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Estate issues in Hong Kong when French nationals are involved

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The settlement of a French national’s estate including assets in Hong Kong can be relatively costly, long, and problematic if simple precautions, such as the appointment of an executor, are not taken.

From a Hong Kong perspective, which law applies to an international estate?

To determine this, the distinction between movable and immovable property is used:

  • Movable property is governed by the law of the deceased’s “domicile” (a common law concept referring to one’s permanent home);
  • Immovable property is governed by the law of the place where it is situated, “Lex Situs“.
  • The notion of “domicile” is to be determined as a matter of priority since it can determine the law applicable to movable property.

To determine the “domicile” of a person, it is necessary to determine where the person intended to take up residence and whether he/she had severed his ties with his/her domicile of origin.

Whether the death took place in Hong Kong or not, regardless of the law applicable to the estate, as soon as the estate includes assets in Hong Kong, whether movable, such as a bank account, shares held in a securities account, or real estate, it will be necessary to go through the “Probate” procedure.

By “Probate”, we refer to a judicial procedure for the settlement of estates, specific to common law countries such as Hong Kong.

Dealing with estates in Hong Kong often confuses French nationals because the way estates are handled in France varies significantly.

Indeed in France, the notary takes charge of the entire procedure from the opening of the estate, the determination of the heirs to liquidation and sharing, including the inventory of assets. In Hong Kong this role is entrusted to an executor, whether professional or not.

Hong Kong law provides for two options:

  • appointing an executor by way of a will; and
  • the absence of a will and in this situation, relies on the law to appoint the administrator of the estate.

If an executor is not appointed, the settlement of the estate in Hong Kong will take longer, and the settlement of the estate relating to the property in France will be suspended during this time.

The Probate Procedure

The opening of the estate in Hong Kong requires the filing of an application with the Probate Registry, a division of the High Court of Hong Kong, for the issuance of a Grant of Representation Order, empowering the executor or administrator, as the case may be, to manage the estate. Once the Grant of Representation is obtained, the procedure does not stop there, as there are a certain number of other legal requirements to be met.

The process will be less troublesome in the presence of an executor appointed by the deceased in his will. Indeed, the administrator of an estate has to prove his capacity, which is all the more complicated when the deceased was a foreign national.

The importance of drafting a will in Hong Kong

In the absence of a will, the “Probate” procedure (which is already slow) is further lengthened.

For this reason, we strongly recommend that French nationals owning property in Hong Kong, or in another Common Law country, have a will drawn up in English to designate one or more executors.

It is important to emphasize that a Grant of Representation is required to take possession of the property in Hong Kong, even if French law applies to the whole estate. Banks will require this Grant of Representation to release funds held in an account in the deceased’s name, and this applies to other common law countries.

For French nationals who move from one country to another and hold property in several common law countries, there are simplified procedures to avoid having to obtain a Grant of Representation in each country.

Finally, it is essential to be reminded that when it comes to international estate matters, we must make a distinction between the following:

  • the determination of the law applicable to the estate, which determines the rules of devolution of the estate (the heirs and the share due to them);
  • the settlement of the estate (role of the notary in France/ Probate procedure in Hong Kong); and
  • inheritance tax.

In light of the above, the assistance of a lawyer to guide you through the successive steps of an estate (being at the stage of the planning or the opening of the Probate procedure) is fundamental.

If you need more hands-on assistance with your legal issues, we recommend to contact one of us at OLN. Our French practice has decades of experience advising French nationals on estate planning and can provide expert advice to help you protect your Hong Kong assets.

If you have any questions regarding your estate planning or other legal issues, feel free to contact us.

Disclaimer: This article is for reference only. Nothing herein shall be construed as Hong Kong legal advice or any 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.

OLN Has Once Again Been Recognised by The Legal 500 Asia Pacific

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We are pleased to share that Oldham, Li & Nie has been recommended again by The Legal 500 in its 2023 Asia Pacific edition for our Commercial, Corporate and M&A practice. The Legal 500 stated “Under the leadership of Tracy Yip acts on corporate matters across Asia, including restructurings, acquisitions and disposals, corporate governance issues, joint ventures and commercial agreements. Yip heads up the firm’s M&A practice, while founder and senior partner Gordon Oldham has a particular focus on the drafting of commercial contracts and restructurings. Simon Wong is another name to note with experience across M&A and capital markets deals.”

