Litigation Law Updates

Find out all about our firm’s latest Litigation Law Updates below. To learn more about any individual item, please contact us here.

18 Aug 2015

Judicial review on the decision of the Medical Council refusing to disclose identity of members sitting at disciplinary inquiry, legal adviser and defence counsel

The disciplinary inquiry in question was held in relation to a medical practitioner (“W”) in public. The initial sentence for a warning letter to be served on W was substituted by an order that W’s name be removed from the General Register for a period of 1 month after the Council was alerted by the media that W did not have a clear record. In the written decision given by the Council on the same day, the Council stated that they would expect legal representatives of a defendant to be frank with the Council in respect of the defendant’s disciplinary record in the future.

Enquiries on the identity of members sitting at the inquiry, the Legal Adviser of the Council and the defence counsel were made by a member of the public (“N”) who is unconnected with the case. N did not explain his purpose of the inquiry despite being repeatedly asked by the Council. N then applied for judicial review to quash the Council’s decision in refusing to disclose the requested information (“the Decision”). The Council relied on the Data Protection Principle 3 (“the Principle”) in Schedule 1 of the Personal Data (Privacy) Ordinance (Cap. 486) (“the PDPO”) to restrict disclosure to N.

The Court of First Instance allowed N’s application and quashed the Decision. Godfrey Lam J found that the Council had irrelevantly taken into account the Principle in making the Decision and failed to consider the requirements of the principle of open justice, which if applicable, would invoke section 60B(a) of the PDPO for exemption to the Principle.

Godfrey Lam J in his obiter stated that the principle of open justice was not limited to physical access to the court room where a judicial hearing is taking place and applied to all tribunals exercising the judicial power of the state. The public interest in the administration of justice and the accountability of the judicial process required basic information about the identities of the key persons who have taken part in a public judicial hearing should normally be published. If the information was not disclosed in the written decision of the tribunal, then it should be disclosed upon inquiry made at a time reasonably close to the hearing.

28 Jul 2015

The Contracts (Rights of Third Parties) Ordinance, Cap.623

Background

The Contracts (Rights of Third Parties) Ordinance, Cap. 623 (hereinafter, “the Ordinance”) is expected to come into force on 1st January 2016.

There are two aspects to the doctrine of privity of contract, and it is the second aspect (that is, a party who is not a party to the contract cannot acquire and enforce rights under the contract) that the Ordinance seeks to address.

Legislative provisions

The Ordinance stipulates that a third party may enforce a term of a contract either where the contract contains an express provision that the third party may do so (section 4(1)(a)) or where the term purports to confer a benefit on the third party (section 4(1)(b)). Section 4(1)(b) will not apply if, on a proper construction of the contract, the term is not intended to be enforceable by the third party. Section 4(1) applies to a third party even if the third party was not in existence when the contract was entered into.

Section 5 provides the third party with the same remedies that would have been available to the third party in an action for breach of contract as if the third party was a contracting party.

Where the third party has assented to the term and the promisor has received notice of the assent or where the third party has relied on the term and the promisor has relied on or can reasonably be expected to have foreseen that the third party would rely on the term, then the contracting parties cannot rescind or vary the contract without the third party’s consent.

Conclusion

Whilst the likely impact of the Ordinance remains unknown, if Hong Kong follows the default commercial position of the UK (that is, to exclude the operation of the equivalent statute), then the impact may be minimal. Nonetheless, there should be careful drafting of the contracts by the contracting parties.

15 Jul 2015

Impact of Citic Pacific Limited v Secretary for Justice

Summary:

The Court of Appeal in Citic Pacific Limited v Secretary for Justice (2015 HKEC 1263) disagreed with the narrow approach in Three Rivers (No.5) to the definition of “client”. In the context of corporations where the information may be acquired from employees in different departments or at various levels of the corporate structure, the court considered that the process of gathering information for the purpose of obtaining legal advice needs to be protected. The Court of Appeal also held that the “client” is simply the corporation, and the question is “which of its employees should be regarded as being authorized to act for it in the process of obtaining legal advice.”

Relying on the constitutionally entrenched right of legal professional privilege (hereinafter, “LPP”) (which is protected by Article 35 of the Basic Law), the Court of Appeal adopted a broader test for legal advice privilege than that previously adopted. It held that the “dominant purpose test” espoused by Tomlinson J (as he then was) in Three Rivers (No.5) sets the proper limit for legal advice privilege, i.e. an internal confidential document produced or brought into existence with the dominant purpose that it or its contents are used to obtain legal advice is privileged from production.

