Admissibility of foreign judicial documents as evidence in subsequent civil proceeding

The Hong Kong Court of First Instance recently in Capital Century Textile Co Ltd v Li Dianxiao [2018] HKEC 1429 considered the question in relation to the admission of a PRC criminal judgment as evidence in Hong Kong civil proceedings. This article discusses and compares the position in Hong Kong and in the Mainland China.

Hong Kong

It is a well-established rule of evidence in common law jurisdictions that judicial and factual findings in earlier proceedings are not admissible for use in subsequent ones. This is known as the Hollington principle, which has long been a source of controversy for its inflexibility. The principle has been modified by s62 of the Evidence Ordinance in Hong Kong to allow the admission of domestic criminal convictions as evidence in subsequent civil proceedings.

In Capital Century Textile Co Ltd v Li Dianxiao [2018] HKEC 1429, Capital Century sought to adduce and rely on a PRC judgment in criminal proceedings against Li in the 2nd Intermediate People’s Court in Beijing, as evidence to undermine the defence of Li in the Hong Kong civil proceedings. The Hong Kong Court of First Instance was required to determine the admissibility of the PRC judgment. In this case, the judge reaffirmed that the application of the Hollington principle and its importance to ensuring the right to a fair trial.

Essentially, the right to a fair trial requires an impartial and independent judge to formulate his own opinions based on the admissible evidence and the submissions made to him. He should not be influenced by the opinion of someone else. If findings of fact and inferences made by another judge were admitted in later proceedings, there is a risk that the subsequent decision-maker would be influenced by the opinion of the earlier adjudicator. This principle is only subject to limited exceptions of opinions of scientific and expert witnesses who might be better placed to evaluate a specialist area than the judge, and where the findings are binding on other courts by reason of “estoppel per rem judiciatam” (i.e. a doctrine which bars a party from litigating a specific issue that has been decided in prior separate proceedings).

At the same time, it is also important to note that the Hollington principle does not impose a blanket ban on admitting earlier judicial findings in subsequent proceedings. The admissibility question is a fact-sensitive one and should be examined with the purpose of the principle in mind. For example, if the judgment sought to be adduced only summarizes and report factual evidence presented in that court, without any element of judicial judgment and opinion, there is no risk of influencing the subsequent adjudicator with another’s opinion. In the circumstances, in Capital Century, the court delineated different sections in the PRC judgment in its analysis. In doing so, it held admissible the section which merely summarized the factual evidence presented in the 2nd Intermediate People’s Court in Beijing, and held inadmissible the evidence which engaged the opinion of the PRC court – hence triggering the operation of the Hollington principle.

Mainland China

Courts in Mainland China take a similar approach to the admissibility of foreign judicial documents in the PRC court proceedings. “Foreign judicial documents” refer to judgments and arbitration awards rendered outside the territory of Mainland China. Judgments and awards rendered in Hong Kong are considered foreign judicial documents for this purpose.

There is no specific rule regarding whether Hong Kong judgments or awards can be directly admitted as evidence by the Mainland courts.

Under PRC law, a foreign judgment or foreign arbitral award could be recognised by the Mainland courts pursuant to a reciprocal judgement enforcement treaty or the New York Convention. According to the arrangement for mutual recognition and enforcement of civil and commercial judgments between Mainland China and Hong Kong,[1] subject to certain conditions, Hong Kong judgments can be recognised in the Intermediate People’s Court at the place of domicile or ordinary residence of the party against whom the recognition application is filed, or the place where the property of that party is situated.

Alternatively, a foreign judgement could be admitted as evidence in the same way as a normal documentary evidence created outside of China, by being notarised, authenticated, or certified through procedures stipulated in the relevant treaty concluded between the PRC and that foreign country.[2] Documentary evidence created in Hong Kong would need to be (i) attested by a China-Appointed Attesting Officer entrusted by the Mainland[3]; and then (ii) examined and transmitted by the China Legal Service (H.K.) Ltd, with its seal with specified usage and receiving court. In 2015, the Supreme People’s Court further clarified that notarisation, authentication or certification procedures are not necessarily the prerequisite of courts’ assessment of the factual findings unless such evidence concerns the parties’ identification.[4]

However, factual findings contained in foreign judicial documents are inadmissible in the Mainland courts. For all the evidence developed outside of Mainland China, the Mainland courts are required to form their own views on the admissibility after examining the factual evidence referred to in the factual findings of the foreign judicial documents, and taking into account the parties’ views on such factual evidence. Therefore, unless consented to by both parties, factual findings in foreign judicial documents would only be admitted after the Mainland courts conduct their independent examination and assessment of evidence.

