Litigation 2023 Comparisons

Hong Kong is a common law jurisdiction whose courts follow the adversarial model. The judiciary is independent of the executive and legislative branches of the government. Although many hearings are preceded by written submissions, oral argument remains very important.

Hong Kong has a court system that is separate from that in Mainland China.

The Small Claims Tribunal deals with claims worth up to HKD75,000. The District Court (DC) deals with claims between HKD75,000 and HKD3 million, and the Court of First Instance (CFI) of the High Court has unlimited jurisdiction.

The CFI has several specialist lists, each with a judge in charge and specific practice directions. These are:

• the commercial list;
• the construction and arbitration list;
• the administrative and constitutional law list;
• the personal injuries list;
• the admiralty list; and
• the intellectual property list.

Although no formal lists have been established for them, insolvency and company-related matters are normally dealt with by a "Companies Court", presided over by one or more Companies Court judges. Probate actions are likewise conducted in accordance with specialist procedures.

The Family Court is a division of the DC which deals with matrimonial and family proceedings.

There are various specialist courts, such as the Labour Tribunal and the Lands Tribunal.

The Court of Appeal (CA) hears appeals from the DC and CFI, among others.

The highest appellate court is the Court of Final Appeal (CFA), which is staffed by local permanent and non-permanent judges, as well as non-permanent judges from other common law jurisdictions. The chief justice of the CFA is head of the judiciary.

Only writs and other types of originating process are publicly available. Other filings, such as pleadings, court orders and witness statements, are generally not.

Hearings are generally open to the public, but sometimes the court will sit in private, for example where it is necessary for public safety or where a witness might otherwise be hindered.

By statute, some matters are required to be, or are usually, heard in private, such as injunctions, insolvency, arbitration matters, evidence for foreign courts, family and children, and mental disability. Some intellectual property matters are also heard in camera.

No legal representation is allowed in the Small Claims Tribunal and the Labour Tribunal.

Subject to that, barristers and qualified solicitor-advocates may appear in open court in all courts.

Non-solicitor advocates have rights of audience up to DC, but not in the CFI, CA and CFA, with a few exceptions, including magistracy appeals, contested bankruptcy matters, and hearings in chambers.

Foreign lawyers may not advise on Hong Kong law or conduct cases in the courts.

Third-party funding in litigation is generally not permitted in Hong Kong (see exceptions in 2.2 Third-Party Funding: Lawsuits). Doing so may be both a tort and a criminal offence.

There are three main exceptions to the prohibition:

• the third party has a legitimate interest in the outcome;
• cases with "access to justice" considerations, eg, a party is unable to pursue a meritorious claim without financial support from a third party; and
• a miscellaneous category, including insolvency proceedings.

Third-party funding is permitted in arbitration, but the funded party must give written notice of the funding agreement to the arbitration body and other parties, and the third-party funder must comply with a code of practice setting out relevant practices and standards.

Where permissible, third-party funding is available for both plaintiff and defendant.

There is no minimum or maximum funding amount.

A third-party funder may fund any costs related to pursuing or defending a claim, including adverse costs, the premium for costs insurance, security for costs, and other financial liability.

In June 2022, amendments to the Arbitration Ordinance (Chapter 609) (AO) were gazetted to allow the use of outcome related fee structures in arbitration, including court and mediation proceedings under the AO. These include conditional fee arrangements, damages-based agreements, and hybrid damages-based agreements. The legislation will take effect when the necessary subsidiary legislation has been finalised. 

Contingency fee arrangements in contentious proceedings are otherwise still prohibited and may be both a tort and a criminal offence.

There is no time limit for obtaining third-party funding.

There are, generally, no rules as to pre-action conduct although the parties' conduct may be considered by the court when exercising its costs discretion.

An exception is the Pre-Action Protocol for personal injury cases, whereby:

• the plaintiff must send a "letter of claim" to the proposed defendant at least four months prior to proceedings;
• the defendant must provide a constructive reply within one month; and
• the parties must communicate constructively over the next three months and mutually disclose information and documents on liability and quantum.

Non-compliance without good reason may lead to adverse orders and/or sanctions, including wasted costs orders, and the exercise of the court's power to stay proceedings.

The limitation periods for commencing civil claims are mainly prescribed by the Limitation Ordinance (Chapter 347):

• breach of contract: six years from the breach;
• action based on a deed: 12 years from the breach;
• tort (excluding personal injuries): six years from when the damage was suffered;
• personal injury: three years from the accident or the date of knowledge (whichever is later) for negligence claims; two years from the accident for claims under the Employees' Compensation Ordinance (Chapter 282); and
• recovery of land: 12 years from when the right accrued (60 years if the claim is brought by the government).

The above time limits may be varied, for example:

• by defendant's acknowledgement or part payment;
• where the plaintiff is under a disability, time runs from when the plaintiff ceases to be under a disability or dies (whichever is earlier); and
• where the action is based on fraud, and a relevant fact has been deliberately concealed, or is for relief from the consequences of mistake, time runs from when the plaintiff discovers the fraud, concealment or mistake, or could have discovered it with reasonable diligence.

Jurisdiction over a defendant may be established by:

• effecting service of process on the defendant within Hong Kong;
• an exclusive or non-exclusive Hong Kong jurisdiction clause in a contract; or
• the defendant acknowledging service of process without challenging jurisdiction, or taking a step in the proceedings which constitutes submission to the court's jurisdiction.

See 3.5 Rules of Service for rules of service within and out of jurisdiction.

Proceedings are usually commenced by filing a "writ of summons" or, in some circumstances, an "originating summons". The writ may be endorsed with a concise statement of the nature of the claim made or relief sought, or a full statement of claim. Insolvency proceedings are commenced by petition.

