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OLN Partners Richard Healy & Stephen Chan are the Hong Kong Chapter Authors for the 2017 Global Legal Insights to: Litigation & Dispute Resolution available online now. The Litigation & Dispute Resolution 2017 publication covers key topics including efficiency and integrity, injunctions, cross-border issues, disclosure and privilege, costs and funding, settlement and mediation, and arbitration and expert determination in 31 jurisdictions.
Parties in conflict and disputes rarely apologize to one another. No one wants to admit liability, and saying sorry is often seen as an admission of liability.
On 13 July 2017, the Legislative Council of Hong Kong passed the Apology Bill (soon to be the Apology Ordinance) to enable parties to apologize without fear of legal implications.
Background
Historically, an apology is seen to be an implied admission of fault and/or liability. Such apology, whether written or oral, may constitute evidence of liability in civil proceedings.
Parties in dispute are therefore constantly advised by lawyers not to apologize for their actions, even if the party is in the wrong. The fear of legal implications overrode morality and common decency.
The Apology Ordinance
Under the Apology Ordinance, an apology is defined as an expression of regret, sympathy or benevolence. The apology need not be in writing. It can be oral or by conduct.
If a party has apologized, the Apology Ordinance provides that the fact of that apology will not constitute an express or implied admission of the person’s fault or liability and must not be taken into account in determining fault, liability or any other issue in connection with the matter to the prejudice of the person.
Exception
While evidence of an apology made by a person is not normally admissible as evidence for determining fault, the Apology Ordinance makes an exception. The exception is this:
If there is no other evidence available for determining an issue, it is possible for statements of fact contained in an apology to be admitted as evidence in the proceedings, provided that it is just and equitable to do so.
The following example may trigger the exception. One party may say to another:
“I am sorry about what has happened”
The above would not normally be admissible as evidence on liability. However, the situation may be different if the party apologizing goes on to say the following:
“The goods were not delivered to you because we had inadequate staff on that day.”
The above might be admissible as evidence even if the apology itself is not, particularly if the fact of adequate or inadequate staff became a relevant issue in civil proceedings and this was the only piece of evidence available in the proceedings. Clearly, this exception means that parties should take great care in how they apologize and what they should include in their apology.
Insurance Coverage
The Apology Ordinance also has potential impact upon insurance coverage.
Section 10 of the Apology Ordinance provides that an apology does not render void or affect any insurance cover, compensation or other form of benefit for any person in connection with the matter. There is also an express prohibition against attempting to “contract out” of this section by, for example, a disclaimer or waiver of rights. This section also takes effect whether or not the contract of insurance was entered into before or after the commencement date of the Apology Ordinance.
Liability insurance policies typically contain conditions that an insured party shall not make any admissions of liability or prejudice the claim without the insurer’s prior consent. While Section 10 may avoid an admission of liability, potential problems may arise if the insured prejudices the claim by making an apology which contains facts that are later ruled as admissible by the Court for the reasons set out above. In such circumstances, there may be argument as to whether the additional facts appended to the apology can properly be regarded as being part and parcel of the apology itself.
When Will It Take Effect?
It is currently unclear as to the commencement date of the Apology Ordinance although it is expected to come into effect later this year (2017) or early next year (2018).
Conclusion
With the implementation of the Apology Ordinance, being the first jurisdiction in Asia to do so, Hong Kong is leading and consolidating its position as one of the foremost centers in the Asia region for mediation and dispute resolution.
Although similar legislations have been passed in the United States, Canada, Australia and the United Kingdom, only time will tell whether the Apology Ordinance will influence parties in Hong Kong to more readily apologise to each other for wrongful conduct.
What should be quite clear however is that making an apology is not all without its risks and parties should continue to take proper legal advice before doing so.
OLN is pleased to have been shortlisted in several categories for the Asian Legal Business Hong Kong Law Awards as follows: –
Managing Partner of the Year – Gordon Oldham
Woman Lawyer of the Year – Tracy Yip
Young Lawyer of the Year – Adam Hugill
Firm of the Year categories: –
In my last recent “Transparency and Beneficial Ownership of Hong Kong Companies”, I raised the likelihood of a Companies (Amendment) Bill 2017 (the “Bill“) being published.
The Bill has indeed now been published and it does aim to introduce new legislation in Hong Kong, to improve transparency in the beneficial ownership of Hong Kong incorporated companies; this is to enhance Hong Kong’s regulatory regime on combating money laundering and terrorist financing.
