Hong Kong: immigration win for same-sex couple

In a landmark ruling, the Court of Appeal held that the Immigration Department’s visa policy, insofar as it denies same-sex couples eligibility for consideration for a dependant visa, breaches the right to equality enshrined in article 25 of the Basic Law.

The Decision

This case involved an application to the Immigration Department for a dependent’s visa for an individual in a same-sex civil partnership recognised under the Civil Partnership Act 2004 in England. The application had been rejected on the basis that the Immigration Department did not view the applicant as a “spouse” for the purposes of its dependent visa policy.

In the Immigration Department’s view, “spouse” was limited to a husband or wife in a heterosexual and monogamous marriage as defined under section 40 of Hong Kong’s Marriage Ordinance. This interpretation  thereby excludes couples whose same-sex marriage or civil partnership has been legalized under the laws of some other jurisdiction but is not legally recognised in Hong Kong.

The Court of Appeal held that such interpretation breached article 25 of the Basic Law, which provides that “All Hong Kong residents shall be equal before the law”. It followed that the dependent visa policy would be unconstitutional on the basis that it discriminates on the ground of sexual orientation, unless the difference in treatment could be objectively justified.

While it was recognised that courts will generally allow the legislature and/or government decision makers a wide margin of discretion when it comes to matters of socio-economic policy, the court noted that where such a measure discriminates against individuals on grounds such as sexual orientation, there would have to be “very weighty” reasons justifying the policy.

In this case, the Immigration Department failed to satisfy the court that the difference in treatment was objectively justified taking into account its discriminatory effects.

Key takeaways for employers

This decision will be welcomed by employers for whom the inability to secure immigration approval for the same-sex spouses of potential candidates has to date hindered recruiters efforts to secure and retain the best possible talent in the international market.

Gareth Thomas
Gareth Thomas
Partner, Head of Commercial Litigation, Hong Kong
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+852 2101 4025
Gillian McKenzie
Gillian McKenzie
Senior Associate
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+852 2101 4222

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Filed under Employment, Hong Kong

Chinese Court recognises a US commercial judgment for the first time based on principle of reciprocity

On 30 June 2017, the Wuhan Intermediate People’s Court (Wuhan Court) handed down a decision recognising and enforcing a civil judgment of the Los Angeles Superior Court in California, USA (the “Wuhan Decision“) based on the principle of reciprocity. This is the first time that a Chinese court has recognised and enforced a US commercial judgment.

Pursuant to the PRC Civil Procedure Law, Chinese courts can recognise and enforce foreign court judgments only on the basis of international convention, bilateral treaties or the principle of reciprocity, provided they do not violate basic principles of Chinese law, state sovereignty and security, or public interest. China has not ratified the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters nor has it entered into any bilateral treaty with major jurisdictions such as US and UK for the mutual recognition and enforcement of civil court judgments. It follows that the only ground upon which US commercial judgments may be recognised by the Chinese courts is the principle of reciprocity.

There is no clarity as to the meaning of the principle of reciprocity in China. However, we note that in December 2016, the Nanjing Intermediate People’s Court recognised and enforced a Singaporean commercial judgment in Kolma v SUTEX Group (the “Nanjing Decision“) on the basis of de facto reciprocity in Singapore. Continue reading

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Filed under China, Enforcement, Jurisdiction

Herbert Smith Freehills hires three new projects and disputes partners in China

Herbert Smith Freehills has appointed three partners to its Mainland China team, specialising in projects and projects-related disputes.

  • Hew Kian Heong is one of the leading international construction and infrastructure disputes lawyers in China, regularly acting for Chinese and international clients in complex cross-border disputes.
  • Ellen Zhang is one of the leading lawyers in the Chinese PPP and outbound investment market, advising Chinese companies on complex project development, investment and financing overseas, particularly in the power and infrastructure sectors.
  • Michelle Li has a strong reputation in construction and infrastructure disputes, particularly advising Chinese state-owned enterprises on a broad range of project implementation issues and disputes arising from overseas projects.