These documents may generally be amended with or without the court's leave, depending on the document in question and the stage of the proceedings.

The plaintiff is responsible for the service of the originating process.

Service Within Hong Kong

A defendant who is an individual ordinarily resident in Hong Kong, may be served personally, by registered post, or by insertion through their letterbox. If the defendant is a Hong Kong company, service may be effected at its registered office.

Where these methods are impractical, the court may order substituted service, eg, through newspaper advertisement or service on a third party. The court has even allowed service by access to a data room.

Service Outside Hong Kong

The plaintiff needs the court's leave to serve out of Hong Kong. The court will need to be satisfied that:

• there is a serious issue to be tried;
• there is a good arguable case that the court has jurisdiction under one of the "gateways" set out in the Rules of the High Court (RHC) (or the equivalent rules in the DC); and
• Hong Kong is the most appropriate forum for trial.

The gateways include:

• the defendant is domiciled or ordinarily resident within Hong Kong;
• the claim arises from a contract made within Hong Kong or governed by Hong Kong law, or which contains a term giving the Hong Kong court jurisdiction;
• the claim is in respect of a breach of contract committed within Hong Kong;
• the claim is based on a tort, with the damage sustained, or resulting from an act committed, in Hong Kong;
• the subject matter of the action is a land within Hong Kong; and
• the claim is to enforce a judgment or arbitral award.

Once leave is granted, the writ may be served in accordance with the laws of the place of service or through designated authorities.

Service in Mainland China or Macau

To serve a writ in Mainland China or Macau, the plaintiff must lodge with the court:

• a request for service;
• various copies of the writ; and
• certified Chinese translation of the documents.

The Registry will send the documents to the relevant judicial authorities of the Mainland or Macau to arrange for service.

Once a writ has been served, the defendant must file a form of "acknowledgment of service" within 14 days, indicating whether they intend to defend the action, failing which the plaintiff may be entitled to enter a default judgment. 

There is no class action procedure in Hong Kong. Representative proceedings are permitted however: where numerous persons have the same interest in any proceedings, one or more representative plaintiffs may conduct the claim on behalf of others, and the eventual judgment will be binding on all represented plaintiffs.

Whether the persons concerned do have the "same interest" is determined by a three-fold test of whether there is: a common interest, a common grievance, and a remedy that is beneficial to all.

Solicitors are required to give an estimate of the likely costs upon the client's request whenever possible. If that is not possible, solicitors should give a general forecast, indicating the method by which their fees will be calculated.

Interim applications may be made before trial and may be in respect of both procedural and substantive matters. Such applications include:

• amendment of pleadings;
• particulars of an opponent's pleading;
• striking out a claim and summary judgment (see 4.2 Early Judgment Applications);
• injunctions (see 6.1 Circumstances of Injunctive Relief);
• security for costs;
• interim payment; and
• discovery of documents.

Summary Judgment

In many cases, the plaintiff can obtain summary judgment on grounds that there is no defence to a claim or part of it. On 1 December 2021 the "fraud exception" was abolished, meaning that summary judgment in claims based on an allegation of fraud is now possible.

Application is made by summons after the defendant has given notice of intention to defend and following service of the plaintiff's statement of claim. It must be supported by an affidavit verifying the facts and stating a belief that there is no defence.

To avoid summary judgment, the defendant must satisfy the court that there is a triable issue by providing affidavit evidence showing that there is a genuine and credible defence. If the defendant succeeds, the court may grant either unconditional or conditional leave to defend. Otherwise, the court will enter judgment in favour of the plaintiff.

Striking Out

At any stage of the proceedings, the court may order a pleading to be struck out, either on its own motion or upon an application by summons supported (in an appropriate case) by affidavit, on the grounds that it:

• discloses no reasonable cause of action or defence;
• is scandalous, frivolous or vexatious;
• may prejudice, embarrass or delay the fair trial of the action; or
• is otherwise an abuse of the court's process.

The court may order the action to be stayed or dismissed and for judgment to be entered accordingly.

Default Judgment

See 3.6 Failure to Respond.

See 4.2 Early Judgment Applications.

Preliminary Issue/Summary Disposal of Case on Point of Law

The court may require any question or issue arising to be tried as a preliminary issue prior to trial. It may also determine any question of law or construction of any document at any stage of the proceedings where it appears that such question is suitable for determination without a full trial and it will finally determine the entire matter or any issue in it.

Challenging Jurisdiction

A defendant may challenge the court's jurisdiction. Among others, the application may be based on the following grounds.

• Forum non conveniens: the case should be heard in another jurisdiction which provides a more appropriate forum.
• Arbitration clause: the dispute is covered by an arbitration agreement and should be referred to arbitration.
• Jurisdiction clause: the dispute is covered by an exclusive or non-exclusive jurisdiction clause referring the dispute to the courts of another jurisdiction.
• Lis alibi pendens: there are proceedings between the parties elsewhere in respect of the same cause of action.

The application is made by summons stating the grounds. The court may deal with it on the affidavit evidence or try it as a preliminary issue.

A party not named as a plaintiff or defendant may intervene and be joined to an action if:

• they ought to have been joined as a party, or their presence is necessary to ensure that all matters in dispute may be effectually and completely determined and adjudicated upon; or
• as between them and a party to the action there may be a question or issue arising out of, relating to, or connected with any relief claimed in the action, which it would be just and convenient to determine as between them and that party as well as between the other parties.

Such a party may be joined by the court on its own motion or on an application to intervene made by summons, supported by an affidavit showing their interest in the matters in dispute.

