On 16 July 2021, our Partner Mr. Gordon Tsang and Paralegal Mr. Arthur Hung were invited to give a presentation on IPOS in Hong Kong and the United States to the Directors of the Bank of Julius Baer.

From the right: Bank of Julius Baer’s Managing Director – Senior Advisor Mr. Kevin Kwan, our Partner Mr. Gordon Tsang and our Paralegal Mr. Arthur Hung

Gordon gave a comprehensive introduction on Hong Kong’s IPO listing rules and practices to the Directors including the latest updates to the listing requirements and accountability of professionals, the reorganisation of Red-Chips listing, H-shares listing, trust arrangements, and latest development on VIE structures. Gordon also compared the pros and cons of listing in Hong Kong and the United States.

Please contact Mr. Gordon Tsang for any enquiries or further information.

Background

Following the public consultation conducted by the Financial Services and the Treasury Bureau (“FSTB”) from November 2020 to January 2021 outlining the legislative proposals to enhance anti-money laundering and counter-terrorist financing (“AML/CTF”) regulation in Hong Kong, FSTB published the Consultation Conclusions on 21 May 2021 (the “Consultation Conclusions”). The Consultation Conclusions proposed a licensing regime for virtual asset services providers (“VASPs”), a two-tier registration regime for dealers in precious metals and stones (“DPMS”) and other technical amendments under the Anti-Money Laundering and Counter-Terrorist Financing (Cap.615)(“AMLO”). This newsletter focuses primarily on VASPs.

The Need for Regulation of VASPs

Trading of virtual assets (“VAs”), such as cryptocurrencies, has become the trend in recent years. It is generally recognised that VAs pose inherent Money Laundering / Terrorist Financing (“ML/TF”) risks to the financial system. While VAs is not legal tender in Hong Kong, they are frequently traded locally. FSTB wished to safeguard against ML/TF by introducing a licensing regime under the AMLO for VASPs.

Scope and Coverage

FSTB proposed to designate the business of operating a VA exchange as a “regulated VA activity” under the AMLO and require any person seeking to operate a VA exchange in Hong Kong to apply for a licence from the Securities and Futures Commission (“SFC”) as a licensed VASP under the AMLO.

VA exchange is defined as “any trading platform which is operated for the purpose of allowing an offer or invitation to be made to buy or sell any VA in exchange for any money or any VA, and which comes into custody, control, power or possession of, or over, any money or any VA at any point in time during its course of business.”

Regarding the definition of VA, it appears that FSTB prefers more flexibility by reserving powers to alter the definition of VA to cope with the fast-developing VA industry.

However, it is worth noting that peer-to-peer (“P2P”) trading platforms, which allow the posting of bids and offers between sellers and buyers, would not be regarded as a VA exchange, to the extent that the actual deal is transacted outside the platform and the platform is not possessing of any money or any VA by any means at any point in time. Furthermore, the Consultation Conclusions also appeared to have excluded the over-the-counter trades from the proposed new VASP licencing regime at this stage.

Licensing Requirements

FSTB has set out the licensing requirements for potential VASPs whereby the applicants shall be eligible and satisfy the “Fit-and-Proper Test” before being granted a license.

A wide range of factors will be taken into account for the SFC to determine the integrity of the applicant as set out below:

(i)    Whether the applicant has been convicted of ML/TF offences.
(ii)   Whether the applicant has been convicted of other fraudulent, corruption or dishonest offences.
(iii)  Whether the applicant has failed to observe AML/CTF or other regulatory requirements.
(iv)  Experience and qualifications of the applicant.
(v)   Good standing and financial integrity of the applicant.
(vi)  Appointment of at least two responsible officers to ensure compliance with AML/CTF requirements and other regulatory requirements.

Regulatory Requirements and Powers of the SFC

Apart from the AML/CTF requirements, FSTB would require licensed VASPs to provide services to professional investors only.

The SFC is empowered to supervise the AML/CTF conduct of VASPs and enforce any regulatory requirements to ensure full compliance. The SFC also enjoys a variety of powers for enforcement, in particular, the power to enter the VASPs’ business premises for routine inspections.

Transitional Arrangements

A 180-day transitional period upon commencement of operation of the licensing regime is proposed to facilitate applications by interested parties.

Please contact our Partner Mr. Rodney Teoh for any enquiries or further information.

This newsletter is for information purposes only. Its content does not constitute legal advice and should not be treated as such. Stevenson, Wong & Co. will not be liable to you in respect of any special, indirect or consequential loss or damage arising from or in connection with any decision made, action or inaction taken in reliance on the information set out herein.

