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Employment Matters to Consider in Economic Downturn

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Hong Kong economy faced a heavy blow first by a series of protests and social events stemming from the controversial Extradition Bill in 2019, now followed by the coronavirus epidemic since January 2020.  There is even mounting global concern now as tourism slows, consumer spending weakens and supply chains stall.

Hong Kong recorded an unemployment rate of 3.4% between November 2019 and January 2020, peaking in more than 3 years.

The Organization for Economic Cooperation and Development (“OECD”) said that global growth could plummet to just 1.5% in 2020, far less than the 3% originally projected before the virus surfaced. OECD also warned that Japan, Europe and the United States could plunge into recession if the situation worsens.

Employers’ strategies  

Facing a glum economic outlook, employers may consider a number of strategies to minimize expense and maximize income.

  1. Downsizing

To withstand the challenges of recession, the most common and quickest solution is to begin with direct cost-cutting. Companies may axe certain operations, or at least temporarily suspend non-critical business activities.  Reducing headcounts is also a viable solution in essential teams or departments that cannot be closed.    

  1. Alternative work arrangements

As economist Wayne Cascio says, “Morale is the first casualty of downsizing.” Business leaders who wish to take a more long-term approach to reducing expenses can consider alternatives, such as requesting employees take annual leave or unpaid leave, or suspending work for a certain period.

These options can ease pressure on the need of severance payment due to downsizing, minimizing attention or criticism from trade unions or media. The temporary adjustment will help businesses survive financial pressure while easing employees’ panic over potential redundancy. Cathay Pacific Airways Ltd launched a voluntary unpaid leave program last December with positive reception; more than 1,000 customer service staff have applied for unpaid leaves.

  1. More alternatives

Apart from the above, some employers may consider renegotiating remuneration packages with employees. Employers taking this approach will need to think outside of the box, and offer incentives that shift the focus away from monetary awards to employee recognition.

For instance, employers can offer non-monetary compensation, including flexible work hours or insurance packages in return for a lower salary. An example is that Linklaters provides a scheme launched in 2017 which allows German non-partners to take a reduced salary in return for a fixed 4-hour week, which won praise from both partners and participating fee earners. 

  1. Others

Other cost-minimizing strategies are available to employers, such as negotiating a lower rent with landlords of the office spaces, negotiating prices with service or product suppliers, and reviewing programs or pay practices that do not offer enough return on investment etc.

Employers’ obligations when considering above strategies

  1. Downsizing

Employers need to be aware of implications of redundancy. First of all, there are severance costs for redundancy in Hong Kong for employees employed under a continuous contract for not less than 24 months. 

Although under the Employment Ordinance (Cap. 57 of the Laws of Hong Kong), severance payment can be offset against the following payments already made to the employees, employers should be careful on the calculation and to what extent such payments can be made offset:

  1. Gratuities based on length of service or occupational retirement scheme benefits (excluding any part attributable to employee’s contributions) have been paid to the employee; or
  2. Accrued benefit (excluding any part attributable to employee’s contributions) has been paid to the employee, or is being held in a mandatory provident fund scheme by the employee.

On redundancy, employers still need to observe any notice period requirements under the employment contract. If an employment contract does not provide for notice periods, the Employment Ordinance provides that the length of notice required to terminate an employment contract shall be not less than one month for a continuous without or after probation period or a payment in lieu of the notice period required.

Any employer making redundancy of employees without notice or payment in lieu is a breach of the Employment Ordinance. 

  1. Alternative work arrangements

A substantial, fundamental and unilateral variation in the terms and conditions of employment arising from the employer’s conduct has been found sufficiently serious to amount to a repudiation or fundamental breach going to the root of the contract. This would warrant an employee terminating his contract of employment without notice or payment in lieu, on the ground of constructive dismissal under common law.  Such an employee can claim for termination compensation from the employer.

As such, if employers wish to implement alternative work arrangements, it should seek consent from employees first. Both parties should have a mutual understanding of the new work arrangement in order to avoid future disputes or possible labor action, and to achieve a win-win situation.