A defendant can apply for an order requiring the plaintiff to provide security for their costs, usually on the ground that the plaintiff is ordinarily resident outside Hong Kong, or that the plaintiff is a nominal plaintiff suing for the benefit of some other person and may be unable to pay the defendant's costs if ordered to so.

The court will consider all relevant circumstances, such as:

• the merits of the plaintiff's claim;
• whether the application is being used to stifle a genuine claim;
• whether the plaintiff's lack of means has been caused by the defendant; and
• whether a costs order may be enforced easily against a foreign plaintiff.

The court may also order a plaintiff which is a limited company to give security for costs if there is reason to believe it will be unable to pay the defendant's costs.

Upon determining an interlocutory application, the court may make a costs order. It has discretion, but the general rule is that costs follow the event, ie, costs are awarded against the unsuccessful party.

The court may also decide that there is to be no order as to costs, or that costs be "reserved", so that a decision is made later. If a costs order is made, but the amount is not agreed, the court may order the amount to be "taxed" (ie, assessed) by the court, or make a summary assessment.

The court may also determine when the costs are to be paid, eg, immediately or at the end of the proceedings.

The timeframe depends on a number of variables, such as the urgency of the application, whether it is to be made on notice to the other side, the need for the parties to exchange evidence and legal submissions in advance, the length of the hearing required, and the availability of the court, the parties, and their legal representatives.

The court will entertain urgent applications. For example, time-critical applications for injunctions such as freezing orders will usually be heard on the same day that the relevant evidence and other papers are submitted.

General Discovery

Discovery, which is limited to the disclosure of documents relevant to the matters in question in an action, is conducted in three main stages.

• Automatic discovery: after pleadings are closed each party must serve a list of the relevant documents which it possesses, or which are within its control or custody (see also 5.3 Discovery in Hong Kong).
• Specific discovery: upon a party's application the court may order the other side to produce specific documents if satisfied that discovery is necessary for disposing of the matter fairly, or for saving costs.
• Inspection of the documents disclosed: the party producing the documents must allow the other parties to inspect and take copies of the documents.

The court may make orders limiting discovery for purposes of case management or to advance certain "underlying objectives", for instance, cost-effectiveness, the expeditious disposal of cases, proportionality, procedural economy and the duty to ensure fairness between the parties.

Discovery is an ongoing obligation, so if a relevant document comes into a party's possession, custody or power at any time after discovery has taken place, the new document must be disclosed in a supplemental list, or by notice.

Pre-action Discovery

Prior to proceedings, a person who is likely to be a party to an action may apply to the court for an order requiring another likely party to produce documents which are directly relevant to an issue arising out of the claim.

Generally, non-parties cannot be ordered to give discovery. Exceptions include:

• pre-action discovery (see 5.1 Discovery and Civil Cases);
• "Norwich Pharmacal" discovery against a person who has become involved (directly or indirectly) in the wrongful acts of others, requiring them (among other things) to identify the wrongdoer so that remedies may be pursued; and
• bankers' books orders requiring a bank to produce records for the purpose, eg, of policing compliance with a freezing order.

See 5.1 Discovery and Civil Cases.

Applicable Test

The parties must disclose all documents in their possession, custody or power relevant to a matter in question.

A document is "relevant" if it tends to prove or disprove a matter in issue, or may enable a party either to advance their own case or damage the case of their adversary (or may fairly lead to a train of inquiry which may do so).

List of Documents

The parties' list of documents must set out the following.

• In schedule 1, all relevant documents in a party's possession, custody or power. This schedule is split into two: documents that party is willing to produce, and those it objects to producing on the ground of privilege.
• In schedule 2, all documents that have been but are no longer in a party's possession, custody or power.

There is no applicable information in this jurisdiction.

Hong Kong recognises legal professional privilege (LPP), as follows.

• Legal advice privilege: this protects from disclosure any confidential communications between a client and their legal advisers for the purpose of obtaining or giving legal advice.
• Litigation privilege: this protects confidential communications between the client, their legal advisers, and/or any third party made for the sole or dominant purpose of actual or contemplated litigation.
• LPP is not available if the communications were made for some fraudulent or illegal purpose, or it has been waived by the client.

A party may also refuse disclosure of documents:

• which are or record communications made for purposes of settlement, eg, "without prejudice" correspondence;
• the production of which may expose it to criminal proceedings;
• where disclosure would be contrary to public policy (public interest immunity); and
• where disclosure is prohibited by statute.

Injunctions may be ordered as both interlocutory and final relief.

An interlocutory injunction may be granted where the applicant can show:

• there is a serious issue to be tried; and
• the balance of convenience lies in favour of granting the injunction.

"Balance of convenience" involves consideration of factors which vary from case to case, in particular:

• whether damages would be an adequate remedy for the plaintiff (such that an injunction should not be granted);
• whether the defendant would be adequately compensated under the plaintiff's undertaking as to damages (see below) if the injunction is wrongly granted;
• the relative strength of the parties' cases; and
• the public interest.

(American Cyanamid Co v Ethicon Ltd [1975] AC 396 and subsequent cases)

Before granting an interlocutory injunction, the court usually requires the plaintiff to give an undertaking in damages, ie, an undertaking to the court to pay damages to the defendant for any loss sustained as a result of the injunction if it later transpires that the injunction should not have been granted.