OLN has also been named for the first time as the Firm to Watch for our Restructuring and Insolvency practice – “Oldham, Li & Nie, led by Richard Healy, carries a strong breadth of restructuring & insolvency matters and has garnered specific expertise in audit negligence as well as large scale winding up proceedings.”

OLN IP Services, our Intellectual Property consultancy, has also been recognised by the directory this year.

Legal 500 Asia Pacific Leading Firm 2023 Oldham, Li & Nie
Legal 500 Firms to Watch Oldham, Li & Nie
About The Legal 500 Asia Pacific

Published annually, The Legal 500 Asia Pacific Guide provides unbiased commentary and insight into the legal marketplaces of 25 Asia Pacific jurisdictions.

The rankings reflect the results of detailed analysis of law firm submissions and thousands of interviews conducted by The Legal 500 team of experienced researchers.

The directory also lists Firms to Watch to highlight those likely to make their mark on the rankings in the years to come. 

OLN Recognised Again as a Leading Firm by Chambers and Partners

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We are pleased to announce that Oldham, Li & Nie has been recognised once again as a Leading Firm by Chambers & Partners in its newly released Greater China Region Guide 2023.

Chambers & Partners is the world’s leading provider of legal research and analysis. Its second edition of Greater China Region Guide brings together extensive, independent in-depth market analysis, and rankings of the leading law firms and professionals across all four jurisdictions of the Greater China Region. It features five exclusive sections: China (International Firms), Hong Kong Bar, China (PRC Firms), Macau SAR and Taiwan Jurisdiction. 

Our departments were recommended as follows:

  • Corporate/M&A: Independent Hong Kong Firms – Band 3
  • Family/Matrimonial (International Firms) – Band 4

Our four lawyers received individual rankings:

Chambers Greater China Region 2023 Badge - Ranked Firm Oldham, Li & Nie

OLN獲新發佈的《亞洲法律概況2022/23年度排名》高度推薦

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我們很高興地宣布，高李嚴律師行再次獲得《亞洲法律》的高度推薦。

《亞洲法律概況2022/23》認可本行在以下業務領域的專業知識：

  • 爭議解決 – 高度推薦
  • 企業併購 – 推薦
  • 知識產權 – 推薦
  • 勞工及僱傭 – 推薦
  • 私人客戶 – 推薦
  • 重組與破產 – 值得關注

高李嚴律師行還於以下行業被推薦：

  • 保險 – 推薦
  • 消費品及服務 – 值得關注
  • 科技及通訊 – 值得關注

《亞洲法律》亦認可本行的合夥人在各自的業務領域中獲得排名:

  • 高國峻 被公認為爭議解決方面的業界資深律師
  • 李卓賢 被公認為爭議解決方面的卓越律師
  • 葉琳寶 被公認為公司企業和商業法方面的卓越律師
  • 宋靜妍 被公認為知識產權方面的卓越律師
asialaw Profiles 2023

關於《亞洲法律》

《亞洲法律概況》是唯一一份全面分析亞洲地區和國內律師事務所以及該地區頂尖律師的法律名錄。

概況於每年 9 月在線上發佈，而今年的排名為23 個司法管轄區（從孟加拉到越南）以及 28 個行業和業務領域提供律師事務所和律師推薦。

仲裁員的披露責任：模糊不清的法律救濟

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（本文於《香港律師》二零二二年八月期刊發表）

在Halliburton Company v Chubb Bermuda Insurance Ltd [2020] UKSC 48一案中，英國最高法院認為，仲裁員有法律責任披露可能掩蓋其公正性的事實和情況。此判決被譽為釐清了有關仲裁員利益衝突的英國法律，但令人費解的是，法庭卻未有實際制裁備受挑戰而又未能履行其披露責任的仲裁員。

