By Kenneth Yung, Associate

Previously, legal practitioners were only obliged to advise their clients involved in family litigation as to the availability of family mediation and to provide them with the relevant information, but the parties were then free to opt out of family mediation as they saw fit or appropriate.

However, since the new Practice Direction 15.10 issued by the Hong Kong Judiciary came into effect on 2^nd May 2012, parties to family litigation instituted on or after 2^nd May 2012, are required to consider engaging in mediation to resolve their dispute. Each party, or the party’s legal representative, must file a Certificate of Mediation with the Court indicating whether or not the party wishes to attempt mediation, and if one chooses not to do so, the party must set out the reason.

Any party who does not wish to attempt mediation must be made aware of the possibility of the Court making an adverse costs order when a party “unreasonably fails to engage in mediation”, as the new Practice Direction 15.10 expressly provided that:-

1.4    In exercising its discretion on costs, the Court takes into account all relevant circumstances. These would include any unreasonable failure of a party to engage in mediation where this can be established by admissible materials. Legal representatives should advise their clients of the possibility of the Court making an adverse costs order, where a party unreasonably fails to engage in mediation.

1.5    The Court will not make any adverse costs order against a party on the ground of unreasonable failure to engage in mediation where:
(i)    The party has engaged in mediation to the minimum level of participation¹ agreed to by the parties or as directed by the Court.
(ii)     A party has a reasonable explanation for not engaging in mediation.

Footnote 1 -    An example of a specified minimum level of participation may be as follows: “Agreement between the parties as to the identity of the mediator and the terms of his or her appointment, agreement as to the rules applicable to the mediation (if any) and participation by the parties in the mediation up to and including at least one substantive mediation session (of a duration determined by the mediator) with the mediator”.

With the new Practice Direction 15.10 now in force, it brings the Court’s approach to mediation in Matrimonial and Family proceedings more in line with other civil proceedings (since Practice Direction 31 came into effect on 1^st January 2010 – a party may face an adverse costs order if one fails to engage in mediation to the minimum level of participation or has no reasonable explanation for not engaging in mediation).

Clients should be aware and be warned that if the Court considers that a party has unreasonably refused to attempt mediation, and insisted on pursuing the dispute by litigating to trial at Court, the party may not be awarded an order for its legal costs even if the party succeeded at trial!

It is therefore advisable for any party in Matrimonial and Family proceedings to engage in mediation to the minimum level of participation to avoid any potential adverse costs order made by the Court on the ground of unreasonable failure to engage in mediation.

This article is for information purposes only. Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances.

The Globalaw 2012 Asia Pacific Regional Meeting was recently held in Hong Kong and hosted by Oldham Li & Nie. 

The event took place from the 19th to the 21st of April, 2012. There were 33 Globalaw member firms represented, most members from the Asia Pac region, from Korea to NZ and many from further afield with a strong presence from dedicated members from across the USA, England, Netherlands and France.

There were very interesting talks by Itzik Amiel, Richard Healy, Christopher Hooley, Rickesh Kishnani, Philippe Koutouzis, Gordan Oldham, Mike Rowse, Arthur Shay and Vera Sung.

In the year of the Dragon, specifically the rain dragon, the weather was very apt. However the tropical downpours, which limited sightseeing visibility at the Peak and cancelled the afternoon hike, did not dampen the spirits.

The Globalaw members were treated to various activities around Hong Kong including a trip on the Aqua Luna boat, which sailed around the Hong Kong harbour, before dropping guest off at the world renowned Hutong restaurant in Tsim Sha Tsui. Sightseeing tours included the Big Buddha (largest bronze Buddha in the world, 34m high), the Po Lin Monastery, the Peak, Stanley Market and a hiking trip led by Gordon Oldham.

We would like to thank all of the Globalaw members who travelled across the globe to attend this event and ANT Trust & Corporate Services for helping sponsor this event.

www.flickr.com Oldham Li & Nie's GLobalaw Asia Pacific Regional Meeting 2012 photoset

By Elodie Dellavolta, Foreign Qualified Lawyer

China has its own Intellectual Property (“IP”) rules so you need to learn these quickly!
Here are 10 “Key Rules” to enable you to properly protect your IP in the PRC and so reduce your business risk.