Common types of interlocutory injunctions include the following:

• Freezing (Mareva) injunction: prevents the defendant from disposing of or otherwise dealing with its assets in Hong Kong or elsewhere.
• Proprietary injunction: restrains the defendant from disposing of or otherwise dealing with specific assets it holds or controls.
• Anti-suit injunction: restrains a party from commencing or continuing proceedings in another jurisdiction, where Hong Kong is the appropriate forum, and where commencing the foreign proceedings would be oppressive or vexatious or in breach of an arbitration agreement or exclusive jurisdiction clause.
• Anton Piller order: requires the defendant to permit the plaintiff to enter and search premises and allow articles to be removed and detained.

An injunction may be obtained on the same day as the application if the circumstances are urgent (see 4.7 Application/Motion Timeframe for urgent applications).

Applications for interlocutory injunctions are generally made inter partes, but ex parte applications are permitted where the matter is of extreme secrecy or urgency, where the purpose of the injunction would be frustrated if the defendant is informed, or the defendant cannot be found.

On an ex parte application the applicant must make full and frank disclosure of all relevant matters, including any arguments which could reasonably be raised by the defendant against making the order.

If an interlocutory injunction is obtained ex parte, a "return date" for an inter partes review hearing will be marked in the order. At that hearing the defendant may apply to set aside or vary the ex parte order.

The applicant is usually required to give an undertaking in damages (see 6.1 Circumstances of Injunctive Relief). The applicant may be required to "fortify" the undertaking by providing security, eg, making a payment into court. These conditions apply whether the application is made ex parte or on notice.

A worldwide freezing injunction may be granted if the court is satisfied that:

• the plaintiff has a good arguable case;
• there are no assets (or insufficient assets) within Hong Kong to satisfy the plaintiff's claim, and there are assets outside Hong Kong; and
• there is a real risk of dissipation of those assets so as to render any judgment which the plaintiff may obtain unenforceable.

The plaintiff is usually ordered to give an undertaking not to enforce the Mareva injunction in a foreign jurisdiction without the leave of the court.

A freezing injunction may be made in respect of assets held in the name of a third party where the plaintiff can show that there is good reason to believe that the defendant has an interest in, control over or access to such assets, so that they may be used to satisfy a judgment against them.

Non-compliance with an injunction may constitute contempt of court, which can result in sanctions, such as a fine or imprisonment. A third party who knowingly assists in or permits such non-compliance by the defendant may likewise be in contempt of court.

Trials are generally conducted orally and follow a set order:

• plaintiff's opening speech;
• evidence from the plaintiff's factual and expert witnesses (each examined in chief by the plaintiff; cross-examined by the defendant, and re-examined by the plaintiff);
• defendant's opening speech;
• evidence of the defendant's factual and expert witnesses (each examined in chief by the defendant; cross-examined by the plaintiff, and re-examined by the defendant);
• defendant's closing speech (if any); and
• plaintiff's closing speech.

The judgment may be delivered by the court immediately, or the judge may reserve judgment to be handed down in due course, having considered any closing written submissions filed by the parties. See also the discussion on the timeline for handing down of judgments under 14.1 Proposals for Dispute Resolution Reform.

The court may give case management directions with or without conducting a hearing. It may direct the plaintiff to take out a case management summons, or simply fix a date for a case management conference.

Hearing of Case Management Summons

Parties are required to serve a notice specifying the orders and directions sought at least seven days before the hearing. The court will deal with all outstanding interlocutory applications during that hearing, and if that is not possible, it will adjourn the remaining matters to be dealt with at a specified time.

Case Management Conference

The court may also decide to hold a case management conference. Each party must file a Listing Questionnaire no less than seven days before the conference, and the plaintiff must lodge a bundle containing copies of all pleadings, witness statements and expert reports no less than three clear days before the conference.

See also 4.2 Early Judgment Applications and 4.3 Dispositive Motions.

A party may apply for an action to be tried with a jury if it concerns a claim in libel, slander, malicious prosecution or false imprisonment.

The law of evidence is mainly comprised within the jurisprudence and relevant statutes, such as the Evidence Ordinance (Chapter 8), the High Court Ordinance (Chapter 4) (HCO) and the RHC (and the DC equivalent).

Evidence is generally admissible so long as it is relevant, lawfully obtained and not prejudicial to the interests of justice. Evidence is relevant if it makes the existence of a fact in issue more or less probable.

The main grounds for challenging the admissibility of evidence are:

• irrelevance;
• exclusionary rules of evidence apply, eg, rules against hearsay evidence and non-expert opinion evidence; and
• privilege.

Parties may adduce expert evidence only if the court has granted leave or the parties agree. Such expert evidence must be reasonably required to resolve the issues before the court, and may be excluded if the question in issue does not require specialist knowledge.

Parties may agree to instruct joint or separate experts. If parties cannot agree on a joint expert, the court may appoint a joint expert if it is satisfied that it is in the interests of justice to do so, considering all the circumstances of the case.

See 1.3 Court Filings and Proceedings.

Level of Intervention

All judges have different practices, but in principle, given that Hong Kong follows the common law adversarial system, the court will only intervene during a hearing or a trial to the extent necessary to clarify or to develop any points that may have been made or missed by counsel or witnesses.

The judge will, however, take an active role in ensuring that relevant rules are followed, and that irrelevant, inadmissible or repetitive materials are excluded.

Delivery of Judgment and Decision

Judgments following trial will usually be handed down in open court. Reasons will be given. Judgment is often reserved to be delivered at a later date.

The timeframes for proceedings and the duration of trials will vary depending on factors such as:

• the complexity of the underlying facts;
• the number of parties involved;
• the number of interlocutory applications made;
• the number of witnesses and the volume of documents involved;
• the availability of the court and counsel; and
• the number of days required for a trial.

It is not possible to give a meaningful estimate of the time a case will take from commencement to trial, but it is not uncommon for the trial to take place more than two years after the commencement of proceedings.