Similarly, judicial findings, opinions and comments of foreign courts that are prepared by foreign judges based on their understanding of procedural and substantive laws of that country or region are also inadmissible in the Mainland court.

Conclusion

As cross-border commercial activities increase, there has been an increasing amount of disputes involving proceedings in both the Mainland and Hong Kong. The admissibility of Hong Kong judicial documents or judgments in support of Mainland proceedings (and vice versa) is clearly an important aspect in the overall strategy.

 


[1] Arrangement of the Supreme People’s Court between the Courts of the Mainland and the Hong Kong Special Administrative Region on Mutual Recognition and Enforcement of Judgments of Civil and Commercial Cases under the Jurisdiction as Agreed to by the Parties Concerned (Fa Shi [2008] No. 9)

[2] Article 11 of the Provisions of the Supreme People’s Court on Evidence in Civil Proceedings (Fa Shi [2001] No.33)

[3] Management Measures of China-Appointed Attesting Officer (Hong Kong) (2002) (Order No. 69, Ministry of Justice)

[4] Supreme People’s Court’s Minutes of the Second National Working Conference on the Trial of Foreign-Related Commercial and Maritime Cases (Fa Fa [2005]) No.26)

 

Dominic Geiser
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Helen Tang
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Rachel Yu
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Celine Wang
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INCREASE IN CIVIL JURISDICTIONAL LIMITS FOR DISTRICT COURT AND SMALL CLAIMS TRIBUNAL IN HONG KONG

On 27 June 2018, the Legislative Council passed resolutions to increase the civil jurisdictional limits of both the District Court (DC) and the Small Claims Tribunal (SCT). Subject to completion of legislative scrutiny and negative vetting, the amendments are expected to come into effect on 3 December 2018.

The primary aim behind these changes is to allow better distribution of cases among the Court of First Instance (CFI), the DC and the SCT, such that the CFI can concentrate on handling cases with greater complexity or involving higher claim amounts. Apart from easing the caseload in the CFI, the changes are also expected to lower legal costs for parties whose cases may be brought to the DC or the SCT, where legal proceedings are generally less costly.

District Court

The changes raise the financial limit of the DC from:

  • HK$1 million to HK$3 million, in respect of the DC’s general jurisdiction and equity jurisdiction where the proceedings do not involve or relate to land;
  • HK$3 million to HK$7 million in respect of the DC’s equity jurisdiction for claims wholly involving or relating to land; and
  • HK$240,000 to HK$320,000 in respect of the DC’s jurisdiction for proceedings involving recovery of land or relating to the title to an interest in land, in terms of annual rent, rateable value or annual value of the land.

Small Claims Tribunal

The SCT will have jurisdiction over claims up to HK$75,000, as opposed to the current upper limit of HK$50,000. Apart from increasing the jurisdictional limit, the claim amounts corresponding to fees will also be adjusted in the Small Claims Tribunal (Fees) Rules. Further details are set out in summary table (b) below. Continue reading

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New convention on the enforcement of mediation settlement agreements approved

On 26 June, at the 51st session of UNCITRAL, final drafts for a Convention on the Enforcement of Mediation Settlements and corresponding Model Law were approved. This paves the way for adoption by UNCITRAL’s Commission later this year. It is understood that the Convention will be called the Singapore Mediation Convention and will be signed at a ceremony in Singapore in 2019. The Convention must then be ratified by at least three member states to come into force.

Approval of the drafts represents the culmination of several years’ work by UNCITRAL Working Group II. Its aim has been to implement an international regime for the enforcement of mediated settlements broadly akin to the 1958 New York Convention for the enforcement of arbitral awards. This will increase the attraction of mediation for international parties, with all its well-known cost efficiencies and other potential benefits.

The initiative stems from a concern that the use of mediation to resolve international disputes has been impeded by the fact that, unless a  settlement reached via mediation is in the context of a pending arbitration and can be converted into an arbitral award,  parties can only enforce it in the same way as any other contract. In an international context, this can involve potentially difficult (and usually lengthy) processes to obtain a court judgment and then enforce it in a foreign jurisdiction.

Whilst problems of enforcement of mediated settlements have been sparse in practice (certainly compared to court judgments or arbitral awards), the Convention will no doubt add credibility to mediation as an international dispute resolution process. It will also make mediation particularly well suited to cross-border disputes.  At the Global Pound Conference series, delegates in Asia, Africa, the Middle East and Latin America all revealed a desire for legislation or conventions to promote the recognition and enforcement of settlements. This may reflect the varied and complex legal and political frameworks in these regions. Many of those surveyed manage businesses and disputes across several borders, where legal regimes can vary from stable, tested and familiar to those that are only a decade old. The call for regulation and certainty is even more critical as the pace of development intensifies through new trade treaties and investment, and massive initiatives such as the Belt and Road. The Convention and Model Law look set to respond well to this demand and may hail an inflection point for the use of mediation in these developing regions.

