LAWS4000 Private International Law Notes, Study notes of Private international law

Download LAWS4000 Private International Law Notes and more Study notes Private international law in PDF only on Docsity! LAWS4000 1 Topic 1: Private International Law Introduction →Kuwait Airways v Iraqi Airways: Lord Nicholls: Conflict of laws jurisprudence is concerned essentially with the just disposal of proceedings having a foreign element. Private International Law: Called as Conflict of laws →Different countries have different laws, there may be possible conflict of more than one country may have jurisdiction and more than one law can be applied. →The conflict of law rules is designed to stop these conflicts by identifying which court has jurisdiction and which of the laws apply. →It is private as it concerned with disputes between individual but not states and it is international as cases involve country other than Hong Kong. Definition: Country →Any territorial unit having own legal system even if not independent nation. Scotland is separate country from England as it has a separate legal system but Wales is not. →i.e. Thus, each USA states is a separate country. Hong Kong also has its own separate legal system from the Mainland or Macau. Contract between Hong Kong companies and Mainland companies involves conflict of laws issues and Mainland is treated as if foreign country. Common Law v European rules →Rules of conflict of laws differ from country to country. There are significant differences between the conflicts of law rules in common law countries and it includes Hong Kong and the civil law countries. →e.g. Hong Kong has more flexible rules which give a lot of emphasis to allowing judges to exercise their discretion to produce a fair result. →e.g. Civil law is much more certain and rule based.  HK derives its basic rules from the English common law rules but source has considerably dried up since 1980s as more and more English law adopts EU(civil law based) conflicts rules. Hague Conference on Private International Law →If the law is same, no need for private international law. →International body – Hague Conference (HCCH) has 90 states members plus the European Union and aims to attempt to build bridges between different legal systems. They even opened a regional office in Hong Kong late 2012. → UNCITRAL/UNIDROIT also involved in harmonization. Possible Questions →Which country’s courts should have jurisdiction over the matter – Hong Kong or foreign court. • Involve to what extent should you allow forum shopping. (the practice of choosing a specific jurisdiction favourable to an anticipated.) • London used to be the libel capital of the world and still the best place for a wife to bring divorce proceedings. HK is a better place to bring divorce proceedings than Mainland. • A growing trend to sue in England a parent company for wrongful acts of subsidiary company which have occurred in a foreign country which has not got a good legal system. LAWS4000 2 →If Hong Kong court has jurisdiction to hear the case, does it apply Hong Kong law or the law of another country? – Many situations where if Hong Kong court has jurisdiction, it applies its domestic law, e.g. family law, or it may apply foreign country law – e,g, PRC contract law →Should a court in one country recognise and enforce a court judgment obtained in another country? The Need for These Rules →Commerce • In Hong Kong, there are many contracts, thus many legal disputes and it usually involves a foreign party. • To encourage contracts with foreign party, clear rules are needed for which law to apply, which court to hear the case and whether a judgment obtained in a country can be enforced in another country where the defendants have their assets. →Minimise forum shopping • Disincentive for plaintiff to bring claim in a jurisdiction if the same law is to be applied in another jurisdiction. →Avoidance of parallel proceedings • Wasteful of resources and danger of conflicting decisions →To achieve justice • Sometimes it is only fair to apply the law of another legal system. • e.g. HK married man goes to work in Saudi Arabia. While there he marries a second wife which is permitted under Saudi law. Very unfair to his HK wife if Saudi law applied. →Fairness requires recognition/enforcement of a judgment of another country • Res judicata: The principle of res judicata, a Latin term meaning 'a matter judged', broadly prevents a party from re-litigating a claim, defence or issue already litigated. This is intended to ensure the finality of judgments and protect litigants from multiple litigations involving the same claims or issues. • E.g. If a French company gets a judgment in its favour for breach of contract against a Hong Kong company in a French court that should be the end of the litigation. French company should be able to recover the damages awarded from the Hong Kong company’s assets in Hong Kong. Hong Kong company should not be allowed to reopen the case by suing the French company in Hong Kong in relation to the same dispute. Comity →Judges often stress comity. →Respect for another country’s legal system as a reason for applying foreign law or for deciding the case should be heard in a foreign court. Sea Powerful II Special Maritime Enterprises (ENE) v Bank of China Ltd (2016) HKEC 90 →Anthony Chan J: “Comity has a warm ring. It is important to analyse what it means. We are not here concerned with judicial amour propre but with the operation of systems of law. Courts around the free world endeavour to do justice between citizens in accordance with applicable laws as expeditiously as they can with the resources available to them. This is an exercise in the fulfilment of which judges ought to be comrades in arms.”  This means, for example, that Hong Kong court would be very slow to conclude that a party would not get a fair trial if proceedings were allowed to commence in a foreign court and that interference in foreign proceedings, e.g. by use of anti-suit injunctions to stop the foreign proceedings, should be kept to a minimum. Key Conflicts Issues facing a Hong Kong court LAWS4000 5 A Hong Kong party makes a will in Brazil and if Hong Kong courts deal with this case, they will classify it first. 1. To apply Hong Kong conflict of law rules, they conclude the will is governed by Brazilian law. 2. For all Brazilian law or just ordinary Brazilian law? If all, it includes their conflict of law as well. e.g. I have a contract and say Brazilian law applies, all Brazilian law should apply and it will be a problem where Brazilian conflict of law rules say about this issue that they will say Hong Kong law applies, then it will be a situation where you are applying the Brazilian law and the conflict of law rules say Hong Kong rules applies, becoming a never ending loop between the two. HK court will try and do exactly what a Brazilian court applying its own conflict of laws rules would do if the case was being heard in Brazil. In which case, if one of the parties is from HK, Brazilian court might apply its own conflict of laws rules which might say HK law applies .So what does the HK court do then? HK conflicts law says Brazilian law applies; Brazilian conflicts law says HK applies. This is the problem Renvoi creates, If you apply the foreign law including conflict of law rules, they will say the opposite of Hong Kong law.  If it is Brazilian conflicts rules this makes the case very complicated and expensive. Hard enough to discover what the foreign Brazilian domestic law is without the extra complication of finding out what are its conflicts of law rules on the subject. Re Ross Fact →A lady who is an English national has spent over 50 years living in Italy. →She is however legally still under English law, domiciled in Italy. →She has made a will and under her will, she excluded her son. →In English law, you can leave your money to whoever you want to while Italian law has an opposite system where belief in family values strongly and the wife and children are entitled by law mandatorily to a certain percentage of the deceased estate. → Thus, if Italian law is applied in this case, her son should have a share of her estate and the will she made will be invalid. Conclusion →A judge in England and his approach was to decide first the case as if he is a judge hearing this case in Italy. Under conflict of law rules, they decided Italian law applies and they have to decide like a judge in Italy would have done so. →However, it is told that under English law, Italian law is to be applied and as an Italian judge, Italian conflict of law rules say that about the son getting a percentage doesn’t apply if the testator is a foreign national like the deceased in this case. There is an impasse here, where she was domiciled in Italy and since she is still a foreign national, English law should still apply) →To break the impasse, there is evidence from Italian law expert saying that an Italian judge would always in this situation decide that ordinary Italian law will not apply as she is not a national and would therefore apply English law. →Therefore, the judge said he will then base a judgment on what a Italian judge would decide. Remarks →It doesn’t apply to all areas of law, e.g. it doesn’t apply to contract law and e.g. under Chinese civil code, it stated all reference of foreign law means domestic law and doesn’t include conflict of law rules. LAWS4000 6 →People who favoured despite the complications, this discourages forum shopping because if we apply all the foreign law, then we are reducing the same results as if the case had been heard in a foreign country. E.g. In Re Ross, the results will be the same in England and Italy. →Lots of judges therefore don’t like this rule as it makes the law unnecessarily complicated and judges in some areas will say that we will not apply renvoi in these particular area purely for pragmatic reasons as it makes the law too expensive. →Judges avoid applying renvoi as it is too complicated and adds unnecessary expense. → There is a English commercial case involving ownership of three planes and the three planes in question are in different countries and three different countries law are applied in relation to each plane and the judge said it is difficult to find what the law is in one country and it makes the law too difficult to find each conflict of law rule in each country, thus there are many areas in law that doesn’t apply renvoi. Macmillan v Bishopgate Investment Trust Millet J: It owes its origin to the laudable endeavor to ensure that like cases should be decided alike wherever they are decided, but it should now be recognised that this cannot be achieved by judicial mental gymnastics but only by international conventions. →Renvoi doesn’t apply to choice of law in contract. Usually find this in wills and marriage issues. →Judges avoid renvoi and apply domestic law of the foreign country as well. Blue Sky One Ltd v Mahan Air (2010) Fact →The world divides into two roughly about law. →One half says when it is about ownership of airplane, it applies the law where the plane is registered, other half says they apply law where the plane is situated. →The plane is in Poland airport at the time transfer of property occurred. English law is applied and conflict of law rules is applied where the plane was at the time of transfer and thus it is Polish law and it should be void under Dutch. →Domestic law of Dutch, according to a law expert said if the Dutch court will view this case, conflict of law rules applies and the law of country of registration which is England should be applied and thus the transfer should be a valid one. Conclusion →For pragmatic reasons, the court decided not to apply renvoi and just to use ordinary Dutch domestic law and thus the transfer is void. Remarks →People criticised the decision when law has gone madly as the English court has applied the rules on conflict of law and concluded the Dutch law applies but then when not applying renvoi, they arrived at a conclusion that a Dutch court will not have concluded, it is a pointless decision when you don’t apply all the Dutch law in it. →However, if you apply all the Dutch law, there will be a counter-argument that it will be giving priority to that country’s conflict of law rules instead of your own. → The decision doesn’t seem no right when the English court decide Dutch law applies are actually arriving at a decision, they know where a Dutch law will not admit it – while there are pragmatic reasons for not making it too complicated – in relation to that nevertheless, you can see sometimes not applying renvoi will have strange results – the point of view of drafting legislation and you want to make it clear if the legislation refer to a foreign law – you want to make it clear that reference to foreign law is to purely domestic law of the foreign country to avoid potential complications. LAWS4000 7 Determining what the relevant foreign law is →If foreign law applies, how does the Hong Kong court find out what the foreign law is and how does it apply to the facts? Civil legal system vs Common legal system →In civil legal system: Foreign law is a matter of law and therefore the judge hearing case is his job to investigate and find out what the actual foreign law is. →In common legal system: They regard foreign law as a question of fact and the default rule if you bring a case and you want a particular fact to be taken into account, thus you need to plead it in your statement of claim and put down all the material facts that your case is going to be based on. It is also your obligation is to prove all facts that you are alleged. If you don’t plead the foreign law, then the fact is ont relevant to the legal dispute and therefore will be ignored by the Hong Kong judge and you simply end up by just deciding the case on your own law. (law of lex fori – Hong Kong) →Two rules to assist the parties to apply it to the facts. Default rule and presumption of similarity. Default rule: If foreign law is not pleaded, case will be decided on the basis of Hong Kong law even though under the principles of private international law of a foreign law should apply. Aluminium Industrie Vaassen BV v Romalpa Aluminium Ltd (1976) Fact →The effect of a clause in a contract for the sale of goods which provide for the seller to retain title to the goods until payment is made. The contract terms in issue in that case were written in Dutch language and expressly governed by Dutch law, but neither party pleaded Dutch law, and the court accordingly applied English law to the contracts. Conclusion →If you don’t plead foreign law, the case will be decided purely under the domestic law of the court hearing the case. Proof of Foreign Law: Default Rule Dicey Rule 2 (1) Where a party relies on foreign law, that law must be pleaded and proved as a fact to the satisfaction of the court by evidence or sometimes by other means. (2) In a case involving a foreign element in which foreign law is not pleaded, the court will apply Hong Kong (lex fori) law. →If issue of foreign law is not raised in the pleadings the court will assume the parties are content for Hong Kong law to apply. SL v CPYD (2020) Fact →An attempt was made by one of the parties to argue that there is no constructive/resulting trust because PRC law is applied under conflict of law rules and these were concepts unknown under PRC. Conclusion →This argument was rejected and Hong Kong law applied simply on the basis that PRC law had never been pleaded. →The plaintiff never pleaded Mainland law in the claim and therefore ordinary Hong Kong applies and Hong Kong law recognize these types of trust. Proof of Foreign Law: Presumption of Similarity Dicey Rule 2 (3) Where foreign law is recognized to be applicable, but there is no evidence, or insufficient evidence, of the content of the foreign law, it will in general be presumed to be the same as Hong Kong law. →If you plead the following law and didn’t produce any evidence of what the relevant law is – logically if foreign law is a fact and you are the plaintiff, you have to prove it, thus it is your obligation e.g. expert witness about the foreign law. LAWS4000 10 → The writ was served on the defendant in Hong Kong and if the writ is served in hk, there is a presumption that Hong Kong is the appropriate jurisdiction for the case, the burden is on the defendant to rebut the presumption to say the law in Nanjing is the appropriate law and one of the argument is that the plaintiff in this case is taking a derivative action on behalf of the company that he is a shareholder of the company, as a shareholder, you are claiming compensation for the company – there is a suggestion that derivative action were unknown under Mainland law. → Thus, Mainland law will not actually hear the case, not the company suing but the shareholder suing on behalf of the company – as a way to try and convince the court that the presumption that Hong Kong is the appropriate forum to be rebutted – they say there is an equally a presumption of similarity and the presumption is Nanjing rules on derivative rules are the same as Hong Kong. Conclusion → The court dismissed this argument and said not to apply the presumption of similarity to disprove another presumption → To minimise the expense and inconvenience of proving foreign law as a matter of fact the Evidence Ordinance (cap8.) s .59 provides that where the High Courts of Hong Kong or England (or on appeal from those Courts) have reached a decision on foreign law is admissible as evidence in a later case as establishing the relevant foreign law unless the contrary is proved. • If a Hong Kong court has reached a decision on what the foreign law actually is, under Evidence Ordinance, you are entitled in Hong Kong court to refer the Hong Kong judge the previous decision on the following law and that decision will apply in your case unless the defendant successfully disproves it. • e.g. many Hong Kong cases: Hong Kong judge has ruled Macanese law concerning gambling contract and there are. Many precedents and that means whenever this Macanese law comes up in Hong Kong, the plaintiff only need to refer the judge to previous decision, and it will ease the proof of foreign law. Topic 2: Domicile and other personal connecting factors →Every country in the world has different rules which operate in relation to your personal law – such as marriage and succession. →The idea behind it is you take your personal law with you whenever you go in the world. E.g. Hong Konger goes to Saudi Arabia and takes the second wife and it is perfectly ok in Saudi law but the man is domiciled in Hong Kong, and in Hong Kong they don’t recognise this marriage. →Hong Kong law is really based on the English common law way back in the 1980s and before that and unlike a lot of jurisdiction in the world, they haven’t modernised their law like England and Singapore to deal with all these issues in private international law, much still use common law. Domicile is one of the exception where Hong Kong got legislation about this to improve common law rules. LAWS4000 11 Significance of domicile →Decides choice of law in areas of personal law such as marriage, statue, succession and taxation. →Hong Kong only recognise divorce if one of the party is domiciled in the jurisdiction where the divorce occurred. →Moreover, you cannot declare your own domicile. E.g. In a will, you cannot say where you are domiciled and there is no legal effect. →Domicile idea: Which law district in the world are you mostly connected to. Domicile Ordinance 2008 →Lex fori applies its own rules on domicile to determine where a person is domiciled. →Technical term for person whose domicile is at issue is the propositus. →Ordinance significantly changes the law on domicile in Hong Kong. →Old law is still relevant if the issue of domicile is before March 2009. • Common law rules about domicile are very technical and usually have results where someone’s legal domicile has no relation in common sense. Thus, the idea of domicile ordinance is to make law less technical and have a more common sense result about where your domicile actually is. Cap 596 Domicile Ordinance Section 13 The domicile that an individual had at a time before the commencement date* of this Ordinance (1 March 2009) shall be determined as if this Ordinance had not been enacted. →If the issue is of someone’s domicile before March 2009 arises, you have to apply common law rules – still possible now – e.g. construction of will, may have made the will before 2009 March --e.g. concubines claiming rights, need to prove both parties were domiciled in Hong Kong when they form relationship as concubines – e.g. grandchildren claiming grandmother is concubine of man and become his concubine in 1955 and have to prove whether they are domiciled at that time – in this way, common law rule still operates.. General rules Cap 596 Domicile Ordinance Section 3 (1) Every individual has a domicile. (2) No individual has, at the same time and for the same purpose, more than one domicile. (3) Where the domicile of an individual is in issue before any court in Hong Kong, that court shall determine the issue in accordance with the law of Hong Kong. →Everyone has a domicile. →Everyone can have one domicile at the same time. Old Law Domicile of Origin →Common law rules in domicile are still existing in England with some minor changes only. →Domicile of origin is acquired at birth. It is determined by your parents. Follow your father if legitimate, if not your mother. →It is a complete reflection of norms that existed way back in 19th century. It is based on traditional rules. →It is very artificial as it focuses on father’s/mother’s domicile at time of child’s birth which may have little connection to country where child will live in. →There are areas of uncertainty – child born after father’s death or post divorce; adopted children; same sex couple? These are unknown. →Despite it is not relevant now: the idea is: the domicile of origin is the one you get at birth, you are born in Hong Kong but it is not necessarily your domicile of origin. It depends on where your parents are married at the time you were born, if they were married at the time you are born, you take your father’s domicile. LAWS4000 12 Domicile of Origin is hard to lose →Traditionally courts were very reluctant to conclude domicile of origin was lost. → There is a high burden of proof abandoned domicile of origin. • People from England would go out for many years to colony to work and have the ultimate intention to go back to England to retire. They haven’t lost the domicile of origin even they move to other colonies to work for many years. At common law, the courts are very slow to recognize you have lost your domicile of origin. Ramsay v Liverpool Royal Infirmary Facts →Ramsay lived a colorless life but he is in Scotland and when his family went to Liverpool, England, he followed as well and lived rest of his life in England and spent 30 years in England and never went back to Scotland. Conclusion → The court decided he hadn’t acquired any new domicile in England and the domicile of origin still continued. → He has no attachment to England at all, he is just following his family and will go wherever they went but he has no intention to settle in England permanently. There is a high burden of proof to prove they lost their domicile of origin. Domicile of Dependency →It applied to individuals lacking full legal capacity – children (up to age of 18) and married women. →Same as person on whom dependent – husband in case of married woman and father if child legitimate, mother if not. Also follows mother if father dead. →Despite it contains criticisms of sexist, there is a beneficial result that if you have a classic family, they all have the same domicile and if the father changes their legal domicile, they change together as well. It is good in relation to legal affairs – it will be quite complicated if all different domicile in a legal point of view. For children, they will continue their domicile until they acquire their own and if woman is divorced, they can have her own domicile. Domicile of Choice →It can be acquired once 18 years old. →The test will be residence + intention to make a permanent home in the country. →Intention is subjective potential for lots of disputes – especially as often it will involve ascertaining the intention of a deceased person. IRC v Bullock Facts →Canadian man who comes to England to become a pilot and married an English lady and lived in England for 44 years and issue is has he got a domicile in England. Conclusion →Courts decided that he hasn’t acquired a domicile of choice, despite he is physically here and, but he answered to the judge to make him believe that he will be on the first boat back to Canada after his wife died. It shows the detail that the courts look at. →Drevon v Drevon (1864) Kindersley VC: ’There is no act, no circumstance in a man’s life, however trivial it may be in itself, which ought to be left out of consideration in trying the question whether there is an intention to change domicile..’ →It is relevant to Domicile Ordinance: it is much based on English law recommendation to change law of domicile but didn’t really change it – these case about adult acquiring domicile is relevant to ordinance. →You cannot acquire domicile until 18, but you can marry in 16. The test is a dual one – physical and mental element – impossible to acquire a domicile of a country instead you are LAWS4000 15 from me, I went to Singapore I become much happier with my friends in Singapore and I decided to stay there for time to come. Conclusion → In those words, court had no difficulty in deciding that there is no evidence of permanent intent to stay in Singapore evidence just show she want to stay there to get over the breakup with boyfriend. Re Estate of Loucas Haji-Ioannou (2009) Facts →There is a wealthy man who is a Greek origin which acquired a domicile of choice in Monaco. →He then became badly ill and decide to live in Greece for better medical environment and went back to Greece, he stayed in Greece for 10 years and had a home and business there and died without being cured. Conclusion →Court decided he didn’t acquire a domicile of choice in Greece as if he is cured, he will go back to Monaco instead of staying in Greece, the medical condition is the only reason he stayed in Greece. Change of Domicile of Choice →Presumption against a change must be proved on a balance of probabilities. Compare proving change of domicile of origin. →Court would analyse all the evidence as to whether there was an intention to cease to reside permanently in the current domicile of choice – makes trial long and expensive. →There must be some intent that you intend to abandon that particular domicile and must physically leave the district. Sekhri v Ray (2014) Facts →Issue: Whether the doctor living in England has changed her domicile to Singapore. →Husband is a lwyer and when he went to Singapore, she followed him there. Conclusion → She hadn’t intended to abandon the domicile in England and the court look at things like email to her friends in England and said things like I am glad to get a breather in Singapore at the moment – the friend emailed her to say there is a good job vacancies in England – and she replied would love to but next time when there is vacancy email me --- which all shows she didn’t abandon domicile in England. Kelly v Pyres (2018): For a change in domicile, physical presence and intention must coincide. Problems of Domicile of Choice →Where a person goes to a country with a federal system such as Australia. Australia has different legal system in each state and which state did they intend as their domicile of choice is a problem. Domicile of Origin – Revival →If the domicile of choice is abandoned and not replaced, the domicile of origin revies. Udny v Udny Facts →Domicile of origin is in Scotland and he lived in England for 30 years, spend most of his time gambling and didn’t pay debts and his life is difficult in England and reluctantly he left England and went to France and had no intention of going back to Scotland again and couldn’t go back to England. Conclusion → His domicile is Scotland at this time as he abandoned England domicile of choice and hadn’t acquire a new one in France and in between of domiciles. →Domicile of origin is then revived and his domicile will be Scotland despite he hasn’t been back there for many years. LAWS4000 16 Any better alternative to domicile? → Nationality • It is easier to establish, sometimes still not right. E.g. Re Ross – no intention to go back to live in England and to apply English law to her will when she lived in Italy and never go back. → Habitual (Ordinary )Residence • You can still leave after a few months after having this habitual residence. → Permanent right of Residence/Right of abode → Religion • Some countries have religion and it can be abused. Scandal in Malaysia is where people changing to Muslims such that they can marry young girls. → Advantages over domicile – easier proved and more understandable to the ordinary person. → Disadvantages – may have more than one nationality and is the connection to a country sufficiently strong to justify its laws applying? In the case of religion it is easy to change it! Changes made by the Domicile Ordinance 2008 →Abolishes domicile of origin, the revival rule and domicile of dependency →Domicile of choice – Test of permanent intention to reside changed →Applies if the issue of a person’s domicile from 1st March 2009 is relevant. • Apply common law if the issue is what is person’s domicile before the date. • Domicile Ordinance Section 13: The domicile that an individual had at a time before the commencement date* (1st March 2009) of this Ordinance shall be determined as if this Ordinance had not been enacted. →Domicile Ordinance Section 14: The domicile that an individual has at a time on or after the commencement date* of this Ordinance shall be determined as if this Ordinance (other than section 13) had always been in force. →**There should be no mixing of the old and new law. ***First, we have to work out the actual dates in the disputes, and have to know someone’s domicile date to someone relevant, e.g. presentation of the divorce petition and see if the date of the petition is 1/3/2009 or after. If someone’s domicile is relevant to the date 1/3/2009 or onwards, you will apply the ordinance and ignore any common law rules, Domicile of children Cap 596 Domicile Ordinance, Section 4 (1) A child is domiciled in the country or territory with which he is for the time being most closely connected. (2) Where the child’s parents are domiciled in the same country or territory and the child has his home with either or both of them, it shall be presumed, unless the contrary is proved, that the child is most closely connected with that country or territory. (3) Where the child’s parents are not domiciled in the same country or territory and the child has his home with one of them, but not with the other, it shall be presumed, unless the contrary is proved, that the child is most closely connected with the country or territory in which the parent with whom he has his home is domiciled. →Section 4(1): closely connected to – emphasises in finding out where is the child’s home – e.g. you have a Hong Kong child and go to boarding school in England. • Issue will be whether he has an English domicile or Hong Kong domicile as the child is living in England more than living in Hong Kong LAWS4000 17 • A Hong Kong court won’t regard the boarding school as his home – we don’t want to be too precise/definite in the rules, we want to leave it open textured and give the court wider discretion to decide it but to make the law a little certain. →Ways to decide where a child’s domicile is: 1. Courts can take into account child’s preferences where parents are in different countries. Cap 596 Domicile Ordinance, Section 11(2) In determining for the purposes of section 4 the country or territory with which a child is for the time being most closely connected, account shall be taken of any preference that the child may have as to the country or territory in which to have his home. 2. There is a presumption that if the parents domiciled in the same country, the child is mostly connected to that country as well. (Section 4(2)) 3. If the parents domiciled in different countries, the presumption is that the child is most closely connected with the parent who has a home with (Section 4(3)) Domicile of Married Women (Section 14(3)) →Domicile of dependency is abolished, a married woman is now treated like everyone else. They are free to have her own domicile. Domicile of Adults Cap 596 Domicile Ordinance, Section 5 (1)On becoming an adult, an individual retains (subject to subsection (2)) the domicile that he had immediately before he becomes an adult. (2)Subject to sections 6, 7 and 8, an adult acquires a new domicile in a country or territory if— (a)he is present there; and (b)he intends to make a home there for an indefinite period. →The domicile of origin and revival in common law has been abolished. →Current law: You keep the domicile until you have a new one, where you have a domicile of choice and the test is laid out in Section 5(2). →Once you are 18, you retain the domicile you had immediately before but you take on a new domicile if you are present in a country with the intention to make a home there for an indefinite period. • It has deleted the word ‘permanent’ compared to the common law test, however there is no clear rationale, it may be because it is an easier test to comply with. • Thus, the common law approach as an adult to acquire a domicile is not much different when compared to the Domicile Ordinance. Present Intent Relationship Zeng Lifan v Zeng Xingguo (2019) →The case has explained the relationship between presence and intent. → Douglas Lam DJ: “where a person is said to have acquired a new domicile, but a home has not yet been made there (in other words, he is not yet resident there), it seems to me that the intention required for section 5(2)(b) must, save in exceptional circumstances, be an intention to make a home there presently. Put another way, to acquire a new domicile at a particular place under section 5(2), a person must intend to make a home there presently for an indefinite period, as opposed to making a home there at some point in the future, whether such future is definite or indefinite.” “On one end[of the spectrum] is ….the immigrant leaving a war-torn country to start a new life in Australia plainly had an intention to make a home in Australia presently for an indefinite period, and once he set foot on Australian soil, he satisfied both the LAWS4000 20 period of his stay is extremely short, and serve no other purpose but for the medical treatment which can be dispensed with. 40. All the husband's family members (including his son from his previous marriage, two illegitimate children, and his current girlfriend) and friends are in the PRC. His family tie is not in Hong Kong whereas he has a very strong family tie in the PRC all along. The former matrimonial home of the wife and the husband is also in the PRC. 41. Most of his investment is in the PRC. The wife knew that the husband had 20 landed properties in the PRC which are worth about HK$56 million, and he has his own record company in the PRC. The wife is not able to tell how much cash he has in the PRC. 42. The size and the value of the assets of the husband in the PRC is much more substantial than those in Hong Kong where he only has a landed property and a few million dollars in the bank accounts.” Example 1: Common Law rules (Before 1/3/2009) – Importance of Domicile of Origin A man domiciled in Hong Kong (domicile of origin) and spend his life in India but never has a domicile of choice there. He has no intention to stay there as well. While he is in India, he has a son there and under domicile of origin, he will take the dad’s domicile at the time he is born in India, thus his son will acquire domicile of Hong Kong even he is not born in Hong Kong and never went to Hong Kong. Example 2: Common Law – Domicile of Origin Revives Domicile of origin is Hong Kong and he then emigrated to New South Wales and acquire a domicile of choice, but then he decided to retire to Western Australia, he decided to do road trip from NSW to West Australia but dies on route to Western Australia. He has not got a new domicile in West Australia as he hasn’t got there. Moreover, he abandoned his domicile of choice in NSW as he has left there physically and has no intention to go back there. Thus, now his domicile of origin revives and his domicile in Hong Kong. Example 3: Domicile Ordinance A person is born and domiciled in Mainland PRC and goes to live in New York. He acquired domicile as adult in New York and went back to PRC permanently. He has homes in Hong Kong and Shanghai but doesn’t know where he wants to settle. Domicile Ordinance Section 10 will kick in and the court will decide is the person more closely connected to Shanghai or Hong Kong – e.g. the length of time, whether he got a family in one of this place, whether there is a home This idea of this ordinance is more in common sense. Re Jones’ Estate Facts →The man is borned in Wales and his domicile of origin is England. He then went to seek fortune in Iowa and he marries a lady in Iowa and intends to stay there for the rest of his life and then his wife dies and he is getting lonely. →His sister comes to visit him and suggested him to come to England to live again and without his wife, US has no meaning for him to live anymore. →He then decides to come back on to England and gets on the boat to get back to England but the boat was sunk of the coast of Ireland and he died. Conclusion / Remarks →Common law approach: Domicile of origin will revive where he abandoned his domicile of choice in Iowa and went back to England and hasn’t acquired a domicile of choice in England as he is not physically there, so his domicile of origin will kick in. →Under Domicile Ordinance: A person will keep his domicile until a new domicile is acquired, he has a domicile as an adult in Iowa and he has never got back to England and therefore never acquire an England domicile, and his domicile will still be Iowa domicile. LAWS4000 21 →*****Common law produce a more sensible result in this case. Topic 3: Choice of Law: Tort Scenario Question White Island Case: A cruise ship registered to US company and people went on board at Australia to go on a cruise trip to New Zealand and there are passengers from all over the world. One of the activities of the trip is to go to the White Island and at that time the volcano is active and emitting lava and it is a dangerous negligent thing to allow people of the cruise to do so and about 25 people died and 26 injured. Issue: What law to apply? As it happened in New Zealand, New Zealand has got a legislation scheme of no fault liability where people who are injured in this situation are entitled to some compensation under legislation. However, people can get way more compensation in other places. People who are actually not domiciled in New Zealand were basically going to get a small amount of money if New Zealand law is applied and it is a difficult test to think what law applies. There is a Mainland case where a English registered ship is on the seas and when one of the employees of this ship is negligent in they way they supervised the swimming pool and someone drowned and suffered severe brain damage, where this occurs on the international waters (high seas) and she was taken to Shanghai for medical treatment. Issue: What tort law applies here? As that was the law of the ship, any ship registered on the high seas is as if you were in that country. Thus, England law? The victim is from Mainland and went to Shanghai for medical treatment, should it be Mainland law? →Classic examples of where the tort arises is when tort of deceit, where the deceit is planned at a meeting in England, then the victim is met in Thailand and South Korea to persuade the victim to join the fraudulent scheme, and at last the victim lost money from his bank account in France. It involves many countries and which law should we apply? Tort Committed in Hong Kong →If tort occurs in Hong Kong, the Hong Kong law will be applied. (***NO EXCEPTION to this rule) • Metall and Rohstoff: If in any given case the court concludes that under Hong Kong a tort has been both committed by the defendant and committed in this country, we see no reason either on principle or authority why he should be entitled to claim exemption by reference to some foreign law, and so we do decide. • China Medical Technologies Inc v Paul, Weiss, Rifkind, Wharton & Garrison LLP (2019): “I consider that the plaintiffs have established, at least on a good arguable case basis, that the tort was in substance committed in Hong Kong. Applying the approach explained in Metall und Rohstoff, the relevant law that is applicable to the tort is Hong Kong law alone.” LAWS4000 22 →Even though you may have a situation where everything connects that tort to another country, it doesn’t matter. Hong Kong law will still apply. E.g. A contract governed by Japanese law and have a couple of Japanese people are in Hong Kong and one of them commits the tort of interfering this contract. Despite the contract say it is governed by Japanese law, and every part of the contract connects the tort to Japan, but as long as the act of persuading the Japanese to break the contract occurred in Hong Kong, and it comes to Hong Kong courts, Hong Kong law will apply. →Much different with other countries in the world. If two people are habitually residents of one country and one is negligent and cause injury to the other occurred in Hong Kong and if both of them are residents of Mainland, then Mainland law will apply to that court. (NOT HK Court) If this happens in Hong Kong, as long as it occurs in Hong Kong, Hong Kong law will apply. →However, it presupposes easily to decide where the tort occur, and it is quite difficult sometimes to know in what law jurisdiction the tort occurred in. Tort Committed outside Hong Kong →Johnston par 5.93: “Overcomplicated and apt to confuse the unwary” →If it is committed outside Hong Kong, it is a much more difficult situation where you have a tort that occurs outside its own jurisdiction, what would be the rules that you would use to decide what law to apply? →The possibilities are lex fori, lex loci delict, lex loci damni and closest and most real connection • Apply lex fori: That might not be right where the tort has no or little connection with Hong Kong. Imagine if a Mainland manufacturer of medicine exprted that medicine to Hong Kong and a person buys the medicine in Hong Kong and took the medicine at the airport of Holland on her way on a business trip and became seriously ill. Applying lex fori will be weird where the actual negligence occur in Mainland and injury occur in Holland. • Apply lex loci delicti: Most jurisdictions in the world will apply the law of the countries where the tort occurred (lex loci delicti), e.g. a road accident occurs in New Zealand and the tort occurred in New Zealand and is occurred due to negligent driving. ◼ But for economic tort cases, it may be more complicated. It is much more difficult to pinpoint the place where the tort is occurred. Where there is a tort of deceit and you plan the fraud in a number of different countries and execute that in a number of countries. It comes in question about where exactly did the tort occur? To solve this problem, the European Union has tried another method to get away with these problems. • Apply lex loci damni: European Union’s solution to deal with the above problem will be applying lex loci damni where it will be the place where the injury take place. E.g. the above medicine case: Holland law will apply. However, it will be weird to apply Holland law in that case where you just accidentally take the medicine there and no one there is connected to this medicine except it is the place where the injury occur. • Apply ‘most closely connected’: It is difficult to decide when there are many countries involved. →HONG KONG’s POSITION: It is a complete mixture of the above rules. Hong Kong embarrassingly is still applying the double actionability rule from 19th century. General Rule – Double-Actionability →Lord Wilberforce in Boys v Chaplin laid out the double actionability test. Plaintiff can recover damages for tort committed abroad if it is actionable as a tort in English law (lex fori) and defendant is civilly liable under lex loci delicti (law of country where the tort occur) →Defendant therefore must be civilly liable to plaintiff in respect of the tort under both laws. →Very parochial: Lex fori biased rule as if double-actionability rule is satisfied in Hong Kong courts will end up applying Hong Kong law. LAWS4000 25 →The plaintiff in this case goes through all the rules in the Hong Kong tort of passing off. Conclusion →The judge establishes the tort occurred and the liability on the defendant and they get the Mainland excerpt and gave detail evidence that this tort of passing off will be a civil liability in Mainland despite it is not exactly the same, it still satisfies the double actionability rule even if there is no identical rules. →Court say as long as there is civil liability in Hong Kong and Mainland, the DA rule is satisfied. 