Court approval is not required to settle a lawsuit save in exceptional cases, eg, by or on behalf of a person under disability.

Settlement can be recorded in various ways (see 8.3 Enforcement of Settlement Agreement).

Parties may include an express confidentiality clause in their settlement agreement, providing for example that the settlement terms may not be disclosed save for purposes of implementation, or as required by the court or other competent authority.

Where the settlement terms are contained in an agreed court order to dismiss, discontinue or withdraw proceedings, they form part of the court record. Note however that, as a general rule, non-parties have no right to access documents in the court file (see 1.3 Court Filings and Proceedings).

There are various ways of structuring and recording agreements to settle civil proceedings, and this impacts upon the available methods of enforcement. The possibilities include the following:

• Settlement agreement: if a party continues or commences proceedings in breach of a settlement agreement, the other party may either set up the agreement as a defence or apply to the court to stay or strike out the proceedings.
• Agreed judgment for the payment of money: if a party fails to pay the settlement sum, the judgment creditor may immediately enforce the judgment.
• Agreed court order to stay the proceedings upon terms, such as payment within a specified period: the proceedings remain "live" so that if the paying party defaults then, depending on the terms agreed, the receiving party may enter judgment or restore the proceedings.
• Tomlin order, ie, an agreed court order to stay the proceedings on the terms contained in a schedule: this is similar to an agreed court order to stay proceedings, but the provisions may be more complex and/or contain terms which the court has no jurisdiction to order. Again, the proceedings remain "live" and the other party can apply to the court to enforce the settlement terms.
• Agreement to discontinue or withdraw the proceedings: the proceedings are brought to an end, and so if a party breaches the agreed terms, the other party will have to commence a fresh action to enforce the settlement agreement.

Settlement agreements may be vitiated in circumstances, eg, where the agreement to settle was procured by misrepresentation or fraud or was the result of a common mistake.

At trial, the court may grant one or more of the following remedies to a successful litigant:

• debt: order for payment of price/sums due;
• damages (see 9.2 Rules Regarding Damages);
• specific performance: order requiring defendant to do what he agreed to do;
• restitution: order restoring the innocent party to the position they were before the injury occurred;
• injunction: order requiring a party to do or not do something;
• declaration: court declares the legal position of the parties;
• account of profits: equitable remedy requiring a party to surrender the profits attributable to the breach of a fiduciary relationship; and
• costs and interest (see 9.3 Pre- and Post-Judgment Interest and 11.1 Responsibility for Paying the Costs of Litigation).

Nature of Damages

Damages are to compensate the plaintiff for loss suffered as a result of the defendant's conduct, and not to punish. For breach of contract, or tort, damages are to put the plaintiff in the position they would have been in if the contract had not been breached or the tort had not been committed.

Punitive/exemplary damages are rarely awarded, but are available in respect of oppressive, arbitrary or unconstitutional action by servants of the government, where the defendant's conduct is calculated to make a profit which may exceed the compensation otherwise payable by him to the plaintiff, and where they are expressly authorised by statute, such as claims under the Sex Discrimination Ordinance (Chapter 480).

Limit of Damages

No rules limit the damages that may be awarded, but the plaintiff must mitigate their loss and cannot recover loss that ought to have been avoided.

However, there are financial jurisdictional limits for courts at different levels (see 1.2 Court System).

Pre-judgment Interest

Where interest is payable under a contractual term, the court may order pre-judgment interest to be paid in accordance with the agreed rate.

Pre-judgment interest may also be awarded pursuant to Section 48 of the HCO. The rate is decided by the court, but in practice is usually prime rate plus 1%, being assessed on the assumption that the creditor will have borrowed at a commercial rate to fund the shortfall pending judgment.

The court may also award simple or compound interest under common law and equity (for example, compound interest may be awarded where there has been a breach of a fiduciary duty).

Post-judgment Interest

Post-judgment interest may be awarded pursuant to Section 49 of the HCO. The court may fix the rate, but in practice a judgment rate set by the chief justice from time to time, currently 8%, is usually adopted.

The mechanisms for enforcing a domestic judgment include the following.

• Writ of execution: court bailiffs seize the judgment debtor's property.
• Garnishee proceedings: debts owed to the judgment debtor, for example by banks, are attached and paid to the judgment creditor.
• Charging order: certain types of property, such as shares and interests in land, belonging to the judgment debtor are charged to secure payment of the judgment debt; if the judgment debtor still fails to pay, the judgment creditor may apply for an order for sale.
• Prohibition order: restrains the judgment debtor from leaving Hong Kong.
• Oral examination: the judgment debtor is examined in court as to their assets available to satisfy the judgment.
• Appointment of a receiver: transfers the exercise of the judgment debtor's rights in and to its property and contracts to a receiver appointed by, and under the supervision of the court.
• Bankruptcy or winding-up proceedings against the judgment debtor: assets of the judgment debtor are collected and used to pay off its debts.

Common Law

A foreign judgment may be enforced at common law, provided it is for a fixed sum, given by a court of competent jurisdiction, and final and conclusive. The judgment creditor should bring a debt action by writ and apply for summary judgment if the defendant contests.

Foreign Judgments (Reciprocal Enforcement) Ordinance (FJREO)

The FJREO regime applies to judgments of the superior courts of 15 listed countries (Australia, Austria, Belgium, Bermuda, Brunei, France, Germany, India, Israel, Italy, Malaysia, The Netherlands, New Zealand, Singapore and Sri Lanka). The plaintiff must file a simple ex parte application, supported by affidavit, showing that the judgment is final and conclusive, a sum of money is payable under the judgment, the sum was not payable as taxes or fines, and that the judgment has not been wholly satisfied and could not be enforced by execution in the foreign country.