Employers should also notify the provider of MPF of any change of contribution if necessary, and draw attention to employees of any such changes. In any event, employers still need to comply with statutory requirements such as payment of wages and MPF contribution etc. unless an employment contract has been terminated. This is to avoid claims surrounding constructive dismissal. 

As long as the employment contract is not terminated, the length of years of service of the relevant employee being affected by any alternative work arrangements, like non-pay leave or suspension of work should not be affected in principle.   

  1. Renegotiate remuneration package

An employee employed under a continuous contract can claim remedies for unreasonable variation of the terms of the employment contract against the employer if, in the absence of an express term in the contract allowing for such variation, the employer unilaterally varies the terms of the employment contract (including reducing the employee’s wages or benefits) other than for a valid reason as specified in the Employment Ordinance. 

Any such variation or change in the terms and conditions of an employment contract should be mutually agreed upon by both the employer and employees before it is implemented, to avoid claims by employees in unreasonable variation.   

Maximizing manpower efficiency during off-peak period 

To make the most use out of available employees during down seasons, corporations can divert resources and manpower to tasks that usually cannot be done during peak business seasons, such as:

  1. Back-office maintenance and other practical matters

Businesses should plan the practical elements like staffing, inventory, back-office maintenance and supplier during off season. It is important to review and analyze business data to prepare for the next peak season, or to predict consumer trends and demands in your market for the coming year.

  1. Keeping social media accounts alive to attract clients and customers

It helps to keep the followers of a business around so that they remember your business when sales are active again. Businesses can work on marketing strategy to maximize traffic and interactions on social media accounts.

  1. Diversifying clientele

Businesses can partner with other companies who needs their services or products at other points in the year. For example, a company selling summer clothes can target consumers in other parts of the world during winter in its locality.

If you have any question and wish to discuss further regarding the topic discussed or on other employment issues, please contact victor.ng@oln-law.com.

This article is for reference only. Nothing herein shall be construed as any formal legal advice for that matter to any person. Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.

Emigration from Hong Kong to Singapore: The Importance of Migration Tax Planning (5)

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Singapore has been considered a hitherto rival of Hong Kong in many respects.  Singapore has roughly 65% of the area of Hong Kong and 75% of the population count. Both are highly developed international financial centres and regional logistic hubs.  Both adopt the common law system, with a rather simple, single-tier tax regime.  Despite of the many striking similarities, there are differences. Among them, the most apparent distinction is that Singapore is an independent sovereign state, which might be the explanation why it is becoming one of the popular emigration destinations for Hongkongers amid recent social turmoil and the coronavirus plague.  Singapore is particularly attractive to working professionals (financial services professionals in particular), as well as entrepreneurs eyeing expansion of his/her business and investment portfolios. A trend of expatriates from China migrating and moving their assets to Singapore is also observed for similar reasons.

In the six months ended 31 December 2019 alone, Hong Kong underwent a net outflow of 28,500 residents, the largest since the end of 2012.  The same trend was observed in capital flow, with Singapore seeing an estimated USD4 billion inflow from Hong Kong from April to August 2019.

How to Become a Singapore Citizen / Permanent Resident

Singapore offers a number of pathways to citizenship through permanent residence, covering family, study, business innovation, investment, and employment. 

1. Investment visas – the “Global Investor Programme” (GIP)

The criteria for investment migration is relatively high, particularly after substantial overhaul to the GIP which will take effect from 1 March 2020.  The main applicant will be required to fulfil either one of the following:

  1. at least 3 years entrepreneurial or business track record, running a company with an annual turnover of at least SGD200 million (roughly USD143.07 million as at 26 February 2020);
  2. whose immediate family owns a 30% shareholding in a company with an annual turnover of at least SGD500 million (roughly USD357.63 million as at 26 February 2020);
  3. founding a company with SGD500 million valuation and invested in by reputable venture capital firms; or
  4. being a family office principal with at least 5 years entrepreneurial, investment or management track record, and net investible assets of SGD200 million.

