Charles Allen, a partner at RPC, and head of its Hong Kong office, explains these trends, and the concerns facing the city and its judicial system post-COVID. What can we look forward to in this jurisdiction by 2024?
What trends have you observed in Hong Kong commercial litigation since January as we approach the last few months of the year 2023?
Hong Kong has reopened as a major international hub after the COVID-19 restrictions were lifted. Hong Kong is still a favorite for parties who want to settle their Asian disputes because of its strong common law judicial system, and respected and independent judiciary.
We have seen a rise in new business disputes, as well as an increase in debt and insolvency cases in 2023. This is due to the shockwaves of COVID-19 and supply chain disruptions, and the global economic downturn that has followed. Our disputes practice is still busy despite global economic downturn.
In the same way, the rise in remote work, a result of the pandemic and the increase in disputes arising from employees who are employed under Hong Kong contracts but have been working overseas, has also led to an increase of cross-border disputes.
Hong Kong clients continue to be concerned about cyber security. We continue to see commercial litigations in this area, despite a 50% increase in technology related crime in Hong Kong during the first half of 2018. In 2023, we received instructions in relation to cyber-fraud, cryptocurrency assets and cybersecurity breaches. Hong Kong Courts have recognized cryptocurrencies as real property, which has helped with crypto-asset recovery.
Hong Kong clients are also concerned about cyber security.
We expect Hong Kong to continue to be a hotbed of crypto litigation, especially as the city slowly reopens to retail investment in cryptocurrency through its new regulatory scheme for trading platforms that trade virtual assets under the Securities and Futures Commission.
As I will explain in greater detail below, international arbitration has been a very popular tool for resolving disputes in Hong Kong in this year.
What other changes have you observed in your practice? These trends are they part of a larger pattern in commercial litigation?
We have received many new instructions for commercial disputes, including acting as counsel at arbitrations. In fact, it is evident that the number of arbitral proceedings has increased, following the trend of Hong Kong, where international arbitration is the preferred way to resolve commercial disputes.
International arbitration is a popular choice for commercial parties because of its increased flexibility and confidentiality. The Hong Kong International Arbitration Centre, or HKIAC, remains one of the world’s leading arbitral institutions and received the highest number of filings since over a decade, in 2022.
Hong Kong continues to be a popular venue for truly pan-Asian disputes and disputes with a Mainland China element. This is due to the various agreements that Hong Kong has with Mainland China. This year, parties to Hong Kong arbitral proceedings have used the 2019 Hong Kong – Mainland China agreement on interim measures regularly, continuing a trend from last year, when parties sought to preserve assets or evidence worth $1.1 billion in the Mainland through the HKIAC.
Our engagement this year as counsel on arbitrations covering a variety of industries including construction, insurance, and financial services, is evidence of the extent of the growth of arbitration in Hong Kong as well as the breadth of RPC’s practice in commercial disputes. This year, I was also appointed as an arbitrator in a greater number. The new matters include disputes involving COVID era PPE supply contract and cryptocurrency.
We continue to be very busy in this area, particularly in professional indemnity. We have also seen a slight decrease in inquiries relating to competition and regulatory disputes.
International arbitration is a popular choice for commercial parties because of its increased flexibility and confidentiality.
What advice about litigation would you give to law firms or corporations as we approach 2024?
The key advice is to be patient in Hong Kong when filing claims. There are currently long waiting lists because the courts have a heavy workload. We recently had a trial set for 11 days in 2025.
Despite the current pressure on the judiciary in Hong Kong, the quality and consistency of judicial decisions remain high. Our courts are an attractive venue for Asian cases, especially those involving Mainland Chinese. I encourage parties to not be discouraged by the current backlog in cases when choosing Hong Kong Courts for commercial disputes.
Parties who need to tighten up their timeline control should include Hong Kong arbitration clauses into their commercial contracts. Hong Kong is a leader in the field, as I have highlighted above.
What further observations would you like to make regarding the development of commercial litigation in Hong Kong?
A new arrangement, which will make it easier to enforce Hong Kong judgments on the Mainland (and vice-versa), is about to enter into force. The Mainland Judgments (Reciprocal Enforcement), Ordinance, which is slated to enter into force in this year, is designed to better integrate enforcement regimes between the two jurisdictions. Enforcement will no longer be subject to an exclusive jurisdiction clause for mainland courts. Non-contractual civil judgements and criminal proceedings containing a payment order can also now be enforced on Mainland China.
The Ordinance also increases the types of decisions and the number designated courts whose rulings can be enforced in the Mainland. The increased enforceability aims at making the Hong Kong courts a more attractive and effective option. Parties will be able to recoup costs and damages if they win a case against a Mainland Party.
Recent attention has been focused on the heavy workloads of senior judges. Our view is that the judiciary would benefit from a large recruitment drive, particularly for the High Court bench. A closer look at the senior solicitor advocates could be considered for possible appointment. The judges could be promoted to the High Court or they could be appointed directly.
Hong Kong’s courts are improving their technology capabilities in terms of procedures. The e-filing of court documents began in May 2022. However, it is only available for personal injury and tax cases before the District Court. This roll-out will be expanded to include other courts and causes of action. The Hong Kong court system will be modernised in order to reflect the post-pandemic way of working.
Charles Allen, Partner
One Taikoo Place, 35/F, 979 King’s Road Quarry Bay, Hong Kong
Tel: +1 852 2216 7167
Charles Allenis RPC’s Hong Kong Office Head and leads the commercial disputes practice. Charles Allen is a partner, solicitor advocate, and dispute resolution lawyer. He leverages his more than 25 years of experience in the jurisdiction in order to provide clients with advice on a variety of commercial disputes in the Asia Pacific Region, both in court and in arbitration proceedings. Charles is also an arbitrator for commercial disputes and sits regularly as the Chairman of the Solicitors Disciplinary Tribunal.
RPC, a full service international law firm is widely acclaimed for its dispute resolution expertise. Clients seek it out to handle a wide range of disputes including the most complex and expensive on the market. RPC has been named Law Firm of The Year three times in a row since 2014. It represents clients from the insurance, retail and media industries, as well as professional services, professional services, and many other fields.