Materials approved on 26 June have not yet been made available on the relevant UNCITRAL webpage.  However they will in due course be posted on this page, which currently contains the most recent drafts (from February 2018) together with other details of the initiative.

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HONG KONG COURT GRANTS ANTI-SUIT INJUNCTION TO RESTRAIN CONTINUATION OF PRC PROCEEDINGS

In Chen Hongqing v Persons whose names are set out in the second column of the Schedule Hereto, HCA 2648/2017 (unrep., 29 May 2018), the Hong Kong Court of First Instance granted an anti-suit injunction in favour of the Plaintiff, an intended purchaser of a Hong Kong company, to restrain the continuation of certain PRC proceedings commenced by the Defendants. Considerations such as non-exclusive jurisdiction clause, a real risk of deprivation of a fair trial in the foreign court and coercion exerted by senior management to cooperate with the local government were all relevant to the Court’s decision. Continue reading

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CROSS-BORDER LITIGATION: INTERNATIONAL PERSPECTIVES

We are pleased to release the third issue of our periodic publication “Cross-Border Litigation”, designed to highlight legal and practical issues specific to litigation with an international aspect.

Tapping into the expertise of the firm’s leading commercial litigators across the globe, the publication gives readers the benefit of their hands-on experience and flags key developments that should be on commercial parties’ radars.

Topics covered in this issue include:

  • A selection of recent developments from across the globe
  • Litigation funding on the rise internationally
  • Judicial turf wars in Dubai
    Is this the end of the “conduit” jurisdiction?
  • Multi-jurisdictional litigation: Lessons from cross-border intellectual property enforcement
  • Introducing…
    Our new Milan office and Laura Orlando
  • The growing “internationalisation” of China’s courts
  • Indonesia-related commercial contracts
    Guide to dispute resolution clauses

To download the publication, click here.

To read the previous issues, click here.

Adam Johnson QC
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DISPUTE RESOLUTION IN ASIA-PACIFIC: PARTIES SEEK EFFICIENT PROCESSES AND ENFORCEABLE OUTCOMES

Following our report on the Global Pound Conference series, which brought together over 4000 stakeholders at 28 conferences worldwide, our analysis of the Asia Pacific results reveals different demands in Asia and Oceania.

Six Asia Pacific cities hosted conferences to assess how dispute resolution can be improved: Singapore; Hong Kong; Chandigarh, India; Bangkok, Thailand; Sydney, Australia and Auckland, New Zealand. Each conference addressed the demand side (commercial party perspectives on dispute resolution); the supply side (what advisers and providers are delivering to commercial parties); the key obstacles and challenges; and what needs to be addressed to effect change.

In Asia the data revealed a clear desire for enhanced regulation of mediation compared to Oceania. At first blush, this could be said to be rooted in civil versus common law traditions. But only one of the Asian countries to host a GPC event, Thailand, has a civil-law system. The reason appears to be more complex: enhanced regulation, particularly around enforcement, would lend credibility to mediation in Asia as a viable alternative to litigation or arbitration. This is particularly so in the context of commercial cross-border disputes. UNCITRAL’s proposed New York-style Convention on the mutual recognition and enforcement of mediation settlement agreements is likely to be applauded in Asia and may hail an inflection point for the use of mediation.

In Oceania, the results reveal more appetite amongst businesses for (a) front-loading in terms of protocols and clauses promoting ADR and (b) collaboration between parties and lawyers. This accords more with the data from other GPC conferences worldwide.

Region-wide, the data highlights that commercial parties want to use mediation and other ADR processes more, either alone or as an adjunct to adversarial proceedings. However, the data shows that the market is not responding adequately. As a result, mediation remains under-utilised, and actual use lags behind positive attitudes to it. Unless parties and their advisors actively take a different course (for example through inserting escalation clauses in contracts, actively proposing mediation at the point of dispute, or by following mandatory mediation protocols), there is likely to remain a perpetuation of the “same old processes” – litigation and arbitration.

