Hong Kong's Financial Dispute Resolution Scheme will be expanded with effect from January 1 2018 and July 1 2018 by amending the jurisdiction and terms of reference of the Financial Dispute Resolution Centre. Alongside the recent changes to allow third-party funding in arbitration, the changes to the scheme show that alternative dispute resolution is coming of age for financial disputes in Hong Kong where there is an imbalance of power between parties.
The Companies (Winding Up and Miscellaneous Provisions) (Amendment) Ordinance 2016 introduces key changes to the administration of the winding-up process. While the ordinance aims to improve the corporate winding-up regime by increasing creditor protection and enhancing the integrity of the winding-up process, the somewhat limited changes represent a missed opportunity to modernise Hong Kong's antiquated corporate insolvency regime.
After months of consultation and debate, the Companies (Winding Up and Miscellaneous Provisions) (Amendment) Ordinance 2016 has been published, although an enforcement date is yet to be set. The stated aim is to improve and modernise the corporate winding-up regime by increasing protection of creditors and enhancing the integrity of the winding-up process.
The Insurance Authority has launched two new initiatives to promote the use of 'insurtech' in Hong Kong and encourage insurers and technology companies to team up to develop innovative insurance technology in light of recent market trends. The initiatives aim to promote the development of new technologies in Hong Kong's insurance sector and maintain Hong Kong's competitiveness in the Asian market.
The Insurance Authority will begin to collect a levy from policyholders through premium payments to insurers from January 1 2018. Holders of life insurance policies and general insurance policies (eg, travel, motor, property and household) will be required to pay the levy; however, reinsurers, policies underwritten by captive insurers and marine, aviation and goods-in-transit businesses are exempt.
The Insurance Agents Registration Board recently initiated disciplinary proceedings against a former AIA International Limited agent for breaches of the Code of Practice issued by the Hong Kong Federation of Insurers. The resulting disciplinary action included a payment order of HK$806,200 against AIA; however, this decision was reversed by the Court of First Instance following a judicial review.
The Office of the Commissioner of Insurance and the China Insurance Regulatory Commission recently signed an agreement to conduct an equivalence assessment on the insurance solvency regulatory regimes of Hong Kong and mainland China, as well as to implement procedures and transitional arrangements to increase cooperation between the two insurance regulatory bodies.
The Hong Kong Financial Services Development Council recently released a report entitled Turning Crisis into Opportunities: Hong Kong as an Insurance Hub with Development Focuses on Reinsurance, Marine and Captive. Pointing out that Hong Kong is facing stiff competition from regional competitors, the report identifies opportunities to strengthen Hong Kong's position in the reinsurance and insurance industry.
In a recent case, the Court of Appeal took the opportunity to clarify the lower courts' role when reviewing disputes over taxed costs. In doing so, the Court of Appeal appears to have come to a sensible compromise in allowing some costs that had been approved by the taxing master but disallowed by the judge on review.
The Securities and Futures Commission (SFC) in Hong Kong has been very active in using civil proceedings pursuant to Section 213 of the Securities and Futures Ordinance to seek redress for investors. A recent judgment confirms that the SFC can seek restorative orders not only against parties to impugned transactions, but also against individuals who aid or abet or who are involved.
Integrated bank accounts are very common in financial hubs such as Hong Kong. In addition to sub-accounts categorised by different currencies, an integrated account may also have sub-accounts with other features (eg, credit cards, investments and insurance). A recent case shed light on the approach of the courts to such accounts in the context of enforcement proceedings and rival claims by different judgment creditors.
In Bespark Technologies Engineering Ltd v JV Fitness Ltd the High Court recently took the opportunity to remind liquidators of their duty to give full and frank disclosure when making an ex parte (without notice) application to the court. A failure to do so could have serious consequences, including a refusal to approve the appointment of a liquidator or an order for his or her removal. The duty to be full and frank applies to all ex parte applications, so there are general lessons to be learned.
The Court of First Instance recently considered some of the legal principles surrounding the scope of an auditor's duty to detect alleged irregularities in a company's financial statements and, in appropriate circumstances, to report alleged wrongdoing to the relevant regulatory authorities. The judgment is an interesting review of some of the legal issues involved, including the applicability of the defence of illegality in the context of a claim brought by a liquidator on behalf of a company against its former auditor.