厦門新景地集團有限公司 v Eton Properties Ltd (2016) HKEC 872 Facts →Where someone want to bring a claim in Hong Kong for the tort of inducing a breach of contract and this inducement to try and get a Mainland company to break a contract with a Hong Kong company. →The tort happened in Mainland, and they went to persuade the Mainland company to break a contract with the Hong Kong company. Conclusion →The parties successfully established tort in Hong Kong. →However, the expert evidence in Mainland revealed that this is not a tort of any sort under Mainland law and it is not a civil law recognized under Mainland law. Thus, the DA rule was not complied with. Substance or Procedure Damages →Damages in tort falls within substance. →Hodson in Boys v Chaplin: ‘the law relating to damages is partly procedural and partly substantive’ →When we are looking at the comparison between foreign law and Hong Kong law is when the comparison between the substantive law rules of Hong Kong and the jurisdiction where the tort occurred, things like head of loss (substantive law). →Even though rules about what is procedure under the traditional Hong Kong rules are too wife and logically should be much narrower. →It is no surprise that in Australia case – there is a new liberal test of what is substantive law. It now has a narrow view of what is procedural. That case decided at that point is the same time when the courts abolished DA rule. However, under Hong Kong law, if you have a very wide view of the traditional common law rule of what is procedure. It is advantageous for the plaintiffs under the DA rule, in particular under the rules about substance and procedure, the courts have decided assessment of damages (how much you actually get, how you calculate the actual amount of damages) is a matter of procedure. → Leading Common Law Case Harding v Wealands (2006) Facts →Under English rules which weren’t DA rule but if in Hong Kong, DA rules apply. →The man is injured by his girlfriend due to negligent driving when they went back to NSW for holiday, and he became a paraplegic. →Under English law, there is negligence and under the NSW law, there is negligence as well. If apply the DA rules, it satisfies as there is civil wrong under substantive law of both countries. Conclusion →For the cap on damages, it is classified as a procedural rule and can be ignored by lex fori, deciding the assessment of damages is procedural and is advantageous to plaintiffs who are bringing claims under DA rule because if cap on damages (there might be limitations imposed on amount of damages) is procedural, it can be ignored completely, and it wouldn’t be relevant to the DA rule whether it comply or not. (How much you actually get) LAWS4000 26 →**Procedural differences are ignored by the party. Remarks → Substance – is there liability, causation, remoteness, mitigation, contributory negligence, volenti, deny a particular head of damage, see Hoffmann LJ → Procedure – assessment of damages Boys v Chaplin Lord Wilberforce “matters of assessment or quantification…. are for the lex fori to determine.” Also, procedure where there is some condition precedent in foreign law that must be fulfilled before P can sue e.g. must first go through ADR. Substance/Procedure →However, remember that if the ‘modern approach’ to substance/procedure is take assessment of damages would be classified as substantive law. A wide view of substance would reduce the chances of plaintiff’s success under the DA rule. Exception to the General Rule → The courts have ‘power to avoid injustice by introducing an element of flexibility into the rule’ and apply the law of the country which has the most significant relationship with the occurrence and with the parties. →Lex Fori Applied Boys v Chaplin (1969) Facts →Two British soldiers were on a duty to Island of Malta and because of negligent driving of one solider, the other soldier is injured. →Negligence is established in both England and Malta, but Malta didn’t recognize pain and suffering as a head of loss. →Injured soldier brought a claim in English court claiming pain and suffering damages, the DA rule on pain and suffering isn’t satisfied as it isn’t recognized under the foreign law. Conclusion → The court said they will apply an exception to the DA rule as the factors are overwhelmingly connected to England as both soldiers are English only on a temporary presence on Malta. → The only connecting factor is that the accident took place in Malta and nothing connected the tort to Malta and has no interest in dispute of the two British soldier, thus the exception should be applied and damage should be based on English substantive law applying head of pain and suffering should be awarded. → Lord Wilberforce makes it clear that this exception is not going to be applied in every case and he highlights that it is going to be the exception but not the rule where it is going to operate. The exception will not be successfully invoked in many cases and there must be a clear and satisfying ground for departing from the DA rule. There is no real guideline given. →The courts will ignore the DA rule in situations where the connecting factors are overwhelmingly connected to a jurisdiction. →Lex loci delicto Applied Red Sea Insurance Co Ltd v Bouygues SA (1995) Facts →There is a huge building project in Saudi Arabia, contractors were all carrying out work with a Saudi client. → Red Sea were ensuring the quality of the building work and head office was in Hong Kong, the only connection is only Hong Kong is where the head office was. LAWS4000 27 → The building is defective, and they are claiming compensation under the insurance policy from the Hong Kong insurance company and they were liable to pay due to the policy but then they want to take action to recover the money from sub-contractors who have done the defective work and they wish to sue the sub-contractors in negligence. →Under Hong Kong (lex fori) law, there are no claim against these sub- contractors as they have a complete defence, but the defence is not recognized under Saudi law. Conclusion →The Privy Council said that the exception should apply here that there is nothing connecting to Hong Kong except it is the head office of the plaintiffs, everything connects to Saudi Arabia all about the huge project there and therefore they are going to apply the exception and apply Saudi law in this case. 厦門新景地集團有限公司 v Eton Properties Ltd (2016) HKEC 872 (above) Facts →The case is about tort of inducing a breach of contract unknown under Mainland law. → Whether the exception apply? Conclusion →Mainland law will apply and this is not useful to plaintiff as there is no civil wrong in Mainland, there is no use for plaintiff to use this exception. Kwok Yu Keung v Yeung Pang Cheung (2005) Facts →He is injured by negligence of bus driver while he is on a coach in Mainland. The plaintiff is from Hong Kong, the coach is from a Hong Kong company, the driver is a Hong Kong resident. The problem with the claim in Hong Kong is that the accident occurred in Mainland. →Mainland didn’t recognize pain and suffering damages. There is no concept of carrier’s liability thus you cannot sue the driver’s coach company for the negligence of the driver. Conclusion →DA rule is not satisfied but everything connects to the case to Hong Kong, the only Mainland connection in this case is that the accident happened in Mainland. Thus, the exception applied. Johnson vs Coventry Churchill International Facts →English employees were sent to work in Germany and he was injured in Germany on the building site due to the negligence of his English employer as he didn’t get a safe system. Conclusion →DA rule isn’t satisfied as under the German law, any accident at work wasn’t covered by no fault compensation scheme and it is not a civil wrong under German law. →As a result, they tried to apply the exception and it applied as the only connection with Germany is that the accident occurred in Germany and the employer, employee and contract of work are all connected to England. →Exception considered in Sophocleous v Secretary of State for the Foreign and Commonwealth Office (2018): the common law rules on choice of law in tort applied because the events –violence (torts) committed by British soldiers in Cyprus • The Courts stated that the DA rule should be the one normally applied and the exception should not be applied too often to avoid it becoming the general rule. • The courts said they want to take note of the principle of comity, and in most of the cases where the exception applies, you end up applying the lex fori rule and therefore if you are generous with the exception, you end up disrespecting the foreign law, thus you shouldn’t be colonial in the approach here and as a result it should only apply the exception in very extreme circumstances. LAWS4000 30 Chan Wai Chung v China Travel Service (2022) Facts → Someone is buying a HK ticket for a journey on a coach in Mainland and it is a HK company and is injured by the coach driver in the Mainland. Conclusion →→ This must be a case where the DA rule and exception will be considered – but there is nothing about this in the judgment – even in some parts it mentioned negligent – the reason why they didn’t consider DA rule as the plaintiff tries to bring claim under contract law → If you have someone buy services for you and the services aren’t performed effectively, you can sue them in tort for negligence – but it can also be sued in implied contract of services and implied term of care and skill – where you have contract with the company for the journey →In the contract, there is implied term of care and skill – you will sue in contract and the law in contract doesn’t have anything related to DA rule and exception. → This may be sometimes a way away from the DA rule that only applies when you sue in tort – by suing contract instead, you are able to avoid the DA rule – the plaintiff gets damages therefore based on contract law in avoidance with DA rule Reform of the Law → HK out of step with most other countries in applying the double actionability rule → Most jurisdictions apply the lex loci delicti rule e.g. Australia, Canada and most recently New Zealand (2017), and from 1996 until 2009 England. US goes for a system similar to the closest connection rule → But is this an improvement? Problem of emphasis on lex loci delicti –deciding case on basis of foreign law involves the parties in unnecessary uncertainty and expense. Also a problem of deciding where the tort was committed. 厦門新景地集團有限公司 v Eton Properties Ltd (2020) HKCFA 32 →Lord Sumption in CFA: “The double actionability rule has been discarded in a number of common law jurisdictions including Australia and Canada, and abolished by statute in others, including England and New Zealand. Its application in Hong Kong may one day need to be reconsidered, but for the moment it is accepted on all sides that the rule, together with the exception, remains the law in Hong Kong.” ZHANG RUI KANG v TUNGHSU GROUP CO LTD (2023) HKCFI 1866 → The court proceeded on the basis that the double actionability rule is still the law in Hong Kong. →***There is still no real plans to depart from the DA rule in recent judgments as seen. →Mainland double actionability rule abolished. General rule will apply the lex loci delicti subject to two exceptions: → Exception 1: If both parties have same country of habitual residence, then that jurisdiction law applies. (cocoon rule) • e.g. if 2 Hong Kong people where one injured another in road accident in New Zealand – then under Mainland law, Hong Kong law applies. →Exception 2: If the parties choose a governing law after the tort occurred that law shall apply (the rights of party to choose which tort law shall apply) European Changes →Rome II took effect January 2009 LAWS4000 31 • General rule A 4 (1) Law of country where the damage occurs lex loci damni – not the country where the tort was committed. (simple and not complicated rule about where the tort actually occurred) • Exceptions: Habitual residence A 4(2) If both parties were habitually resident in a particular country when damage occurred – that country’s laws applies.(The so-called “cocoon” rule) • More closely connected A4(3) → If tort manifestly more closely connected with a country other than those above. Manifestly more closely connected might be based on a pre-existing relationship between the parties, such as a contract which is closely connected with the tort. A very high standard is required to satisfy A4(3) WINROW v HEMPHILL [2014] EWHC 3164 ; OWEN v GALGEY[2020] EWHC 3546(QB) → Special rules to deal with deciding which law governs product liability. A5 ***Exceptions similar to DA rule, if those rule doesn’t work that fairly, then you can depart from those rules in favour of the jurisdiction that tort is more closely connected with. →Rome II now says quantification/assessment of damages =substance. Law applicable to the tort will now also apply to the issue of assessment. Will deter forum shopping. → However, A26 will enable English judges to reject US scales of compensation-can refuse to apply foreign law if “manifestly incompatible with public policy”. →Choice of law clause • A14(1)(a) allows the parties to agree on what law should apply after the tort occurs. • Where all the parties are pursuing a commercial activity, a pre-tort choice of law clause is allowed. • But not effective where all the elements relevant to the situation at the time when the event giving rise to the damage occurs are located in a country other than one chosen. LAWS4000 32 Topic 4: Choice of Law in Contract →In common law (e.g. Hong Kong/England): they say the relevant law to apply is called ‘proper law’. EU calls it ‘applicable law’ → Why is it important to know what law may apply to the contract – the courts do allow you to apply law other than your own law because of 1. You gain some substantive law advantange e.g. Hong Kong law applies and not the foreign law – relevant to Hong Kong where you may find that in the case of foreign exchange transaction • There could be a danger that it may be illegal under Mainland law or Malaysian law but valid under Hong Kong law or there may be vitiating factors such as economic duress which is recognized in Hong Kong but not in other foreign countries --- thus parties may seek to plead foreign laws to gain litigation advantage 2. In order to establish Hong Kong has jurisdiction to hear the case: allowing Hong Kong courts to take jurisdictions to hear a case is if Hong Kong law applies to the dispute – 50% of the case of choice of law in Hong Kong in relation to contract are trying to use getaway so the case can go ahead in Hong Kong. Express Choice of Law Clause →Vita Food Prodcuts Inc v Unus Shipping Co Ltd: Lord Wright: ’Where thereis an express statement by the parties of their intention to select the law of the contract, it is difficult to see what qualifications are possible, provided the intention expressed is bona fide and legal, and provided there is no reason for avoiding the choice on the ground of public policy” • Principle of autonomy: as much as possible, the parties are free to choose and they are free to choose which jurisdiction, what law to apply – thus it is very common in any commercial contract that there is a clause specifying what law to apply. • In that case, the point was made that it is not evidence of lack of good faith that the choice of law is a choice that has no connection with either party (e.g. Italy and Mexico law contract and say Hong Kong law apply – because those law are regarded as especially good for commercial parties – no connection at all with your country) →They are some major research done showing that contracts having a connection in some way with PRC and it showed in general world of commercial contract that there is a common split of Hong Kong law was to applied and Mainland law was to applied or English law was to applied and also New York law was to applied (since new York law are in favor of intellectual property contracts). LAWS4000 35 doesn’t like that, when parties are entering into contract, the party should know from day 1 that what they do is lawful and legal under the contract. • How do they know that if the agreement become unclear about which law to be applied. Thus, it must be clear what law is to be applied and if there is a situation where it really will depend on the choice of the parties which law is to be applied, then the clause will be declared to be void. Compare with The Mariannina Facts → The contract provided: in the event of dispute, arbitration in England, English law to apply. But then the contract went on to say, if the arbitration clause was declared to be enforceable, Greek law will apply, and the Greek courts will have jurisdictions. Conclusion → Court finds this to be quite acceptable as the parties are just covering the backs in case of the intended dispute resolution mechanism didn’t work and the switch will not depend on any choice of any party. →Thus, this case show you may be able to change the choice of law if that is dependent on some neutral event happening which neither party is responsible for. →Parties are free if they should so wish to change the agreed choice of law after the contract is made. MAURITIUS COMMERCIAL BANK v HESTIA HOLDINGS LTD (2013) • Quite useful when e.g. you have a Hong Kong company and all contracts are governed by Hong Kong law and they are taken over and the new party in charge of it are all from India and far more familiar with Indian law and thus want Indian law to govern the contract, as long as the parties agree to that, there is no legal difficulty in occurring that. Express Choice of Law – Mandatory Restrictions →Consumers: s17 Control of Exemption Clauses Ordinance ;s7 Unconscionable Contracts Ordinance – foreign choice of law clause of no legal effect if one party consumer, habitually resident of Hong Kong, and essential steps for making the contract took place in HK . • There are mandatory law which cannot be evaded by any express choice of law clause. E.g. Agoda: in small print: in event of any dispute, Singapore has jurisdictions and Singaporean law applies to this agreement. But most countries in the law have mandatory laws, e.g. for European law, basically consumer, the only law that can apply to them is their own law. • Only CECO and UCO are the legislations you cannot contract out by using choice of law. • Basically, if a consumer is making a contract in HK with anyone outside HK, they have rights under these two measures to protect consumers and they can’t be taken away by an express choice of law clause in favor of some other jurisdictions – but it only applies to these two little bits of legislation only – actually that doesn’t give much protection to consumer. E.g. Cruise ship contracts: the cruise got people from all around the world – thus they want to make things manageable in case of a dispute with all passengers, thus they will say they have exclusive jurisdiction where the cruise company come form and that law apply – that wouldn’t be effective in Hong Kong for Hong Kong passengers but only in relation to the rights under these two legislations only – not a great deal of protection. → In the case of commercial parties the term will have no effect if court considers the foreign choice of law clause was imposed mainly to evade the Ordinance.S17(2) CECO S7(2)UCO. LAWS4000 36 → Equally the Ordinances will not apply despite there being a choice of law clause of Hong Kong if the court considers that this was not the proper law of the contract. S17(1) CECO S7(1) UCO • You cannot specify Hong Kong as the choice of law in a commercial contract. In order to get advantage of the CECO and UCO, e,g. you come from jurisdiction that doesn’t have UCO or CECO, you can’t take advantage of Hong Kong from that by saying Hong Kong law applies if the contract has no connection with Hong Kong and the proper law of the contract will be some other jurisdiction. → UK has far more detailed protection on mandatory law, same as China, as they don’t like foreign laws to be applied. Chimbusco Pan Nation Petro Chemical v Arkstar Ship Management PTE Ltd (2019) HKCU 221 Facts → There is an agreement with the Singaporean parties saying that Hong Kong law applies, dispute arose, one of the parties want to take advantage of CECO to argue that relevant exclusion clause will be unreasonable. Conclusion → Courts rejected this claim as it is specified in the legislation that if you got no real connection with Hong Kong, you can’t get the benefits of the Hong Kong law and say Hong Kong law applies → EMPLOYMENT CONTRACTS s70 Employment Law Ordinance nullifies any term of contract of employment which purports to extinguish /reduce any right/benefit /protection conferred on an employee by the EO → Is this provision mandatory? Or can the HK court apply the choice of law specified in the contract provided it was inserted in good faith and not in a deliberate attempt to evade the Ordinance? • Employment Ordinance is not 100% clear on whether it can be excluded by the choice of foreign law – one thing Hong Kong has, under Hong Kong EO, if it applies, an employee can buy themselves out of a contract, if your contract says you have to have six months’ notice before you terminate it. Under Hong Kong law, if you pay the employer 6 months’ salary, you can leave immediately, if employee is head hunted by a top firm, they are quite happy to subsidize that money and buy the remaining part of the employee’s contract. • Employers don’t like that so can they apply other laws that doesn’t give employee’s that right? – the ordinance is not clear on this. →Two conflicting Hong Kong case: Cantor Fitzgerald Europe v Boyer (2012) HKEC 301 Facts / Conclusion → Reyes J “One cannot attempt to get around the protection afforded by the EO to employees working here through the expedient of choosing a foreign law”. → The judge think that the Ordinance prevents you contracting out by having a choice of law in favor of some other country, he did that by looking at the legislations and there are categories of employees that specifically the legislation doesn’t apply to such as foreign seafarers who come to Hong Kong on a ship registered overseas, they are excluded from an ordinance. → Thus, the court thinks if there are such express exclusions, then everybody else the ordinance is intended to apply to. HSBC v Wallace (2008) 1 HKLRD 613 Facts → The contract of employment says English law applies and the court decided that it would be upheld as they couldn’t see any specific in the EO to the contract and they believe this clause is put in good faith as from HSBC point of view, it is very desirable that the employees should be governed by the same law. LAWS4000 37 Conclusion →Upheld as it had been put in the employment contract in good faith and not as “a device artificially introduced to exclude Ordinance protection.” **Comparing the conflicting case. Cantor Fitzgerald Europe v Boyer (2012) HKEC 301 is the better one. Thus, likely the EO cannot be contracted out of by an express choice of law clause. Implied Choice → Hong Kong adopt the view of implied choice of law as well. → Similar to the officious bystander test for implying terms in domestic law. • Century Yachts v Xiamen Celestial Yacht (1994) 1 HKC 331: Litton JA “…the test is what ordinary businessmen would have been likely to have agreed if their minds had been directed to the question…there can be no doubt ….They would have said that Hong Kong law governed their contracts. It would have been highly improbable they would have selected PRC law, having regard to the commercial realities of the matter”. Century Yachts v Xiamen Celestial Yacht (1994) Facts → There is a Hong Kong company, and they were in the luxury yachts business and have clients all over the world incl. Hong Kong and clients contracted to buy the yacht and the contracts say Hong Kong law apply. → When they got an order, they will make a contract with Mainland company to construct the yacht and there is no choice of law clause in the agreement at all. Eventually, there is a dispute with the Mainland yacht manufacturer, the issue is what law applies. Conclusion →The CA decided HK law apply as it is the implied intention of the parties, supposing a yacht that was unsatisfactory, unseaworthy, and it was sold on by the Hong Kong company to the customer and the customer will bring a claim in Hong Kong against the Hong Kong company relying on Sales of Goods Ordinance. If the defects of the yacht have been caused the negligent manufacturer, the Hong Kong company will join the Mainland party as a party to the action as well. → Thus, you have in essence a dispute about quality of yacht between HK company and the manufacturer, HK company and client. it will be ridiculous if the party intend to apply two different law, two different standard in the defect of this yacht. The contract of the company with client is governed by HK law, it must be the intention of the parties that the same law will apply to the HK contract with Mainland as well. Remarks →It may fail the officious bystander test because there is no doubt about it but the plaintiff intended that HK law will apply to the contract with the Mainland company and there is no evidence in the law report that was the intention of the mainland company. → Nevertheless, the court decided that after looking at the facts, the intention was HK law was to apply. ***Compare First Laser case. No Choice – Proper Law →The view is taken that the implied choice of law test is real no different from what the test is when there is no choice of law. (First Laser case) That the implied choice of law test is about objectively which jurisdiction is the contract most closely connected to and all the criteria you take into account are same as no choice. • First Laser: It says there are two categories, express choice and no choice. If it is no choice, then you are governed by applying proper law, the transaction which has the closest and most real connection. LAWS4000 40 → The lender is a company from the Bahamas, and they were lending US dollars to a borrower who were a Panama company and the money was to be lent in new York and repayable in new York. → There is only a slight connection where one of the guarantors is a Hong Kong company and one of the agreements is drafted and signed by the defendant in Hong Kong. Conclusion → Court says Hong Kong law doesn’t apply as the most likely scenario is the proper law of the contract is New York law, the place where the money has to be repaid in, it shows it is a tempting way for the courts to decide which country is most closely connected with the contract. Place of Performance →However, place of performance doesn’t always work. If