“Our firm has already captured a healthy amount of Chinese project and investment work generated by China’s US$900 billion ‘Belt and Road’ initiative,” said CEO Mark Rigotti. “Adding the transactional and disputes experience on complex projects offered by Hew, Ellen and Michelle will complement our existing team perfectly. I’m delighted to welcome them to the partnership.”

The appointments will increase the size of Herbert Smith Freehills’ Greater China team to 27 partners and over 170 other legal professionals in Beijing, Hong Kong and Shanghai.

“The massive scale of the ‘Belt and Road’ initiative is generating huge numbers of infrastructure projects across Asia and beyond – and every new project also has the potential for complex disputes,” said Justin D’Agostino, Managing Partner, Asia. “Hew, Ellen and Michelle will join our existing team advising clients on these developments and add essential projects, financing and projects disputes expertise to our offering.”

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Forum Election, Forum Non Conveniens and the Singapore International Commercial Courts

In its recent decision in Rappo v. Accent Delight International Ltd and another [2017] SGCA 27, the Singapore Court of Appeal considered the distinction and relationship between the doctrines of forum election and forum non conveniens.  Notably, the Court also considered whether the potential availability of the Singapore International Commercial Court (“SICC“) represents a relevant consideration in determining whether Singapore is an appropriate forum. Continue reading

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Filed under Jurisdiction, South East Asia

Spotlight on investor protection: The Hong Kong Financial Dispute Resolution Centre implements a more moderate package of reforms

The Financial Dispute Resolution Centre (FDRC) in Hong Kong has issued its conclusions to its consultation on proposals to significantly expand the jurisdiction of the Financial Dispute Resolution Scheme (FDRS), its alternative dispute resolution scheme for conflicts between financial institutions and their individual customers.

The FDRC’s consultation met with mixed responses, with respondents from the banking and securities sectors opposing the proposed changes while other respondents, including the Department of Justice and consumer rights groups, supported the suggested reforms.  Given this, the FDRC has chosen to implement a more moderate package of reforms than those it originally contemplated (as outlined in our October e-bulletin).

The key changes from the consultation paper include:

  • raising the maximum claimable amount to HK$1,000,000.  This is an increase from the current limit of HK$500,000, but significantly lower than the proposed increase to HK$3,000,000;
  • extending the limitation period for lodging claims from 12 months to 24 months from the date of purchase of the financial instrument or date of first knowledge of loss, whichever is later, rather than the 36 months previously suggested; and
  • that the FDRC will cease its current practice of providing case information such as application forms, mediated settlement agreements or arbitral awards, to the Securities and Futures Commission and Hong Kong Monetary Authority.  However, it will continue to provide monthly reports regarding the number and type of disputes handled by the FDRC and information regarding systemic issues and suspected serious misconduct.

The FDRC also announced that it will enact a range of other reforms in a form largely unchanged from that proposed in its consultation paper. These include:

  • expanding the scope of eligible claimants by allowing “small enterprises” to bring complaints against financial institutions (FIs);
  • accepting applications for claims which are under current court proceedings without requiring the claimant to withdraw the case from court; and
  • introducing a voluntary referral system.

These reforms amount to a sizeable expansion of the FDRC’s jurisdiction. As foreshadowed in our previous bulletin, FIs are likely to see an increase in claims being accepted by the FDRC once these reforms are enacted, though this increase is likely to be smaller than that which would have resulted from the enactment of the FDRC’s original proposals.

The amended terms of reference for the FDRS are expected to take effect on 1 January 2018, with the exception of the reforms allowing small enterprises to bring claims, which will take effect on 1 July 2018.

Our recent e-bulletin sets out the reforms in more detail.  If you wish to discuss these further, please do not hesitate to contact our Hong Kong team featured on the e-bulletin or your usual Herbert Smith Freehills contact.

 

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Filed under Financial Services Regulation, Hong Kong

The Apology Ordinance has been gazetted today in Hong Kong

The Apology Ordinance has been gazetted today and will come into force on 1 December 2017.  The law was passed on 13 July and is intended to facilitate the resolution of civil disputes in the territory. Hong Kong is the first jurisdiction in Asia to enact apology legislation and its Apology Law is the broadest enacted to date worldwide.