Yet parties increasingly seek informal processes driven by commercial, cultural, and business needs that require a negotiated settlement. Layered upon this, technology is likely to assist in any transition from formal to informal dispute resolution processes. Unconstrained by rules of procedure, mediation is well-placed to capitalise on the greater adoption of technology in dispute resolution. Online Dispute Resolution has the capacity to fundamentally change how disputes are resolved in the future. The planned Asia Pacific ODR platform for B2B disputes will promote negotiation and mediation as pre-cursers to arbitration. In the long-tern, the development of an online region-wide platform may be highly important in reforming approaches to commercial dispute resolution in the region.

To read more about the Asia Pacific GPC results and what this means for your business, please see our article published in the American Bar Association’s Dispute Resolution Magazine Spring 2018 edition here.

 

Justin D'Agostino
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May Tai
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UK SUPREME COURT CLARIFIES LEGAL POSITION ON “NO ORAL MODIFICATION” CONTRACTUAL CLAUSES

Parties to commercial contracts often insert a “no oral modification” (or NOM) clause to prevent attempts to undermine written agreements by informal means. Such clauses are intended to prevent contracting parties being bound by subsequent variations unless the specified formalities (for example, it is fairly typical in commercial contracts that a variation must be recorded in writing and signed by the parties) are complied with.

In the recent decision of Rock Advertising Limited v MWB Business Exchange Centres Limited [2018] UKSC 24, the UK Supreme Court unanimously held that an agreed oral amendment to revise the terms of a payment schedule to a lease contract, which contained a NOM clause, was ineffective. The majority of the UK Supreme Court based its reasoning on the broad proposition that the law should give effect to contractual provisions which required specified formalities to be observed to recognise a variation. Lord Sumption (who gave the judgment for the majority) disagreed with the Court of Appeal’s view that recognising the oral variation, despite the NOM, promoted party autonomy. On the contrary, he found that the effect of the Court of Appeal’s ruling was to override the contracting parties’ intentions such that they would be unable validly to bind themselves as to the manner in which future changes in their legal relations were to be achieved, however clearly they originally expressed their intentions in that regard.

While the UK Supreme Court was aware that its decision may cause injustice to a party who had relied on the orally varied contract to its detriment, it pointed out that various doctrines of estoppel would provide a safeguard in appropriate cases.

The Court also commented, by way of obiter dictum, on the rule in Foakes v Beer (which provides that part payment of a debt is not good consideration for the release of the whole) to the effect that to depart from the rule would require a re-examination of the decision in Foakes v Beer and while “it is probably ripe for re-examination“, it should be a matter for an enlarged panel of the Court.

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

 

Gareth Thomas
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Dominic Geiser
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Shaping the future of dispute resolution: global themes and regional differences revealed

The Global Pound Conference series – a unique and ambitious project to inform how commercial disputes should be resolved to better serve modern business – brought together over 4000 dispute resolution stakeholders, at 28 conferences in 24 countries worldwide.

Herbert Smith Freehills, global founding sponsor of the series, has teamed up with PwC and IMI (International Mediation Institute) to identify key insights from the voting data. With a focus on the needs of in-house counsel, this ground-breaking report challenges the traditional and fundamental notions of what clients want and how lawyers should represent them in a dispute. Continue reading

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Podcast: How Arbitration and ADR can be used together

In this short podcast Professional Support Consultants Hannah Ambrose and Vanessa Naish look at how Arbitration and Alternative Dispute Resolution (or “ADR”) can work together. The podcast considers how parties can agree to an ADR process in addition to, or alongside arbitration, looking at approaches in different jurisdictions and under different arbitral institutional rules, before turning to the complexities of drafting escalation clauses in contracts. Finally it looks at how a successful settlement should be formalised to be most effective and enforceable. Continue reading

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2018 International Arbitration Survey – Enforcement of Arbitration Awards in the ASEAN region

This year marks the 60th anniversary of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, the “New York Convention”. Widely seen as one of the most successful international law treaties, the New York Convention was the foundation for the successful growth of arbitration as a preferred method for resolving international business disputes.

In connection with this significant milestone, Herbert Smith Freehills is conducting a survey on the enforcement of arbitration awards in the ASEAN region. We are keen to hear your views on how this enforcement regime has operated in practice in the ASEAN region, and how effective it is thought to be.

The survey will take less than 10 minutes to complete. Your participation will provide important information to support the research. All responses will be respected as private and confidential. The survey closes on 1 June 2018.

The results of this survey should be directly relevant and important to all businesses and enterprises that trade or invest into and across the ASEAN region. We will be glad to share the key findings and conclusions from the survey with all contributors.

Please follow this link to begin the survey: https://www.surveymonkey.com/r/92MKYPW.

Thank you very much for your support. 

 

Alastair Henderson
Alastair Henderson
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Kritika Venugopal
Kritika Venugopal
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Filed under Arbitration, South East Asia