本文將審慎研究由賀知義勳爵宣判的英國最高法院一致裁決。作者將論證，第一，披露責任的理論根源並不穩妥。其次，訂定披露責任儘管有助提高國際仲裁的透明度，但如沒有任何實際後果，只會落得毫無意義。本文將指出有關辭呈機制和擬議制裁的邏輯缺陷。我等謹認為，英國最高法院應採用明確測試：無法履行披露責任的仲裁員應被免職，並向仲裁方提供救濟 。

背景

2010年墨西哥灣井噴事故導致Deepwater Horizon鑽油臺遭受破壞。與其他涉事方達成了11億美元的和解協議後，Halliburton根據其責任保險單向Chubb展開仲裁，尋求彌償。在雙方未能就第三名仲裁員的委任達成協議下，英國高等法院在經抗辯的聆訊後委任了Kenneth Rokison QC 為仲裁員。Rokison隨後在 Halliburton 不知情的情況下獲任命為另外兩宗與 Deepwater Horizon 事件相關的仲裁程序的仲裁員。Halliburton發現後，對Rokison的公正性提出質疑，並根據Arbitration Act 1996（「1996年《仲裁法》」）第24(1)(a)條要求免職 。

英國最高法院裁定，仲裁員有一項「次要」的法律責任披露任何可能影響其獨立性或公正性的情況。賀知義勳爵認為，這法律責任蘊含於1996年《仲裁法》第33條，而其規定仲裁員在仲裁程序中必須公平公正地行事。賀知義勳爵認為只有仲裁員作出強制披露，才能夠履行其法定公正責任，以及委任合同中相應的隱含條款 。

應用上述法律原則，英國最高法院同意仲裁共同方確實可於重疊的仲裁程序中先測試其案件強弱，從而於餘下仲裁程序取得優勢，故仲裁員有責任披露任何相關任命，以消除表面偏頗的印象。然而，仲裁員沒有披露也不代表會自動被免職。這極其量只構成一個考慮因素。儘管Rokison確實沒有遵從披露責任，剝奪了Halliburton在仲裁程序中異議的機會，從而損害了仲裁的公平性，但英國最高法院平衡各因素後裁定Rokison無需請辭 。

使人困惑的理論根源

首先，披露責任法理上的先天缺陷剝奪了其任何獨立存在的可能性。披露責任據稱的根源為以 1985年《聯合國貿法會國際商事仲裁示範法》（《聯合國示範法》）條文為藍本的1996年《仲裁法》。為了跟上仲裁界不斷演變的標準和期望，1996年《仲裁法》刻意省略任何關於披露責任的條文 。英國最高法院如此對1996年《仲裁法》第33條的重新解釋，不僅顯得與立法原意不符，更使披露責任有名無實。一個較少爭議的主張，又不把披露責任從屬於公正責任，可能是基於必要性和公共政策考慮將其隱含在委任合同中（Haywood v Newcastle upon Tyne Hospitals NHS Foundation Trust [2018] UKSC 22, [32]）。下文將進一步闡述，若英國議會採納了《聯合國示範法》第12條，法定救濟亦理應存在的。

空有法律責任而沒有救濟：鼓勵仲裁員明知故犯

英國最高法院判決中最明顯的不足，是未有因應仲裁員違反披露責任而提供周全的救濟。英國最高法院於決定仲裁員是否應出任該職位時，樹立了雙重標準：

1.       如果尋求任命的仲裁員未能獲得仲裁共同方同意，向非共同方就相關仲裁作出必要的披露，該仲裁員自然應拒絕任命；

2.       相反，若然仲裁員明知故犯，在披露自己已出任相關仲裁程序的仲裁員前已接受任命，則除非法庭發現偏頗，該仲裁員也不會被免職 。

換言之，英國最高法院無法提供任何制裁（或誘因 ）來阻止仲裁員接受不應接受的任命。共同仲裁員在相關任命中出現偏頗的風險不應被低估。仲裁方在有關連的仲裁程序中藉指定同一位仲裁員以獲得「內幕信息」的情況並不罕見（例如Beumer Group UK Ltd v Vinci Construction UK Ltd [2016] EWHC 2283）。保密訴訟與生俱來的是缺乏公眾的監督和一致的裁決標準，如果法院無法有效執行披露責任，該責任無異於無牙老虎。Rokison絲亳無損地脫身，正正揭示了披露機制現存的漏洞，本應為強制的機制卻淪為自願性質。