The Apology Ordinance reforms the legal consequences of making any sort of apology (written, oral or by conduct). An apology will not constitute an admission of fault or liability (even if it includes such an admission), nor may it be admissible in evidence to the detriment of the apology maker. This is the case unless the maker of the apology wishes it to be admitted or it falls to be admitted in the usual way through discovery, oral evidence or an equivalent tribunal process.  The law has far-reaching consequences for anyone involved in contentious civil disputes, whether before the courts or tribunals in Hong Kong. The Apology Ordinance has the scope substantially to change the way insurance, evidence and settlement are approached in civil proceedings and regulatory and disciplinary matters.  For more details on the impact of the Ordinance, please click here.

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Filed under Announcements, Hong Kong

Hong Kong Court of Appeal finds against bank on the basis that the bank’s exclusion of liability clauses were unconscionable and unreasonable

The Hong Kong Court of Appeal (CA) has recently affirmed a decision of the Court of First Instance (CFI), in which a ruling was made in favour of the plaintiff investors in a mis-selling claim against a bank, albeit on different grounds to that of the CFI (click here for the full judgment and here for our e-bulletin on the CFI decision).

Overturning the CFI’s ruling on contractual interpretation, the CA held that the exclusion clauses in the bank’s services agreement did apply to the plaintiffs’ non-discretionary accounts. The CA however went on to find that the exclusion clauses the bank sought to rely on to limit its liability were unconscionable under the Unconscionable Contracts Ordinance and did not satisfy the requirement of reasonableness under the Control of Exemption Clauses Ordinance.

This is the first decision of its kind where the court considered unconscionability in a banking context.  Our recent e-bulletin examines the decision in more detail.  If you wish to discuss this further, please do not hesitate to contact our Hong Kong team as listed on the e-bulletin, or your usual Herbert Smith Freehills contact.

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Filed under Contract, Financial Services Regulation, Hong Kong

India related commercial contracts: dispute resolution and governing law clauses

We are delighted to share with you the sixth edition of our well-regarded Guide on Dispute Resolution and Governing Law Clauses in India-related Commercial Contracts.

 

The Guide is intended to assist in-house counsel who handle India-related commercial contracts on behalf of non-Indian companies and who need to have a practical understanding of the nuances of drafting dispute resolution and governing law clauses in the Indian context.

The full digital edition can be downloaded in PDF by clicking on this link.

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Filed under Announcements, Miscellaneous

Foreign companies in Hong Kong: You can’t have your cake and eat it too

Summary

In the recent decision of Shandong Chenming Paper Holdings v Arjowiggins HKK 2 Ltd, the High Court of Hong Kong has provided further guidance on the winding up of foreign companies in Hong Kong.

Background

Shandong Chenming Paper Holding (the “Company“) is a paper conglomerate incorporated in the People’s Republic of CHina with a dual listing in Shenzhen and Hong Kong. The Company and Arjowiggins HKK2 Ltd (“Arjo“) entered into a joint venture partnership in 2005 for the purpose of manufacturing paper products. Disputes subsequently arose and an arbitration proceeding was commenced in November 2015, resulting in an award of RMB 167,860,000 damages in favour of Arjo.

On 7 December 2015, Arjo obtained leave from the Honourable Madam Justice Mimmie Chan to enforce the arbitral award.

Since the Company did not appeal to the ruling and yet refused to pay (there was no suggestion that the Company did not have the funds to satisfy the arbitral award), Arjo served a statutory demand for the payment totalling approximately RMB 302 million, which includes the contractual damages, legal and tribunal fees plus interest. In response, the Company sought to restrain Arjo from submitting a winding-up petition, arguing that Hong Kong Court lacked the jurisdiction to wind-up the Company.

The Decision

The Court’s jurisdiction to wind up foreign companies under section 327 of the Companies (Winding-up and Miscellaneous Provisions) Ordinance (Cap 32) is well known. As this power is discretionary, the Court has developed ‘self-imposed constraints’ to justify the exercise of its discretion (the three core requirements), including that:

  1. there had to be a sufficient connection with Hong Kong, but this did not necessarily have to consist in the presence of assets within the jurisdiction;
  2. there must be a reasonable possibility that the winding-up order would benefit those apply for it; and
  3. the court must be able to exercise jurisdiction over one or more persons in the distribution of the company’s assets.