1.    Rule No.1:  Registration of your Trade Mark in your country of origin gives you no similar Protection in the PRC.

Trade Mark rights are territorial and the ownership of a Trade Mark in one country generally provides no advantage when seeking to enforce that Trade Mark in another country. You must register your Trade Mark without delay in the PRC, and ideally within the 6 months of its application in another country, to possibly back date the PRC application.Protection by registration in the PRC does not cover Hong Kong, Taiwan, Macau.  So, registration of your Trade Mark in Hong Kong, Taiwan and Macau does not give you any protection in the PRC. You must separately register your Trade Mark in each of those separate legal jurisdictions.

2.    Rule No.2:  Be the first to file in the PRC. There is no substitute for this.

Unlike in the US where the Law tends to favour the user of a Trade Mark, China’s IP Law favours  the first party to file. There is no effective protection without registration in the PRC. Also remember never to rely on others to register your Trade Mark; indeed if another party registers a Trade Mark in its own name, it may even be able to claim against you!

3.    Rule No.3: Check your Trade Mark is available for registration and use

Take professional advice on the registrability of your Trade Mark before making any application. Conducting a comprehensive search on the availability of the Trade Mark in the PRC is recommended.

4.    Rule No.4: Enforcement of your Trade Mark can only be effected, once your Trade Mark is registered in the PRC.

You don’t have recourse to the different methods of enforcement in the PRC until you actually have a PRC Trade Mark Registration Certificate. However, be aware that the turnaround time to obtain Trade Mark registration in China (PRC) is 12 to 24 months, from application.
If entering into any collaboration with a Chinese partner, do ensure that the relevant contract protects your Trade Mark rights and do ensure that there is a clear written agreement as to who owns what IP.

5.    Rule No.5:  Registration of your western language Trade Mark does not protect the Chinese character version of the same Trade Mark.

English is still not widely spoken in the PRC and so Chinese consumers often find that a Chinese name is much easier to pronounce and remember. The Chinese characters version of your brand name may have even more value than the original foreign-language name.
If you do not protect the Chinese language version of your Trade Mark, a third party could register such and prevent you from using it, as recently experienced by HERMES, the French luxury brand company, which lost an appeal to trademark the Chinese language version of its name in China.
So, consider filing a translation and or transliteration of your Trade Mark, in addition to its English character version.

6.    Rule No.6:  Apply for the Trade Mark for your existing goods/services and also for goods/services to be developed over the next 3 years

Note that the protection of your Trade Mark is limited to the relevant goods/services that the registration covers.
The Chinese system divides each 45 international classes of goods/services into subclasses. To efficiently prevent others from registering/using the same or a similar Trade Mark in the PRC without your prior consent, it is very important that the specifications of goods/services under the registered Trade Mark is appropriately sub classed. The Chinese Registrar appreciates the similarity between the goods/services (E.g: protection of a trade mark for “jeans” will not enable you to prohibit registration/use of a similar Trade Mark for “socks” by a third party), since they fall within different sub-classes.

7.    Rule No.7:  Monitor your Trade Mark

We recommend you to subscribe to a “watch service” so that you receive a report of all similar Trade Marks once advertised.
Also proactively record your Trade Mark with the PRC General Administration of Customs (GAC) to access a 7-years period of PRC Customs protection in the course of the import and export of goods bearing the Trade Mark.

8.    Rule No.8:  Use your Trade Mark within 3 years of registration

Use your Trade Mark to prevent your right being cancelled for non-use. Ask for our advice to keep your registration alive before it is challenged by a third party.

9.    Rule No.9:  Protect your Trade Mark through domain name  registration under the Chinese top level domain “.cn”

10.    Rule No.10:  Adjust your Trade Mark  licensing agreements to fit into the PRC legal system

Remember, certain clauses of any IP licence may be considered invalid under the Chinese legal system, so again, take legal advice in advance!
IP protection is a critical part of ensuring your business success, so get it right. Mistakes can be time-consuming and expensive to resolve.
IP protection is a complex legal area, so obtain professional advice as early as possible.

For enquiries related to this, please contact Chris Hooley (chooley@oln-law.com), Vera Sung (vera.sung@oln-law.com) or Elodie Dellavolta (elodie.dellavolta@oln-law.com).

By Richard Healy, Partner.

You may have read recently that the People's Republic of China ("PRC") Ministry of Justice has recently issued a directive requiring lawyers in mainland China to take an oath of loyalty to the Communist Party.  Accordingly, all newly admitted lawyers, or lawyers renewing their practicing licences are required to swear an oath of loyalty which includes the following wording:

"I promise to faithfully fulfill the sacred mission of socialism with Chinese characteristics….. be loyal to the motherland its people and to uphold the leadership of the Communist Party of China."