I am a Hong Kong party and agree to sell goods to buyer from Indonesia and the buyer says he want the goods to deliver 1/3 to New Zealand, 1/3 to Australia and 1/3 to Japan, equally with three different countries and the place of performance doesn’t work easily in these type of situation. →A(HK) selling goods to B(France) knowing that B will resell to C(Germany), to fulfill the contract, A has the goods manufactured at D’s factory in Vietnam. It is not easy to work out in the A-B contract where the place of performance is going to be. If the goods are handed over to B in France, then French law will apply. If the goods are to be collected in Hong Kong, if that is where A is going to ask Vietnamese factory to hand the goods back to him and going to be picked up in Hong Kong, Hong Kong will be the place of performance. If B ask A to deliver to Germany, then German law potentially could apply, it is thus not easy in these situations to work out the place of performance and the contract is sometimes in these scenario silent. If the agreement specifies that the goods have to be collected by B from Vietnam, is Vietnam the place of performance? The place of performance thus doesn’t always work but Hong Kong judges are addicted to the place of performance as an easy way in many cases to solve what to be a quite complex decision about which law to apply to the contract. Relevant Factor: Country of Intended Performance***** Hong Jing Ltd v Zhuhai Kwok Yuen Investment Co Ltd (2012) Facts →Bank of China were not being paid by the customer that he owed, they said to be the customer (Mainland defendant) to find another person to take over the debt and pay the bank. The defendant went to the plaintiff in Macau, did a deal where the defendant provide securities over properties he has all over the world and the plaintiff agreed to pay the debts owing to Bank of China Hong Kong. Conclusion →Despite the plaintiff is from Macau, the defendant is from Mainland, Hong Kong courts decide that Hong Kong law will apply as they are influenced by the subject matter of contract and is the repaying of a debt owed to a Hong Kong bank. (Bank of China Hong Kong branch). Thus, apply Hong Kong laws due to all the plaintiff’s obligation under the agreement were going to take part in Hong Kong. Remarks →“In my view what is more important is the subject matter of the P's MOU and the place of performance of the subject matter. The subject matter is the acquisition of the debts owing by two non-Mainland registered companies (the two companies were incorporated in Hong Kong and Macau respectively) to a Hong Kong company BOCGI. The debts are in the form of a chose in action created by loan agreements and securities documents which expressly provided for Hong Kong law to be the governing law … Furthermore the performance of the P's MOU was in LAWS4000 41 Hong Kong. The earnest money was paid to Paul Hastings, a firm of Hong Kong lawyers, as stakeholders. If the deal is successful, this money will become the deposit for the price of $810 million. The completion of the transaction was envisaged to be in Hong Kong. The plaintiff's own lawyers are Hong Kong lawyers. In my view Hong Kong law is the one with which the transaction in question has the closest and most real connection.” per Cheung JA at par 72 Relevant Factor: Country of Legal Terminology S Megga Telecommunications v Etowaru (1995) HKC 761 Facts → The issue is whether Hong Kong or Japanese law apply Conclusion →The contract referring to legal concepts are unknown under Japanese law and the contract have a liquidated damages clause (not a Japanese law concept) thus it is a contract where Hong Kong law applies. Relevant Factor: Country specified in Exclusive Arbitration/Jurisdiction Clause** →For example, making Hong Kong the exclusive jurisdiction and the contract is silent about what law to apply, it seems very difficult and impossible to convince the court that some other law actually operates. Making Hong Kong the exclusive jurisdiction surely is the closest connection law jurisdiction with the contract. If they make Hong Kong exclusive jurisdiction, the parties impliedly intend that Hong Kong law will also govern the agreement. Chan Chi Keung v Delmas Hong Kong York Airconditioning v. Lam Kwai Hung (1995) 1 HKC 287 Facts →The issue is whether Mainland or Hong Kong law apply. →It involves a contract for sale of goods and payment is by bill of exchange which has been dishonoured. →In the agreement, there is a term specifying any dispute arising out of this contract, has a clear arbitration clause of going to arbitration in Mainland. → For complicated reasons, counsel is trying to argue Hong Kong law actually apply and they produced a whole list of convincing reasons in favour of Hong Kong being most closely connected with this agreement, over a page of detailed connecting factors with Hong Kong, both parties carried out business in Hong Kong, contract negotiated in Hong Kong, goods to be delivered to defendant in Hong Kong, goods inspected in Hong Kong, price payable in Hong Kong, bill of exchange is drawn and accepted and dishonored in Hong Kong. Conclusion →The courts refused this, as the proper law is Mainland law and these factors are outweighed by the specific clause in the agreement where the Mainland is the place to go where any legal dispute arise out of this particular contract Relevant Factor: Country where the contract was made/negotiated → The place of the contract is made and negotiated, the subject is a recent on. Up to 1930s there is a simple rule that if the contract is silent about which law apply, you apply the law of where the contract is made, but nowadays it could be accidental about which country the agreement is made as now people rely on modern ways of communications and is dropped in favour of the proper law. Relevant Factor: Country of Domicile/Residence of the parties LAWS4000 42 →To look at domicile of residence that only works if both parties are domiciled in the same country. Relevant Factor: Country of the language of the contract →It doesn’t carry much weight. →Hong Kong courts say that the fact the contract is in Chinese, has no relevance in deciding on whether Hong Kong or Mainland law will apply. Sapporo Breweries v Lupofresh (2012) EWHC 2013 Facts →Issue on whether Japanese or English law applies. →One of the argument in favor of English law applying was the fact that after negotiations have completed, the MD of the English and Japanese company, they shook hands and they argued that under English culture, after an agreement, businessman shook hands when they seal the deal, that custom indicated that English law was meant to apply. Conclusion → Courts disagreed that and question if they bowed in Japanese way, does the bowing mean that Japanese law should apply? If contract is in English, that may carry a little weight be a slight factor showing it is in favor of English law. Relevant Factor: Country of the currency referred to in the contract Relevant Factor: Country of the Related Contract*** First National Bank of Chicago v Carroway Enterprises (1990) 2 HKLR 10 Century Yachts v Xiamen Celestial Yacht (1994) 1 HKC 331 Facts / Conclusion →If there are two connected contracts, the argument will be the same law would be applied to both of them. →In a loan agreement, a claim usually is made against the guarantor and a Hong Kong bank who lent money to a Hong Kong company and the agreement is clear where Hong Kong has jurisdictions and Hong Kong law applies. The guarantee agreement however has nothing about choice of law or its jurisdiction. Courts will look into the place of performance, where the guarantee money is going to be paid in. It is also more logical to have the same law applying to the guarantee as to the contract, as the guarantee agreement is created to service the loan agreement, to provide security to the loan agreement. Thus, if the two contracts are closely related, the same law applies to both contracts. Relevant Factor: Contract will be illegal/unenforceable under the law of one country Hung Fung Enterprises Holdings v Agricultural Bank of China (2012) HKEC 870 Facts →Implied choice test will be better as parties will surely not choose a law that will result in the contract being completely unenforceable. Conclusion →***It is an important factor that you take into account but not a conclusive factor. Relevant Factor: Contract is unlikely to have a close connection with a country where the contract is ‘bad’ Melvin Waxman v Li Fei Yu (2013) 3 HKLRD 711 Facts / Conclusion →It is held that Hong Kong is the proper law of a shareholder’s agreement, not Mainland law as the agreement created a trust, where it is not a concept recognised by Mainland law. LAWS4000 45 whiskey and smuggle it in to the US at the time of prohibition where all alcohol is banned in US. → Despite the agreement never mentioned transfer to US, and if they couldn’t bring the goods to US, plan B is to bring it back to Canada. Conclusion → The courts rejected this and say on the grounds of comity, the courts will not enforce this agreement as it will encourage people to break the US law by smuggling alcohol into that country. There has to be some evidence that both parties intend that the contract will perform in a country where it will be illegal to carry out such agreement. → Sometimes contract can be unclear of place of performance or suggesting a place where the agreement is legal but under this rule, if both parties intend to carry out the contract in the country where performance is illegal, then Hong Kong will not enforce the agreement. →Not enough to make agreement unenforceable that it is illegal under the law of the defendant’s domicile Spliethoff’s v Bank of China (2015) EWHC 999 Facts →The contract is perfectly valid under English law and going to be performed in England. Bank of China argued that they are from PRC and it is illegal in PRC law and PRC applied here and they cannot enforce the contract. Conclusion →We should only think about the physical place of where the contract is to be performed. → It is not enough to make agreement unenforceable that it is illegal under the law of the defendant’s domicile. →The illegal performance issue is increasing in importance due to the fact of international sanctions being imposed because of the Russian invasion of Ukraine. Celestial Aviation Services Limited v Unicredit Bank AG (London Branch) (2023) EWHC 663 (Comm) Facts → German bank providing finance to a couple of Russian companies and that is going to infringe US sanctions. → Only illegal if they perform any aspect of this contract in US, if they got into the US banking system, it will be illegal under US law. e.g. German bank supply money to Russian company via US bank, that will be illegal. →The German bank is able to satisfy these obligations in England where they will pay cash in England at the time there was no sanction in England and it is still legal in England and they are not performing their duty to pay under the contract in US where it is illegal to do so. Conclusion →“The rule in Ralli Bros provides that the [Hong Kong] court will not enforce an obligation which requires a party to do something which is unlawful by the law of the country in which the act has to be done…Thus, the rule is engaged only if performance of the obligation would require the performing party to act unlawfully in the required place of performance.” → Contract could be enforced as payment by the German Bank could be made without performance in the US where it was illegal. →If law of Hong Kong is the proper law – legal and contract to be performed in Hong Kong – valid contract. Dow v Detrick (1988) 1 HKLR 44 LAWS4000 46 Facts →Loan agreement governed by the Hong Kong law and the guarantor argued that he is not liable as he is Malaysian and under foreign exchange control laws of Malaysia, the agreement is illegal. Conclusion →The courts decided that Hong Kong law applies in this agreement and perfectly legal under Hong Kong law and the place of performance is in Hong Kong where it is repaid in Hong Kong and not in. a place where the transaction is illegal, thus the courts enforced the agreement. →If law of Hong Kong is the proper law – illegal and contract to be performed in Hong Kong – invalid contract. →If law of Hong Kong is the proper law – legal and contract to be performed in Hong Kong – but parties intended to carry it out in an illegal way – invalid contract. →To apply this rule, it must be legal in Hong Kong and it is going to be performed in a country that is illegal. Shenzhen Development Bank v New Century International (Holdings) Ltd (2002) HKEC 1087 Facts →Shenzhen argue it is illegal under Mainland law. It wasn’t clear in this agreement that where the money is to be paid but there is no evidence of common intention that the money will be repaid in Mainland where it is illegal. Conclusion → Under the terms of the contract, it is possible to perform the agreement in Hong Kong thus the court upheld the agreement. Dana Gas PJSC v Dana Gas Sukuk (2017) EWHC 2928 Facts →Agreement governed by English law but one of the problems behind this agreement was with a Middle East company and under their law, you weren’t entitled to any interest under the foreign law. → The problem is even if the agreement is governed by English law and the agreement says the interest is payable in a foreign country, that obligation will not be recognised by English court and they wouldn’t enforce the agreement concerning the interest. → To get around this, they created a second contract in England, governed by English law, the objective is to get around this rule that it says you cannot get interest in any Muslim countries, as it is against the laws and they are not entitled to get any interest. → All they did is to have the agreement in England and the purpose is to ensure that the lender get his interest. The whole idea of the English agreement is to break the foreign law that said you couldn’t charge interest. Conclusion → It is a contract governed by English law and the performance of the agreement (payment of interest) is in England and the courts said they can’t interfere even they know their intent is to break the foreign law. The rule cannot be applied in this case as it only kicks in if you perform the contract in an illegal way in a foreign country. Thus, this agreement is upheld. Remarks →Many people have commented on these rules in the sense while you can see the objective behind it such as don’t want to encourage people to break foreign law. → The common law says it is very limited as to when are they going to intervene, only to intervene when Hong Kong is the proper law and you intend to perform that agreement not in Hong Kong but in another country where it is illegal, only in these circumstances, this rule apply. Thus, it is easy for people to evade it. Ryder Industries Ltd v Timely Electronics Co Ltd CFA (2016) 1 HKC 323 LAWS4000 47 Facts →Contract involving two Hong Kong companies, one is governed by Hong Kong law and one of them are trying to get out of the agreement on the grounds that the agreement is concerning goods and the goods are from China and to perform that contract, and to get the goods from Mainland to Hong Kong, one of the parties will have to infringe Mainland customs regulations. → This infringement of Mainland law is absolutely minor and it is a technical breach of custom and exercise rules in Mainland and normal penalty of this offence is a warning or a small fine. Conclusion → CFA says that it is not disrespecting mainland law here if we enforce this agreement even you are doing something illegal in performance of this contract in the Mainland as it is just a minor breach. Remarks →Lord Collins “There is no basis in authority or principle for holding that every breach of foreign law would come into this category.”par.57 “I would therefore reject the submission..that comity requires the Hong Kong court to treat the contract as unenforceable because of incidental breaches under PRC law in its performance” par .58 →Lord Collins par. 58“it would be extraordinary if it could be regarded as contrary to public policy in Hong Kong to enforce a contract because of breaches in the PRC which the judge found (a) not to be a very serious contravention of the law; (b) not to be conduct which could be described as iniquitous; (c) not to have resulted in actual criminal or enforcement proceedings in the PRC; (d) to have been mere administrative contraventions. There is no principle of law or public policy which would lead to such a conclusion, which would be contrary to commonsense and justice.” → It was decided that as the above rules are based on public policy and comity, a flexible approach should be adopted having regard to the seriousness of the foreign illegality. If this purpose of the rule is all about respecting foreign country law, surely there is some limit and suppose you break the foreign law in a very minor trivial way, but the illegality is absolutely minor, as a matter of common sense, the court should be able to enforce the agreement as long as you are not offending the country law just that you are allowing a very minor breach of the foreign law. → Even though legal under the proper law and performance in a country where it is legal, many commercial contracts will have a term permitting a party not to perform a contract where to do would infringe the laws of a foreign country. → Modern commercial contracts put that clause in as they rely on CoL rule is not helpful enough as it only applies if you carry out some illegal action in a foreign country. → When drafting Commercial contracts , we are trying in many cases to make sure that the contract is one that is protecting yourself from some legal rule and you can see in the situation where you have a contract that is lawful under HK law and you will be performing it in Hong Kong despite it may be illegal in some other countries. → There is a conflict of law says the court will not interfere but if you honor that contract, you will be subject to US sanction as the person I am dealing with is in the US sanctions list. CoL is no help to the party and where you are not performing the contract in US but just HK which it is legal but still it will cause big problems. LAMESA INVESTMENTS v CYNERGY BANK (2020) EWCA Civ 821 Facts → An English contract governed by English law and they are borrowing money from a bank under English law and it is all legal. → However, the bank in question has been sanctioned by US government and if the borrower repaid this money to the bank in England, they will then be subject to LAWS4000 50 they focus on the party that is carrying out the main contractual obligations e.g. where do they leave. → To try and achieve greater certainty there are a series of presumptions concerning different types of contracts. • Sale of goods/services – supplier’s country of habitual residence (e.g. supply goods to a whole range of different countries and got nothing in agreement about what law is to be applied – own law will be the applicable law to operate) (c.f. under geographical test, supplying to France, French law applied, to Germany, German law applies) • sale of goods by auction, country where auction is held. • franchise contract – habitual residence of franchisee • distribution contract –habitual residence of distributor → Contracts not covered by the list – law of the country where the party required to effect the “characteristic performance” of the contract has his habitual residence Art 4(2) • Similar to HK look at part of the contract – non-money side, the main obligation, what makes the contract unique, you have the escape clause where you can apply law of a different country if it is manifested more closely connected to the country. →Some flexibility is given to courts – do not have to apply the above rules (Article 4(5) – escape clause) – where the contract is ‘manifestly more closely connected’ with a different country. Definitely Maybe (Touring) Ltd v Marek Lieberberg (2001) WLR 1745 Facts →English group Oasis made a contract to put on a concert in Germany, they are from England and going to Germany to take part in this concert. →From German promoters’ point of view, the main obligation of the contract will be arranging the venue, staging the concert, checking everything is safe, advertising etc. →The only connection for Oasis with Germany is to perform there. Conclusion → Under EU law, the presumption in Article 4 is the supplier’s country of habitual residence, Oasis is supplying the performance, and they are from UK, thus under the presumption, English law will apply. →However, the courts decided the factors are overwhelmingly connected with Germany, the only connection with England is Oasis came from there and Oasis get paid in England. Thus, Germany law applied, applying the EU rules. →Some rules to protect weaker parties –consumer, insured, employee → Art 6 Consumer – law of country where consumer has his habitual residence provided supplier “pursues commercial or professional activities “ there or “by any means ,directs such activities to” the consumer’s country Leading case of the proper law of the contract →Only choice of law in contract case that goes to CFA, many people still have doubts about the outcome. First Laser v Fujian Enterprises (Holdings) Ltd (2012) Facts → The defendant is a Hong Kong company controlled by Fujian Government. There is a joint venture, and they are having problems with the joint venture partner, they were involved in IP disputes in Mainland. → They are fed up with Mainland law and wanted to continue the production of these crystals outside of Mainland, trying to escape Mainland law. LAWS4000 51 → They decided instead to create this joint venture in Macau, with the plaintiff from Macau. The deal is the plaintiff will provide the finance for joint venture and the defendant was providing that they are going to be responsible for the manufacture and production of these crystals. The deal is that the plaintiff for his 20 million is going to get 51% of both Mainland companies. → For many years, the agreement was well for many years and they are running a very successful business. But the plaintiff never actually received his shares in the second mainland company and despite that, he didn’t mind but one day he discovered the defendant has sold the company to another party for a huge amount of money. → Thus, his 51% share of the company has been sold and wanted to sue the defendant breach of contract as he didn’t receive the shares under the agreement. For the plaintiff’s point of view, Hong Kong is a better law for him to apply. (P claimed entitled to a share of the proceeds as it was the beneficial owner of 51% shares. Problem Mainland law unclear on this. HK law better for P e.g. recognized the concept of constructive trust.) Conclusion First Instance Judge →Used some rules of the Rome Convention to assist him in arriving at the conclusion that the contract had its closest and most real connection with Hong Kong. “While those presumptions are not available under the common law, inferences as to connection may nevertheless be drawn from those factors.” →He decided HK law apply as you got a problem here that all the common law on proper law of contract has been dried up with England becoming part of EU. By analogy, the courts will apply in Hong Kong European law, it is a contract concerning transfer of shares and under EU law, shares are not goods or services but under the characteristic performance here is a supply of the shares and thus the place of the habitual residence of the person who is supplying the shares for money. The supplier of the shares is a registered company in Hong Kong, thus by applying analogy of EU rules, he concluded HK apply. Court of Appeal/Court of Final Appeal →The decision is rejected by CA and CFA, choice of law had to be decided according to common law principles, CA/CFA criticised CFI decision as Hong Kong only have the classic common law principles of choice of law, they emphasized on the place of performance of the