The Bill now requires that:
Set out below are details of these practical changes:
Each Applicable Company will be required to keep and maintain a register (the “Significant Controllers Register“) for any person who has significant control over an Applicable Company (the “Significant Controllers“).
The Significant Controllers Register must contain the prescribed contents and be kept at the registered office of the Applicable Company, or at another prescribed place.
An Applicable Company is a Hong Kong incorporated company, that is NOT:
An Applicable Company also does not include a non-Hong Kong company which has registered branches or representative offices in Hong Kong under Part 16 of the Companies Ordinance.
A Significant Controller means either:
a natural person or specified entity that has significant control over that company (a “Registrable Person“); or
a legal entity that is a member of and has significant control over that company (a “Registrable Legal Entity“).
A person has “significant control” over an Applicable Company if the person fulfills one or more of the following criteria:
In fulfilling those duties to investigate, obtain information and keep information updated about its Significant Controllers, each Applicable Company must give notice to the relevant persons (the “Notice“) if it knows, or has reasonable cause to believe that:
There are certain exempt circumstances where a Notice may be not required.
The following persons have the right to inspect the Significant Controllers Register and obtain copies of the Register:
If an Applicable Company fails to meet the demand for inspection or for making copies by a law enforcement officer, that officer may apply to the Hong Kong Court for an order to compel the Applicable Company to do so.
An Applicable Company must designate at least one representative who has the required qualification, to facilitate and assist it to comply with its duties in relation to the Significant Controllers Register under the new law, including the provision of assistance to any law enforcement officer for the purposes of performing his function relating to the prevention, detection or investigation of money laundering, or terrorist financing.
It is expected that the Bill, if passed, will come into force on the commencement date, indicated in the Bill as being 1st March 2018 .
It is unclear whether the Companies Registry will issue guidelines to help Applicable Companies comply with the new requirements after the Bill is passed, and in particular whether an Applicable Company will be given any transitional period to set up the Significant Controllers Register and to take all necessary actions required to comply with the new law after it comes into force as of the proposed commencement date.
After the Bill is passed, each Applicable Company must start to formulate compliance steps and give itself sufficient time to implement and complete these steps so that as of the proposed commencement date, it will have in place an accurate and up to date Significant Controllers Register. An Applicable Company should also at the same time establish a set of compliance rules in relation to the keeping and maintenance of the Significant Controllers Register to ensure that it will comply with its ongoing obligations under the new law to keep the Significant Controllers Register up to date at all times.
Please contact us for more information.
OLN is delighted to have been ranked across all categories in Hong Kong and China in the 2017 Asian Legal Business (ALB) Intellectual Property rankings.
Improving on last year’s rankings, OLN is ranked in Tier 2 in Hong Kong for both Patents and Trademark/ Copyright, and maintains its ranking in Tier 3 for both categories for China.
OLN’s Intellectual Property team continues to build on its excellent reputation in providing specialist contentious and non-contentious IP advice to its local and international clients. The team has also been bolstered by Stephen Chan rejoining OLN late in 2016.
About ALB and their Rankings
Thomson Reuters Asian Legal Business magazine provides current analysis and information on law-related issues throughout the Asia region. For its rankings, the ALB conducts research based on the individual firm submissions, interviews, editorial resources and market recommendations and then rank the top firms based on the following: –
On 14th June 2017 the Hong Kong Legislative Council passed the third reading of the Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Ordinance. Whilst the Ordinance has not yet come into effect, it is expected to be gazetted and become effective later this year.
This legislation will permit the legalization of the third party funding in relation to arbitration and mediation proceedings in Hong Kong and is expected to provide a considerable boost to Hong Kong’s position as an international arbitration centre.
Hong Kong has been careful to ensure that the legislative change is accompanied by relevant safeguards to protect the system from potential abuse and we believe it is a welcome development and will help Hong Kong to maintain its status as one of the world’s leading dispute resolution centres.
Clients should now be considering the use of dispute resolution clauses adopting Hong Kong arbitration in commercial contracts, given the prospect of litigation funding being available for the resolution of such disputes by arbitration as opposed to proceeding through the court system.
If you would like further information regarding this legislation or any of the issues referred to in this article, please feel free to contact our Richard Healy.
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