Once the court grants leave for the foreign judgment to be registered, it can be enforced in the same manner as a Hong Kong judgment. The judgment debtor may apply to set aside the registration of a judgment within the period stipulated in the notice of registration, by summons supported by affidavit. 

Mainland Judgments (Reciprocal Enforcement) Ordinance (MJREO)

The MJREO regime applies to the enforcement of judgments made by designated Mainland Chinese courts. The following statutory requirements must be satisfied:

• the Mainland judgment is in connection with a dispute arising from a civil or commercial contract;
• the judgment orders payment of a sum of money;
• there was a written agreement designating a Mainland court as the forum with sole jurisdiction to resolve the dispute;
• the judgment was made by a designated court listed in Schedule 1 of MJREO; and
• the judgment is final, conclusive and enforceable in the Mainland.

See also 14.1 Proposals for Dispute Resolution Reform – Mainland-Related Arrangement. 

See 1.2 Court Systems.

Depending on the nature of the decision appealed against, appeals may either be pursued as of right or only with the leave of the court, as follows:

• appeal to a judge in chambers from most decisions of a master is as of right, meaning that no leave of the court is required;
• appeal to the CA from a judgment or order of the CFI is generally as of right, but leave of the CFI or CA is required if the decision relates only to costs or concerns interlocutory matters which are not decisive of a party's substantive rights;
• appeal to the CA from a judgment or order of the DC generally requires leave of the same master or judge, or the CA;
• appeal to the CFI from the Labour Tribunal and Small Claims Tribunal requires leave of the CFI;
• appeal to the CA from the Lands Tribunal requires leave of the Presiding Officer or CA; and
• appeal to the CFA from the CA requires leave from the CA or the CFA.

Where leave to appeal to the CFI or CA is required, the appellant must show that the appeal has a reasonable prospect of success, or there is some other reason in the interests of justice why the appeal should be heard.

Leave to appeal to the CFA is only granted if the question involved is of great general or public importance, or otherwise ought to be submitted to the CFA.

The appeal procedure varies depending on the decision being appealed against:

• Appeals against a master's decision in chambers: no leave required – notice of appeal to be issued within 14 days of the decision and served on every other party within five days thereafter.
• Appeals against CFI decisions (other than interlocutory matters or costs): no leave required – notice of appeal to be served on every other party within 28 days from the date of the decision.
• Appeals against CFI decisions on interlocutory matters or solely on the question of costs: application for leave to be made to the CFI judge within 14 days of the decision; if leave is refused, to the CA within 14 days of refusal.
• Appeals against decisions of the DC and Lands Tribunal: application for leave to be made within 14 (for interlocutory decisions) or 28 days (decisions other than interlocutory) of the date of judgment to the judge or presiding officer in question; if leave is refused, to the CA within 14 days of refusal.
• Appeals to the CFA: application for leave to be made first to the CA within 28 days from the date of the judgment to be appealed from; if leave is refused by the CA, the appellant can apply to the CFA within 28 days of refusal.

Procedure

Generally, the appellant should lodge and serve a notice of appeal on every other party within seven days after leave to appeal is granted, or, if leave to appeal is not required, within 28 days from the date of the judgment or order concerned.

A respondent who wishes to contend that the decision of the court below should be varied, or affirmed on grounds other than those relied upon by the court, or was wrong in whole or in part, must issue a respondent's notice, stating the grounds for such contention and the precise form of the order they propose to ask the court to make.

The respondent's notice should be served within 14 days of service of the notice of appeal (for interlocutory orders) or 21 days in other cases.

No automatic stay of execution

An appeal does not operate as a stay of execution of the judgment. The general rule is that a successful party is entitled to enforce the judgment notwithstanding an appeal.

Issues Considered at an Appeal

An appeal can be on questions of law, questions of fact and/or the court's exercise of discretion.

Appeal from a master's decision to a judge in chambers is by way of a complete rehearing of the application. Parties are not confined to points taken before the master. On other appeals the court considers the evidence given in the court below without re-hearing the witnesses.

The appellate court will generally not interfere with an exercise of discretion by the original court, unless it acted under a mistake of law, took account of irrelevant matters (or failed to take account of relevant matters), or failed to take into account relevant matters, or the decision is plainly wrong.

Adducing New Evidence

While the appellate court has the power to receive further evidence, no further evidence (other than evidence as to matters which occurred after the decision was made) may be received except on special grounds.

Under the test in Ladd v Marshall [1954] 1 WLR 1489, the appellant has to show that the evidence:

• could not have been obtained earlier with reasonable diligence;
• would have a very important bearing on the outcome of the case; and
• is not inherently improbable.

Raising New Points on Appeal

As a general rule, parties cannot take a point on appeal which they did not take in the court below.

The court may only allow parties to raise a fresh point not taken in the court below if it has all the materials necessary to determine the fresh point.

The court can impose such conditions on granting leave to appeal as it thinks fit, such as:

• restricting the grounds of appeal;
• provision of security for the costs of the appeal; and
• conditions as to the time within which the appellant shall procure the preparation of the record.

After hearing an appeal, the appellate court may:

• allow the appeal, and vary or discharge the decision of the court below, and/or remit the matter with its opinion to that court, and/or order a re-trial;
• dismiss the appeal and affirm the decision of the court below; and
• make such orders on costs as it thinks fit.

Costs Order

The general rule is that costs follow the event, ie, the losing party is ordered to pay the successful party's costs of the litigation, or that phase of the litigation. 

The different bases for assessment of costs are as follows.

