HKMA turns up the heat and announces consultation on IBOR transition

On 12 February 2019, the Hong Kong Monetary Authority (HKMA) announced in a briefing to the Legislative Council Panel on Financial Affairs that the Treasury Markets Association (TMA) will hold a long-awaited consultation this quarter on alternative reference rates.

The announcement follows signals from regulators globally that firms should transition away from the London Interbank Offered Rate (LIBOR) and other IBORs to alternative, risk-free, reference rates.

While there is no immediate plan to discontinue the Hong Kong Interbank Offered Rate (HIBOR), the HKMA noted that “as a FSB member, [the HKMA] has an obligation to put in place an alternative reference rate as a contingent fall-back”, tentatively suggesting the HKD Overnight Index Average (HONIA) as the most suitable alternative.

The outcome of this consultation will be a turning point for financial services firms preparing for life after LIBOR, and has important implications for the contractual design and incorporation of “fall-back” provisions in existing derivative, structured finance and syndicated lending contracts.

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No use lashing out over unpaid debts – cosmetics distribution company avoids winding up order despite failing to establish bona fide defence

In Swiss Cosmeceutics (Asia) Ltd [2019] HKCFI 336, Mr Justice Harris of the Hong Kong Court of First Instance declined to wind up a company despite it failing to establish a bona fide defence on substantial grounds. Mr Justice Harris commented on the difficulties presented by sporadic record keeping, and reiterated the principle that the burden of proof lies with the company to demonstrate a bona fide defence on substantial grounds, despite the existence of anomalies in the petitioner’s claim. Continue reading

The Hong Kong Court of Appeal considers constitutionality of the requirement to disclose suspicious transactions

In Interush Limited & Anor v The Commissioner of Police, the Commission of Custom & Excise and Mak Wing Yip Cyril, Superintendent of Police [2019] HKCA 70, the Court of Appeal (“Court”) dismissed a challenge to the constitutionality of an aspect of Hong Kong’s money laundering legislation.

The Court held that the statutory regime which obliges banks to disclose suspicious transactions relating to property known or believed to represent proceeds of a crime is not unconstitutional. In the circumstances of this case, the Court held that although property rights under the Basic Law were engaged, the regime was no more than necessary for the legitimate purpose and societal benefit of anti-money laundering and a reasonable balance had been struck. Continue reading

Want to know more about the Asian Infrastructure Investment Bank?

AIIB and HKIAC are presenting a joint seminar on the AIIB’s status, policies and projects on 21 February. The seminar, which is supported by Hong Kong’s Department of Justice and the ICC, features:

  • an interview with AIIB’s General Counsel, Gerard Sanders
  • a presentation from AIIB’s head of corporate Law, Peter Quayle, on the international legal status of AIIB and dispute resolution
  • a roundtable discussion on what makes a “shovel-ready” AIIB project involving AIIB’s senior legal consultant, Jennifer Handz

Other speakers include Sarah Grimmer, Secretary General, HKIAC, Wesley Wong SC, Solicitor General, Department of Justice, and representatives from Hong Kong’s legal and banking sectors.

Anita Phillips, a professional support consultant in Herbert Smith Freehills’ Hong Kong disputes practice, will speak at the dispute resolution session. She joins Matthew Gearing QC, chairperson, HKIAC, Peter Quayle, Dr James Ding, commissioner, Inclusive Dispute Avoidance and Resolution Office, Department of Justice and Stephen Revell, senior corporate partner, Freshfields Bruckhaus Deringer. Anita has helped lead global research on redefining dispute resolution and also assists with the ICC’s Belt and Road Commission.

To register for this seminar, please click here.

Date: Feb 21, 2019 (8:30 AM – 12:45 PM)

Venue: HKIAC, 38/F Exchange Square II, 8 Connaught Place, Central, Hong Kong

 

HONG KONG’S FUNDING LAW NOW IN FORCE

Hong Kong’s long-awaited legislation permitting third parties to fund arbitrations and related proceedings takes effect today. As heralded in our earlier posts, this is a widely welcomed development in one of the world’s leading arbitral seats, and is expected to generate considerable activity.

If you have questions on the new law, funders’ Code of Practice, or third party funding generally, please contact Justin D’Agostino, Simon Chapman, Dominic Geiser, Briana Young, or your usual Herbert Smith Freehills contact.