This represents a substantial tightening of criteria from the previous 3-year experience and SGD50 million (roughly US$35.76 million as at 26 February 2020) annual turnover requirements, and a much higher threshold than most other popular jurisdictions.

In addition, the main applicant will be required to invest at least SGD2.5 million (roughly US$1.79 million as at 26 February 2020) in either a new business entity or the expansion of an existing business operation, or a Global Investor Programme (GIP) fund.

2. Employment Pass

While Singapore has a relatively higher investment migration threshold than the other popular destinations, its employment pass has the advantage of allowing its holders to work overseas for the Singaporean employer.

Whilst the respective websites of the Immigration and Checkpoints Authority and the Ministry of Manpower have set out some basic requirements, in practice applicants have been required to be engaged in specific industries (which changes from time to time depending on the prevailing administrative preferences), receive a salary well above the published threshold, and wait for such number of years roughly commensurate with the salary level.

For the time being, as it is observed the government is trying to boost (among others) the technology and financial services sectors, executives engaged or with experience in these sectors are believed to have an upper hand.  However, potential applicants are encouraged to seek help from migration experts on the most updated policies and practice.

3. Citizenship

With a few exceptions, a permanent resident is generally eligible to apply for citizenship after having been granted residency for 2 years.

Unlike other popular migration destinations, there are notable differences between the respective rights and duties attached to Singapore permanent residency and citizenship.  The most important is that renunciation of all other nationalities is a precondition for grant of Singaporean citizenship.  Citizenships also receives different rates of subsidies in education and medical treatments from permanent residents.

4. National Service Liability

Those with male children or planning to have kids must pay attention to the national service (NS) liability (colloquially known as military service) of male citizens as well as permanent residents.  While first generation permanent residents via (among others) employment pass and investor visas are exempt from NS, the second generation male citizens and PRs (i.e. the sons of the exempted first generation migrants) are not exempt and will be required to register for NS, even if the latter resides in another country.

Being enrolled in a university, whether in Singapore or overseas, is not by itself a ground for exemption or deferment of NS liability.

Singapore does not treat lightly those who are perceived as attempting to evade NS liability, even where the individual concerned has not lived in Singapore for an extended period.  Once the individual travels to or through Singapore, he will be arrested, charged and imprisoned for a substantial period (usually counting by years or half-years, rather than weeks).  Singaporean law also forbids renunciation of citizenship by a male citizen unless he has completed his NS.

The Singaporean tax system

Singapore and Hong Kong have a limited double tax agreement (DTA) which only covers air and marine transport operations and services.

On the other hand, a number of factors make Singapore a preferred destination for those who or whose business generates substantial cross-border income:

  1. Singapore only taxes income accruing in or derived from Singapore, or received in Singapore from outside Singapore (more on this below);
  2. Singapore has its effective corporate tax rate capped at 17% (with further relief in the first 3 years of operation for Singapore tax resident companies) and individual income tax rate capped at 22%; and
  3. Singapore has no tax on capital gains and dividend distributions, regardless of source.  There is also no estate duty.

Pre-Migration Tax Planning

Given (i) the largely territorial taxation on income earned by individuals; and (ii) the absence of taxation on capital gains, dividend and estate, there is not much pre-migration tax planning to do at the individual level.  On the other hand, employment pass holders must bear in mind that if he fails to stay in Singapore for an extended period of time (at least 183 days per year), his employment income from his Singapore employer is subject to non-resident tax rate, which is substantially higher than the resident tax rate.

The focus of pre-migration tax planning will be at the corporate level.  For a cross-border conglomerate looking to set up its headquarters or holding company in Singapore, particular attention must be paid to when and what foreign income will be considered “received” in Singapore and therefore subject to profits tax.  As a general rule of thumb, the corporate structure should therefore avoid having foreign income which:

  1. is remitted into Singapore, or applied to settlement of a debt incurred in respect of a trade or business carried on in Singapore, or spent on purchasing any movable property (e.g. goods, equipment, raw materials) which is brought into Singapore;
  2. forms an integral part of income deriving from the business of the Singapore entity;
  3. has not been applied to set off against the overseas losses of the Singapore entity; and
  4. has not been taxed by a foreign jurisdiction whose headline tax rate is no less than 15%.