The justification for requiring this oath is that it is supposed to increase the integrity of Chinese lawyers. Whilst that aim seems doubtful, this requirement has drawn criticism from many quarters within China suggesting that it will hinder the development of the Chinese legal system and damage the rule of law in the PRC.

This situation should, however, be contrasted to situation in Hong Kong, which has the status of a Special Administrative Region within the PRC and applies principles of "one country two systems".  The Hong Kong rules of professional conduct do not require the taking of any such oath and indeed the fundamental principles of professional practice emphasize the duty to the client as set out in Rule 2 of the Solicitors' Practice Rules:-

"A solicitor shall not, in the course of practicing as a solicitor, do or permit to be done on his behalf anything which compromises or impairs or is likely to compromise or impair-
(a)    his independence or integrity;
(b)    the freedom of any person to instruct a solicitor of his choice;
(c)    his duty to act in the best interest of his client;
(d)    his own reputation or the reputation of the profession;
(e)    a proper standard of work; or
(f)    his duty to the court."

It should also be noted that common law principles that still apply in Hong Kong, including the principle of confidentiality between lawyer and client and legal professional privilege. The directive by the Chinese Ministry of Justice requiring lawyers to swear an oath of loyalty to the Chinese Communist Party perhaps does no more than reiterate what many overseas have long suspected, that mainland Chinese lawyers first and foremost obligation is to the State and the Chinese Communist Party.  For this reason many overseas clients prefer to take advice as to their overall strategy and structuring of China operations from Hong Kong lawyers where they know they will receive independent advice based solely upon the client's best interests.

OLN can assist you with PRC matters

OLN is happy to assist you with China related matters.  With our team of experienced lawyers and our years of experience in helping our clients strategize and structure deals in China, OLN is able to serve your needs comprehensively.

OLN offers a wide range of services including the establishment and maintenance of business presences in China and all that is associated with such a business.

Associate foreign law firm Ginestié Magellan Paley-Vincent (GMPV) and Oldham, Li and Nie took part on 27 March 2012 to the second edition of "Travailler ensemble in Hong Kong", a forum organized by the French Chamber of Commerce and Industry in Hong Kong (FCCIHK). The purpose of this forum was for French large companies having business in Hong Kong (such as Veolia Environment, Bachy Soletanche, Ibis etc.) to meet and develop working relationships with Hong Kong based French SME's. This event marked the first time that Ginestié Magellan Paley-Vincent and Oldham, Li and Nie introduced themselves jointly to highlight the advantages of cross boarder practices covering both French and Hong Kong law and the wealth of experience with issues such as foreign direct investment in China. Maëva Slotine participated in her capacity of Head of GMPV Hong Kong Office; Tracy Yip represented OLN Finance, Company and Commercial Department and Adam Hugill OLN Employment and Dispute Resolution.

In the article “Be careful when you sue the boss for being sacked” (Hong Kong Business, February edition), OLN lawyer Adam Hugill comments on the case of Chan Wai Ho v Civil Service Bureau DCEO7/2010.

Adam Hugill is an Associate in OLN’s Employment and Dispute Resolution Practice Groups (and not a partner as stated in the article)

By Richard Healy, Managing Partner

The decision to bring a claim or fight a case may be one of the difficult problems faced by any business.

Before embarking upon litigation it is essential to balance the merits of the case against the potential costs, which are not limited to the financial costs.

Whether you win, lose, or draw the case it will be a major distraction. Staff (very often senior management) will have to dedicate resources to locating documents, discussing the intricacies of the case with lawyers providing input to witness statements etc. Obviously, whilst they are engaged in this process they cannot be performing their regular occupations. 

Further, litigation is by definition uncertain.  The most solid looking cases can fall apart when they reach court and any weaknesses will be quickly exploited at trial.  

The case of 2010 BSkyB v EDS case best illustrates how the outcomes of litigation can be a bolt from the blue. A £48million contract was entered into between BSkyB and EDS for the implementation of a customer relationship management project. Unfortunately, the business relationship proved unsuccessful and BSkyB subsequently brought legal proceedings against EDS, alleging that EDS made fraudulent misrepresentations that EDS was able to perform the contract within timescales.

Perhaps the most talked about aspect of the case was the performance of a key witness and former senior EDS employee, Joe Galloway who headed EDS’ Customer Relationship Management Division and was in effect the mastermind behind its bid.  Unfortunately for EDS Mr. Galloway almost single handedly demolished its defence and was found to have falsified evidence.

