Supreme Court decision clarifies basis for the award of Wrotham Park damages

We discussed aspects of “Wrotham Park damages” (also called “license fee damages” or “negotiating damages”) in Herbert Smith Freehills Hong Kong office’s recent Contract Disputes Seminar “Getting your just deserts: remedies for breach of contract”.

To recap, in some cases where there has been a breach of contract, instead of awarding damages calculated on the conventional causation basis, the court may instead award negotiating damages. Such damages are calculated on a hypothetical basis, as the sum which might reasonably have been negotiated between the plaintiff and the defendant had the defendant sought the plaintiff’s permission to do what it did (in breach of contract). The Wrotham Park principle has been applied by the Hong Kong courts.

In the recent decision of Morris-Garner and another v One Step (Support) Ltd [2018] UKSC 20, the UK Supreme Court considered the basis for awarding negotiating damages, and narrowed down the circumstances in which such damages may be claimed. In particular, the Supreme Court rejected the idea that negotiating damages would be available whenever the court considers them to be the “just” response to a contractual breach.

For more details, please see our blog post on the Supreme Court judgment here.

Gareth Thomas
Gareth Thomas
Partner, Hong Kong
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Dominic Geiser
Dominic Geiser
Partner, Hong Kong
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Rachel Yu
Rachel Yu
Senior Associate, Hong Kong
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Filed under Contract, Remedies

Hong Kong Court of Final Appeal clarifies the meaning of “Malice” in defamation claims

The Court of Final Appeal (“CFA“) has handed down its much anticipated judgment in Jonathan Lu & Others v Paul Chan Mo Po & Anor [2018] HKCFA 11 (10 April 2018). The central issue in Paul Chan was the operation of “qualified privilege” when used by defendants in seeking to defeat defamation claims. “Qualified privilege” arises when the law recognises that the need for uninhibited communication outweighs the need to protect one’s reputation. Specifically, the CFA was asked to state its approach to “malice” which is a ground to rebut such a defence. In short, the CFA ruled that “malice” means any purpose apart from that protected under “qualified privilege” and that whether the defendant knew the statements to be false or not, on its own, is not sufficient to establish “malice”. Of interest to legal practitioners, the CFA also laid out the approach by which a jury should be directed when defamation cases are concerned. The CFA allowed the Plaintiffs’ appeal and directed the case to be retried at the Court of First Instance (“CFI“). Continue reading

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Filed under Defamation

Justin D’Agostino to lead ICC Court’s new Belt and Road Commission

Justin D’Agostino, Herbert Smith Freehills’ Global Head of Disputes, has been appointed chair of a new ICC Court commission to develop the ICC’s approach to dispute resolution procedures for China’s Belt and Road initiative.

“There is no ‘one-size-fits-all’ method of resolving Belt and Road disputes. But there is a concerted effort to encourage mediation clauses in Belt and Road agreements, with provision for arbitration if mediation fails,” said D’Agostino, who is also Hong Kong’s alternate member of the ICC Court.

“ICC is already a world leading provider of arbitration and mediation services, with tried and tested mechanisms and a strong pool of arbitrators and mediators. It is ideally placed to provide appropriate, effective dispute resolution services to parties all along the New Silk Road”.

The massive scale of Belt and Road is generating huge numbers of infrastructure projects across Asia and beyond – and every new project also has the potential for complex disputes.

Herbert Smith Freehills is engaged in a significant quantity of work generated by the US$900 billion Belt and Road initiative, advising on deals and projects worth over US$10 billion. Last week, the firm welcomed three new partners to our Greater China practice. Hew Kian Heong, Ellen Zhang and Michelle Li will further strengthen our existing team advising clients on Belt and Road projects.

“As China’s new business champions go global, we are increasingly well-placed to advise them on expansion around the globe, including any international disputes that may arise – both along the Belt and Road and other investment corridors,” said D’Agostino.

Click here for more on resolving disputes that arise out of Belt and Road transactions. This article originally appeared in the 5th edition of our quarterly publication, Inside Arbitration.

For further information, please contact Justin D’Agostino, Global Head of Practice – Dispute Resolution and Regional Managing Partner – Asia, or your usual Herbert Smith Freehills contact.