• Party-and-party: the losing party will reimburse the successful party for the necessary expenses of pursuing or defending the action;
• Common fund basis: the calculation will be more generous than the party-and-party basis, such that expenses reasonably incurred by the successful party will be reimbursed; and
• Indemnity basis: all costs will be allowed except those unreasonably incurred or of unreasonable amount.

Which of these is awarded is at the court's discretion and depends on a range of factors (see 11.2 Factors Considered when Awarding Costs).

In practical terms, party-and-party costs are most often awarded. This usually means that a successful party will be reimbursed around 60-70% of their actual costs spent on litigation.

Taxation

If the parties do not agree on the amount of costs to be paid, the amount will be assessed by a taxing master (ie, taxation). The receiving party will submit a bill of costs, which the paying party may challenge by submitting a list of objections. The taxing master may adopt a "broad-brush" approach to determine the amount of costs payable under a costs order and hear the parties' arguments on specific items in the bill.

The court has broad discretion when awarding costs.

The RHC set out certain matters which the court may take into account in exercising its discretion. These include:

• the underlying objectives (cost-effectiveness, the expeditious disposal of cases, proportionality, procedural economy and the duty to ensure fairness between the parties);
• any payment of money into court;
• any written offer expressed to be "without prejudice save as to costs";
• the conduct of all parties;
• whether a party had succeeded on part of their case, even if they have not been wholly successful; and
• any admissible offer to settle made by a party, which is drawn to the court's attention.

Simple interest is awarded on costs at the prevailing judgment rate as determined by the chief justice from time to time from the date of the costs order.

See 9.3 Pre- and Post-judgment Interest.

The most popular forms of ADR are arbitration and mediation. The relevant statutes are the AO and the Mediation Ordinance (Chapter 620).

In Hong Kong, parties are strongly encouraged by the court to use ADR techniques to facilitate the settlement of their disputes. In particular, the courts in the exercise of their active case management powers incentivise parties to consider whether it is appropriate to attempt mediation. The unreasonable failure of a party to engage in mediation may result in the court making an adverse costs order. Legal advisors are also required to advise clients on this possibility.

On 2 January 2021 the DC launched a new case settlement process to promote the use of ADR. At the heart of this process is a case settlement conference (CSC), at which a CSC master will seek to narrow down the issues to be tried, and review the without prejudice discussions and settlement offers between the parties, to encourage settlement. The CSC is applicable to all civil cases except personal injuries, employees' compensation, false detention claims against the government and equal opportunities cases. The pilot scheme is scheduled to come to an end in December 2022, but may be extended.

See 12.1 Views of Alternative Dispute Resolution.

The Hong Kong government has for many years been actively promoting Hong Kong as a leading centre for international arbitration services. The Secretary for Justice set up an Advisory Committee on Promotion of Arbitration for such purpose. In a 2021 international arbitration survey Hong Kong was ranked the third most preferred seat for arbitration worldwide, and the Hong Kong International Arbitration Centre (HKIAC), the third most preferred arbitral institution.

Hong Kong hosts the offices of a number of reputable dispute resolution institutions, including the following.

• For arbitration: HKIAC, eBRAM Centre (Electronic Business-Related Arbitration and Mediation) (eBRAM), the International Court of Arbitration of the International Chamber of Commerce (ICC-ICA), China International Economic and Trade Arbitration Commissions (CIETAC), Hong Kong Maritime Arbitration Group, and the China Maritime Arbitration Commission (CMAC).
• For mediation: HKIAC, eBRAM and the Hong Kong Mediation Centre (HKMC).

The AO contains important provisions on the conduct of arbitration. It is largely based on the UNCITRAL Model Law. The AO was put in place to reduce court interference in arbitration and does so by conferring wide powers on the arbitral tribunal.

Conduct of Arbitrations

Subject to safeguards necessary in the public interest, the parties are free to agree on how a dispute should be resolved, and the court should only interfere in the arbitration as expressly provided in the AO.

The AO sets out certain general powers exercisable by the tribunal which include:

• requiring a claimant to give security for costs;
• directing the discovery of documents or delivery of interrogatories; and
• directing evidence to be given by affidavit.

Recognition or Enforcement of Arbitral Awards

Section 84 of the AO stresses that, with the court's leave, an arbitral award can be enforced in the same manner as a judgment of the court except in very limited cases. For the relevant laws on enforcement, see 13.4 Procedure for Enforcing Domestic and Foreign Arbitration.

Matters enforceable against the world at large, or falling under the exclusive jurisdiction of the courts may not be referred to arbitration, for example:

• criminal cases;
• family-law matters;
• anti-trust disputes;
• insolvency;
• other administrative matters; and
• employment claims in certain circumstances.

Section 81 of the AO provides that the court may only set aside an arbitral award in certain limited circumstances:

• incapacity of a party;
• invalidity of the arbitration agreement;
• party not given proper notice of the appointment of an arbitrator or the arbitral proceedings, or otherwise unable to present their case;
• award deals with a dispute not falling within the terms or scope of the submission to arbitration;
• composition of the arbitral tribunal, or arbitral procedure, not in accordance with the parties’ agreement or Hong Kong law;
• subject matter of the dispute not capable of settlement by arbitration under Hong Kong law; and
• award conflicts with Hong Kong’s public policy.

These are the exclusive grounds on which an award can be set aside and are identical to the exclusive grounds for resisting recognition and enforcement of awards available under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention"), see 13.4 Procedure for Enforcing Domestic and Foreign Arbitration. 

Under Section 84 of the AO, with the court's leave, an arbitral award, whether made in or outside Hong Kong, may, except in very limited cases, be enforced in the same manner as a court judgment. Leave to enforce will generally be granted mechanistically, unless there are real grounds for doubting the validity of the award.