IFLR1000 has released the second batch of the 31st Asia-Pacific Financial and Corporate rankings. Stevenson, Wong & Co. is pleased to announce that we have been recognized in the following practice areas:

• Capital Markets: Equity
• Retail Funds
• Financial Services Regulatory

IFLR1000 evaluates law firms and lawyers by practice area based on transactional evidence and client feedbacks. Firms are recognized for advising on some of the most complex or innovative transactions in their markets and receiving excellent feedback for their work.

About IFLR1000

The IFLR1000 is an international legal market’s guide focusing on financial and corporate law firms. Since 1990, IFLR1000 has published over 750 practice area rankings across 235 jurisdictions globally.

Please contact our Partners Mr. Hank Lo, Ms. Cornelia Chu, Mr. Rodney Teoh, Mr. Osbert Hui, Ms. Erica Cheng, or Mr. Dominic Lau for any enquiries or further information.

Please click here to see the full rankings.

Our Partner Gordon Tsang has been awarded the Gold Award in the Professional Volunteer service Accreditation Programme (PVSA) 2019-2020 for his continuous contributions to volunteer services. Jointly organised by the Hong Kong Council of Volunteering, the Agency for Volunteer Service, and the Law Society of Hong Kong, PVSA aims to promote and commend professionals and senior executives for contributing their professional knowledge and skills in serving the community.

For any enquiries, please contact our Partner Mr. Gordon Tsang.

(中文) 简介

近几年来，越来越多的企业在制定交易合同时会考虑采用多层次争议解决条款 (multitiered dispute resolution clauses)。多层次争议解决条款的特色在于其要求各当事方在发生争议后需先进行友好协商 (negotiation in good faith) 或调解 (mediation)，并只有在协商或调解无法解决争议的情况下，才能诉诸诉讼 (litigation) 或仲裁 (arbitration)。虽然多层次争议解决条款在商业合同中被广泛采用，但若一当事方在开展仲裁前并没有依据多层次争议解决条款设定的机制进行协商或调解，仲裁庭的管辖权以及其作出的仲裁裁决的效力就存在不确定性，另一当事方可能会向管辖法院提出异议或撤裁。

在最近的C v D [2021] HKCFI 1474 一案中，香港法院对这一问题进行了澄清，确认当事方有否依据协议中的前置争议解决程序进行协商或调解是仲裁申请可否受理的问题 (issue of admissibility)，而不是仲裁庭管辖权的问题 (jurisdiction of the tribunal)。

事实背景

本案的申请人和被申请人皆为经营人造卫星生意的公司，双方签署了一项共同合作开发建造人造卫星的协议 (下称“该协议”)。该协议的第14条是一条多层次争议解决条款 (下称“该条款”)，该条款约定，当事方在争议发生时应先真诚地尝试以协商的方式解决争议 (“the Parties shall attempt in good faith promptly to resolve such dispute by negotiation”)，且任何一方可以以书面通知的形式将争议交由双方的行政总裁进行解决 (“Either Party may, by written notice to the other, have such dispute referred to the Chief Executive Officers of the Parties for resolution…”)。该条款进一步约定，如果在六十个工作日或双方认同的时限内，争议未能通过协商解决，任何一方可以将争议提交只香港国际仲裁中心并根据当时现行的《贸易法委员会仲裁规则》进行仲裁 (“If any dispute cannot be resolved amicably within sixty (60) business days of the date of a Party’s request in writing for such negotiation, or such other time period as may be agreed, then such dispute shall be referred by either Party for settlement exclusively and finally by arbitration in Hong Kong at the Hong Kong International Arbitration Centrein accordance with the UNCITRAL Arbitration Rules in force at the time of commencement of the arbitration…”)。

合作期间，被申请人的行政总裁去信申请人的董事会主 (并抄送其他董事)(下称“该信函”)，告知他们申请人与被申请人之间产生了争议，并邀请申请人的管理层进行改正。被申请人在该信函中亦提出其愿意根据该条款提交该争议交由双方的管理层解决。但被申请人之后并未有将该争议提交至申请人的行政总裁。

随后，被申请人发出仲裁通知，针对申请人展开仲裁程序。申请人认为因为被申请人没有根据该条款发出协商要求，因此仲裁庭并没有管辖权，并提出了管辖权异议。仲裁庭认为该条款要求双方在仲裁前真诚地尝试以协商方式解决争议是强制的 (mandatory)，但将争议交由双方的行政总裁解决则是选择性的 (optional)，而该信函满足了该条款的协商要求。基于此，仲裁庭驳回了申请人的管辖权异议并作出了被申请人胜诉的管辖权及责任的部分裁决 (Partial Award on Jurisdiction and Liability)(下称“该裁决”)。