A company is considered resident in Singapore if the control and management of the business is exercised in Singapore.  This generally refers to location of the board meetings during which strategic decisions are made, or having its executive director or key management personnel based in Singapore.

Conclusion

As seen from above, in terms of taxation Singapore is a relatively friendly jurisdiction to individual investors and executives.  Corporations, on the other hand, should seek tax advice prior to moving its headquarters or holding company to Singapore.

OLN provides a range of migration, corporate restructuring and tax advisory services.  If you have any questions on the above, please contact one of the members of our Tax Advisory Team.

Disclaimer: This article is for reference only.  Nothing herein shall be construed as Singaporean or Hong Kong legal or tax advice, whether generally or for any specific person.  Oldham, Li & Nie shall not be held liable for any loss and/or damage incurred by any person acting as a result of the materials contained in this article.

Coronavirus and the airline industry – a Claimant’s perspective

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Background

It is hard to get away from this topic right now which is dominating the news not just here in Asia, but globally. Many office workers in Hong Kong and mainland China are being advised to work from home, shops are running out of the most basic of commodities, and as for being able to buy facemasks or sterilizing fluid? – let’s not even go there.

The aviation industry is among the hardest hit. Airlines are cutting out routes, grounding aircraft, encouraging staff to take unpaid leave and airport passenger numbers are way down. There are knock-on effects too. Major sporting events and trade fairs have been cancelled. The Shanghai Grand Prix has been called off. So too the Hong Kong Rugby 7’s in April, which are always a nice little earner for the airlines based here.

Passengers hoping to travel may be affected by flight cancellations, or re-routings as the airlines look to consolidate their operations. Can passengers recover their financial losses if they are affected in this way? Worse still (and heaven forbid) what if a passenger were to contract Coronavirus during a flight? Let’s take a look.

The law

The Montreal Convention (or MC99 for short) is an international air law convention that generally applies, as more than 120 countries around the world have signed up to it. The convention provides a uniform and predictable set of rules that govern the international carriage of passengers by air. It also imposes limits on the amounts that can be claimed, but in return the convention imposes a strict liability regime on the airlines up to that specified limit (for injury claims the limit is currently 128,821SDR’s, or USD177,000 in real money!).

Can I claim for injury?

I am not aware of any claims for injury being made by air passengers (yet), although my friends working on the ‘dark side’ will no doubt correct me on this.

A claim of this type is not as straight forward as, say, a simple head injury caused by an item falling from an overhead bin, or being scalded by a super-hot cup of coffee being dropped on your lap by the flight attendant. In fact, the approach for a Coronavirus claim would be along similar lines to how the DVT (Deep Vein Thrombosis) cases were argued, where passengers alleged that being forced to sit in cramped conditions during long-haul flights led to the formation of blood clots. Whilst these DVT claims did not succeed on the whole, they did however force the airlines to re-think their advice to passengers, and airlines now encourage passengers to walk around the cabin and stretch whenever possible.

To succeed with a Coronavirus claim, a passenger would have to satisfy the requirement under the Montreal Convention that being infected during a flight constitutes an ‘accident’ – i.e. something unusual that occurs which is external to the passenger. There is caselaw which assists in helping to establish that this requirement is met. I am not a medical man, but the symptoms which affect a victim of Coronavirus are quite severe (we are not just talking about a mild cough and a sore throat), so that hurdle may well be satisfied in most cases.

In looking to establish a claim, consider the following –

Did the airline fumigate its aircraft on a regular basis (in particular after they flown to regions badly affected by the virus)?

Did the airline operate a regime of temperature testing passengers at check-in, or as they board the aircraft?

Did the airline carry masks on board which can be issued to any passenger taken unwell during a flight with Corona-type symptoms?

Also, did the airline take any steps to segregate, and move away any passenger who became unwell? (Bear in mind many flights are operating with poor load factors, so not having spare seats is no excuse for the airline)

Has the airline complied with local and international health regulations?