被削弱的阻嚇力

另一議題是針對違反披露責任的兩項提議法律制裁能否起到威懾作用，並提供足夠救濟。賀知義勳爵首先指出，當主體事宜接近需要披露的界線，即合理第三者會斷定不披露將構成看似偏頗，則不披露本身已足以構成對該仲裁員公正性的合理懷疑，使其被免職。不過這實際只複述了錯綜複雜的偏頗測試，沒有提供任何獨立的救濟予仲裁方。

其次，當沒有披露的主體事宜被裁定屬嚴重，但不披露本身不構成偏頗，仲裁員可被命令承擔自己的辯護費用及／或提出異議一方的費用。然而，賀知義勳爵引用了1996年《仲裁法》第29條，質疑對失當仲裁員提出個人申索的可能性。第29條的字眼甚廣：除非出於惡意，否則「仲裁員無須為在履行或充作履行其職能時所作或疏忽的任何事情負責」。驟眼看來，如果這條文適用，它亦會防止任何針對仲裁員作出的訟費命令，因為訟費命令亦是一種個人責任。我等謹認為，第29條在此並不相關。首先，披露責任於仲裁員上任前已出現，而任何個人責任豁免權只於此後生效。其次，因不披露而產生的任何責任與仲裁員（充作）履行其職能無關。

若違反責任理應有法律上的回應，公平的補償至少應是該失當仲裁員退還迄今收到的所有報酬，並補償仲裁方在仲裁程序中試圖將其免職而虛耗的訟費。儘管如此，可惜的是Rokison沒有受到任何制裁，不禁令人嚴重質疑上述處罰的可用性。再者，即使Rokison受到法律制裁，於這迂迴曲折的程序中，訟費亦難以充分補償無辜的仲裁方，故確有迫切需要訂定更全面的救濟。

可得的救濟

如上所述，依我等愚見，披露責任應為一項獨立存在的責任，不從屬於公正責任。此外，正如Lady Arden指出，違反披露責任即違反背後的委任合同。英國最高法院應有多種普通法的救濟從Halliburton的困境中把其拯救出來。如仲裁員違反委任合同中如此的隱含責任 ，則仲裁方應可終止合同並要求賠償，正如其他司法管轄區中類似的裁決（見1993年5月12日1996 Rev. Arb. 411, at 411巴黎大法院的判決）。失當的仲裁員亦可能因作出失實陳述而容許仲裁方撤銷委任合同。在適當的情況下，恰當地履行披露責任可為委任合同其中一個先決條件，在條件發生之前，雙方不會受到合同約束，從而消除了任何法律不確定性。

若Halliburton一案發生於香港，《仲裁條例》（第 609 章）第 25 條中申請仲裁員迴避的法定機制則可能派上用場。迴避可從兩方面提出：偏頗或不具備各方當事人約定的資格。「資格」一詞，既未有在法規中定義，亦未有於《聯合國示範法》的注釋說明中解釋。按該詞自然和通常的含義，其意義為一種使某人適合特定工作或活動的特質（《牛津詞典》），自應包括提供全面並如實披露的責任。因此，即使在沒有出現任何偏頗情況下，法院也可以僅因為仲裁員違反披露責任，將失當仲裁員免職。

結論

恕我們直言，英國最高法院對Halliburton案的判決引起的疑問多於其解答的問題。法院沒有充分依據下，訂立了仲裁員的法律披露責任，卻沒有就違反責任而提供週全救濟。法院所提出有限甚或空洞的救濟亦缺乏建設性，尤其是法院沒有盡用現存所有的合同救濟來補償因仲裁員未有履行披露責任而受害的仲裁方。法院的任務是在公正和公平的程序中彰顯各方的利益，故我等希望法院能夠於適當的時候糾正這個裁決。

鳴謝

作者感謝高李嚴律師行合夥人梁泳澤 (Dantes Leung) 律師的研究指導。作者承擔全部錯誤及遺漏的責任。

The Succession of Digital Assets: NFTs, Cryptocurrency or Online Accounts

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There has been an increase of wealth distributed in various forms of digital assets or platforms.  For example, NFTs, cryptocurrencies such as Bitcoin or Ethereum or even online social media or gaming accounts may have substantial value in them. Investment is no longer restricted to its traditional forms, leading to the emergence of many alternative assets investments, most of which are done on an anonymous basis.

