Bank win confirmed by Hong Kong’s highest court

Last Friday, the Hong Kong Court of Final Appeal brought to a close the long-running case of DBS Bank (Hong Kong) Limited v Sit Pan Jit (FAMV 45/2016).

The dispute concerned a claim by DBS Bank (Hong Kong) Limited (DBS) against its former customer, Sit Pan Jit, for failing to meet margin calls in respect of certain investments, and a counterclaim by Mr Sit against DBS for mis-selling such investments based on misrepresentation, breach of duties in contract and/or tort (common law and statutory) and breach of fiduciary duties.

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Filed under Financial Services Regulation, Hong Kong

The Global Pound Conference series and its importance

The Global Pound Conference (GPC) series presents a unique opportunity to engage all stakeholders in a conversation about dispute resolution and how it should best be used in commercial disputes. The time is ripe to review all processes (litigation, arbitration and the range of less formal processes like mediation). Anita Phillips, secretary of the Hong Kong Local Organising Committee and professional support consultant at Herbert Smith Freehills, and Julian Copeman, chair of the Hong Kong GPC Local Organising Committee and Greater China managing partner at Herbert Smith Freehills, discuss the GPC, what topics and discussions delegates can expect, and why it is so important to attend. Click here to watch the videos. 

To find out more about the Hong Kong event on 23 February and to register, click here

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Filed under ADR, Announcements

UK: Deceased’s “husband” and daughter both unable to obtain letters of administration

The English High Court has recently refused to grant letters of administration to a deceased's daughter (the "Claimant") despite her having the highest entitlement to the deceased's estate.[1] The dispute involved a challenge by the alleged widower of the deceased (the "Defendant"), who was found not to have been validly married to the deceased. Therefore the Court declined to grant the Defendant letters of administration. Nonetheless, the Court found that the Claimant had deliberately lied to Court and thus also declined to grant her letters of administration. Instead, the Court exercised its jurisdiction to appoint "some other person" as administrator. This case is a reminder that all parties need to act lawfully and properly when presenting evidence or face the consequences.

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Filed under Private wealth and trusts

Singapore and Delaware courts adopt Guidelines for Communication and Cooperation between Courts in Cross-Border Insolvency matters

On 1 February 2017, the Supreme Court of Singapore and the United States Bankruptcy Court for the District of Delaware announced that they will formally implement the Guidelines for Communication and Cooperation between Courts in Cross-border Insolvency Matters ("Guidelines").  

The Guidelines function as a framework setting out best practice on how to facilitate the processes and procedures of cooperation and communication between courts.  Whilst they do not deal with substantive legal matters, the potential impact of a well-structured framework for coordination cannot be underestimated, particularly in complex cross-border insolvency matters.

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Filed under Insolvency, South East Asia

Herbert Smith Freehills launches ADR Hub

Herbert Smith Freehills has launched a new Alternative Dispute Resolution Hub (at www.hsf.com/adr).  

Sitting alongside our ADR Notes blog (which keeps subscribers up to date on legal and other developments in the ADR landscape), the ADR Hub features the latest thinking and in-depth commentary on the role ADR can and should play within dispute resolution and how it can be used to greatest advantage.

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Filed under ADR, Announcements

Hong Kong Court of Appeal affirms law on express, constructive and resulting trust

The Hong Kong Court of Appeal ("CA") in Ip Fung Kuen v Sam Kee Frozen Meat Co Ltd and others (CACV 107/2016) recently affirmed the well-established principles of express, constructive and resulting trust under Hong Kong law. As well as confirming those principles, the judgment is also noteworthy because of the CA's confirmation of the Court of First Instance ("CFI")'s finding that the plaintiff's lack of education and sophistication in comparison with the appellant (a company established and controlled by the plaintiff's eldest brother) was relevant to whether a trust was established. The CA upheld the CFI's ruling that the appellant held the disputed property in trust for the plaintiff.

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Filed under Hong Kong, Private wealth and trusts

Significant developments in Indonesian criminal law

Indonesia’s Criminal Procedure Code (“KUHAP”) was last revised in 1981. Many are of the view that it has not kept up with legal developments since then and that it is in need of substantial amendments. In the past month, there have been two major developments, namely the promulgation of a new Supreme Court Regulation relating to corporate prosecutions and a significant Constitutional Court decision relating to the supervision of criminal investigations.

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Filed under South East Asia

Hong Kong government launches two consultations on legislative proposals to enhance regime for combatting money laundering and terrorist financing

Earlier this month, the Hong Kong government launched two consultations on legislative proposals aimed at bringing Hong Kong in line with international standards for combatting money laundering and terrorist financing.  With a mutual evaluation of Hong Kong’s regime with other members of the Financial Action Task Force (FATF) looming in 2018, the government is keen to ensure that Hong Kong’s regime aligns with the FATF’s standards.  The consultations will last for two months and will end on 5 March 2017.  Subject to the views and comments received, the government aims to introduce the proposed reforms into the Legislative Council in the second quarter of 2017.