Justin D'Agostino
Justin D'Agostino
Global head of practice, dispute resolution and regional managing partner, Asia
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+852 2101 4010

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Filed under ADR, Arbitration, China, Hong Kong

An international convention on the enforcement of mediated settlements – UNCITRAL moves one step closer

The UNCITRAL working group that has for several years now been considering the potential for an international enforcement regime for international mediation has now completed its work and produced draft instruments.

At its most recent meeting in New York, the UNCITRAL Working Group II (Dispute Settlement – formerly Arbitration and Conciliation) approved a draft convention and a draft amended Model Law on international settlement agreements resulting from mediation. Continue reading

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Filed under Government proposals and consultations, Mediation (General)

Hong Kong Courts grant anti-suit injunctions to restrain foreign proceedings in breach of an arbitration agreement

In Arjowiggins HKK2 Ltd v Shandong Chenming Paper Holdings Ltd [2018] HKCFI 93, the Hong Kong Court of First Instance has granted an anti-suit injunction in favour of a recipient of a Hong Kong arbitral award to restrain the continuation of the overseas proceedings by the losing party. The Court held that Continue reading

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Filed under Arbitration, Hong Kong, Interim applications

Singapore’s first cryptocurrency dispute to go to trial

There has been a significant increase in interest in, and the use of, cryptocurrencies in recent times. Cryptocurrencies are essentially de-centralised virtual currencies, which are not linked to any particular country, nor regulated by any central bank or monetary authority.

In late December 2017, the Singapore International Commercial Court (SICC) decided that the nation’s first dispute involving cryptocurrency merits a full trial. While this case does not involve questions of the legality of cryptocurrency itself, it involves issues relating to the manner in which such cryptocurrencies are traded.   Continue reading

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Filed under Singapore, South East Asia

Japan International Mediation Centre to open in Kyoto

It has recently been announced that a new “Japan International Mediation Centre” is to open in Kyoto, reportedly in early 2018.

Mediation is a form of alternative dispute resolution in which an independent third party helps resolve a dispute through negotiation. The opening of a new centre dedicated to resolving commercial disputes in this manner is an interesting – and welcome – addition to the international dispute resolution landscape in Japan.

To read more on this development, please click here.

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Filed under ADR, Japan

Amendments to the Singapore International Commercial Court Regime to strengthen Singapore as an international arbitration seat of choice

On 9 January 2018, amendments were passed to the Supreme Court of Judicature (Amendment) Act (“SCJA “) which clarify that the Singapore International Commercial Court (“SICC“) has jurisdiction to hear proceedings relating to international commercial arbitration.  The amendments also abolish the pre-action certificate procedure for applications to the SICC.

Established in 2015 as the ‘international’ division of the Singapore High Court, the SICC has gone from strength to strength in a short span of time, gaining a reputation for the quality and speed of judgments rendered. Since its establishment the SICC has heard 17 cases on matters ranging from construction, investment, banking and finance, and shipbuilding, all of which are high value cases involving international parties and counsel.

These latest amendments, along with the addition of four new esteemed international jurists to the SICC bench, are intended to further increase the popularity and usage of the SICC, and Singapore as a preferred seat of international arbitration. Continue reading

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Filed under Arbitration, Jurisdiction, South East Asia

Hong Kong Court confirms third party banks do not owe a duty of care to holders of Mareva Injunctions

The Hong Kong court has for the first time held that a third party bank does not owe a duty of care to the holder of a Mareva injunction. Applying the reasoning of an English decision, the Court of First Instance in Grasberg Capital Asia Limited v Bank of Communications Limited concluded that it was not fair, just or reasonable to impose such a duty of care and that it was ‘plain and obvious’ that one did not exist. Continue reading

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Filed under Hong Kong, Interim applications

Court of first instance considers auditor’s duty to detect and report irregularities in accounting statements

In Days Impex Ltd v Fung Yu [2017] HKEC 2269, the Court of First Instance refused to strike out a negligence claim brought against an audit firm for failing to detect a substantial fraud at two of its client companies, both of which are now in liquidation. Importantly, the Court held that an auditor’s duty is not as narrow as to be restricted to the provision of information and advice.  Instead, the duty can extend to detecting material irregularities in the client’s accounting statements and reporting any fraud or suspected fraud to the company (and, in some cases, to relevant regulatory or enforcement authorities). Continue reading

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Filed under Hong Kong