Civil Procedure In Hong Kong

[Tommie]

It is procedure which brings to life the rights of the people. What use is a right under contract, the right to personal liberty, without a means of enforcement? Damages, habeas corpus, yes; but how does one get them?" -

WS Clarke

Preface, Hong Kong Civil Court Procedure

November 1994

The original standard reference to Hong Kong's civil procedure rules providing section by section annotations to the Rules of the High Court, the High Court Ordinance, the Limitation Ordinance, the Court of Final Appeal Ordinance and Rules, the District Court Ordinance and Rules, and a section devoted to family law statutes and subsidiary legislation, all with extensive commentary, discussion and comparative analysis, kept well up to date on a bi-monthly basis.

WS Clarke, BA, LLB (Brit Col), LLM (London), Barrister and Solicitor of the Supreme Court of British Columbia, Solicitor of the Supreme Court of Judicature in Northern Ireland, Solicitor of the High Court of the Hong Kong Special Administrative Region, Honorary Lecturer, Department of Professional Legal Education, University of Hong Kong, Editorial Board member of Hong Kong Cases

Civil procedure in Hong Kong is governed by the Rules of the High Court and the accompanying Practice Directions issued by the Chief Justice. These Rules were substantially revised by the enactment of the Civil Justice Reforms (CJR), which came into effect on 2 April 2009.

Reducing the cost of delay associated with litigation proceedings and proper case management are the declared cornerstones of the CJR. The reforms were introduced to counter a trend of multiple interlocutory applications, excessive discovery and unfocused proceedings that led to delay and unnecessary expense. Parties that do not follow the revised procedures as set out in the CJR can expect adverse cost orders9 or, in severe cases of non-compliance, to have their claims struck out by the court.10 Costs will no longer be necessarily awarded to the successful party and the court can now have regard to whether the costs that were incurred were in proportion to the amounts at stake in the claim.

There are a number of different procedures by which court proceedings can be commenced in Hong Kong. In particular, certain types of actions (such as judicial review) have their own specialised procedures. Nevertheless, most commercial actions are commenced by a writ of summons. A typical set of court proceedings will consist of the following steps.

The plaintiff (claimant) issues in the CFI a writ of summons endorsed with a statement of claim. In a typical claim for breach of contract, it will recite which provisions of the contract have been breached, the key facts supporting it and the remedy sought.

At this point, the plaintiff can apply for summary judgment if it considers that there is no defence to the claim. This application will be decided quickly by the court on affidavit evidence from both parties. Judgment may be given for the whole or part of the claim if the court is satisfied there is no real defence. If otherwise, the matter goes to a full trial, the stages of which are as follows:

It is difficult to generalise the time frame for a piece of civil litigation. This will depend on a variety of factors, including the extent of discovery, the availability of witnesses and the complexity of the issues in dispute. Nevertheless, one can usually expect a judgment at first instance within two years of the commencement of proceedings; a summary judgment application may be determined within as little as three, but usually within six, months of proceedings being initiated.

Among the most common interim applications are those for summary or default judgment. As mentioned above, the plaintiff may apply for summary judgment on the grounds that the defendant has no defence to its claim, or no defence to a claim for liability, but possibly a defence to the amount of damages claimed.11 A plaintiff may enter default judgment against a defendant who has failed either to give notice of intention to defend or to serve a defence within the times prescribed in the rules.12

A recent amendment to the Rules of High Court and Rules of District Court means that a plaintiff that has alleged fraud against a defendant may now bring a summary judgment application against that defendant. Previously under the Rules, a plaintiff to any action begun by writ that included a claim based on an allegation of fraud could not apply for summary judgment (the fraud exception). On 20 August 2021, the government published an amendment rule abolishing the fraud exception in relation to applications for summary judgment in the High Court and District Court on or after 1 December 2021.

There is sometimes a risk that an unscrupulous defendant may remove its assets from the jurisdiction or otherwise dissipate them when it learns that proceedings have been commenced against it. This is a particular concern given the ease with which funds can now be transferred electronically across borders. A Mareva injunction can be obtained at the outset of proceedings to restrain the defendant from disposing of assets that may be held in Hong Kong and, in certain circumstances, outside Hong Kong. The injunction is ancillary to the main proceedings and is made after the court has considered affidavit evidence from the plaintiff. Typically, the injunction order is served on banks that hold funds of the defendant and the banks must comply with the order. There are very strict requirements for full and frank disclosure in the evidence filed, and the plaintiff must give an undertaking to compensate the defendant and other parties affected by the injunction if it is subsequently held that the injunction should not have been granted.

A party to litigation in Hong Kong can apply to court for an order permitting it to enter the premises of another party to inspect and preserve property belonging to that party that may, for instance, be needed as evidence in proceedings. The difficulty with following this procedure is that the other party will be alerted to what may happen if the order is granted and may take advantage of the delay to destroy the property concerned. To address this possibility, in exceptional circumstances, the court may grant an Anton Piller order, without prior notice to the defendant, which directs the defendant to allow the people specified in the order to enter its premises and take away and preserve evidence. Given the draconian nature of the order, which is almost akin to a criminal search warrant, it has been described as a 'nuclear weapon' in the law's armoury.13 Accordingly, the courts are very concerned to ensure that the process is not abused.

As with a Mareva injunction, if an Anton Piller order is later found by the court to have been wrongfully obtained, the party who obtained the order is liable to compensate the other party and other affected third parties for losses suffered as a consequence of the order.

On 2 April 2019, the government signed the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong Special Administrative Region (Arrangement). After signing the Arrangement, Hong Kong has become the first and only jurisdiction outside the Mainland where parties to arbitral proceedings, seated in Hong Kong and administered by a list of arbitral institutions established or set up in Hong Kong, can apply to the courts of the PRC for interim measures. Currently, the list of eligible institutions include the Hong Kong International Arbitration Centre (HKIAC), the China International Economic and Trade Arbitration Commission Hong Kong Arbitration Centre and the International Court of Arbitration of the International Chamber of Commerce (ICC).

Interim measures available in the PRC include property preservation, evidence preservation and conduct preservation. Interim measures available in Hong Kong include injunctions and other interim measures for the purpose of maintaining or restoring the status quo pending determination of the dispute; taking action that would prevent, or refraining from taking action that is likely to cause current or imminent harm or prejudice to the arbitral proceedings; preserving assets; and preserving evidence that may be relevant and material to the resolution of the dispute.

The Arrangement came into force on 1 October 2019. The HKIAC announced that as of the end of 2020, 34 applications for interim relief were filed before the PRC courts in support of HKIAC-administered arbitrations, out of which almost all have sought to preserve assets in the PRC, and the HKIAC is aware of 20 decisions by various PRC courts subsequently granting applications for preservation of assets totalling approximately US$1.47 billion.

On 27 November 2020, the government and SPC signed the Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and HKSAR (Supplemental Arrangement) to improve the 20-year old Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and Hong Kong. The Supplemental Arrangement clarifies that a party seeking recognition and enforcement of a Hong Kong award is entitled to apply to the relevant PRC court for interim relief before or after its application for recognition and enforcement. This should mitigate the applicant's concern that the respondent may dissipate its assets while the award is in the process of being recognised and enforced.

Unlike many other jurisdictions, Hong Kong does not currently have specific provisions for dealing with multiparty litigation. The only alternative is a more restrictively interpreted representative procedure. A slight variation of facts or a possibility of a different defence to a claim brought by one member of the 'class' may be sufficient to deny the entire class the same interest in the proceedings.

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