The most devastating blow to his credibility came from a dog name Lulu belonging to Mark Howard QC (who has recently been retained by OLN in connection with a piece of litigation).  Mr. Galloway was adamant in his evidence that he had attended and duly obtained an MBA from Concordia College in the US Virgin Islands, this went so far as to claim that he attended numerous classes a day for several months.  These claims, however, were demolished when Mr. Mark Howard QC produced the MBA Certificate which his dog Lulu had successfully obtained on the internet from Concordia College.  Lulu in fact achieved better grades than Mr. Galloway. 

The upshot of it was that Mr. Justice Ramsay found that Mr. Galloway did not just seek to boost his academic qualifications which might have had a limited effect on his credibility but that he gave completely falsified evidence.  In his judgment he stated “Joe Galloway’s credibility was completely destroyed by his perjured evidence over a prolonged period.  It is simply not possible to distinguish between evidence that he gave on this aspect and on other aspects of the case.  My general approach to his evidence has therefore to be that I cannot rely on the truth of his evidence unless it is supported by other evidence or there is some other reason to accept it.”  This left EDS with little alternative but to accept that Joe Galloway had lied to the court and perhaps hardly surprisingly he was dismissed from his employment with EDS. After a long battle, the parties announced a £318million settlement of the dispute – an amount way beyond the capped liability pursuant to the original contract!

While a majority of litigation cases settle, many settle after costly expenses have been incurred.  Assessing the risks of litigation can provide an evaluation of the merits and potential costs associated with a particular piece of litigation at an early stage.

BSkyB v EDS leaves us practical issues to consider. While the outcome of the case was indeed quite disastrous for EDS, litigants can take measures to reduce the various risks of litigation such measures can be summarized as PREPARATION, PREPARATION, PREPARATION.


•    Objectively assess your case before filing a lawsuit as litigation can be extremely resource-intensive – BSkyB v EDS lasted for 110 days, involving 500,000 documents and 70 witnesses!

•    Examine the facts, evidence, and claims that he or she wishes to present. Summarize the key facts in advance by reviewing documents or any available information, and interviewing witnesses.  Check that their statements are consistent with each other.

•    Create a succinct outline of the strengths and weaknesses of the position of your case. While supporting evidence and witnesses that prove your case can be the keys to your success, there is always a chance that a court might not accept all of your information as evidence. If your case depends highly upon oral evidence, this should be taken into account when determining the presentation and approach of your case.

•    Try not to rely upon the evidence of just one witness as the dishonesty of a witness can completely damage your case.

•    Consider who will need to give evidence – the more witnesses you put forward does not necessarily mean the better it will be for your case.  Confirm the witness background, experiences, and qualifications.

•    Prepare and evaluate the contents of the witness statements as these will be important pieces of evidence to be exchanged with the other side and to be presented in court.

•    What is your legal budget? The financial implications of bringing or defending a claim should be carefully considered. Legal fees in BSkyB v EDS were estimated to be over £70million! Although the general position is that the loser pays the legal fees and expenses of the winner, in reality, the winner often does not recover all costs incurred in its entirety.

•    Estimate hidden costs. There is always a price to pay for litigation, regardless of whether one wins or loses a case. Hidden costs, such as the effort, stress, and man-hours spent can be substantial.

•    Estimate potential reputational damage. Litigation can result in irreparable damage in reputation. Companies may strain relations with its customers or business partners and confidential business information may be revealed to the public.

•    Target an early settlement. With an early settlement, unforeseeable litigation risks and costs can be avoided.

Summary

Litigation can be uncertain.  Unusual circumstances can always occur.  However, these risks can be mitigated by good preparation. 

As Muhammad Ali said “the fight is won or lost far away from the crowd – behind the lines, in the gym and out there on the road long before I dance under those lights”.

Seeking legal advice before deciding on litigation can save you in the long run. OLN can guide you through all aspects of your case and advise on whether litigation is the best option. We pride ourselves in looking at the case from multiple angles, whether it be the opportunity cost of your employees, the financial reward or the damage to your brand.

OLN entered two teams into the Child Welfare Scheme (CWS) City Challenge.

The event, which was held on the 18th of February 2012, is an "Amazing Race" themed challenge were participants navigate Hong Kong island in a scavenger hunt. The race included tests on Nepalese general knowledge and fun challenges along the way.

One of the OLN teams, led by Adam Hugill won the corporate challenge.

The following article interviews another OLN team leader, Chris Hooley, head of the Corporate and Commercial Practice.

Click to enlarge