Hong Kong updates

Arbitration & ADR

ADR coming of age for financial disputes in Hong Kong
  • Hong Kong
  • 02 November 2017

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.


Employment & Benefits

Contributed by Howse Williams Bowers
Court limits scope of non-solicitation restrictions
  • Hong Kong
  • 21 November 2018

A Hong Kong court recently considered the enforcement of a non-solicitation clause against an employee who was employed as a delivery worker. The court's observations in this case as regards the enforceability of non-solicitation clauses reiterate the well-established position that employers have no right to be protected against competition per se.

Could moonlighting employees be breaching more than just their employment contracts?
  • Hong Kong
  • 03 October 2018

In Hong Kong, there is an increasing emphasis on the importance of reciprocal duties of trust and confidence between employers and employees. 'Moonlighting' employees (even ones who take up ancillary employment with a non-direct competitor) often sit in a legally precarious position, since questions are bound to arise in relation to their fiduciary duties, restrictive covenants and the implied term of trust and confidence.

Preventing employment discrimination versus upholding status of marriage
  • Hong Kong
  • 15 August 2018

The Basic Law states that "the freedom of marriage of Hong Kong residents and their right to raise a family freely shall be protected by law". This protection is understood to be limited to marriage between monogamous heterosexual couples, which has led to debate on the equal treatment of homosexual couples. The principal issue is that treating same-sex relationships differently is discriminatory. The Court of Appeal recently considered this issue from an employment perspective.

First Conduct Rule breaches: not just anti-competitive, but illegal
  • Hong Kong
  • 20 June 2018

The Competition Commission recently issued an advisory bulletin on the potential risks that could arise under the Competition Ordinance (Cap 619) in the employment context. The commission identified a number of practices between employers which are at risk of contravening the First Conduct Rule of the ordinance – specifically, wage-fixing and non-poaching agreements and the exchange of sensitive information.

With great power comes great responsibility
  • Hong Kong
  • 30 May 2018

In a recent case, a senior employee was found to have acted as a de facto director of the plaintiff company as a result of her position and responsibilities within the company. Consequently, the employee was held to have breached the fiduciary duties which she owed to the company by diverting business opportunities away from it and making unauthorised use of its resources.


Insurance

Contributed by Howse Williams Bowers
HKIA launches public consultation to update its guidelines
  • Hong Kong
  • 08 January 2019

The Hong Kong Insurance Authority (HKIA) will take over the regulation of insurance intermediaries from the three self-regulatory organisations in mid-2019. Given that there are several sets of competence standards across these organisations, it is necessary to consolidate and update them in line with the statutory requirements to improve protection for policyholders. As such, the HKIA recently held a public consultation on two guidelines under the Insurance Ordinance (Cap 41).

Hong Kong reinsurers to receive preferential treatment from Chinese regulators
  • Hong Kong
  • 11 September 2018

The Hong Kong Insurance Authority (HKIA) has achieved a consensus with the China Banking and Insurance Regulatory Commission that the latter will provide preferential treatment to Hong Kong reinsurers by reducing the reinsurance credit risk requirement under China's Risk-Oriented Solvency System for mainland insurers that use Hong Kong reinsurers authorised by the HKIA. This new arrangement should improve Hong Kong's credentials as an Asian reinsurance hub.

Hong Kong Insurance Authority launches consultation on draft enterprise risk management guideline
  • Hong Kong
  • 10 July 2018

The Hong Kong Insurance Authority recently released a draft guideline on enterprise risk management as part of Hong Kong's move towards a risk-based capital regime. The draft guideline considers the recent consultation and review of the relevant insurance core principles by the International Association of Insurance Supervisors and aims to nurture a strong risk culture which reflects the values, attitudes and norms of business behaviour.

Lawmakers building HK$1 million safety net for policyholders
  • Hong Kong
  • 22 May 2018

Lawmakers recently met to discuss a new bill to establish a policyholders' protection scheme to protect policyholders' interests in case an insurer becomes insolvent. This safety net will cover individuals, small and medium-sized enterprises and building owners' corporations. All authorised insurers in Hong Kong will have to participate and pay an initial levy to build up the two compensation funds – namely, the life fund (for long-term policies) and the non-life fund (for general policies).

Complaint channels for insurance policyholders
  • Hong Kong
  • 03 April 2018

If a policyholder is dissatisfied with the conduct of an insurer, agent or broker, there are various channels for making a complaint. One such channel is the Insurance Claims Complaints Bureau, which was recently revamped to provide Hong Kong's insurance industry with improved methods of settling personal insurance claims and disputes by providing policyholders with an alternative dispute resolution process.


Litigation

Contributed by RPC
Email scams and related recovery litigation
  • Hong Kong
  • 15 January 2019

In a series of recent judgments, the first-instance courts in Hong Kong have demonstrated an increasing flexibility in assisting victims of internet and email fraud, including granting declaratory relief without trial. The courts' increasing willingness to grant declaratory relief without trial in these circumstances is a significant step in the right direction, as it has simplified the civil action to be taken by those affected by email fraud and similar scams.

Former employees gain head start?
  • Hong Kong
  • 18 December 2018

The High Court recently considered the general legal principles for the grant of injunctive relief to protect an employer's confidential information alleged to have been taken by one or more former employees for the benefit of their new company. The outcome in the case (to date) illustrates the balance that the courts must often strike between recognising the legitimate interests of an employer and a former employee's entitlement to use their own skills and knowledge without obtaining an unfair advantage.

Qualifying shareholders' access to company records
  • Hong Kong
  • 11 December 2018

The recent decision of the High Court in Ninotre Investment Ltd v L & A International Holdings Ltd is a further example of the court's statutory power to grant a qualifying shareholder access to and inspection of company records. Section 740 of the Companies Ordinance (Cap 622) has become an established mechanism for aggrieved shareholders, with legitimate complaints in their capacity as shareholders, to obtain access to and inspection of company records.

Lead regulator wins landmark civil lawsuit
  • Hong Kong
  • 27 November 2018

The Securities and Futures Commission (SFC) has been using Section 213 of the Securities and Futures Ordinance (Cap 571) to good effect to secure (among other things) compensation on behalf of counterparty investors to impugned transactions. As a result of a recent landmark judgment of the Court of Final Appeal, the SFC's remit under Section 213 extends not only to (for example) insider dealing involving locally listed securities and regulated trades, but also to contraventions of Section 300.

Charging order over funds in court
  • Hong Kong
  • 13 November 2018

The High Court recently considered whether in principle a judgment creditor is entitled to a charging order over funds paid into court by a judgment debtor in a different action involving another party. The case is an interesting review of the respective interests of the parties when funds are paid into court pursuant to a court order. It concerns the application of established principles to what appears to be a different situation, but one that may give other litigants pause for thought.


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