Conclusion

The impact of the Court of Appeal judgment is two-fold. Firstly, a broader definition of “client” has been embraced, one that is not just limited to the legal department of a corporate entity. Secondly, the “dominant purpose test” is considered more appropriate in setting the proper limit to legal advice privilege. As a result of this case, this means that documents produced by employees for the dominant purpose of obtaining legal advice are likely to be privileged.

Further, the Court of Appeal also noted the unsatisfactory nature of the procedure by which the matter had proceeded before the judge (the judge did not have the assistance he should have had from the parties in examining the documents), and urged the Department of Justice and the legal profession to consider the English experience of engaging an independent lawyer to deal with LPP material.

28 Jun 2015

Record Fine was imposed for the Abuse of Market Dominance

On 10 February, 2015, the National Development and Reform Commission (“NDRC”) announced a record fine of 6.088 billion yuan on Qualcomm for its alleged abuse of its dominant position on several specific markets in violation of the Anti-monopoly Law of the People’s Republic of China (“Anti-Monopoly Law”).

In Article 17 of the Anti-Monopoly Law, section 1 prohibits the sale of commodities at an unfairly high or low price; and section 5 prescribes the unreasonable tie-in sale of commodities or the addition of other unreasonable trading conditions.

There were examinations on Qualcomm’s market share for licenses of various standard essential patents (“SEP”) using wireless communications technology, and sales of CDMA, WCDMA and LTE baseband chips and it was proved that Qualcomm held a dominant position in each market. Qualcomm was found to have abused its dominant position by charging unfairly high royalty fees, tying the sale of SEPs with the sale of non-SEPs, and imposing unreasonable conditions on the sale of baseband chips.

In cases involving abuse of market dominance, the Anti-Monopoly Law permits fines of one to ten percent of the turnover for the preceding year. Qualcomm was fined less than ten percent of its China-based turnover due to its willingness to cooperate during the investigation and agreement to implement a rectification plan.

17 Jun 2015

English Court Decision on the Inconsistency in Arbitration Clauses

In a recent English case, Shagang South-Asia (Hong Kong) Trading Co. Ltd v Daewoo Logistics Corp. [2015] EWHC 194 (Comm), the High Court of England and Wales considered the situation where the contract provides for the arbitration to take place in one jurisdiction but to apply the laws of another jurisdiction.

The underlying dispute of the case involves two clauses in a fixture note between the owner of vessels (“the Owners”) and the charterers (“the Charterers”). Clause 23 of the note stated that “Arbitration: Arbitration to be held in Hong Kong. English Law to be applied.” Clause 24 stated that “Other terms/conditions and charter party details base on Gencon 1994 Charter Party.”

As the parties did not state which of the alternatives in clause 19 of the Gencon form should apply, English law and London arbitration became automatically applicable under clause 19(a).

The Owners then began arbitration in London and appointed an arbitrator as the sole arbitrator under clause 19(a). The Charterers disputed the appointment but the arbitrator ruled that the English Arbitration Act was applicable and he was properly appointed under clause 19(a).

The award of the arbitration was appealed in the High Court of England and Wales. The issue before the court was whether the arbitration was subject to English law or Hong Kong law.

The court considered the argument that the parties were based in Asia and that London is less convenient for the arbitration but held that it was not a determining factor. The judges gave significant weight to the words “arbitration to be held in Hong Kong” and ruled that the words implied a choice of Hong Kong as the seat of arbitration and Hong Kong law is applicable. “Significant contrary indicia” is necessary to displace the presumption.

The decision clarifies that the choice of an arbitration seat will imply a choice of the procedural law of that seat. Parties should also bear in mind the importance of clear drafting, especially in expressing their intentions on the arbitration venue and governing law clearly in the contractual documents. It is also worth noting that the judges in the case had also made positive comments on the Hong Kong arbitration system, stating that Hong Kong is a “well known and respected arbitration forum”.

21 May 2015

Period of adverse possession accumulated against the British Colonial Government expired on 30 June 1997

In Hong Kong, section 7 of the Limitation Ordinance (Cap.347) provides for a 60-year limitation period for the government to bring actions to recover land.

In the recent High Court case Jade’s Realm Ltd v Director of Lands [2015] HKEC 95, the Plaintiff and its predecessors-in-title had been in adverse possession of a piece of government land in the New Territories since 1937 (or even earlier). The Director of Lands’ included in its Amended Defence that since the title of the Colonial Government over the piece of land was a leasehold title, any adverse possession period accumulated against the Colonial Government had come to an end on 30 June 1997 when the lease expired. Any period accumulated after 30 June 1997 was less than the required 60 years. Such defence was accepted as valid in rejecting the Plaintiff’s application to strike out the same.

This might be considered as an important decision for similar adverse possession claims against the government, since claimants may no longer rely on any 60-year period which started prior to and ends after 1 July 1997 as the period required for adverse possession against the government.

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