法庭判决：仲裁申请可否受理 vs 仲裁庭管辖权

申请人认为仲裁庭并不具备管辖权，进而向香港法院申请撤销该裁决。根据香港《仲裁条例》(第609章) 第81条的规定，如仲裁裁决处理的争议不是提交仲裁意图裁定的事项或不在提交仲裁的范围之列 (第81(2)(a)(iii) 条) 或者仲裁庭的组成或仲裁程序与当事方的约定不一致 (第81(2)(a)(iv) 条)，则该仲裁裁决可以被香港法院撤销。

香港原讼法院在分析了一系列的学术著作及之前英国、美国及新加坡的案例后，认为国际上普遍的观点是当事方有否依据协议约定进行前置争议解决程序是仲裁申请可否受理的问题，而不是仲裁庭管辖权的问题。法庭作出此认定的其中一个主要原因是争议解决程序决定的不是争议应否交由仲裁庭裁决，而是争议于何时交由仲裁庭裁决。因此，除非当事方在协议中明确约定未遵循约定的前置争议解决程序将导致仲裁庭不具备管辖权，否则仲裁庭的管辖权未必会受到影响，其中包括就当事方有否遵循前置争议解决程序的问题作出裁定。基于以上理由，法庭驳回了申请人的撤裁申请。

评论及要点

此判决对于香港仲裁法律的发展而言是非常重要的判例。在此之前，未能依据协议约定的前置争议解决程序进行协商或调解可能会导致仲裁庭不具备管辖权，增加仲裁裁决被撤销的风险。在本案中，香港法庭为这一问题提供了确切的指导，确认了当事方未能遵循多层次争议解决条款中约定的前置程序应当作为仲裁申请是否可受理的问题，而并不必然导致仲裁庭的管辖权产生问题，亦未必会构成法庭撤销仲裁裁决的基础。基于此判例，日后仅基于未遵循约定的仲裁前置争议解决程序的撤裁申请极有可能会被法庭驳回。

虽然如此，若想要稳妥开展仲裁程序，当事方仍然需要谨慎制定及严格履行多层次争议解决条款。若当事方没有遵循协议约定的前置争议解决程序，仲裁庭可能会搁置仲裁程序甚至拒绝受理仲裁申请。

本文由本所合伙人，诉讼及争议解决部主管徐凯怡律师、卢家俊高级律师和黄晊晄律师撰写。若阁下想了解更多详情，请联络本所徐凯怡律师 (heidi.chui@sw-hk.com)。

于本文中提供的一切资料仅供参考，不构成任何法律意见，资料亦受制于适用规定及法例不时的更新与修改。若需取得相关法律意见，须咨询法律顾问。

We are delighted to announce the promotions of Mr. Calvin Lo, Mr. Gordon Tsang, and Mr. Dominic Lau from senior associates to the firm’s partnership, effective from 1 July 2021.

Mr. Calvin Lo | Partner, SW Private Client

Mr. Lo joined the firm in 2015. He has a wide range of experience in private client work, including family and matrimonial matters, trust advisory work, estate and succession planning, often with cross-border elements, jurisdiction and forum disputes. He also specialises in handling MIP Committee and guardianship applications as well as for personal injury and fatal accident claims. He is also a HKMAAL accredited family mediator.

Mr. Lo is a Full Member (TEP) of the Society of Trust and Estate Practitioners (STEP). He recently won a STEP Excellence Award for being the top scorer worldwide at distinction level in the exam of STEP Diploma in International Trust Management.

Mr. Gordon Tsang | Partner, Corporate Finance

Mr. Tsang was admitted to practise as a solicitor in Australia in 2012 and in Hong Kong in 2013. He joined the firm in 2015. Mr. Tsang has extensive experience in handling a wide range of corporate and commercial matters, including pre-IPO restructuring and financing, Hong Kong and U.S. IPOs, mergers and acquisitions, loan and financing transactions, corporate governance and general compliance for listed companies as well as private enterprises.

Mr. Tsang is also the Non-Executive Director of China Regenerative Medicine International Ltd (Stock Code: 8158); the Company Secretary of Sunshine 100 China Holdings Ltd (Stock Code: 2608), Mabpharm Limited-B (Stock Code: 2181) and Sundy Service Group Co. Ltd (Stock Code: 9608).

Mr. Dominic Lau | Partner, Regulatory Enforcement & Compliance

Mr. Lau is dual-qualified in New York (USA) and Hong Kong. He joined the firm in 2019.
He is experienced in a broad range of commercial litigation including shareholders’ disputes, international arbitration, and land and property disputes.

In September 2018, Mr. Lau gained higher rights of audience in the high court.