The Company, while accepting that the first and third of the above requirements were satisfied, argued that the second requirement (that Arjo would derive sufficient benefits from a winding-up order) was not satisfied.

In this regard, the Company argued that it had no assets in or businesses conducted from Hong Kong and the sole connection with Hong Kong was its listing on the HKEX. This follows that a liquidator appointed in Hong Kong will be able to achieve nothing, and that a winding-up order would be ‘an exercise in futility’.

Arjo contended the share listing status as a ‘valuable and realisable’ asset in Hong Kong. In addition, Arjo argued that a restructuring of the Company and its assets during the arbitration process was a matter which ought to be investigated by a liquidator.

While the Honourable Mr Justice Harris found that the value of the Company’s listing status in Hong Kong was, viewed realistically, not capable of providing a material benefit to Arjo or other creditors, he held that the availability of the restructured assets to a liquidator was material to the second requirement.

In addition, Mr Justice Harris held that a winding up order would exert considerable pressure on the Company’s management to satisfy its debts to Arjo and this would indirectly constitute a ‘benefit’ to Arjo capable of satisfying the second requirement.  However, notwithstanding this finding, Mr Justice Harris held that there was an additional matter which justified the “moderation” of the requirement that benefit to Arjo be shown.

Mr Justice Harris found that the Company, while having a primary listing in Hong Kong, had simply refused to pay the arbitral award (which had become enforceable as an order of the Court).  He found that there was a strong public interest to disabuse foreign companies of the idea that they can take the benefit of access to Hong Kong’s financial system without the burden of complying with the law. The refusal to honour the arbitration award and the listing in Hong Kong showed contempt for the integrity of Hong Kong’s legal system.

Conclusion

The judgment of the Court in this matter confirms that while the “three core requirements” remain critical to the exercise of the Court’s discretion, the application of those requirements can be moderated if the circumstances clearly call for it.  In this case, it was clear that Company was trying to take the benefit of Hong Kong’s financial system while at the same time, trying to disregard the integrity of its legal system, and Mr Justice Harris, in dismissing the matter, held that it was necessary to “disabuse other mainland companies of the idea” that they can have their cake and eat it too.

Gareth Thomas
Gareth Thomas
Partner, Head of commercial litigation Hong Kong
Email | Profile
+852 2101 4025
Jeremy Haywood
Jeremy Haywood
Associate
Email
+852 2101 4120

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Filed under Hong Kong, Insolvency

Apology legislation passed in Hong Kong – what does it mean for you?

On 13 July, Hong Kong’s Legislative Council passed a law (the Apology Law) intended to facilitate the resolution of civil disputes in the territory. The Apology Law, which is expected to be gazetted and come into force shortly, reforms the legal consequences of making any sort of apology (written, oral or by conduct). An apology will not constitute an admission of fault or liability (even if it includes such an admission), nor may it be admissible in evidence to the detriment of the apology maker. This is the case unless the maker of the apology wishes it to be admitted or it falls to be admitted in the usual way through discovery, oral evidence or an equivalent tribunal process.

Hong Kong is the first jurisdiction in Asia to enact apology legislation and its Apology Law is the broadest enacted to date worldwide. The driver behind it is that apologies may in some circumstances ‘unlock’ disputes and lead to settlement without recourse to formal legal action. Since parties (and their lawyers and insurers) may be reluctant to do anything that may be construed as an admission of liability, apologies have to date been sparse. The Apology Law seeks to incentivise disputing parties to make apologies, whether in the direct aftermath of an accident or dispute, or further down the line, should the dispute escalate.

The law has far-reaching consequences for anyone involved in contentious civil disputes, whether before the courts or tribunals in Hong Kong. The Apology Law has the scope substantially to change the way insurance, evidence and settlement are approached in civil proceedings and regulatory and disciplinary matters. The scope for ‘tactical’ apologies by counterparties should be borne in mind as set out below.

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Filed under ADR, Announcements, Hong Kong