non-money side of the agreement which is where the shares have to be transferred in shares, analogous to goods, strong case law of goods, applying the same to shares, apply the law of the country where the goods are going to be delivered to. →CA approved statement in Benjamin Sale of Goods. “Law of the country where all or a significant proportion of the obligations imposed by the contract were to be performed –strong claim to be the proper law”. • “I agree with Court of Appeal that the judge placed insufficient weight on the subject matter of the agreement and its place of performance, and was influenced by the presumption in the Rome Convention (now superseded by the Rome I Regulation) that a contract is most closely connected with the country where the party who is to effect the performance which is characteristic of the contract has, at the time of conclusion of the contract, his habitual residence, or, in the case of a body corporate or unincorporate, its central administration.” par 55 LAWS4000 52 • “The Rome Convention rule does not reflect the common law, because it emphasises the place where the party is based, rather than the place where performance is to be effected.” par 55 • Apart from saying EU law doesn’t apply, criticising the judge who try to apply EU law, on the basis that the EU law focus on the person who supply, but common law looks at the place of where it is carried out. Remarks →“ The place of performance ..was the transfer of shares in a Mainland company: the shares were ‘state assets’ belonging to the window company of a Mainland provincial government ; the transfer of which would require approval of the Mainland authority… and the parties expressly agreed to engage Mainland Lawyers to handle the transfer. They all pointed towards Mainland law to be the proper law of the contract.” → Highlighted place of performance is an important common law factor in deciding what law applies and his judgment in choice of law is extremely short and he just acquits it with goods, and wonder what country do these shares have to be transferred in and because the defendant is a state- owned company, it had to have approval for the transfer from the Mainland authorities, the only way the transaction can take effect will be by engaging Mainland lawyers, going to the mainland and arranging the transfer of the shares. On the facts of this case, it is clear defendant could only make transfer in Mainland thus Mainland law applies. → On this case, you find that the actual judgment on place of performance and what law to apply is very simplistic in the judgment. Look at the shares and look at where is the place of performance, where to be transferred. Thus, Mainland law applied. → The whole reason the defendant setting up the JV in Macau is to get away with Mainland law. When deciding these issues, the first thing is to look at the issue in dispute. The approach all the way through CFI, CA and CFA was they simply looked at the contractual obligation requiring a transfer of the shares but look at the facts of it. The transfer of the shares is just a small part of the contract, is the consideration clause of the contract. What is puzzling is that why didn’t the court decide about what is the proper law of the joint venture, that is the contract that the courts should have been concerned with and non-performance of one of the clause in the joint venture, if you took that approach, the place of JV will be Macau. It is never made clear that why is it that all the way through the courts just extract one clause from JV and treated that as a separate contract on its own. → Normally it seems that the place of performance is where the transfer of shares is to occur (general situation) on the facts of First Laser, it is sensible that the shares will be transferred to Mainland. → However, it is not sensible where it is said the general rule should be in the case of transfer of share, it should be the country where the transfer is to take effect in, easily happen in a country where there is not much connection with the parties. • e.g. HK company sold some shares in it to B. Haven’t discovered you are going to be in a meeting in London, and agreed to transfer the shares in London next week, but to transfer shares legally, you have to hand over the shares certificate and a buyer’s note that you are selling these particular shares but the actual legal transfer of shares by the owner and their contractual obligation is completed by LAWS4000 55 think parental consent is a formality, and English law doesn’t require a man of 25 to have parental consent and thus the marriage is a valid one under English law. The problem is that they will have a problem that the wife marries again in England and he will be committing adultery but in France, it is okay as they are not married under French law. → Zoom marriages will be perfectly okay in some countries especially after COVID. → Many countries e.g. India, Pakistan thinks Zoom marriage is absolutely permissible and in some USA states as well such as Utah, where you can have a Zoom marriage that is valid. In Hong Kong, you can’t have a zoom marriage, it has to be a face-to-face marriage. In that situation, all we have to do is to go to a country which recognises all certain of marriage and if one of the people is in that country that recognises Zoom marriages, then it complies with the formalities rules of that country, then the marriage is a valid one as far as the Hong Kong is concerned. However, how come that can be a valid marriage e.g. Bride in India while I am in Hong Kong, where is the marriage taking place? As Hong Kong doesn’t allow zoom marriages, the answer would be that would be regarded as a foreign marriage, if that we are getting married in India and if India are okay with zoom marriages it will be valid as far as Hong Kong law’s concerned. → For immigration purposes, if you want your partner in the country, it is easier if they are married to you and if whatever reason physically you can’t get them into the country to marry, you can go to their country, marriage will be the perfect compromise. → If foreign country recognises a “common law marriage” – a marriage with no formalities - this will be recognised in HK. Wong Zhong Lan Xiang v Wong (2003) HKEC 421 Facts →The court were trying to decide whether there is a valid marriage and one of the decisions they have made is that the elderly Chinese couple in question have eventually ended up in New York in the early 1930s, at that time in New York, there is a concept of common law marriage – there is no need for any ceremony at all and it was enough that you live together as if you were man and wife and the wife refer the man as her husband vice versa. Conclusion → Even there is no formal marriage, it is still recognised as common law marriage under New York law. → Again some of the cases involve whether or not there is a good marriage, under Chinese customary law, again there are no precise rules about what formalities are required in relation to that, in the Wong case, there is a chance there is a good Chinese customary marriage in China because they had read marriage paper to prove marriage and the bride is carried to her husband’s village and the bride and bride groom had met prior to marriage and jewellery is given to the bride and wedding feast is held, thus it is recognised as a marriage also under Chinese customary law before they went to New York Nachimson v Nachimson (serial monogamy) (instant divorce permitted) Facts →The party argued the Russian marriage isn’t valid as under Russian law, at that time it could be so easily dissolved that all the parties had to do is to inform the other party they were divorcing them, nothing else is needed to end the marriage, it is argued that marriage that could be ended in such a flimsy way wasn’t a marriage. Conclusion → The court rejected the view as how the marriage end concern is whether there is a valid marriage under Russian law, and there is. Fung Sing Wai v Chow Chiu Wan (2017) 2 HKLRD 551 Facts →They can’t even establish a customary marriage in Mainland as the evidence they put forward is the dinner that the man and lady attended and there is no evidence of anything other than it is an ordinary dinner and the LAWS4000 56 man and lady didn’t even wear wedding clothes, no evidence of announcement of marriage during dinner and it isn’t evidence of a marriage under Mainland customary law. Conclusion → Was there a valid marriage in the Mainland in 1949? Argued at that time marriage could take place in accordance with local custom but no evidence produced that such a customary marriage had occurred – only a dinner that the H and W attended but no wedding clothes or reference to bride and groom or announcement of marriage or toasting of guests. → Gradually in common law, judges start not to like this, as it is losing control of what sort of marriages could be recognized in England and particularly concerned with different practices under Muslim countries where a man can marry up to 4 wives and very young girls can be married even pre-puberty. So, they want to control to some degree what marriages should be upheld. Eventually in the leading case of Brooke v Brooke, these controls were taken back. Essential Validity → Look up at all the fundamentals that make up the marriage such as • this relates to issues of capacity such as minimum age, too closely related (consanguinity), mistake as to identity • parties personal law applies but which law is that where, e.g. HK man marries Malawian lady in Bangkok and go live in New York. → Dicey: Dual Domicile Test: Marriage is invalid if it is invalid under the law of either parties antenuptial domicile. This means you apply the law of both the man and the woman, if the marriage is not valid under the law of e.g. the woman’s domicile, then the marriage is not recognised in Hong Kong even though it is valid under the man’s domicile. • At that time of the development of the law, you have the common law rules on domicile of origin, there are lots of English people going aboard but they obtain their domicile of origin in England, thus the rule that judge favored is this dual domicile rule, in order for this marriage to be recognised, it must be valid of both the wife and husband’s domicile at the time of the marriage under the law of the each domicile, under lex fori, at least one of the party’s domicile should be having a domicile of lex fori, thus will be taking control of what marriage do they recognise. • The main negative of this rule is that it is quite difficult to comply with it and it leaves lots of limping marriages which are not recognised in the lex fori but might be recognised in a foreign jurisdiction. • To present days such as case of CFA, HK man who went to NY to have same sex marriage and tried to argue there is constitutional right for same sex marriage in HK but on the dual domicile point, HK will not recognise same sex marriage, as even if his partner is domiciled in New York where same sex marriage is allowed, this guy is definitely domiciled in HK and HK doesn’t recognise same sex marriages, thus dual domicile rule is the rule that found most favored. • It is also focusing on the communities that the parties were living in or have the closest connection to at the time the marriage take place. → Cheshire’s Test: Intended Matrimonial Home Test • Presumption is that the governing law is that of the husband’s domicile, but this is rebutted if at the time of the marriage the parties intended to establish their home in a different country and they carry out this intention within a reasonable time. While it has been applied at sometimes, hasn’t found the same amount of favor among the judges, it is a bit different as it says they don’t agree with Dicey and think the focus should be on interest and concern of the countries where the parties are closely attached at the time the marriage take place and the focus should be on the interest, morality and social consciousness where they are going to live in. LAWS4000 57 • e.g. if HK lady is going to marry an Arab man and she will be his fourth wife, dual domicile test will fail as monogamy. Under Cheshire’s test, if they are going to live in Saudi Arabia, that is perfectly acceptable and it is quite acceptable under Muslim law to have that situation, it won’t be undermining Hong Kong belief in monogamist marriage. It becomes less attractive when you look at the fact that it is based on finding an intention about where they intended to make their matrimonial home after the wedding took place and often that may not be clear, in that case presumption applies and the domicile of husband applies, and it becomes sexist again. Or sometimes to apply the law of country with the closest connection with the marriage but it is sometimes difficult too. →On the whole cases favour the dual domicile test but note the words of Wall LJ in Westminster City Council v C at par 74 “I fully accept ,as a matter of public policy, that, where it is appropriate to do so ,the courts will seek to uphold the concept of marriage. It also seems from the authorities that in cases where the dual domicile rule would result in non-recognition, and where non-recognition would contradict or conflict with the principle of upholding the concept of marriage, the courts have looked for alternative ways of recognising particular marriages .This has led, as I read the authorities, to the concept that a marriage will be recognised if the parties have capacity under the law of the country of their intended matrimonial home or under the law of the country with which the marriage has its most real and substantial connection” → The one thing the courts should not do is to use these rules in a way that they will be declining to recognize the marriage where the lex fori has no good reason not to recognize. → His view was if the marriage is one that should be recognized and the lex fori should use any of the rules it takes in order to achieve that result. Don’t just use dual domicile rule but use other rules if it creates a more sensible result. → In this case, it is the reverse situation where they face a case of marriage and made it quite clear that there is no way the English court are going to recognize this marriage. Westminster City Council v C Facts → An English domicile man of a mental age of 3 (maximum mental age) went through a marriage at Bangladesh with a mature woman and is recognized under the Bangladesh law. → It is mental age of 3 and it has been showed he hasn’t got the ability to consent. It fails all the tests, and she is domiciled in Bangladesh where the marriage is allowed and he is domiciled in England, which failed the dual domicile test and they intended to set a home in England and failed the intended matrimonial home test. → England is the place with the most closely connected country which fails again; thus marriage is not recognized. Conclusion → **Judge said we can be creative about which test to use but predominantly it is still the dual domicile test. →The marriage failed all kinds of test. →These rules are largely, lex fori can take control on what marriages they will be able to recognize outside the formalities. Exception to dual domicile rule: Sottomayor rule →If marriage is in Hong Kong and one of the couple has Hong Kong domicile then marriage is good if valid under Hong Kong law even if not valid under foreign law of the other party. Sottomayor v De Baros (No 2) → Dicey “The validity of a marriage celebrated in [Hong Kong] between parties one of whom has a [Hong Kong], and the other a foreign domicile is not affected by any incapacity which, though existing under the law of such foreign domicile, does not exist under the law of [Hong Kong]” LAWS4000 60 Conclusion →Under the dual domicile rule, where her domicile is Hong Kong and the man’s domicile is Pakistan, and the marriage is valid under Pakistani law but not in Hong Kong law as it has duress thus it failed the dual domicile test. For cases where different countries give different answers on the question on consent, courts apply dual domicile rule. →The law report just mentioned about section 20 of Matrimonial Cause Ordinance, to reject due to duress. →Law is not totally clear, writers agree unfair to apply dual domicile rule to issues of true consent and the best solution would be to apply the personal law of party who is alleging lack of consent. → In the case of lack of consent, the general consensus is you shouldn’t actually apply dual domicile test that the focus should only be the person who is alleging lack of consent, if under their law there is lack of consent, that should be enough. → The reason is to protect vulnerable woman, if there is vulnerable woman who is forced into marriage without consent, she wants to get out of marriage, that is easy as under her domicile, her marriage is not recognized. → But what concern some people is supposing the vulnerable woman wants to stay in the marriage and wants the marriage recognized, so that she is going to have right on divorce. She wants to stay in the marriage, to obtain her benefits of divorce. → Under dual domicile law, it is strictly possible for the husband to say, this marriage can be set aside even my domicile is valid, but under my wife domicile is not valid. That is unfair that a man with a dominant position would be able to exploit his wife’s domicile for his benefit. →Remember the exception to dual domicile rule to all essential validity categories. (Sottomayor v DeBarros (No 2)) →The exception also applies thus if marriage is valid under Hong Kong law, then it is regarded as lacking consent in the other party’s jurisdiction is irrelevant. Vervaeke v Smith Facts → A lady who is a prostitute from Belgium is working in England and she is having immigration visa problems, the way to make sure to continue to live in England was by marrying someone. → She went to a sham marriage with an English man, marriage purely for immigration purposes. Some years later, she met an old and wealthy man, she then married him in England, then she married the man in the morning and the man died in the afternoon. → Provided she is lawfully married to him and she went to Belgium to get a declaration that under Belgium law, where she is still domiciled, sham marriages are void but in England, like Hong Kong, they regard as valid marriages and the only way to get out of it is by divorce. Conclusion →What is the status of the marriage? Under dual domicile test, it fails as under domicile of Belgium, marriage is void. But valid under the English law as the husband’s domicile is England – but the court applied Barros (No 2) where an English man married in England, under English law it is a valid marriage, under exception of dual domicile rule, the marriage is a valid one thus she is still married to the sham man and she isn’t lawfully married to the old man when he died. →Remember the question of lack of consent of third parties (e.g. parents) is classified as a matter of formalities. Public Policy →Courts seldom seem to interfere on this ground. Cheni v Cheni LAWS4000 61 Facts →Court to decide whether they recognsie the marriage between two Egyptians where they are uncle and niece. Was it against the English public policy to recognise this marriage as the two people are closely related. Conclusion →The courts decided to uphold the marriage. The court said when deciding this issue, in the context of marriage, we must apply common sense that good manners and reasonable tolerance. In the context of Egypt, it is a civilised country with ancient laws, thus it is reluctant to pick the view that it is against the English public policy to recognise a marriage which is valid in Egypt. →The courts are slow to intervene and there is a lack of guidance in the cases as when the court will intervene on this ground. All very vague. • Cheni v Cheni: “The courts of this country will exceptionally refuse to recognise… the law of the domicile [of the parties] on the ground that to give it recognition and effect would be unconscionable in the circumstances” • Mohamed v Knott: ‘marriage… repugnant to any decent-minded English man or woman’. (People many commented where the court recognise a girl of 13 can marry and the court even applied the test if the marriage is repugnant to any decent minded English man or woman. At what age does the girl have to be so young that Hong Kong will regard the marriage as against a public policy to recognise it?) (Difficult where these marriages passes all those matrimonial home test and dual domicile tests. Courts are slow at this as it may affect the principle of comity.) → A foreign restriction on marrying someone of a different colour or religion or a ban on widows remarrying would almost certainly be declared against public policy in HK and the marriage would be recognised in Hong Kong. → But what about a marriage undertaken to evade HK’s immigration rules or a “prostitute marriage” (man pays a sum of money to a woman’s family in order to marry her– known as bridewealth)? • Hong Kong will not intervene as usually people commit immigration fraud by going to sham marriage, they commit a criminal offence and go to prison and that’s thought to be punished enough and if they want to get out of the marriage, they have to divorce. • Prostitute marriage – Hong Kong court will not interfere as well – as different part of the world has a different view towards marriage, e.g. African countries, woman regarded as family property and regard her as an asset to sell off for money, therefore from the point of view of their marriage it is just a transaction of money, will Hong Kong interfere this common culture in the world, no indication that Hong Kong will regard an arranged marriage as against public policy. • And does the public policy restriction apply to formalities? Same Sex Marriages →Cannot have a valid same sex marriage in Hong Kong. • Section 4 Marriage Reform Ordinance: ‘The voluntary union for life of one man with one woman to the exclusion of all others.’ → Hong Kong legislation adheres exactly to the Christian concept of what is a marriage – monogamous different sex marriage – the attempt by two females to marry in Hong Kong. • Balaoro Marietta v Secretarty for Justice (2020) HKCFI 348 Facts → Little church in Hong Kong that believes in same sex marriage and married in that particular church but still not recognized in Hong Kong. LAWS4000 62 Conclusion / →Foreign same sex marriage? – If A and B are domiciled in Sweden which is a country that permits same sex marriage, and come to live in Hong Kong? • Recognition of a foreign same sex marriage in Hong Kong, in the absence of any legislation on the matter, would be decided by ordinary principles of conflict of laws. • It satisfies the formality rules and dual domicile rule. It is also not contrary to public policy in Hong Kong. Same sex marriage and public policy consideration. → It appears there are no public policy considerations that would prevent recognition of a same sex marriage in Hong Kong. Leung Chun Kwong v Secretarty of the Civil Service & Ors (2019) HKCFA 19 Facts / Conclusion →Courts stated that it would not be against public policy to allow same sex couples the same benefits as heterosexual ones as this would in no way weaken the institution of heterosexual marriage in Hong Kong. → “How is it said that allowing Mr Adams medical and dental benefits weakens the institution of marriage in Hong Kong? Similarly, how does permitting the appellant to elect for joint assessment of his income tax liability under the IRO impinge on the institution of marriage in Hong Kong? It cannot logically be argued that any person is encouraged to enter into an opposite-sex marriage in Hong Kong because a same-sex spouse is denied those benefits or to joint assessment to taxation” → The same sex partner should be entitled to the same benefits and wanting to apply joint assessment for tax purposes, there are no public policy reason why we should not recognize the marriage as the court say how would denying these benefits same sex couples encourage people to make more heterosexual marriage in Hong Kong. Thus, no public policy consideration against same sex marriages. → A high degree of liberalism in Hong Kong courts attitudes now. → When it is first challenged in HK courts: CFI rejected that they don’t recognize any same sex marriage as it is against the public policy because this weaken the concept and status of monogamist heterosexual marriages in Hong Kong and it will weaken heterosexual marriages. • There is no particular public policy reason not to recognize them, there is no ‘no consent’, age, duress issue thus there is no obvious reasons why Hong Kong courts should not recognize same sex marriage. • In particular, they don’t think it will weaken the institution of heterosexual marriage in Hong Kong. As Hong Kong actually recognizes valid foreign polygamous marriages, if it recognizes polygamous marriage, and not weakening institution of heterosexual marriage in Hong Kong, it is hard to argue consistently that same sex marriage will weaken it. Same sex marriage and dual domicile test → There is a problem if therefore a Hong Kong domiciled person marries abroad in a country where same sex marriages are legal. The marriage will not be recognised in Hong Kong as it fails the dual domicile test. Under Hong Kong marriage law, same sex couples cannot marry. → In fact, in Canada, where they recognize same sex marriages, they also have the dual domicile test, we are getting lots of people coming in and marrying in Canada, but the marriage isn’t recognized in Canadian law as they aren’t domiciled in Canada. The marriage will be recognized in Canada even if the dual domicile test has not been satisfied. LAWS4000 65 a foreign country in a ceremony where he could have taken more than one wife (Re Bethell). → Changed by HUSSAIN v HUSSAIN. HK domiciled man not already married goes through polygamous ceremony in foreign country to a lady who is single-marriage valid under dual domicile rule. →One difficult point is what happens if a woman domiciled HK marries a man domiciled Pakistan (polygamy permitted there). She marries in Pakistan. Polygamous? • In Radwan v Radwan(No 2) it was decided that in this case the law of the intended matrimonial home should apply – therefore if they intended to live in Pakistan the marriage would be a valid polygamous marriage as it is a valid marriage by the law of the country in which they are going to live. Concubines →Permitted in HK until 7th October 1971(Mainland 5th May 1931) – treated as “secondary wives” – children of a concubine can inherit if “husband” dies intestate. • Ancient Chinese concept: The idea of it is important to have a son in a family, what if the wife can’t bear a child. The solution to this is to allow the man to form a relationship with another woman in the hope they can have a male child and while this other woman will not be given a status of a full wife, more than a mistress less than a wife, still given status to which is in some degree similar to wife. → Issue of whether a woman is a concubine determined in HK by conflict of laws principles using the dual domicile rule. How to decide whether concubine relationship are recognised? Suen Toi Lee v Yau Yee Ping (2002) 1 HKLRD 197 Facts / Conclusion → CFA said strictly speaking this is not international law but looking at a particular Hong Kong problem, but logically the way to solve this problem is to apply the same rules as conflict of law which is applying the dual domicile test. →Therefore, the law in this case, the courts say we will regard the concubine relationship anyone between 31-71, you have a man and a lady both domiciled in Hong Kong, and go through a concubine ceremony, that relationship will be recognised in Hong Kong. Re Estate of Tse Chu (2012) HKEC 770 Facts →Husband and wife domiciled in Hong Kong. →Under the law at that time it is permissible for man to have a concubine. Conclusion →Formal validity – apply law of lex loci celebrationis which is Hong Kong. There is no particular formalities or ceremony required, they only need an evidence of a common intention to form a concubinage. LAWS4000 66 Topic 6: Choice of Court Part 1 → Usually, we will want home town advantage • If you are a plaintiff, you can have your own rules, your own ‘referee’ and obviously better to have litigation in a country you are familiar with. • A lot of litigation recently in Hong Kong has been about collisions at sea among ships and in this region, as the maximum you can recover by compensation varies dramatically from 1 jurisdiction to another one. If the case went to Hong Kong and not South Korea, you will get 52 million USD more by having it to be heard in Hong Kong courts. • Moreover, the party will have familiarity with own court system, judges and language – avoid expense and difficulty of using interpreter . → Remedies may be different in other jurisdictions and costs rule are different – there may be rules that loser pays winners’ costs may not apply. → But often other party is reluctant to give home town advantage and wants a neutral jurisdiction. New Hampshire Insurance Co v Phillips Electronics North America Corp (1998) CLC 1062 “Disputes about jurisdiction are one of the plagues of modern litigation. All too often they involve resources and expenses which seem more appropriate to the substantive trial...This reflects the fact that more often than not...disputes as to jurisdiction are motivated not by the desire for a trial that satisfies the interests of justice, but by some other perceived advantage in bringing to a halt ,or delaying the proceedings that have been commenced in this jurisdiction” per Phillips LJ → When fundamental rules of choice of law was established in English common law. The courts says, these rules will take courts hours which is the best jurisdiction to hear the case, but the reality is it is complicated as it is so fact sensitive. → Thus, you find in many disputes, you have this major trial, the trial is simply about where to hold the main trial on the issues in dispute and over the years, judges have complained about the amount of time has been taken up in court in deciding the choice of law. • e.g. one HL case of AK Investment of whether the case should be heard in England or not, the judge say it is crazy they used four days in HL and 700 pretrial pages to read and relevant documents of 14000 pages, and 170 authorities cited and skeleton arguments of 200 pages. It is a major expensive litigation simply about the case to be heard. → You find choice of jurisdiction is just tactical litigation to get the other party to settle, as if you are the party with deepest pockets and you want to other party to settle and they are more limited in money they got, then the threat of expensive litigation on where the case to be LAWS4000 67 decided will pressurize the other party to settle. → Many big companies in the world, the ones who had the most dominant bargaining power, they don’t insist on having an exclusive jurisdiction clause, they want to keep it vague, as a tactic they may be able to use to settle the case. It is no surprise in our region this is so important as in so many cases a party doesn’t want to litigate in Mainland because if they go there, they will settle. Thus, in Hong Kong Law every month, there are full of cases where the party are fighting should the case go to Hong Kong or Mainland. VTB Capital v Nutritek (2013) UKSC 5 “There is also a real danger that if the hearing is an expensive and time-consuming exercise, it will be used by a richer party to wear down a poorer party, or by a party with a weak case to prevent, or at least discourage, a party with a strong case from enforcing its rights.” per Neuberger LJ Jurisdiction → The problem all jurisdictions have in the world is that the rules on jurisdictions, the sort of cases you can hear in your court, the rules are very extensive and wide ranging, thus it is very easy indeed that you get a case in Hong Kong and you have jurisdiction to decide upon but the connection to Hong Kong is very remote → You have wide jurisdiction rules that are heard in common law courts as wide as impossible, the reason that they are relax on wide interpretation on civil procedural rules on jurisdiction because we have the common law filter of forum non conveniens where the court will decide whether their court is the most appropriate court for them to hear the case. →First thing that needs to be established is whether the Hong Kong court has jurisdiction applying its own civil procedure rules. →N.B. This is not a civil procedure course, but you need to be aware of the main rules in order to properly apply conflict principles on jurisdiction. Jurisdiction as of right – Submission →A party cannot object to Hong Kong court having jurisdiction if by agreement – e.g. choice of court clause in favour of Hong Kong, or by conduct showing party has voluntarily submitted to the Hong Kong court having jurisdiction. • N.B. The normal forum non conveniens rules do not apply. • If one is going to challenge the jurisdiction of the Hong Kong court, the party should make it very clear in all the dealings with the court, as it is so easy to get into a situation where before you know it, you are just fighting the case on its merits. If you want to make sure you haven’t submitted to the Hong Kong court jurisdiction, and all the correspondence with the party and the court, you need to make it clear the main argument is you don’t think Hong Kong has the jurisdiction to hear the case. →Definition of Submission: PJSC Bank v Zhevago (2021) EWHC 2522: ‘the defendant’s conduct was wholly unequivocal conduct demonstrating an intention to have the case tried in this jurisdiction, the Court was entitled to look at the totality of the conduct…’ • So it is a question of fact whether you have actually submitted. Classic one is simply that you act like an ordinary defendant will do in a particular case and go through the normal defences. 杭州天道實業有限公司 v Chau Oi Fung (2014) HKEC 1828 Facts → They initially issues a summon applying to set aside the writ on the grounds they think Hong Kong doesn’t have jurisdiction, then the next day they filed a contradictory document of unfiled defence fighting the case purely on its merits, never referred again to the issue of the jurisdiction. The defence submitted is purely on the merits, the courts say the submission of the LAWS4000 70 acceptance rules. (The courts have said we should not apply strict rules of offer and acceptance.) →Law out of step with modern methods of communication and a more liberal approach to where the contract is made is now adopted. Apple Corp v Apple Computers Facts →They are trying to find out where the contract is made in either California or England, they only have transcript of email and telephone calls passing between two jurisdictions. Clearly a contract have been made but which jurisdiction the acceptance is made and which jurisdiction the acceptance is communicated is virtually impossible to determine. Conclusion → This case made the point of modern technology which gave the example supposing to have contract of two international companies where both companies in Hong Kong and France decided the contract will form when the managing directors of Hong Kong and France will simultaneously sign the contract in the video call link. Thus, it concluded if it is not clear where the contract is made in, the view will be taken pragmatically that it is in both countries and not to go deep in strict offer and acceptance situation. Long Arm Jurisdiction – Contract →Contract governed by Hong Kong law – O11 Rule 1(1)(d)(iii) – Cases going back to Hong Kong trying to establish Hong Kong laws apply such that Hong Kong can take jurisdiction. →O11 Rule 1(1)(e): Breach of contract committed in Hong Kong – Problem of deciding where the breach was committed. • Lots of this case are concerned with non-payment of money. • The contract itself and the default common law rule, you pay the money in the place where the creditor decides – that is the normal rule. Huang Ping v Owen Burswood (2009) Facts →They tried to argue the jurisdiction is Hong Kong, the money haven’t been paid in this case and there is evidence the money is payable in Australia. Conclusion →Hong Kong therefore doesn’t have jurisdiction. Union Bank of India v Glory Universal Group (2021) HKLRD 381 Facts → At first sight, they didn’t look at Hong Kong has jurisdiction as the contract said the payment had to be made and paid into a US bank account, but then there is evidence presented that the money will immediately go from US account to Hong Kong account. So at the end of the day, the money is going to a Hong Kong bank account and therefore the place of payment is Hong Kong. Conclusion / →Non-payment: Court looks at the express or implied place of performance. If this cannot be ascertained, the default rule is that the payment is deemed to occur at the creditor’s place of business. Chow Man v Wang Hong Chun (2022) HKCFI 746 Facts →Debts being owed and tried to sue in Hong Kong and it is clear that the creditor has no place of business in Hong Kong and the money has to be paid in either Macau or Mainland. Conclusion → There is no evidence that the creditor has a place of business in Hong Kong. →O11 Rule 1(1)(h): Claims concerning Hong Kong land. →O11 Rule 1(1)(i): Debts secured over Hong Kong land. Long Arm Jurisdiction – Tort LAWS4000 71 →O11 Rule 1(1)(f): “..claim is founded on a tort and the damage was sustained, or resulted from an act committed within the jurisdiction” • Hong Kong will have jurisdiction if the claim is founded on a tort and it has to be substantial damage within the jurisdiction or resulted from an act committed from the jurisdiction. • Must have evidence ‘damage resulted from a substantial and efficacious acts committed within Hong Kong – whether or not other substantial and efficacious acts have been committed elsewhere.’ Metall and Rohstoff v Donaldson (1990) 1 QB 391, Manek v IIFL Wealth (2021) EWCA 264 → Altrans Fast Cargo v Liu Yugang (2023) HKCFI 1579 Facts / Conclusion →Hong Kong has no jurisdiction as all the tortious acts are occurred in the Mainland. Not a single part of the tort is committed in Hong Kong. Brownley v Four Seasons Facts / Conclusion →They have taken a remarkably controversial wide view of what the express ‘damaged was sustained within Hong Kong means it is even wider in Hong Kong than England. Everyone takes that to mean, in a case of tort, the damage in personal injury case is the actual physical injury sustained because of negligence e.g. road accident. → It has now taken an incredibly wide view on what the damage means. It could cover indirect……… as well as direct. (REFER TO Fong Chak Kwan v Ascentic Ltd (2022) HKCFA.) Fong Chak Kwan v Ascentic Ltd (2022) HKCFA Facts / Conclusion →A wide meaning was given to the words ‘the damage was sustained… within the jurisdiction.’ could cover indirect damage as well as direct. →Hong Kong court therefore had jurisdiction over a plaintiff who was injured in the Mainland (direct loss) but returned to Hong Kong four days after the accident and received medical treatment in Hong Kong. (indirect loss) Remarks →It is hugely controversial as it means you have an injury caused by negligence like this case in Mainland, badly injured in the mainland because of negligence, but then, what does the injured party do, in the case, the injured party which is a Hong Kong people goes to Hong Kong and receive a lot of medical treatment in Hong Kong for the injuries sustained. → CFA said that indirect injury will give a Hong Kong court technical jurisdiction to hear this particular case. This is a controversial decision as people say it is ridiculous where someone injured in country X and look at the best jurisdiction for his tort case and will go to get medical treatment in country U, meaning that the party will get jurisdiction in that country. →Justification for this rule is that they say it is not going to be a problem and won’t create unfairness when you end up e.g. having Hong Kong having jurisdiction in tort cases that has no connection with as we have the filter of forum non conveniens where we think Hong Kong is not appropriate, we can then decide the case will not go ahead here, thus we don’t think this will result in lots of tort cases coming to Hong Kong when they got little connection with Hong Kong except the victim is treated here. Whether Hong Kong will take the case or not will be an argument between the parties about forum non conveniens and whether Hong Kong is the best place jurisdiction to hear the case. LAWS4000 72 →Defamation on internet – Tort committed or damage occurs in place where it is read rather than the place where the material was first posted on internet. • Assuming the plaintiff has a reputation capable of being damaged in the jurisdiction. • Dr Yeung Sau Shing Albert v Google (2014) HKEC 1315: If you have defamation in internet, that can be read by anyone in the world. →P must show “a real and substantial tort” had been committed in Hong Kong. Meaning there is got to be a significant publication of the defamatory material in Hong Kong. • This was not established in XU YING v XU WEIHONG [2020] HKCFI 1955 as no evidence defamatory article had been published in HK. • JAMEL (YOUSEL) v DOW JONES [2005] QB 946: Only five internet subscribers had accessed the article in the UK and three of them is connected with the legal parties thus no one have read the article. • Compare ORIENTAL PRESS GROUP V GOOGLE [2018] 1 HKLRD 1042 CA: Defamatory material in 6 months have 2000 hits, that is okay and the court felt the defamation has actually occurred in Hong Kong and Hong Kong has sufficient connection with it due to the 2000 hits. Thus, there is tort committed Hong Kong if there was a substantial publication there - 2000 hits =substantial publication Forum non conveniens →Under the common law rules, even if the court technically has jurisdiction, there is general discretion to stay proceedings in Hong Kong if the court thinks another forum is more appropriate for the trial of the action. → Equally even if proceedings have started in another country, the HK court, if it has jurisdiction, has the discretion to decide it is the forum conveniens and allow the case to be heard in HK and can even order an anti -suit injunction ordering D to discontinue proceedings in the foreign court. →To stop Hong Kong hearing cases where there is little connection with Hong Kong and somewhere else is far more appropriate forum. E.g. Writ is issued, defendant apply stay for in favor of some other jurisdiction, Hong Kong by and large follow the forum non conveniens principle laid down by Goff LJ. The Test laid down by Goff LJ “the basic principle is that a stay will only be granted on the ground of forum non conveniens where the court is satisfied that there is some other available forum having competent jurisdiction ,which is the more appropriate forum for the trial of the action i.e in which the case may be tried more suitably for the interests of the parties and the ends of justice" Goff LJ in Spiliada How the court decides the forum conveniens →Leading Hong Kong case: The Aghuguna Meranti (1987) 2 HKC 126, where the court breaks it down into three steps. In practice it is little different from the English test. (some judges have taken two and other four steps) →Summary of the general principle of forum non conveniens given in SPH v SA (2014) HKEC 957 The Spiliada test was restated by the Court of Final Appeal in SPH v SA (2014) 17 HKCFAR 364 at [51] as follows: "1. 'The single question to be decided is whether there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of an action i.e. in which the action may be tried more suitably for the interests of all the parties and the ends of justice? 2. In order to answer this question, the applicant for the stay has to establish that first, Hong Kong is not the natural or appropriate forum ('appropriate' in this context means the LAWS4000 75 should go to Mainland but there is no case as there is no dispute as there is no defence of why the money isn’t paid thus the application is dismissed due to defendant haven’t put forward any legal dispute between the parties. Shenzhen CTS International Logistics v Dajiang International Investment (2017) HKEC 858 Facts →Mainland company unable to deliver goods to Hong Kong company and incurs lots of storage charges and sued the Hong Kong company for the storage charges and their defence is that we think Guangzhou maritime court is an appropriate forum for the case but they haven’t put forward any legal defence or reason about why they hvent paid the plaintiff’s the storage charges that they were owed. Conclusion / Remarks →..if the plaintiffs satisfy me that the defendants have no arguable defence then, save in an exceptional case, the right course would be to refuse a stay … because there would no real issues between the parties which should be tried either here or elsewhere” per Clarke J in Adria Services YU v Grey Shipping (This case applied) Stage 1 – Jurisdiction as of Right →Is somewhere else more appropriate than HK? Must be shown Hong Kong is not the natural or appropriate forum (defined as the place with which the action has the most real and substantial connection) and there is another available forum which is clearly or distinctly more appropriate. →If the D does not clearly identify where the other appropriate forum is then his FNC claim will fail as it is impossible for the court to carry out any comparative exercise. →Thus in HWOOHUANG LINDA v FU BEING SAN [2012] HKEC 1668: The claim failed as the defendant pleaded that the USA was the more appropriate forum, impossible to make a comparison with 51 different forums! → Decision followed in Wong Chi Hung v 郭國基 [2013] HKEC 649 where defendant merely alleged the more appropriate forum was the PRC! • The court system in the Mainland is not consistent that you have certain part in country such as Beijing Nanjing Shanghai where the courts there have very reputation but the further away you go from Beijing, the more variable the justice actually is. Wong Chi Hung v 郭國基 [2013] HKEC 649 Facts → The original pleadings just said Mainland is the more appropriate forum, the case came to court as they were asked to amend the Mainland in favor of a particular Mainland Jie Ming court. Conclusion → Courts refused to allow them to amend the pleadings, should have known the basic rule of identifying the Mainland court you want to go to, thus there is no comparative exercise that can be carried out thus forum non conveniens defence is dismissed. Stage 1 Factors → In deciding this the Hong Kong court will take into account numerous factors which often make the outcome unpredictable. Relevant factors include; Factor: Hong Kong Connection of Parties Factor: Location of Witnesses and Documentary Evidence • MAY be important: Extreme example: Supposing you got a dispute in Hong Kong company and French company, all the key witnesses are in France and are French speaking and all the documentation relevant to the case is in French, obviously France is a more appropriate forum to hear the case as if it is heard in Hong Kong, it is far LAWS4000 76 more expensive and time consuming, all witnesses coming here, all documents translating, thus France is a more appropriate forum. • One issue is that during COVID is that many people cannot attend trial in Hong Kong due to COVID restrictions, the issue is whether the cases could go online, courts throughout the world are being encourages to put more hearings online. In fact in Hong Kong currently, there is a bill in LegCo that laid down statutory criteria the court will take into account how much a trial can go ahead online, where you have a situation where the witness are outside Hong Kong or in Mainland, witness can give evidence by link and there is lot of inconsistences of whether Hong Kong judge accept witness can give evidence by video link, reason why judges disagree as some Hong Kong judges have experience hearing online, but some may have bad experience such as