Hong Kong litigation guide
Kathryn Sanger and Peter Sze
Clifford Chance
Tel: +852 2825 8888; Fax: +852 2825 8800; Website: www.cliffordchance.com
Hong Kong is the international financial and commercial capital of Asia, benefiting from an excellent infrastructure and super efficient airport. Hong Kong is also a popular dispute resolution forum. It has retained its well-respected common law legal system and has a highly regarded legal profession and judiciary, as well as being a jurisdiction where parties can work in English. Recent reforms look set to improve the territory’s reputation further.
In February 2000, a Working Party was appointed by the Chief Justice of Hong Kong with a mandate to: “…review the civil rules and procedures of the High Court and to recommend changes thereto with a view to ensuring and improving access to justice at reasonable cost and speed.”
The Civil Justice Reform (CJR) legislation came into effect on April 2 2009 implementing piecemeal changes to Hong Kong’s existing court rules and procedures. The aim of the reform is to improve the cost-effectiveness of the Hong Kong system of civil procedure, reduce its complexity and lessen the delays encountered in litigation, always subject to the fundamental requirements of procedural and substantive justice. The key feature of the CJR is the courts’ duty to take a proactive approach in case management.
These reforms should serve to increase Hong Kong’s attractiveness as a place for dispute resolution. Notably, following Hong Kong’s handover to the People’s Republic of China in 1997, Hong Kong was guaranteed a high degree of autonomy for 50 years as a Special Administrative Region of the PRC. Thus, Hong Kong continues to use a common law system based closely on the English common law system, and will do so until at least 2047.
Litigation advocacy in Hong Kong is largely undertaken by barristers, who enjoy unlimited rights of audience. Solicitors have limited rights of audience at present, although the Chief Justice has established a working party to consider granting full rights of audience to solicitors with the requisite experience.
Foreign judgments can be enforced in Hong Kong either by registration under statute or, if statutory registration is not applicable, under common law. Following the handover, reciprocity between Hong Kong and the UK no longer exists. As such, UK judgments can only be enforced in Hong Kong under common law.
The statutory registration procedure does, however, appear to remain available for judgments emanating from countries listed in the Foreign Judgments (Reciprocal Enforcement) Order, which has not been amended following the handover.
In respect of the enforcement of judgments between Hong Kong and the PRC, there has been a recent positive development: on July 14 2006, the Supreme People’s Court of the PRC and the Government of the Hong Kong SAR entered into an arrangement for the reciprocal recognition and enforcement of judgments in civil and commercial matters. The arrangement came into effect on August 1 2008 and provides for the enforcement of PRC judgments in Hong Kong, and vice versa. To be eligible for enforcement, the judgment must be final and conclusive, enforceable in the place rendered, be given on or after August 1 2008 in connection with a written exclusive choice of court agreement and order the payment of a sum of money in a civil or commercial matter.
Arbitration
Arbitration is popular in Hong Kong. The number of cases in which the Hong Kong International Arbitration Centre (HKIAC) was involved grew to a new high of 602 in 2008.
Arbitration in Hong Kong is governed by the Arbitration Ordinance, which provides for two distinct regimes: domestic and international. The significant difference between the two regimes is that the domestic regime provides the Hong Kong courts with additional powers, not available under the international regime, to intervene in and assist with the arbitration process. The international regime is based on the UNCITRAL Model Law on International Commercial Arbitration and follows the principle that the Hong Kong courts should support, but not interfere with, the arbitration process.
Reform, however, is underway and a draft Arbitration Bill is expected to become law in 2009. The new Bill abolishes the distinction between domestic and international arbitrations and essentially applies the Model Law (with only necessary amendments) to all arbitrations in Hong Kong. By adopting the Model Law for all arbitrations in Hong Kong, the territory is bringing its entire arbitration regime in line with international best practice.
Hong Kong is a party to the 1958 New York Convention by virtue of the PRC’s accession on its behalf. The Hong Kong courts are pro-enforcement and have an excellent record in enforcing foreign arbitration awards in accordance with the New York Convention.
The New York Convention does not apply as between Hong Kong and the PRC (because they are not different contracting states). Arbitration awards are enforced between the PRC and HK pursuant to an arrangement which came into force in early 2000 and upon terms more or less the same as the New York Convention. Parties to arbitration can be represented by anyone they choose; solicitors often represent their own clients in arbitration.