To consider how to plan the succession of digital assets, it would be useful to distinguish between digital assets that are transferable and those that are non-transferable.

Transferable Digital Assets

Transferable digital assets include cryptocurrency, NFTs, funds kept in online accounts such as Alipay or WeChat pay.  These can generally be passed down by including provisions in a will. Most countries may treat them the same as any traditional assets (such as bank accounts or real estate property) and require a form of grant of representation to access the digital assets. 

Some companies may even provide the feature on their software platform whereby the user can designate an individual as an emergency contact to receive the data in the user’s account under conditions specified by the user, such as upon the user’s death or incapacity. This feature would potentially allow an executor or trustee nominated in the user’s will (if there is one) to gain access to valuable personal, financial and business information after the user’s death even before presenting an authenticated grant of probate to the company, as well as to act on such information for the benefit of the user’s next generation pursuant to the will.  For example, Apple has a policy known as Legacy Contacts where the person who is set as a Legacy Contact can access photos, messages, notes (but not passwords, music, subscriptions, etc.) with just the access key generated when the Legacy Contact was set and the death certificate.

Given the popularity of digital assets, popular trading platforms for cryptocurrency and other digital assets already have some form of structured policy for dealing with account holders who have passed away.  Some trading platforms have adopted the traditional requirements of dealing with any other physical asset, i.e. requiring beneficiaries to provide the grant of representation, death certificate and other supporting documents to allow access into the deceased person’s account, whilst other platforms give their users options to complete their know-your-client procedure which allows the platform to identify the person using the account, and therefore assist beneficiaries in accessing such accounts.

However, as currently there is no uniform standard on how to pass on digital assets, the best and simplest method is to make sure your beneficiaries are able to find out not only what digital assets you own.  Importantly, and due to the highly secured and encrypted nature of digital assets such that a form of password or key is required to access the assets, it may be important to store such passwords in a safe place but also make your beneficiaries aware of how to access such passwords and keys.

Non-transferable Digital Assets

Non-transferable digital assets are usually digital assets that are licensed for personal use, but not owned in a legal sense.  These include email accounts, social media handles and accounts or mobile app accounts and information contained therein. These generally cannot be passed down simply by a will and may require non-conventional estate plans.

Despite the personal nature of these non-transferable Digital Assets preventing them from being passed down, it is possible to preserve these in accordance with the wishes of the deceased person.  For example, Instagram offers a service known as “memorialising” the deceased person’s account, which allows the memorialized account to be kept as if it was frozen in time.  Facebook offers a further service that allows the person to designate a legacy contact to manage the memorialized account to a certain extent (such as writing a pinned post to share a final message or to update the profile picture, but not allowing removing or changing past posts etc.).  YouTube also provides an estate planning service known as Inactive Account Manager, which allows the person to designate who should have access to the information or whether the account should be deleted.  Otherwise, individuals may need to go through hoops of customer service and in the end not even be able to access any personal or important information.

Inheritance tax considerations

Digital assets (in particular cryptocurrencies) can fluctuate in value rapidly.  In Hong Kong, where estate duty has been abolished, this generally does not create any concern.  However, digital assets may also be based in other jurisdictions that impose inheritance tax, and therefore the applicable jurisdiction of the digital asset or the company through which the digital assets are held before investing in such should be given consideration and taken into account when conducting estate planning.

Conclusion

With diversified forms of valuable assets and technological advancements offering new solutions to asset succession and security, individuals face more considerations than ever in wealth protection and succession.  It is highly recommended that a legal framework should be carefully planned to ensure their wealth can be preserved free from unwanted interference.

Disclaimer: This article is for reference only.  Nothing herein shall be construed as legal 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.