One consultation paper proposes to amend the Companies Ordinance to enhance the transparency of beneficial ownership of Hong Kong incorporated companies.  Under the proposals, all Hong Kong incorporated companies (other than listed companies who will be exempt) will be required to obtain and hold beneficial ownership information, which will be available for public inspection.  The regime will be backed by criminal sanctions for non-compliance.  For further details, please refer to our e-bulletin of 16 January 2017.

The other consultation paper proposes to extend customer due diligence (CDD) and relevant record-keeping requirements to designated non-financial businesses and professions (DNFBPs), when they engage in "specified transactions".  They include solicitors, accountants, real estate agents and trust or company service providers (TCSPs).  The proposals are intended to be implemented by extending the application of the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance, which currently only apply to specified financial institutions.  It is also proposes that a licensing regime be introduced for TCSPs, which (unlike the other DNFBPs) are not currently subject to any regulatory regime.  For further details, please refer to our e-bulletin of 18 January 2017.

If you wish to discuss the above further, please do not hesitate to contact any member of the Hong Kong team listed on the respective e-bulletins, or your usual Herbert Smith Freehills contact.

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Filed under Financial Services Regulation, Hong Kong

What does it mean to “act for another”? Hong Kong Court of Final Appeal issues important clarification under the Prevention of Bribery Ordinance

In the recent case of HKSAR v Luk Kin Peter Joseph & Yu Oi Kee (FACC 8/2016), the Hong Kong Court of Final Appeal (CFA) clarified the scope of agency in the context of group companies for private sector offences under the Prevention of Bribery Ordinance (POBO).

The case involved the disposal of a subsidiary by China Mining Resources Group Limited (China Mining). Joseph Luk (Luk) and Yu Oi Kee (Yu), directors of the subsidiary, were alleged to have made false declarations of interests on the board minutes authorising the disposal. The CFA examined whether an agency relationship existed between directors of a subsidiary as agent and the parent company as principal, and held that for the purpose of section 9 of POBO, an agency relationship can arise without any pre-existing duty (legal, contractual or fiduciary). The mere acceptance of a request to act in relation to the principal’s affairs or business may itself create an agency relationship. The CFA unanimously dismissed the appeals and upheld Luk's and Yu's convictions.

This is an interesting decision for directors, particularly in the context of group companies in Hong Kong. It is common for companies to adopt a group structure whereby the various businesses of the parent company are conducted through its directly-owned and/or indirectly-owned subsidiaries, with different people holding directorships in the parent company and the subsidiaries. The CFA's broad interpretation of "agent" under section 9 of POBO means that directors should be more cautious of whether a duty to act with good faith has been imposed on them with respect to their conduct of affairs related to companies in which they do not hold directorships.

The case also highlights a further POBO private sector offence: corrupt transactions with agents under section 9(3), for which no monetary or other benefit need be transferred. If an agent, with intent to deceive his/her principal, uses a receipt, account or document in which the principal is interested, which contains false or incorrect statements intended to mislead, an offence is committed. Here, the board minutes were the document in question and contained false statements that Luk had no interest in the acquiring company. He was in fact its beneficial owner. This offence is of practical relevance but may be overlooked in the purview of bribery offences, as no transfer of advantage is involved.

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Filed under Hong Kong

Julian Copeman and Anita Phillips discuss the Global Pound Conference and what to expect at the upcoming Hong Kong event

Hong Kong Lawyer has published an article by Julian Copeman, partner, and Anita Phillips, professional support consultant, discussing commercial dispute resolution in Hong Kong and what the Global Pound Conference series has highlighted for change at other events across the globe to date. The article can be accessed here.

The Global Pound Conference on 23 February at the Convention and Exhibition Centre is a timely opportunity for all stakeholders (users, lawyers, advisors, experts, judges, arbitrators, mediators, academics, government bodies and dispute resolution institutions) to reflect on what is working in Hong Kong and what needs to change. With a keynote address from the Secretary for Justice, closing remarks from the Chief Justice, and the Solicitor General discussing the responsibilities of each stakeholder group in shaping the future of dispute resolution, there will be fervent debate. With third-party funding of arbitration and the promotion of mediation (including through apology legislation) high on the Hong Kong legislature’s agenda, the time is ripe for a conversation that covers all dispute resolution processes and provides a clear framework for quantitative and qualitative outputs.

The full programme can be found here. Register to attend the event here.

Julian Copeman
Julian Copeman
Greater China Managing Partner
Email | Profile
+852 2101 4245
Anita Phillips
Anita Phillips
Professional Support Consultant
Email | Profile
+852 2101 4184

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Filed under ADR, Announcements, Arbitration