danger of coaching, people may be off screen assisting them, it also can be messy as well if you want to refer to a particular paragraph of a document to ask the witness to read it and comment, hard to tell whether someone is telling the truth if that person is not physically before you. There is a strong view where you are cross-examining witness, you need them physically before you to test their veracity or not, emphasised in lot of Hong Kong cases. • HK courts said if we try to argue that all the witnesses are in the Mainland, that will not really be significant as HK is so close to Mainland. Relevant to convenience and expense of litigation. However, the mere fact that the witnesses are all in the Mainland carries little weight “the [HK] Court has consistently held in essence that in general, that the witnesses are in mainland China itself cannot be a good reason in support of an application to stay on forum non conveniens. Even if the COVID-19 measures currently in place would continue to prevent the relevant witnesses from coming to Hong Kong to attend the trial, taking evidence by video-conferencing facilities is not uncommon now and there is no suggestion before me that taking evidence this way would cause any inconvenience.” Tang Qiong v Zhang Tingting [2020] HKCFI 1388 Per Master Lam para. 11 • However, Hong Kong judges prefer key witnesses to be present. Standard Chartered Bank (HK) Ltd v Nie (2021) 1 HKLRD 712 “…experience informs that it is unsatisfactory to have the evidence of key witnesses given via video link, for example it is difficult to ensure that the witness will be looking at the same document on which he is questioned, and it is always difficult to control a witness when he is not in court” per Anthony Chan J. This decision was upheld by CA [2021] HKCA 380 “22. Notwithstanding the COVID-19 pandemic, as far as the situations in Hong Kong are concerned, the taking of viva voce evidence in person (both in civil and criminal trials) remains the usual norm here.” per Lam V-P Anthony Chan J summed up the HK courts attitude to allowing VCF in TSANG WOON MING v LAI KA LIM 2020 HKCFI 891 at para.9 1) The giving of evidence by video conferencing facilities ("VCF") is an exception; (2) The starting point is that proceedings are conducted in court. I would add that this is more important when it comes to a trial; (3) Sound reason is required to justify a departure from the starting point; (4) The solemnity of court proceedings and its atmosphere is highly important in the taking of evidence; (5) The court may be more disposed to exercise its discretion to allow evidence by VCF in respect of technical or purely factual evidence which involves no serious issue on credibility or relatively unimportant evidence; (6) Where the credibility of the witness is seriously contested, it is important for the witness to be examined under the solemn atmosphere of the court; (7) Costs and convenience may be important considerations which the court will have to weigh in the determination of the application; LAWS4000 77 (8) Ultimately, it is a matter of judgment of the court choosing the course best calculated to achieve a just result by taking into account all the material considerations, including whether the witness is capable of attending the proceedings, any prejudice to the other party, the Underlying Objectives , any delay to the proceedings and practical considerations like the availability of the facilities (see Practice Direction 29). Factor: Lis Alibi Pendens (Lawsuit Pending Elsewhere) →What you want to avoid at all costs is the worst case scenario of two identical claims going on, one in Hong Kong one in another jurisdiction. The defendant defending identical claim in different jurisdiction, and it is double of cost and may have conflicting decisions in the end and thus doesn’t want parallel proceedings – under EU rule, the courts that has jurisdiction first in the case, until it is decided, no other EU courts can touch that case – thus it is impossible to have parallel proceedings in Europe, but not in HK. → HK takes a pragmatic rule and takes a general view that the fact there could be parallel proceedings albeit you don’t want it is not fundamentally decisive – if you have a rule with no parallel proceedings, e.g. HK has a rule of no parallel proceedings and if case has started in Mainland and Hong Kong can’t hear the case, all happen will be plaintiff will go to the Mainland first before Hong Kong irrespective of where is the most appropriate forum for the case actually is. Thus Hong Kong courts will not think it is a big deal in the fact that proceedings started already in another jurisdiction – it has to be an extreme case to reject the claim on the grounds of identical proceedings, dislike of parallel proceedings. (A factor but not decisive SA v SPH (2013) HKEC 212) China Construction Bank (Asia) Corp Ltd v Shanghai Pudong Development Bank (2017) HKEC 171 CA Facts →Case started in Hong Kong, the plaintiff and defendant are then ordered by a Mainland company to get involve in Mainland proceedings which involve the same issues as in Hong Kong, when the case came to Hong Kong application, the case should be stayed in favour of the Mainland, by the time the application is made, the Mainland proceedings were already advanced and the plaintiff actually didn’t take part in the Mainland proceedings have been successful in the first instance in Mainland and the case is now being appealed in Mainland. Conclusion →Courts say it is a complete waste of resource to have the case go ahead in Hong Kong when the Mainland proceedings are advanced in the matter thus shouldn’t continue Hong Kong proceedings → Neither party is responsible for the identical proceedings as well – it is not their fault who want the case to go ahead in Hong Kong that the Mainland court compelled them to get involve in the case in Mainland – little bit of weight given. →“The relevance of lis alibi pendens is clearly established, and consistently applied in a number of court decisions, to be one of the relevant factors that a court will take into account when addressing the Stage 1 question of whether an applicant for a stay has demonstrated that another jurisdiction is clearly or distinctly more appropriate than Hong Kong” Fok PJ at para.10 BRIGHT SHIPPING LTD v CHANGHONG GROUP (HK) Ltd [2020] HKCFA 24 → The fact that lis alibi pendens is not normally considered an important Stage 1 factor is illustrated by the recent attempt to reopen the Bright Shipping decision [BRIGHT SHIPPING v CHANGHONG GROUP (HK) LTD [2022] HKCFI 920] on the grounds that the P, who had successfully established HK was forum conveniens, had then participated in the Shanghai proceedings. This was not regarded as a sufficient reason for reopening the original decision as “… lis alibi pendens is only a relevant factor at the Stage 1 analysis and that the possibility of inconsistent findings by the SMC does not of itself render Shanghai the appropriate forum” [para. 49] LAWS4000 80 Stage 1 Continued → The application of stage 1 is very factual. For example whether in a tort claim the place where the tort was committed is an important factor will depend on whether both parties where from that jurisdiction, whether liability is denied and most of the witnesses are in that country, on other hand it will have little relevance if neither party is from that place and the only issue is quantum which could easily be decided by a HK judge even if the law of the country where the tort was committed applied see Ma’s judgment in THE PENG YAN [2009] 1 HKLLRD 144 CA paras 25-28 approved of in the AL KHATTITA [2018] EWHC 389 • It is just about looking at each side and see where the most appropriate forum is. • Burden of proof is presumed in Hong Kong that is the most appropriate forum in jurisdiction as of right or long arm jurisdiction where you have to prove Hong Kong is far more appropriate than the other jurisdiction. AL Khattita (2018) EWHC 389 Facts →Plaintiff has a ship and is from Qatar and the plaintiff’s ship collided with the defendant Indian ship in the UAE waters. →Usually, where you have the tort, it is the most appropriate forum for the dispute. The tort in this case, which is the defendant’s negligence is a Indian party and it occurred in UAE waters while plaintiff is from Qatar. Qatar and UAE are enemies and Qatar party thinks they won’t get justice in UAE courts thus ask the courts to go ahead in England. →How is England the most appropriate forum? Conclusion →Courts say it is significant that both parties are represented by English shipping lawyers and there is no difficult issues for UAE law to apply here as liability has been agreed, it is easy for English judge to do as it isn’t diffifcult UAE law. → The key factor is that the witness in the cases were all English speakers, that would have meant if case go to UAE, where they don’t allow oral evidence, it is only by documents, if the case went to UAE, then all the witness statements of the witnesses with English speaking, will have to be translated to Arabic and there is a big danger that lot of the meaning of those words will be lost in translation thus they felt that the English courts is an appropriate forum. BRIGHT SHIPPING v CHANGHONG GROUP (HK) LTD [2022] HKCFI 920 (see above) Facts →Collision at sea, actual negligent collision takes place in international waters. (middle of China, Japan and South Korea) →The plaintiff’s ship sunk and all people died. Hong Kong FC? **More compensation if heard in Hong Kong. →However, the plaintiff’s ship has no connection to Hong Kong and defendant’s ship has a Hong Kong connection and is registered in Hong Kong.**(CRUCIAL factor) →Thus, writ can be served on the defendant and have jurisdiction as of right and immediately it is up to the defendant to try to establish Shanghai Maritime Court is a far more appropriate forum than Hong Kong, where there are investigations and report compelled by the Mainland authorities in English and Chinese. →Plaintiff in the same day brought proceedings in Hong Kong while defendant brought proceedings in Mainland. There is parallel litigation in Shanghai as well as the insurers are bringing the claim arising out of collision against both plaintiff and defendant in Shanghai and the plaintiff have jurisdiction as of right. LAWS4000 81 Conclusion →At stage 1, the defendant doesn’t have any strong argument to conclude Mainland is far more appropriate as they are not overwhelmingly showing Shanghai has more experience and no factors are strong. The courts highlighted there is no natural forum for this dispute where it occurs in international waters. →The argument of parallel proceedings in Mainland is also weak by the time of the case came to CFA as Hong Kong proceedings has already become very advanced where Mainland haven’t started litigation. →Courts say it is also okay for the witness who is in Mainland to give video link. It is a neutral situation where neither party have strong connection with Hong Kong or Mainland, the burden of proof on defendant that Shanghai court is a far more appropriate forum and there isn’t any strong reasons to convince Hong Kong courts of this. →Judges are reluctant to give up jurisdiction in favor of a foreign court and concluded to go ahead in Hong Kong. → The question of in which jurisdiction the court order can be enforced is a very significant factor in deciding the appropriate jurisdiction (some judges treat this as a stage 2 factor). • In MOLOOBHOY v KANANI [2012]EHWC 1670, there is a significant factor in favour of England being more appropriate than Dubai was that D had substantial assets in England but none in Dubai so the English judgment could be easily enforced England but not in Dubai. • See also RICH VILLAGE v GRAND PRIDE HOLDINGS [2012] HKEC 1208 (judgment upheld on appeal [2013]HKEC 95 ) where the fact a Mainland judgment could not be enforced in HK was considered a “compelling factor” in favour of HK being the appropriate jurisdiction. “Bluntly put it would be absurd for the parties to litigate in a place where a primary relief…would be useless” par48. • SHENZHEN CTS INTERNATIONIAL LOGISTICS v DAJIANG INTERNATIONAL INVESTMENT [2017] HKEC 858 at par.37 Kappa Sea (2017) HKEC 1891 Facts →There is jurisdiction as of right because the writ is served on the defendant legal adviser in Hong Kong. →The case involves cargo of oil going from Indonesia to Myanmar and plaintiffs are a seller from Singapore and a buyer from Myanmar. The defendant is the owner of ship transferring oil from Singapore. There is no Hong Kong connection. →Oil is contaminated with other cargo on board of the ship and it arrives in Myanmar and discover it is not up to required quality, it is inspected by Myanmar officials and then sold in a very low price in Myanmar. Conclusion →How can Hong Kong be the natural forum for this dispute? Only connection is that they are represented by Hong Kong solicitors and one of the expert witness is English speaking and the court say you can’t get your way to say Hong Kong is appropriate forum just by engaging an expert that doesn’t speak Burmese language. →Witness in this case are all from Myanmar and none of them spoke English and the evidence is about the condition of oil and why is it sold in such a low price and all involved witness giving evidence in Myanmar. Thus there is no way that Hong Kong is a natural forum for the dispute even though Hong Kong has jurisdiction as of right. Botanic Ltd v China National Oil Corp (2008) HKCU 1312 Facts → The plaintiff has organised a big purchase of oil from Venezuela on behalf of China National Oil and haven’t been paid for services so he is suing this Chinese state company in Hong Kong. LAWS4000 82 Conclusion → HK is a more appropriate forum than Beijing - key witnesses of P would not travel to Beijing, doubts that Beijing judges’ English language skills would be adequate to cope with a case where all the documents were in English and the issues of PRC law involved in the case were uncomplicated. → One of the key reasons why the court decided Hong Kong is a more appropriate forum is because the key witnesses in the case from Venezuela have indicated in affidavit that they are too frightened to give evidence in Mainland as they felt they could be subject to physical abuse if they give evidence in mainland against the Chinese state owned company. The judge in the case is diplomatic and said it is unfounded but understandable. You can also see that all the relevant documentations in English and the judge is condescending and patronizing saying that they didn’t think Mainland judges’ English ability will be able to cope the documents in the case. →A choice of law clause (not choice of jurisdiction clause) may be significant but not always. • In deciding what the law is, a choice of jurisdiction clause is very important, exclusive jurisdiction e.g. the Mainland that is a very powerful factor in favor of Mainland law apply, but it doesn’t work the way around just because you got a choice of law clause in favor of the mainland, that doesn’t mean the court are automatically assume that the Mainland is the proper jurisdiction for the case to be heard in. • “ a choice of law clause is not to be elevated to the status as a choice of forum clause” per To J in YANTAI WANHUA POLURETHANES V PUR PRODUCTS [2012] HKEC 1736 Yantai Wanhua Polurethanes v Pur Products (2012) HKEC 1736 Facts →The choice of law clause contrary to the normal practice was significant in deciding the most appropriate jurisdiction for the case, but specially, it is about a dispute involving a Mainland plaintiff and the defendant has a contract to distribute the plaintiff’s products in Mainland and Northern Europe and there is a choice of law clause in favor of Hong Kong, the defendant is a commercial agent and the application is made to stay proceedings in favor of England. Conclusion → The court decided that Hong Kong is the appropriate forum, not England, the reason for that was if the case have gone to England, England would have applied mandatory European rules regarding commercial agents that all EU countries have adopted and will give the commercial agent a lot of rights over rights under contract. →Courts say if the parties have got a choice of law clause in agreement, it must be their intention that the rights of the commercial agent will be governed by the terms of the contract between the agent and the principle. Whatever rights the agent have will be governed by the agent, that must be their intention. →Thus, it will be contrary to their intention if the case will go to England and apply their mandatory European law. Remarks →Example of choice of law clause is important in deciding jurisdiction but by itself it doesn’t carry much weight. →Court decided Hong Kong is forum conveniens on the basis that if the case was stayed in favor of England, they won’t apply Hong Kong law but mandatory European rules with the result defendant would be able to get out of the agreement he had made. ***→If it is decided that Hong Kong is the appropriate forum, the defendant application is lost. LAWS4000 85 mandatory law which will result in the plaintiff definitely losing in the foreign forum and it is a strong stage 2 reason in favor of the case go ahead in Hong Kong, if it goes to the foreign forum, you will almost certainly lose the case. Factor: Fair Trial →This issue is very difficult for judges, due to comity and it is a huge call for a judge to conclude Hong Kong is to hear the case because plaintiff will not get a fair trial in the relevant foreign jurisdiction. ON the other hand, judges recognise this could be a possibility. →On the issue of the burden of proving the lack of a fair trial. Cherney v Deripasky (2008) EWCA CIV 849 Facts →The party involved in many litigation in many countries and he is majority shareholder of the Russian company and he has got the reputation of very close to Putin and allegedly helped to cause chaos in US presidential election and he is banned in many countries in the world. Thus, it has been said he is a character of wealth and important to Russia thus making him influential and making him to influence the outcome in any litigation in Russia. →Cherney is a rival of Putin and he said he won’t get a fair trial in Russia and his life will even be endangered. Conclusion →The courts accepted that. MB&Services v United Company Rusal (2020) Facts →The courts decided they wouldn’t get a fair trial as the Rusal company is a Deripasky’s company and the evidence given that he had approached the plaintiff’s lawyer and offer a bribe if the plaintiff drop the client from the case. →There is evidence of this man’s reputation and the lawyer is frightened to give any affidavit explaining the details of this as he fear safety of his family in Russia. Conclusion / Pacific International Sports Clubs v Soccer Marketing International (2009) EWHC 1839 (Ch) Facts →The case is to be heard in Ukraine or England. → Plaintiff who is the enemy of Ukrainian government will not get a fair trial and there is very impressive range of evidence and they said that Transparency International, their conclusion in corrupt countries in the world, and showed Ukraine is a corrupt country and relied policy paper from the US and referred that widespread corruption in Ukrainian judicial system and relied on the report of US about international development and there is public opinion survey about Ukrainian about the most corrupted system and judicial system is very high. Conclusion → Courts say it is not strong enough as you have to prove that you personally will not get a fair trial in that country – you need really strong evidence before the court will accept there has been a lack of fair trial. →General anecdotal evidence that a country has a corrupt judiciary is not sufficient. You must be showing convincing evidence that plaintiff would not get a fair trial in this particular case. →In the case of Hong Kong, what is more likely to happen is that the courts will intervene is usually the case of a defendant who has strong connection with a particular government and the judges in that country may be influenced by the government to come to a decision that is in favor of that party. China International Fund v West China Cement (2020) HKCFI 2976 LAWS4000 86 Facts → This major project to produce cement in Mozambique and it is big importance to country where it will give the country lots of wealth and it is election year as well. →It is essential as the government is concerned that the cement production plan gets off the ground that year and the government has much control over the plan. The plaintiff has a major shareholding in that plan and in one case of first instance in Mozambique, they reduced the interest from 80% to 1%. Conclusion → The point is the courts decided if he went to Mozambique to try and argue the decision to dilute his interest in the company that controlled this plan is not valid and there is no chance he is going to win as the defendant in this project, they are the investment arm of the ruling party of Mozambique and the ruling party paired the judges salary. →Clearing on those facts there won’t be fair trial in Mozambique when the defendant is strongly connected to the Mozambique government and they will have a big interest in the outcome in favor of defendant. →It was therefore in the defendant's interest to have as large a share in the project as possible. → The fact that no fair trial would be possible was evidenced by the fact that judges were not independent of the investment arm Frelimo, they had to be party members and were dependent on FRELIMO for their salaries and the decision in earlier proceedings in Mozambique where the court held a resolution diluting the plaintiff's interest from 80% to 1% was valid was difficult to understand'. → In England and Hong Kong courts say, if you want to be successful in raising fair trial argument, there is got to be cogent evidence, very strong evidence of lack of a fair trial in the foreign jurisdiction and it isn’t enough where you produce anecdotal evidence, you must show cogent evidence such as Pacific International Sports Clubs v Soccer Marketing International (see above) →“Comity requires that the court be extremely cautious before deciding that there is a risk that justice will not be done in the foreign country by the foreign court, and that is why cogent evidence is required“ per Lord Collins in AK INVESTMENT v KYRGYZ MOBIL TEL LTD [2011] UKPC 7. → For a useful commentary on this case see Forum Non Satis: Spilaida And An Inconvenient Truth: Briggs [2011]LMCLQ 329. • Briggs say what you are doing in court is saying country X where you will not get fair trial when country X will not be in court to represent itself and defend itself on whether a fair trial will be granted there, Briggs view is that the most direct thing to do is to let the case go to foreign court, and if it is going to enforce the judgments in Hong Kong by then, you know the outcome of the trial and by then you will be able to have a clear evidence of whether or not a fair trial has gone ahead or not and in enforcement stage, you have defence that the judgment is procured by fraud. Sometimes you can establish lack of fair trial simply of because of previous litigation in that country: • AK Investment – it is able to convince the courts of Privy Council that they won’t get a fair trial based on last time the litigation in their country where they aren’t given notice the trial is about to start until the actual morning of the trial and when they ask for adjournment, no adjournment is coming and expert witness come and produce without warning and the judges without any convincing reasons refuse to honor the arbitration clause in favor of the case going to another jurisdiction thus all the bad experience in previous trial indicating that they won’t get a fair trial in the future. Fair Trial in Mainland LAWS4000 87 →In Mainland, there is evidence that when there is a case which features a local business, often the government put pressure on the judges to decide in