign State: People’s Republic of China
Official Language: Chinese, English
Government: Devolved executive-led system within a unitary one-party socialist republic
Area: 2,754.97km2
Population: 7,500,700
Currency: Hong Kong Dollar (HKD)
GDP total: HKD3.417 trillion (USD439.459 billion)
GDP per capita: HKD452,289 (USD58,165)
Time zone: UTC +08:00
Calling code: +852
Internet TLD: .hk

[Source: Wikipedia]

Q&A on Commercial Litigation
  1. What is the court structure applicable to commercial disputes in Hong Kong?
    The District Court hears the following cases:

    • General contract and tort cases (between HKD75,000 to HKD3 million);
    • Real property cases (including tenancy cases) where the annual rate or rateable value or the annual value of which does not exceed HKD320,000;
    • Matrimonial and family cases.

    The High Court is made up of the Court of First Instance and the Court of Appeal. It has both appellate and original jurisdiction.

    • The Court of First Instance has unlimited jurisdiction over all civil claims as follows: (i) Money claims for HKD3 million or above; and (ii) All other claims falling outside the District Court’s jurisdiction (including judicial review, winding up and bankruptcy and appeals from the Labour Tribunal and the Small Claims Tribunal (on a point of law)).
    • The Court of Appeal hears appeals from the District Court and the Court of First Instance, and certain statutory bodies (i.e. Lands Tribunal).

    The Small Claims Tribunal hears claims up to HKD75,000. No legal representation is allowed at the Small Claims Tribunal.
    The Lands Tribunal hears:

    • Applications by landlords for possession of premises.
    • Disputes about building management.
    • Applications for the determination of compensations caused by land resumption and payable by the Government because of public developments pursuant to the relevant ordinances.
    • Appeals against the assessment of rateable value / government rent or market value of property under the Housing Ordinance (Cap. 283).
    • Applications made by majority owners of a land for the sale of the land for redevelopment purposes under the Land (Compulsory Sale for Redevelopment) Ordinance (Cap. 545).
  2. Who decides questions of law and fact in the Hong Kong courts?
    In Hong Kong, judges decide questions of law and fact. Cases are heard under the common law adversarial system.
    Jury trials are rare in civil cases. However, a party may apply to the court for a trial by jury if there is at issue a claim in respect of libel, slander, malicious prosecution, false imprisonment or seduction, or any matters prescribed under the Rules of High Court.
  3. What is the nature of legal representation in Hong Kong? Do foreign lawyers have a right of audience in the Hong Kong courts?
    Legal representation in Hong Kong is divided between barristers and solicitors.
    Barristers

    • Unlimited rights of audience in all courts
    • Instructions from solicitors / Director of Legal Aid / Department of Justice
    • Overseas barrister

    Solicitors

    • Wide range of services
    • Limited rights of audience in courts
    • Solicitor Advocate
    • Registered foreign lawyers
  4. What types of legal fee arrangements are generally adopted by Hong Kong lawyers? To what extent are legal fees fixed by law?
    Barristers

    • as a disbursement in the solicitors’ bill
    • must be agreed in advance for court attendance

    Solicitors

    • Litigation – time costs basis
    • Non-contentious matters – agreed fee/time costs basis
    • written fee agreement (retainer fee):-
      • the scope of service to be provided;
      • the costs to be charged; and
      • client’s signature to confirm knowledge of the retainer
    • Contingency fee arrangement – illegal (aka champerty and maintenance)
  5. What are the time limits applicable to commercial disputes in Hong Kong?
    Under Limitation Ordinance (Cap. 347):

    • Contract claims (not under seal) – 6 years from the date of breach.
    • Contract under seal claims – 12 years from the date of breach.
    • Personal injury claims – generally 3 years from the date of the accident, or the date of knowledge of the injury by the Plaintiff, whichever is the later.
    • Claims under Employee’s Compensation Ordinance – 2 years from the date of occurrence of the accident (injury occurred during employment)
    • Fatal accident claims – 3 years from the date of death or the date of knowledge of the death by the deceased’s dependent (whichever is the latter).
    • Actions to recover possession of land – 12 years from the date on which the right of action accrued to the Plaintiff or to a person through whom the Plaintiff claims.
    • Other tort claims – 6 years.

