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 Court of Final Appeal recently considered the lower-instance decisions in the Yung Kee Holdings saga. The long-running case concerned a dispute between two brothers over a famous family-owned roast goose restaurant. In a unanimous decision, the Court of Final Appeal ordered that the business be wound up, but gave the disputing parties 28 days to discuss a share buy-out.
In its recent decision in the winding-up of Grande Holdings Ltd, the Hong Kong Court of Appeal unanimously held that an amount due under a complex derivatives contract was a liquidated sum entitling the resulting creditor to vote at the first meeting of creditors. The ability to vote at the first creditors' meeting can be important, as it is at this meeting that the liquidator of the company is chosen.
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.
Hong Kong's largest health insurer, AIA, recently issued letters to doctors in private practice advising them that it is clarifying the policy wording for 'medically necessary' procedures. In an attempt to avoid reimbursing what it regards as 'excessive health procedures' at private hospitals, AIA is proposing that only seven significant comorbidity and five acute conditions be recommended for inpatient care.
There has been a number of recent cases in Hong Kong in which successful parties have been awarded their costs on a more generous basis against unsuccessful parties – known as an 'indemnity' basis (in contrast to what is commonly called a 'standard' or 'party and party' basis). A recent example in the Court of Appeal is Qiyang Ltd v Mei Li New Energy Ltd. One might be forgiven for sometimes thinking that orders for indemnity costs are a norm, but they are not.
First Asia Finance International Ltd v Tso Au Yim & Yeung appears to be another example of a misconceived claim against a defendant solicitors' firm. In this case, the court held that the solicitors owed no duty of care to the plaintiff company (which was not a client) with respect to the preparation of a settlement agreement. The plaintiff also failed with a claim that it had informally retained the defendant solicitors with respect to the drafting of the settlement agreement.
The Securities and Futures Commission (SFC) has cast a wide net with its use of civil proceedings pursuant to Section 213 of the Securities and Futures Ordinance. Recently, the Court of Appeal dismissed an appeal arising out of the SFC's use of Section 213 proceedings to obtain declarations that three defendants based in Hong Kong had contravened Section 300 of the ordinance by engaging in a deceptive course of business in transactions involving shares listed on an overseas stock exchange.
In Far Wealth Ltd v Lo Ki Mou the High Court dismissed the proceedings as an abuse of process because the plaintiffs could have protected their position by way of a counterclaim in prior proceedings commenced against them by the defendants. While fact specific, it is clear from the judgment that the court was exercising a wide discretion based on the "underlying objectives" of the court rules.
In Competition Commission v Nutanix Hong Kong Ltd a High Court judge recently considered the scope of the 'direct use prohibition' contained in Section 45(2) of the Competition Ordinance, which protects a person who is required to answer questions as part of an investigation by the Competition Commission pursuant to Section 42. The case decides that the protection does not extend to a third party, even where the third party is the subject of the commission's investigation.