The New York Convention is applicable, such that awards obtained in other Convention jurisdictions are enforceable in Hong Kong. Under the AO, the applicant can make an ex parte application, supported by an affidavit, for leave to enforce the award. As with other ex parte applications, the applicant bears the duty of full and frank disclosure.

An order granting leave to enforce the award should then be served on the award debtor, which then has 14 days to apply to set aside the order. For grounds of setting aside, see 13.3 Circumstances to Challenge an Arbitral Award.

Timeline for Handing Down of Judgments

New practice directions (PD36 and PD37) came into effect on 6 June and 5 September 2022 respectively, providing guidance on the timeframe for the handing down of judgments in the HC and DC, and in the Lands Tribunal. Similar provisions concerning the Family Court will take effect from 9 January 2023.

For instance, judgments for interlocutory applications are to be handed down within three months after the conclusion of the hearing, those for trials and substantive applications which last for less than 15 days, within six months, and those for trials and substantive applications which last for 15 days or more, within nine months.  When reserving judgment after an oral hearing, the court must at the same time fix the actual handing-down date of the judgment in accordance with the stipulated timeframes.

Remote Hearing

In view of the impact of COVID-19, Hong Kong Courts at different levels have been conducting remote hearings in civil proceedings in appropriate cases since April 2020. Four guidance notes were issued setting out the relevant arrangements. 

The Hong Kong Judiciary conducted a public consultation on the draft Courts (Remote Hearing) Bill between June and September 2022. The draft Bill seeks to provide a comprehensive legal framework for the application, operation and effect of remote hearings for court proceedings, and is expected to be passed in 2023. Among other things, the draft Bill proposes that:

• The court may make a remote hearing order on its own motion, or on application by any party to the proceedings, as a case management decision;
• In deciding whether to make a remote hearing order, the interests of justice shall be the over-arching guiding principle. Factors to be considered include:
1. the nature, complexity and urgency of the proceeding; 
2. the nature of the evidence intended to be adduced; 
3. the views of the parties; 
4. the ability of the parties to engage with and follow the proceeding (if conducted through a remote medium); and 
5. the personal or special circumstances of the parties including any visual or auditory impairment, cognitive difference and mental or psychological health issue; 

• The measures taken to ensure that evidence is given freely without coercion or other influence. 
1. the potential impact of the order on the assessment of the credibility of witnesses and the reliability of the evidence; 
2. the quality and security of the remote hearing facilities and their availability to the parties;
3. whether there is any public order, security, public health or emergency concern which makes it undesirable or impracticable for the parties to attend the proceeding in person; and
4. any other relevant considerations. 
• A remote hearing will be regarded as the same as a hearing in a physical setting in all relevant aspects, eg, a remote participant is deemed to be present at the place of hearing and to have complied with any relevant requirements for appearing physically, and the law in force in Hong Kong relating to evidence, procedure, contempt of court and perjury applies to a participant attending remotely, even if outside Hong Kong.
• Remote hearings which are open to the public will be broadcast on Judiciary premises such as open court rooms.
• New offences are created for recording, publishing and broadcast of remote and physical court hearings. 

Electronic Court Filing

The Court Proceedings (Electronic Technology) Bill was passed on 17 July 2020 enabling the use of electronic technology in proceedings in court. It is intended that an integrated court case management system ("iCMS") will be rolled out allowing for the e-filing of court documents, electronic payment of court fees, and electronic authentication of court documents that require to be signed, sealed or certified. 

The Ordinance came into operation on 1 October 2021. As at 29 July 2022, the iCMS may be used in relation to three types of proceedings in the DC, namely personal injuries, tax claim and civil actions. It is expected that the iCMS will be gradually rolled out to the Magistrates' Courts, the HC, the CFA and the Small Claims Tribunal. 

Mainland-Related Arrangement 

On 22 April 2022, the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Bill was gazetted. This represents the local legislation piece required to implement The Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region signed in January 2019. 

The Bill provides mechanisms to facilitate the reciprocal enforcement of Mainland and Hong Kong judgments. A judgment creditor may apply to the CFI to have Mainland judgments in civil or commercial matters registered on an ex parte basis. Once registered, the Mainland judgment may be enforced in the same way as a CFI judgment. The Bill also provides for the application of certified copies of certificates for Hong Kong judgments in civil or commercial matters, to facilitate recognition and enforcement of the judgments in the Mainland. 

The Bill has a wider application than the existing regime under the MJREO (see 9.5 Enforcement of a Judgment from a Foreign Country), which covers only money judgments granted where there was an agreement providing for the exclusive jurisdiction of the courts in the Mainland or Hong Kong.

Operation of Courts in COVID-19

In view of COVID-19, the Hong Kong courts announced a General Adjourned Period (GAP) from 29 January to 3 May 2020, and again from 7 March to 11 April 2022, during which courts were closed for all business except urgent and essential hearings/matters. 

The following social distancing rules and crowd control measures continue to be in force: 

• seating capacity in the public galleries of courtrooms, court lobbies, registries and account offices has been reduced to enhance social distancing;
• protective shields and partitions have been installed in courtrooms as appropriate; 
• persons entering judiciary premises are required to use the government's "LeaveHomeSafe" app or other means to record their visits to enhance the health protection of the community; and
• vaccination is generally required for entering Judiciary premises. 

Suspension of Limitation Periods 

There have been no special orders for the suspension of limitation periods because of COVID-19. Court business has continued to be transacted during the pandemic, therefore there should be little, if any, disruption to initiating an action in Hong Kong.