    Extension:

    • court discretion; and
    • agreed among parties.
  6. Are there any pre-action discovery procedures available to a party who wishes to initiate a claim?
    3 main stages of discovery:

    • Automatic discovery
    • Specific discovery
    • Inspection

    Other form of discovery
    Interrogatories – in the form of question / answer.

  7. What role does mediation play in the litigation process? Is mediation imposed as a prerequisite to a commercial claim or is strongly encouraged by the Hong Kong courts?
    Current standard is that courts do encourage parties to engage mediation before proceeding to a full court action. Adverse cost order can be granted to any party who unreasonably refuses to engage in mediation.
  8. How is a commercial claim initiated in Hong Kong courts?
    4 ways of initiating a civil claim:

    • Writ of Summons
    • Originating summons
    • Originating motion
    • Petition
  9. What happens if a defendant fails to respond to a claim?
    The Plaintiff can apply to the court for default judgment against the Defendant.
  10. Are there any summary procedures which can be applied for by the plaintiff or defendant in a commercial claim?
    Summary judgment – judgment without a trial. However not applicable to the following matters:

    • libel, slander;
    • malicious prosecution;
    • false imprisonment;
    • seduction;
    • allegation of fraud; or
    • an Admiralty action in rem.
  11. What interim reliefs can a party seek to maintain the status quo or prevent further loss or damage pending the final decision of the Court?
    Available interim reliefs are as follows:

    • Injunctions:
      • Mareva injunctions (freezing injunction)
      • Anton Piller orders
      • Quia timet injunctions
      • Interim payment – where a Plaintiff can show that if the case proceeds to trial, he or she will recover a substantial award of damages from the Defendant.
    • Interim payment
    • Appointment of receivers – manage or protect property pending the trial.
    • Appointment of provisional liquidators
    • Free-standing interim relief
  12. What sort of evidence is required to support a commercial claim? How do the Hong Kong courts evaluate oral and documentary evidence?
    The admissibility of evidence are generally governed by Evidence Ordinance. Typical types of evidence are the followings:

    • Evidence from Witness (written and oral)
    • Documentary evidence (privileged documents excluded)
    • Expert opinions

    When evaluating the evidence, factors taken into consideration are:

    • Authenticity of the documents (and whether they are admissible under statue)
    • Consistency and logic of all the evidence
    • Character and credibility of the witness
    • For expert witnesses – further technical requirements
  13. When will a court consider expert evidence and how are expert opinions treated?
    When a case involves technical matters which are likely to be outside the experience and knowledge of the parties and the judge. The court may grant leave to the parties with appropriate directions, for example:

    • the number of expert witnesses from each side.
    • the timeline to file and exchange expert reports.
  14. Will parties be able to recover the costs incurred in pursuing a claim in court?
    Court has absolute discretion of making a wide range of costs orders:

    • Costs can be awarded during any stage of the claim.
    • In general, successful party in most cases will be awarded the costs.
    • In some cases, the court can award proportional costs to the unsuccessful party (ie: it can be partial success of a party’s list of claims or counterclaims).
    • Security for costs.
  15. How long do commercial claims take to be resolved in the Hong Kong courts?
    Although after civil justice reform the courts have improved It will depend (but not limited to) the following factors:

    • Progress of each party
    • Complexity of the case
    • Volume of evidence
    • Number of witnesses (and/or experts) to be called
  16. How can a successful party enforce a court judgment?
    The courts issue the following orders:

    • Charging order – a charge on an interest in land or over securities.
    • Garnishee order
    • Writ of execution
    • Writ of possession.
    • Appointing a receiver.
    • Winding-up petition (company) or bankruptcy proceedings (individual).
    • Examination – which involves an oral cross-examination of the judgment debtor (or an officer is a corporation) as to the assets available to satisfy the judgment.
  17. Can an unsuccessful party appeal against a court’s decision?
    The Hong Kong Court system of civil appeals is briefly laid out in the diagram below.