Has the airline checked the aircraft’s ventilation systems recently, bearing in mind the Coronavirus outbreak?

Has the airline taken steps to follow up on information provided by health authorities that an infected passenger may have been onboard one of their flights?

What about flight cancellations and denied boarding?

Here’s the interesting thing. Airlines are not cancelling services because of Coronavirus per se, they are cancelling because of poor demand and load factors. The distinction is a subtle one, but very important nonetheless for any passenger left out of pocket by a flight being cancelled at short notice.

The Montreal Convention allows air passengers to claim compensation for the damages which flow from their travel disruption. More precisely, the convention allows passengers to claim for any financial losses incurred such as booking alternative flights, hotels, meals, ground transportation etc. where the airlines have taken no, or inadequate steps to look after the affected passengers. Proof of loss is required though, so passengers should keep hold of receipts, invoices, credit card payment slips and the like. Passengers should also have in mind the strict 2-year limitation period that applies to claims of this nature.

As for denied boarding, well if you undergo a temperature check after arriving at the airport and are deemed to be carrying a fever then the airline may be within its rights to deny travel. There would be little point in making a claim if the airline has direct evidence to show that you may be infected. Whether you can secure a refund on your ticket may depend on the type of ticket purchased, as certain promotional or cheap fare tickets have restrictive terms that apply.

Contact

If you have any questions (or better still you wish to make a claim) then send an email to gdoldham@oln-law.com

Bad Faith Trademark Filling for Names related to the COVID-19 in China

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With the Amendments to the China Trade Mark Law, taking effect on 1 November 2019 and focusing on combating bad faith trademark filling and counterfeiters, we anticipate that maliciously pre-emptively trademark filling for names in connection with the 2019 Novel Coronavirus (now officially named as coronavirus disease (COVID-19) and severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) by World Health Organization (WHO) such as abbreviation/short names for the infectious diseases, names of hospitals and terms relating to the novel coronavirus would be refused for registration by the China National Intellectual Property Administration (“CNIPA”).

Bad faith trademark filling of 火神山 (pronounced “Huoshenshan”) and 雷神山 (pronounced “Leishenshan”)

As all may have known, to deal with and curb epidemic, China commissioned a new 1000-bed make-shift hospital in Wuhan, the epicenter for COVID-19 pandemic on 3 February 2020. The hospital was completed in a record span of ten days, named Huoshenshan hospital (Chinese火神山医院) serves as a quarantine hospital designated to treat patients infected with COVID-19 and will play an essential role in the ongoing battle against COVID-19, which attracted the world’s attention. In addition to this, a second field hospital, Leishenshan Hospital (Chinese 雷神山医院) has also commenced construction using the same model.

Surprisingly, there are some trademark applications for registration of these Chinese names of the above-mentioned two hospitals, i.e. 火神山 (screenshot 1) and 雷神山 (screenshot 2) filed on 3 February 2020 in the following classes:

Class 5 for pharmaceutical and medical products

Class 10 for surgical and medical apparatus and instruments

Class 32 for non-alcoholic beverages

Class 33 for alcoholic beverages

Class 35 for advertising; business management services

Class 43 for provision of temporary accommodation services

Bad faith trademark filling for the Chinese name “非典” (pronounced “Feidian”) aka SARS

Moreover, our search for the Chinese name “非典” (pronounced “Feidian”) aka SARS (Severe Acute Respiratory Syndrome – outbreak in 2003) on the PRC Trade Mark Register which showed around 57 applications for trademarks containing the Chinese name “非典” (SARS in Chinese) filed between 2003 to 2019 (Screenshot 3). Nevertheless, none of them were approved for registration.

Comments

In accordance with the amendments to Article 4 of China Trade Mark Law prohibiting bad faith trademark filling – “an application for trademark registration filed in bad faith without any intention to use of the trademark shall be rejected” and stipulation of Article 10(8) of the ChinaTrade Mark Law, signs that detrimental to socialist morality or customs or having any other adverse effect may not be used as trademarks, we envisage that these trademark applications for registration of the names of the two hospitals, i.e. 火神山 and 雷神山 will not be approved for registration, unless they were filed in the name of the local government authority or their authorized organization.    