favor of that local business – that widespread concern of legal system in Mainland – what about Hong Kong judges attitude to this – they have a dividing line between making it quite clear they don’t think a lot of the Mainland system but also not over critical of it – trying to strike a balance between the two. New Link Consultants v Air China (2004) HKCU 581 Facts →There is no evidence that there wont be fair trial in Beijing courts. →The problem there is one of the parties is state-owned company. →It is argued they won’t get fair trial if you were a foreign litigating against a state-owned company in Mainland, evidence of expert witnesses disagreed about whether fair trial is possible. Conclusion → At the end of the day, the judges concluded that there isn’t adequate evidence that you wouldn’t get fair trial in Mainland. They need cogent evidence of the particular fact. →The judge accepted the evidence of an expert and the evidence is there is local protectionism exist in some place of China and cant generalise all courts in China suffering the same problem. → The case is going to Beijing courts, and the courts say judges in Beijing are well trained and highly qualified, the legal environment in Beijing is superior to the rest of china and there are numerous examples where the courts have held against china parties in favor of foreign parties. → Things are bad in some part in China but not in others. Courts of Shanghai, Nanjing, Beijing, courts are of high quality. → If you want to argue that you won’t get a fair trial in mainland, you need to show clear evidence to the court to show you won’t get a fair trial, which is very difficult to establish – to date, no one has ever successfully argued that you will not get a fair trial in the Mainland. Gain Park Holdings v Eversino Investments (2014) HKEC 1982 “It is nowadays unlikely that concerns as to the quality of justice to be had in mainland courts per se will persuade a Hong Kong court not to grant a stay in favour of the PRC. It is open to plaintiffs in Hong Kong to make allegations of a denial of justice, but these must be asserted candidly and supported by cogent and positive evidence, which is lacking in the present case.” Per DJ Chan Factor: Enforcement Issues →Sometimes, it comes up in Stage 1, sometimes in Stage 2. If you have a situation where you are not able to enforce a foreign judgment in Hong Kong, where the party has no assets in the foreign jurisdiction, that is good reason why it should go ahead in Hong Kong. Luso International Banking Ltd v Summi (Group) Holdings Ltd (2021) HKCFI 906 Facts →Case in Macau, they were claiming from the defendant of 20 million but the evidence was that in Macau, the Macanese court will only be able to issue a valid judgment of about 364thousand of that 20 million. → There could be no enforcement order, no judgment in Macau for 20 million that could be enforced in Hong Kong. The defendant has no assets in Macau and were in Hong Kong and gone to Macau and not in a position under Macanese law to make an enforceable judgment that could be enforced for 20 million in Hong Kong. Conclusion →The inability to fully enforce the judgment in the foreign court , Macau, and the fact that it was not possible to obtain in Macau a judgment for the full sum owing that could be enforced in Hong Kong is a strong stage 2 reason in favor of not staying the Hong Kong proceedings. LAWS4000 90 Conclusion → England had specialist IP courts and Qatar had not, did not mean that substantial justice could not be obtained in Qatar. →However, Hong Kong judges seem more willing to depart from this general rule with regard to the Mainland. Shenzhen Futaihong Precision Industry Co Ltd v BYD Co Ltd (2008) HKEC 1093 LS v AD (2012) HKEC 1395 → HK’s vastly superior discovery procedure along with other advantages concerning remedies was regarded as decisive in deciding at Stage 2 level that P would be deprived of significant juridical advantages. → In HK, one of the reasons why the case should go in Hong Kong as the HK’s discovery of document system is so superior than in Mainland. As in Mainland, there is a problem that you only have to produce document that were in your favor and you don’t have to reveal documents that are against your case (complete opposite in HK system. ZJW v SY (2016) HKEC 2219 Facts → Lady petitioning for a divorce in HK and her husband deliberately has got a complex list of companies that made it very difficult to know what the real value of his assets were. → The evidence was she need to know her husband’s asset’s value, under Hong Kong discovery system, she would able to find out quite accurately the value if this goes to mainland, that would not be the case. Conclusion →Divorce petitioner won at stage 2 because of inadequate PRC discovery procedure, if the case went to Shenzhen, the husband could easily withhold information concerning his assets and income. →When it comes to the Mainland, HK courts are quick to use HK superior legal system as a reason why it should been go ahead. Shenzhen Futaihong Precision Industry Co Ltd v BYD Co Ltd (2008) HKEC 1093 Facts → Allegation was that the defendant had been responsible for stealing the plaintiff’s trade secrets and obviously in this case, a lot of it hinged on be able to get hold of documents the defendant have in possession. Conclusion → Courts said these could be obtained easily under the HK discovery system but not Mainland system and said HK is superior too when the damages in Mainland, most can get is half million RMB. → In HK, the plaintiff can claim 5 million RMB. Also claiming mandatory injunction, that remedy isn’t available in Mainland as well and remedies under CT and tracing is also not available in Mainland, thus a whole list of advantages if the case went ahead in Hong Kong to the plaintiff as the legal system in HK is much more superior. →In three Court of Appeal cases it has been held that the fact that the P will recover greater compensation in Hong Kong than in the foreign forum is a Stage 2 reason in favour of Hong Kong → Countries have been slow to update the total damages you can claim in these maritime claims such as collision and didn’t update in line with inflation. Mainland didn’t update since 1976. → In these cases, it is clear that if you are in situation where you can get substantially more compensation in Hong Kong compared to the foreign jurisdiction, that is a good stage 2 reason in favor of Hong Kong. THE ADHIGUNA MERANTI [1987] HKLR 904 Facts / Conclusion →If the claim went ahead in Hong Kong, plaintiff can get 1.27 million USD damages, where in Indonesia, they never updated the limit since 1848, the maximum you can get is only 2541 dollars. Bright Shipping v Changhong Group (2019) HKCA 106 LAWS4000 91 Facts / Conclusion →Mainland hasn’t increased their limits since 1976 and Hong Kong’s last update is 2012, if this case go to Hong Kong, you will recover 3.6 times the amount of compensation compared to the Mainland. Pusan Newport v Milano Bridge (2022) HKCA 157 Facts / Conclusion →If the case went ahead in Korea, you will get maximum of 24 million and in Hong Kong, 82 million. So there is 50 million difference where Korea hasn’t increase the limit for 45 years. Stage 2 →Stage 2 is biased in favor of plaintiff and if he loses at stage 1, he has a second bite of the cherry. →Fact that if the case go to foreign court and plaintiff will be certain to lose can be taken in account as well. Waxman v Li Fei Yu Solut (HK) (2013) HKEC 1125 Facts / Conclusion →They are certain to lose as they are claiming beneficial interest of shares and it is unknown in Mainland. Stage 3 →The complication in Hong Kong is that we have stage 3 where if you lose at stage 1, you go to foreign court and if you win in stage 2, the Hong Kong court has this balancing exercise to decide which way to go. (Stage 3) →If Stage 2 is yes, then court must weigh up the advantages of stage 1 against the disadvantages of stage 2. → Can be a very difficult balancing the two – for the court to rule that Stage 1 trumps Stage 2 must be convinced that despite loss of Stage 2 personal/ juridical advantages e.g. greater damages in Hong Kong, ‘substantial justice’ can done in the more appropriate Stage 1 forum. Pusan Newport v Milano Bridge (2022) HKCA 157 (see above) Facts → Everything in this case connected to Korea, collision occurred in Busan and all parties are Korean, the only connection with Hong Kong is that they are able to serve the writ in HK when the D’s sister ship is in hk. → Stage 1, absolutely clear cut that Korea is far more appropriate forum as the case has got no real business with Hong Kong at all and it is all about the defendant’s ship demolishing some of the plaintiff’s crane in Busan in Korea. → Stage 2, where the reason of the difference between the damages is so huge that CA has to balance those two in stage 3. Conclusion → “Stage 3 calls for an evaluative exercise that involves weighing the fairness to the parties. The process evokes measuring the extent to which the parties deserve the juridical advantages or disadvantages concerned, a question that should take into account the geography of the case. It can, I think, readily be accepted that the stronger the connections with a jurisdiction, the more deserving the parties are of the juridical consequences, favourable or otherwise, flowing from a trial there.” per Chow JA → The stronger the connection with stage 1 in the particular jurisdiction, it is only fair that is the jurisdiction that the case should go to, where in this Pusan case, all connection are with Korea and there is 58 million difference, LAWS4000 92 obviously the plaintiff is forum shopping – it is just because the plaintiff can get more money if it is heard in HK than Korea. → The court decided in favor of Korea being appropriate forum, stage 1 trumped stage 2 and they were able to distinguish the other cases. → Meranti: Case as the amount you can get in Indonesia is too small just 2000 dollars but where in Korea case you can still get 2x million. → Bright Shipping: It is distinguishable where stage 2 is decided in favor of HK on the basis there isn’t a strong connection with Mainland unlike the Pusan case. Criticisms of Forum non Conveniens →“the traditional rules.. are very open-textured…the courts have not developed any mechanism whereby the principle of appropriateness can be given any greater precision..everything depends on the circumstances of each case…the court is required to balance the competing demands of convenience ..and justice. No guidance can be given as to how this balancing exercise is to be performed.”Hill;Jurisdiction in Civil and Commercial Matters:Is there a Third Way (2001) 54CLP 439 • It is why by Hill, he exasperated FNC rules and says one of the problem arises is that the judge are not deciding whether the jurisdiction is an appropriate forum but the more appropriate forum and that of course is a difficult task to undertake. FNC is unsatisfactory that what it is doing is encouraging lengthy litigation about where to hold a trial, gives example of cases where it took 2/3 years to decide where the case is to go and over 20 days of hearing about it and secondly, the rules are not predictable, and it is hard to know what conclusion the court will come to in many of these cases. This is encouraging litigation and also this rule is too proplaintiff (Busan case as an exception) Many cases are too pro-plaintiff and this is a big problem in the common law world, what law to hear the case should be very clear but the way the legal system work is very unpredictable and undesirable to have a big trial over where the trial is going to be. → The reason for these rules is because you have these wide jurisdiction rules that give the courts virtually all jurisdiction in the world the technical jurisdiction over a very wide range of cases. Moreover, under O11 rules, many of them, you can have a case come in Hong Kong, when there is hardly any connection with Hong Kong and the dispute, FNC is the filter to try ensure there is case that has sensible connection with Hong Kong should actually be tried here. Thus, it is fact sensitive and unpredictable outcomes, e.g. the Pusan case where it is a hard decision to make. (P damage deprived of VS facts all connecting to South Korea) → Clause of Jurisdictions: which it is a good way in many cases to avoid the difficulties of FNC and any well drafted commercial contract should have a jurisdiction clause in the agreement. Topic 7: Choice of Court Part 2; Jurisdiction Clauses and Anti-Suit Injunctions Jurisdiction clauses →There are three types of jurisdiction clauses. i. where both parties agree to submit to the exclusive jurisdiction of a particular court; parties agree the claim can only be brought to that particular court named in the clause, no other court – it is still possible that jurisdiction clause of exclusive nature and have more than one court mentioned e.g. HK and French company JV agreement, the clause mention HK/France courts – more than one possible jurisdiction – if you have agreed HK/France, one party elects to go France, you can’t dispute on that). ii. where both parties agree to submit to the non-exclusive jurisdiction of a particular court; the parties agreed to submit to jurisdiction of e.g. Macanese court, if the case goes there, no dispute on that, we will not fight it but crucially the party are free to LAWS4000 95 → “Proceedings cannot be brought outside the chosen jurisdiction under the exclusive jurisdiction clause unless there is some exceptional reason for doing so ,and it would be “most unusual” for a Hong Kong court to stay proceedings brought in Hong Kong pursuant to a Hong Kong exclusive jurisdiction clause” per Lok DJ in HYUNDAI ENGINERRING v UBAF (HONG KONG ) [2012] 5 HKLRD par 38 →Therefore an exclusive jurisdiction clause will normally be upheld unless there is ‘strong cause’. • Strong cause was defined by Master Benny Lo in DELTATRE SPA v HONG KONG SPORTS INDUSRTIAL DEVELOPMENT LTD [2018] HKCFI 1942 [para.46] Facts → It was a dispute about the streaming of football matches in Asia between a Hong Kong company and an Italian company. → The contract provided that in event of any disputes, the courts of Torino, Italy will have jurisdictions. → Italian party want to sue the HK party, they want to sue and ignored the EJC where HK company’s assets are all in HK. The defendant has no defence that they are in a clear breach of agreement, no defence, to try to avoid EJC in favor of Italy. → The plaintiff try to argue EJC are only relevant when you have a dispute between parties and the matter is likely to go to court, therefore if there is no dispute where the defendant doesn’t have case, then EJC doesn’t apply. Conclusion → The argument has been accepted in some jurisdictions, but not in Hong Kong or England/Singapore. → It is made very clear that it is not a convincing agreement to avoid the application of EJC because if you have EJC, it is thereto deal with any contractual issues between the parties, any time you have to go to court, this clause tells you the jurisdiction you go to, thus it is irrelevant whether the defendant has any defence as if they are guilty of breach of contract, this clause will apply, where you enter into contract, it is foreseeable that when the other party to the contract has broken it and has no possible defence. → Thus, in a case like that, the argument of lack of credible defence is irrelevant as EJC is meant to cover every aspect of this dispute. → Moreover, the idea behind EJC is to have legal certainty, if you have a rule that if the defendant has no credible defence that the clause doesn’t apply, you have the spectacle of the court in a non-chosen forum (e.g. EJC of Mainland and case is trying to be brought in HK, you have a spectacle of non-chosen forum of HK looking at the merits of the case to decide whether the defendant has a strong or weak case, to decide whether the EJC should apply or not, inevitably need to have some hearing on the merits of the case) → Thus, the courts view that the fact that the defendant has no credible defence is not a reason for not applying the EJC. RE Guy Kwok Hung Lam (2022) HKCA 1297 “…something unforeseeable at the time of contract, or something so exceptional that goes to the interests of justice.” [para.84] “In this connection, I do not consider the lack of a credible defence per se to be an unforeseeable, overwhelming or exceptional matter such that it would constitute a "strong cause". Parties, commercial ones in particular, must have, or must be taken to have, foreseen situations where one party could have no defence to a straightforward claim.” → The CA have confirmed lack of a credible defence doesn’t constitute strong cause. Shanghai Gopher Asset Management v China Base Group (2022) HKCA 1724 LAWS4000 96 “31. The following remarks and views expressed by G Lam JA, Re Guy Kwok Hung Lam are particularly relevant in the context of the present application: (1) The court is not bound but has a discretion whether to stay an actino brough in breach of an agreement to refer disputes to a foreign court, but that discretion should be exercised by granting a stay unless strong cause for not doing so is shown; (2) The reasons for departing from the general rule stem from factors not contemplated by the parties at the time of the contract and do not include factors of convenience that were foreseeable (save in exceptional circumstances involving the interests of justice); (3) It is a strong policy of the law to require parties to abide by their contracts. An exclusive jurisdiction agreement is an important agreement between the parties as to how and where their differences are to be resolved. Prima facie they should be held to that agreement. An action brought in breach of it will ordinarily be stopped unless there are strong reasons otherwise. Even where a stay is refused for strong cause shown, the breach may found a claim for damages; (4) The point of an exclusive jurisdiction clause is that the court should not embark upon a review of the merits of the dispute in the first place. (5) In agreeing to an exclusive jurisdiction clause, the parties are contemplating the scenario where claims and disputes have arisen. It ought to be foreseeable to them that disputes may arise in different ways, and that while some disputes may be evenly balanced, others may be one-sided. The strong cause that needs to be shown to justify not staying proceedings brought in breach of an exclusive jurisdiction clause does not include such foreseeable factors; (6) Unless one construes the exclusive jurisdiction clause to apply only to more arguable disputes, which is usually not the natural and proper meaning of the agreement, it would be illogical to say that the plaintiff may bring legal proceedings in Hong Kong if the defendant has a weak case, but must go to a foreign court in accordance with the exclusive jurisdiction clause if the defendant’s case is more substantial; (7) For the court to venture into the merits and decide whether there is an arguable defence before giving effect to the exclusive jurisdiction clause is to do precisely what the parties have agreed should be done by the foreign court. → The whole idea of EJC is to minimize legal disputes and minimize fights about jurisdiction and maximise certainty, so courts will apply EJC except there are very exceptional reasons not to do so. →Therefore in Lo Ka Lee Kelly v Spiriant Asia Pacific (2021) [HKDC] 787 Facts → Both Hong Kong parties in the business of making contracts between each other to supply plastic knives and forks to airlines, the EJC Frankfurt, in one of the previous contract, one of the parties is dealing with Lufthansa. Conclusion → HK Court upheld that particular clause as they agreed to it, the fact that Germany is not an appropriate forum, it is not relevant. → There is an exception, e.g. some unforeseeable event happening, COVID, because of COVID, we have difficulty now in getting witness to travel to Germany to give evidence. But courts think it is still not a strong reason to ignore EJC, when litigation comes to court in Frankfurt, COVID will have ended. → Court stayed proceedings in favour of Frankfurt Germany because of an EJC Frankfurt, even though the dispute involved two Hong Kong companies and all the witnesses were in Hong Kong. It was not ‘strong cause’ for ignoring the EJC that an unforeseeable event occurred after the contract was made, COVID - which would make it more difficult for witnesses to travel to Germany to give evidence there. LAWS4000 97 →An EJC in a trust deed in favor of Bahamas was upheld in A v B (2022) HKCFI 1031 despite the fact that the weight to be attached to the EJC in the case of a trust deed was less, as the court were not faced with the argument that it must ensure that a contracting party must be held to their contractual bargain but with protecting the interests of the beneficiaries. Advantages of EJC 1.Normal FNC rules do not apply -- the fact that you are statute barred in the jurisdiction of EJC is not relevant. 2. ASI (anti suit injunction) to stop breach of a HK EJC – able to get ASI to stop breaking EJC in favor of HK, e.g. the plaintiff is going to the Mainland courts in breach of EJC in favor of HK and the defendant has no difficulty to get ASI. 3.Damages for breach of contract – remedy of damages, where anybody claim damages for breach of EJC, but it is in theory a remedy. (e.g. EJC HK, you go to HK, if then the party who wants to uphold the clause and has to go to Mainland and incur legal costs in the Mainland in trying to argue the Mainland court doesn’t have jurisdiction, all the wasted legal costs, they could be covered by way of damages. 4. Tort of interfering with a contract (e.g. the firm has advised the client to ignore the EJC, and it is interfering with a contract between the P and D if the law firm advised to go to another jurisdiction, thus making liable themselves) 5 . Foreign judgment in breach of EJC HK not enforceable in HK, S3 Foreign Judgments (Restrictions on Recognition and Enforcement) Ordinance 6 . EJC HK enables enforcement of that judgment in the Mainland and vice versa Mainland Judgments (Reciprocal Enforcement ) Ordinance will only applies where you have an EJC in favor of Mainland (lots of cases about it is exclusive clause) but the new Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap 645) (coming soon in HK) ‘REJ’ will apply even if the clause is a non-EJC, extending operation of enforceability much more widely and no longer dependent of EJC. →There is an English case where specialist employment law firm and their client is going to enter into a lucrative contract in India and they didn’t advise them to have a EJC in favor of England and when he is dismissed by his employer in India, they thought of going to India courts that is very slow and inefficient, as a proper employment lawyer should foresee this possibility and advise to have EJC in favor of England in contract, he got over a million pounds of compensation from the English law firms. →Only in exceptional cases will a Hong Kong court in the interests of justice ignore an EJC. GHOSSOUB v TEAM Y&R HOLDINGS HONG KONG LTD [2017] HKEC 1532 Facts →Shareholders of HK company feeling being discriminated as they aren’t paid any dividends and the natural claim is to bring company under S724, but the EJC is in favor of England and under English law, the equivalent of S724 only apply to English registered company, if the court upheld EJC, this will have effect of depriving the HK shareholders of the minority protection under CO. Conclusion → HK courts say it is against public policy to allow this to happen and we are not going to uphold this EJC in favor of England. It is a matter of policy where the minority shareholders should have right and shouldn’t be taken away due to EJC. Exclusive Jurisdiction Clauses – Multiple Defendants some Covered by EJC, Some Not Donohue v Armco Inc (2001) UKHL 64 Facts → Fraud case, 4 defendants accused of fraud: D1 and D2 EJC HK but D3 and D4 (no EJC), not subject to HK jurisdiction.