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.
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.
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.
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.
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.
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 CopemanGreater China Managing PartnerEmail
+852 2101 4245
Anita PhillipsProfessional Support ConsultantEmail
+852 2101 4184
A former solicitor and disability claims tribunal judge, and her husband, forged a will and letter to obtain two adjacent cottages in order to create one, large retirement home for themselves. On conviction, they were sentenced to six month's jail, the maximum sentence. This case should remind readers of the serious penalties for forgery.
Asian Dispute Review, sponsored by the Hong Kong International Arbitration Centre, Chartered Institute of Arbitrators, Hong Kong Institute of Arbitrators and the Hong Kong Mediation Council, has published an article on the Global Pound Conference Series, and what to expect from the Hong Kong event.
The one day Global Pound Conference is coming to the Hong Kong Convention and Exhibition Centre on 23 February and promises to be one of the major dispute resolution conferences of 2017. Delegates from across Hong Kong's dispute market will vote via GPC's voting App, and participate in real time debates by world class speakers.
Help us shape the future of dispute resolution in the territory.
The full programme is here.
Register here before 21 January and benefit from the excellent early bird rate of USD 150.
Herbert Smith Freehills is proud to be a founding sponsor of the Global Pound Conference Series and lead organiser of the Hong Kong event.
Filed under ADR, Hong Kong
In the case of Compania Sud Americana de Vapores S.A. v Hin-Pro International Logistics Limited (FACV 1/2016), the Court of Final Appeal (CFA) overturned the Court of Appeal's (CA) decision and reinstated a Mareva injunction granted in support of proceedings in the English court for breach of an exclusive jurisdiction clause. In doing so, the CFA held that the CA erred in holding that it was necessary to consider whether the plaintiff had a good arguable case in its substantive proceedings under Hong Kong law. Rather, the correct test should be to consider whether the plaintiff has a good arguable case before the foreign court.
The CFA also held that there was no bar on the ground of breach of comity, nor public policy, to the grant of a Mareva injunction to assist in enforcing an award (or potential award) of damages by the English court for breach of an exclusive jurisdiction clause as the Hong Kong court was not asked to enforce the jurisdiction clause itself in favour of the English court. This was so even though the substantive proceedings were conducted before the Chinese and English courts in parallel, with conflicting judgments as to jurisdiction.
The BVI Court of Appeal has recently allowed an appeal concerning a trustee's failure to account and breach of trust. The breach of trust arose as a result of the trustee making an appointment of the trust assets without considering all relevant circumstances. In overturning the decision, the Court noted that if a settlor transfers further property to the trustee, a presumption arises that such property is to be held on trust under the same terms as the original trust. Such presumption can be rebutted, but the burden of proof rests with the trustee to do so.
The case has interest for private wealth matters regardless of jurisdiction, given the popularity of the BVI when structuring assets.