New arrangement enables faster exchange of evidence between Hong Kong, mainland China in commercial, civil litigation

9 March 2017. By Toh Han Shih.

As a reflection of the increasingly close ties between Hong Kong and mainland China, a new legal arrangement enables faster and more efficient exchange of evidence in civil and commercial cases between both sides. China's Supreme People's Court signed an agreement on Dec. 29, 2016 with the Hong Kong government on this arrangement, which took effect on March 1, according to a posting on the Chinese Supreme Court's website.

Prior to this arrangement, there was no specific law to regulate the exchange of evidence between Hong Kong and mainland China, a Chinese lawyer told MLex.

The arrangement facilitates the exchange of evidence between a court in Hong Kong and a court in mainland China. If lawyers in mainland China or Hong Kong need their local court to obtain evidence from the other side, the court can request assistance from the court of the other side, the Chinese lawyer explained.

With increased business involving Hong Kong and Chinese entities, more disputes are likely to materialize where evidence will be required from either jurisdiction, said Hin Han Shum, a Hong Kong-based lawyer at Squire Patton Boggs, a US law firm. The move to facilitate the efficient gathering of evidence should save time, especially when key evidence is located outside the jurisdiction where the litigation is occurring, Shum said.

"With improved efficiency, the costs of the litigation may also be reduced to the benefit of the client. The new law will be welcomed for the enhanced certainty of the procedures," she added.

Ronald Cheng, a partner at O'Melveny, a US law firm, said, "Companies with cross-border litigation will want to give consideration to the arrangement, given that it describes a process with endorsement by the governments in Hong Kong and the mainland."

Previously, when a Hong Kong litigant wished to obtain evidence from mainland China, they had to submit a written request, which subsequently passed through various administrative organs in Hong Kong and mainland China, and finally to the relevant mainland Chinese courts, Cheng said. "It could take a long time before a litigant could get an answer from the authorities."

The new arrangement includes guidance suggesting the evidence should be handed over within six months of receipt of the letter of request, limiting the time needed to expedite the process.

The arrangement simplifies and clarifies the process, Cheng said. In cases in the past, some private litigants in Hong Kong obtained evidence in mainland China on their own, Cheng noted.

Under the arrangement, a mainland Chinese court seeking evidence can ask a Hong Kong court to perform certain functions including questioning witnesses, obtaining documents, taking photographs, and inspecting and freezing assets in Hong Kong. A Hong Kong court can ask a mainland Chinese court to obtain recorded testimony and electronic data from witnesses.

The arrangement stipulates that if a court cannot hand over the evidence because it would violate the laws of the court's jurisdiction, that court should inform the requesting party, so the latter can modify its request to adhere to the jurisdiction's laws.

In Hong Kong, there has been concern among some quarters that the city's rule of law might be undermined by mainland Chinese authorities, despite the guarantee of Hong Kong's autonomy under the One Country, Two Systems arrangement. In January, this concern was exacerbated with the abduction of a Chinese tycoon, Xiao Jianhua, from Hong Kong to mainland China to assist Chinese authorities in criminal investigations into possible fraud and corruption.

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