Article 10 of China Trade Mark Law stipulates that none of the following signs may be used as trademarks:

  1. Those identical with or similar to the State name, national flag, national emblem, national anthem, military flag, military emblem, military anthem, or decorations, among others, of the People’s Republic of China or those identical with the name or symbol of a central state organ, the name of specific place where it is located, or the name or design of its landmark building.
  2. Those identical with or similar to the State name, national flag, national emblem, or military flag, among others, of a foreign country, except as permitted by the government of the foreign country.
  3. Those identical with or similar to the name, flag, or emblem of an international intergovernmental organization, except as permitted by the organization or except that it will usually not mislead the public.
  4. Those identical with or similar to an official mark or an inspection stamp which indicates control or provides guarantee, except where authorized.
  5. Those identical with or similar to the name or symbol of the Red Cross or the Red Crescent.
  6. Those having ethnic discrimination.
  7. Those which are deceptive and likely to mislead the public in terms of the quality or origin of goods.
  8. Those detrimental to socialist morality or customs or having any other adverse effect.

The name of any administrative division at or above the county level or the name of any foreign place known by the public may not be used as a trademark, except that the place name has other meanings or is used as a part of a collective mark or certification mark. Existing registered trademarks containing place names shall continue to be valid.

Hence, the above-mentioned bad faith trademark filling would be disapproved for registration by the examiner on the absolute grounds of Articles 4 and 10 at the initial examination stage.

For more details of the above-mentioned bad faith filling and official names of the disease and virus, you may visit:

http://www.epbiao.com/shangbiaos/29062.html

http://wcjs.sbj.cnipa.gov.cn

https://www.who.int/emergencies/diseases/novel-coronavirus-2019/technical-guidance/naming-the-coronavirus-disease-(covid-2019)-and-the-virus-that-causes-it

Points to note for trade mark owners

While good faith traders will not file any trade mark in connection with COVID-19 or names of the hospital, they may encounter bad faith filers who file their trade mark before they do. 

In view of the recent amendments of the China Trade Mark Laws on bad faith filing, trade mark owners may be able to rely on this ground to pursue relevant actions such as opposition, invalidation and infringement against bad faith filers. In particular, if there is clear and strong evidence showing that the bad faith filer has filed a certain amount of applications and has no real intention to use those trademarks and among which some trademarks belong to others or copies/imitations/translations of the rightful owners’ trademark, but purposely to take advantage of first to file system in China and ride on the rightful owner’s reputation and fame.

Should you have any trademark matters/questions pertaining to inherent registrability, usable availability or bad faith filers in China, please contact evelyne.yeung@oln-law.com or angel.luo@oln-law.com  and we will be pleased to answer and assist.

Screenshot 1 showing applications for 火神山: Source from weibo.cn, one of the most popular online media in China

Screenshot 2 showing applications for 雷神山: Source from weibo.cn, one of the most popular online media in China

Screenshot 3: Source from CNIPA online Trade Mark Register

Are you frustrated by your force majeure clause?

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Synopsis

All businesses should have been incorporating force majeure clauses into their contracts after SARS. If a business does not have a carefully tailored force majeure clause, it is time to draft one and use it going forward. Where a contract does not include a force majeure clause, one needs to revert to the common law doctrine of frustration to determine whether a contract may be terminated. But be warned, the bar is set high as courts do not lightly set aside contracts due to frustration.

The force majeure clause

We live in extraordinary times and it’s safe to say that unexpected events such as the 2019-nCoV outbreak will continue to keep us on our toes. With schools and universities now cancelling classes until mid-March 2020 at the earliest, numerous public events cancelled (including our sacrosanct Hong Kong Rugby Sevens), customer traffic at a standstill for most retail businesses and shipping and logistics everywhere in chaos, force majeure clauses (and the absence of same) are being scrutinized by businesses throughout the region.