 

Justin D'Agostino
Justin D'Agostino
Global Head - Dispute Resolution; Managing Partner - Asia
+852 2101 4010
Simon Chapman
Simon Chapman
Partner, Hong Kong
+852 2101 4217
Dominic Geiser
Dominic Geiser
Partner, Hong Kong
+852 2101 4629
Briana Young
Briana Young
Professional Support Consultant, Hong Kong
+852 2101 4214

 

HERBERT SMITH FREEHILLS CONTRIBUTES TO LEADING PUBLICATION ON LITIGATION FUNDING

Hong Kong has recently seen a flurry of legislative activity in relation to third-party funding. The long anticipated law allows third parties to fund arbitrations seated in Hong Kong including related court and mediation proceedings, as well as work done in Hong Kong for arbitrations seated elsewhere. These legislative changes will come into force on 1 February 2019. In the light of these significant changes to the legal landscape, Herbert Smith Freehills’ Simon Chapman, Dominic Geiser, Briana Young and Priya Aswani have contributed the Hong Kong chapter to the 2019 edition of Getting the Deal Through: Litigation Funding.

The Guide provides expert local insight into third-party funding and related laws, and answers key questions in 21 jurisdictions. Topics covered include: (i) whether third-party funding is permitted; (ii) funding options; (iii) fees and interests funders may charge; (iv) conditional or contingency fee agreements: (v) applicable legislative/regulatory provisions; (vi) termination of funding; (vii) after-the-event insurance; (viii) costs of litigation, adverse costs and security for costs; and (ix) disclosure and privilege.

It is hoped that the Guide will be of interest to third party funders, lawyers and end-users of dispute resolution processes alike, to understand and navigate the latest developments in this area of the law.

Click here to view this publication.

 

Simon Chapman
Simon Chapman
Partner, Hong Kong
+852 2101 4217
Dominic Geiser
Dominic Geiser
Partner, Hong Kong
+852 2101 4629
Briana Young
Briana Young
Professional Support Consultant, Hong Kong
+852 2101 4214
Priya Aswani
Priya Aswani
Professional Support Lawyer
+65 6868 8077

Must reasons be given for removing a director: Hong Kong High Court takes a closer look

In Kenneth Yeung Bing Kwong v Mount Oscar Ltd [2018] HKCFI 2763, the Court of First Instance (“Court“) held that a Hong Kong company is not required to give any reasons for the removal of a director.

The Court rejected a contention that such an obligation should be read into the Companies Ordinance (Cap 622) (“CO“), and, in doing so, reviewed the statutory framework under the CO for the removal of a director and the relevant principles of statutory interpretation. Continue reading

A significant step towards simpler judicial procedures and reduced re-litigation: Hong Kong and the Mainland sign a broader arrangement to recognise and enforce judgments in civil and commercial matters

On Friday 18 January 2019, Hong Kong and the Mainland reached a milestone by signing the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters between the Courts of the Mainland and of the Hong Kong Special Administrative Region (“Arrangement“). When taken together with other similar arrangements that are in train, the Mainland Supreme People’s Court envisages that approximately 90% of judgments of a civil and commercial nature will soon be reciprocally recognised and enforced between Hong Kong and the Mainland. The Arrangement sets out, amongst others, the scope of judgments, jurisdictional grounds, grounds for refusing the reciprocal recognition and enforcement of judgments (“REJ“), and procedural requirements. It will be implemented by local legislation in Hong Kong and take effect after both systems have completed the necessary procedures to enable implementation. Once implemented, the Arrangement will apply to judgments made on or after the commencement date. Continue reading

Hong Kong Court spits out ceviche: “objectionable” Peruvian fisheries business Chapter 11 trustee refused common law assistance

In a highly international cross-border restructuring, the High Court of Hong Kong has refused to assist the New York-based Chapter 11 trustee of a Singaporean subsidiary of the Cayman-incorporated Peruvian business China Fishery Group (“CFG”).

Significantly, the Court held that there was no way that the Chapter 11 proceedings could be recognised given the applicant had no connection to the US. Assistance was also refused on the grounds of public policy as Chapter 11 proceedings had been commenced for the purpose of preventing the enforcement of undertakings made by CFG group companies. This was held to be objectionable and an affront to the Hong Kong Court.

The judgment also reiterated the general principles of common law recognition and assistance to foreign insolvency proceedings and officeholders, but did not consider specifically how the Hong Kong Court would deal with a Chapter 11 recognition application. Continue reading

Hong Kong Court of Appeal ends 12-year Xiamen v Eton Properties saga

As discussed in this post, Xiamen Xingjingdi Group Co Ltd (XJ) and various co-defendants affiliated with Eton Properties Ltd (together, EP) have been involved in a long-running dispute in multiple fora, including a PRC-seated CIETAC arbitration and several Hong Kong court proceedings. The case appears now to have come to an end, with the Court of Appeal (Court) confirming its position on common law actions to enforce arbitral awards and rejecting both parties’ applications for leave to appeal the Court’s 15 April 2016 judgment.

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