    Grounds for appeal

    • points of law;
    • points of fact; or
    • challenging the discretion of respective courts.
  18. How do Hong Kong approach the choice of governing law in a contract in cross-border litigation?
    Parties do have freedom on the choice of governing law in contracts, except for the following circumstances:

    • Contrary to public policy;
    • Not bona fide; and
    • Legal issues – regardless of the choice of law, Hong Kong law must apply regardless of a choice of law clause when it comes to certain areas of law (i.e. sale of goods (consumer protection), employment, real property and insolvency).

    If there is no governing law provision in the contract, the court will generally look for any indication of the parties’ intentions, including but not limited to the following considerations:

    • The law specified in any arbitration clause;
    • The place of performance of the contract;
    • The governing law clause of related contracts;
    • Illegality; and
    • The place of the subject matter of the contract.
  19. Are foreign judgments recognised by the Hong Kong courts? How long do commercial claims take to be resolved in the Hong Kong courts?
    Recognised and enforced under 3 different regimes:

    • Foreign Judgments (Reciprocal Enforcement) Ordinance (Chapter 319)
    • Common law regime – enforceable at common law, there are a number of requirements, such as:
      • the foreign judgment must be final and conclusive on the merits of the claim;
      • the foreign judgment must be for a debt or definite sum of money;
      • the Defendant must have submitted to the jurisdiction of the foreign court; and
      • the foreign judgment was not contrary to Hong Kong rules of public policy or notions of natural justice.
    • Mainland Judgments (Reciprocal Enforcement) Ordinance (Chapter 597) – this is for the enforcement of Chinese judgments from the PRC in Hong Kong. A judgment creditor under a PRC judgment that satisfies the following statutory requirements can apply to the Court of First Instance to register the judgments, :
      • the judgment relates to a commercial contract and was given after 1 August 2008;
      • the parties to the commercial contract had a written agreement made after 1 August 2008 specifying that the courts in the PRC have exclusive jurisdiction over the dispute;
      • the judgment was given by the Supreme People’s Court, a higher or intermediate people’s court or certain recognised primary people’s courts;
      • the judgment is enforceable in the PRC;
      • the judgment is final and conclusive; and
      • the judgment is for a definite sum of money (not being a sum payable in respect of taxes or similar charges or in respect of a fine or other penalty).
  20. How have the Hong Kong courts responded to the Covid-19 pandemic to ensure that the litigation process remains effective while ensuring the health and safety of those involved in the process?
    • Mandatory registration “Leavehomesafe” mobile app when entering courts
    • Body temperature scanning at entrance.
    • Security guards to control elevators (if enough staff).
    • Buttons are covered in plastic film which they replace quite regularly.
    • Perspex screens are placed up in front of the bar table and the judges table.
    • Remote hearings.
ABOUT THE AUTHORS

Jonathan Cheng
Lawyer

He is qualified in New Zealand and Victoria, Australia as a barrister and Solicitor, currently a registered foreign lawyer in Hong Kong. Jonathan specialises in litigation and dispute resolution. He has extensive experience in a broad range of litigation matters, including company matters, trust disputes, shareholder disputes, regulatory and investigatory matters, land title disputes, landlord and tenancy disputes, land resumption cases, contentious probate and trusts disputes.

ABOUT THE FIRM

Name: Yap & Lam, Solicitors
Address: Ground floor, 6 Wai Yan Street, Tai Po, New Territories
Telephone:  (+852) 2638 0820
Email: reception@ylsolicitors.com.hk
Website address: http://www.ylsolicitors.com.hk/
Key contact: Stephen Yap, Principal (stephen@ylsolicitors.com.hk)
Established: 2009
Number of lawyers: 6
Languages: Chinese (Cantonese/Mandarin/Hakka) and English

Brief description: Yap & Lam, Solicitors based in Hong Kong which provides a diverse range of legal services. The major areas of practice include civil and criminal litigation, family and matrimonial, property and conveyancing, China-Appointed Attesting Officers, Notary Public, solemnization of marriages, wills and probate, insolvency, personal injury, dispute resolution, company and commercial, employment and immigration. It also has a representative office in Guangzhou to service the clients in the Greater Bay Area and other parts of China.

Key practice areas: Civil and Criminal Litigation; Family and Matrimonial; Property and Conveyancing; Wills, Probate and Administration; Civil Celebrants of Marriage; China-Appointed Attesting Officers; Notary Public

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