A force majeure clause may be quite vague, specifying that the service provider shall not be in breach of the agreement due to events that have arisen out of forces beyond its reasonable control. Other, more considered force majeure clauses cite specific events such as acts of God, epidemic or pandemic, terrorist acts/wars/riots, government or public authority action, labour disputes and even non-performance by sub-contractors, all very much depending upon the specific nature of the service provider’s business. 

The World Health Organization’s declaration on 30 January 2020 that the outbreak of novel coronavirus is a Public Health Emergency of International Concern may be sufficient proof that an epidemic (if not pandemic) has occurred or at the very least, that an event beyond a service provider’s reasonable control has occurred. 

Negotiated force majeure clauses may include a “reasonably foreseeable” requirement. If there is evidence to suggest the purported force majeure event was reasonably foreseeable, then the force majeure clause may not assist the service provider. The timing of the contract’s execution may be critical in such instances, depending on the specific event that has occurred. 

Once a force majeure event has occurred, there is a need to check for notification provisions that are required per the agreement. Strict compliance with notification requirements (particularly timing of notice, form of notice and any signatures required) may make or break a particular force majeure clause.

It is important to note that the majority of force majeure clauses do not immediately terminate agreements. However, they may specify that after a certain period of time, the parties may be discharged from their legal obligations under the agreement. This is another important consideration when negotiating any agreement.

In Hong Kong, parties without specific force majeure clauses in their agreements may turn to the common law doctrine of frustration, depending upon the specific fact situation. This doctrine may be used to set aside an agreement when an unforeseen event either renders contractual obligations impossible to fulfil or fundamentally alters a party’s purpose for entering into the contract. Such instances may include destruction of the subject matter (such as specific goods), intervening illegality by way of new legislation being passed, death or incapacity of a service provider and/or delay.

Successful application of the doctrine of frustration terminates an agreement. Hence the courts do not invoke the doctrine lightly. Simply citing economic hardship (e.g., higher cost of sourcing alternative goods during a force majeure event) will not be sufficient to terminate a specific agreement. Service providers are therefore well advised to have robust and tailored force majeure clauses in their standard agreements.

For a health check of your standard agreement template or specific advice regarding your force majeure clause, please contact Gordon Oldham, Senior Partner at gdoldham@oln-law.com.

For more information about Gordon Oldham, Senior Partner of Oldham, Li & Nie, please visit the following link: https://oln-law.com/gordon-oldham

OLN Ranked in Chambers 2020 (Global and Asia-Pacific)

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We are delighted to announce Oldham, Li & Nie has again to be ranked in the Chambers and Partners Global and Asia Pacific 2020 directory.

Chambers Global

Departments:

  • Corporate/M&A: Independent Hong Kong Firms – Band 3
  • Dispute Resolution (International Firms) – Recognised Practitioner

Lawyers:

  • Gordon Oldham, Corporate/M&A – Senior Statesperson
  • Tracy Yip, Corporate/M&A – Band 2
  • Richard Healy, Dispute Resolution – Band 4
  • Vera Sung, Intellectual Property – Recognised Practitioner

Chambers Asia Pacific

Departments:

  • Corporate/M&A: Independent Hong Kong Firms – Band 3
  • Dispute Resolution: Litigation (International Firms) – Recognised Practitioner
  • Family/Matrimonial (International Firms) – Band 3

Lawyers:

  • Gordon Oldham, Corporate/M&A – Senior Statespeople
  • Tracy Yip, Corporate/M&A – Band 2
  • Richard Healy, Dispute Resolution – Band 4
  • Jade Tang, Employment – Recognised Practitioner
  • Stephen Peaker, Family/Matrimonial – Band 3
  • Vera Sung, Intellectual Property – Recognised Practitioner

About Chambers Rankings

Chambers rankings offer reliable recommendations on the best law firms and lawyers around the globe and in Asia-Pacific. Chambers has been the leading source of legal market intelligence for over 30 years now. Especially in the Asia-Pacific-wide rankings it covers the most internationally important areas of law, such as Arbitration, Capital Markets, and Corporate / M&A.