Battlegrounds

Hong Kong and Singapore are becoming important international disputes hubs, and moves are afoot to further open up their court systems

The growing importance of Hong Kong as an international litigation centre is reflected by the number of heavyweight litigation partners law firms are sending from London to the special administrative region of China.

Hogan Lovells is the latest to jump on the bandwagon. The firm recently elected its London-based partner and global head of litigation Patrick Sherrington to the Asia managing partner role.

“Asia is an extremely important part of our firm, but it has to become a big enough proportion of the firm’s global turnover – my ambition is to ensure our Asian practice grows to a size that reflects Asia’s importance in the global economy,” says Sherrington, who will relocate to Hong Kong for the new role by May. “As far as litigation is concerned, it’s an area we are building up. I want to get my hands dirty and work on litigation cases when I’m in Hong Kong.”

Hogan Lovells currently has five partners in its dispute resolution practice in Hong Kong. In addition to litigation and arbitration cases the firm has seen broader growth in the practice, including in investigation, enforcement and regulatory compliance work.

Freshfields Bruckhaus Deringer and Clifford Chance are two other firms that have recently sent high-ranking litigation partners to Hong Kong. The former has transferred global co-head of arbitration Lucy Reed and head of international commercial disputes Geoff Nicholas to Hong Kong from New York and London respectively, while the latter has relocated London head of banking litigation Matthew Newick to Hong Kong.

Davis Polk & Wardwell’s double-hire from Clifford Chance in Hong Kong is another signal of the growing importance of the practice in the region. With the appointment of Clifford Chance’s Asian litigation head Martin Rogers and partner James Wadham, the US firm has extended its litigation capability from the US to Asia.

Although the total number of court cases in Hong Kong has not increased much in recent years, several have come close to matching the multibillion-pound claims in London and most involve local tycoons. Clifford Chance partner Brian Gilchrist, for example, represented Chinachem Charitable Foundation in a high-profile court battle over the HK$100bn (£8.7bn) estate of Nina Wang, Asia’s richest woman, who passed away in 2007. Counsel on the case included Benjamin Yu SC and Geoffrey Vos QC, and the bill for legal representation was estimated at more than £2.6m.

Martin Rogers, who is soon to join Davis Polk, is currently defending Hong Kong’s billionaire property tycoon Thomas Kwok against ICAC bribery charges. The trial, said to be one of the largest ever corruption cases, is expected to begin next year.

Higher rights

For litigation lawyers working in law firms in Hong Kong the most significant development of the past year has been the introduction of solicitor-advocates.

In February this year 15 solicitors were granted higher rights of audience (HRA), allowing them to argue cases in the higher courts of Hong Kong, such as the Court of First ­Instance, the Court of Appeal and the Court of Final Appeal. Previously, only Hong Kong-admitted barristers could be instructed in these courts.

These 15 lawyers were among the 90 who sought higher rights from the Hong Kong Higher Rights Assessment Board through exemption. However, more disputes lawyers will be able to obtain the rights through the assessment route when that process starts in the ­coming months.

Brock
Brock

King & Wood MallesonsHong Kong litigation partner Denis Brock is one of the 15. Prior to joining legacy Mallesons in 2010 he practised in Clifford Chance’s Hong Kong office for 14 years. Brock has campaigned for the change since 1998, when he became a member of the Hong Kong Law Society’s working party on introducing solicitor-advocates.

“We’re expecting it to be a source of revenue as we internalise some of the fees in litigation cases,” says Brock. “But most importantly, it gives clients a choice. Many clients don’t understand, or resent, the additional cost of instructing barristers as they’re used to one-stop shops in their home jurisdictions. In addition, solicitor-advocatescan ensure greater connectivity ­between the advocacy and the preparatory parts of the case.”

Skadden Arps Slate Meagher & Flom litigation and arbitration co-head Paul Mitchard, who relocated from London to Hong Kong in 2009 to set up the firm’s litigation practice in Asia, is also among the first 15 Hong Kong solicitor-advocates. Mitchard is a solicitor-advocate in England, where he is also a QC.

“HRA offers clients a real alternative to the bar,” says Mitchard. “It also allows arbitration lawyers to deal directly with urgent court applications and court enforcement issues relating to arbitration without the need to instruct a new party.

“It won’t immediately increase our litigation revenue, but it will help us maintain our competitiveness. It will also provide a new way to sell our services and gain clients.”

The development is important for many reasons, but its impact will be felt in a gradual and subtle way.

“I don’t think it will encourage other firms to set up here, but it will encourage firms already here to think seriously about offering the same facility to their clients for competition,” says Mitchard. “I can’t see this having a short-term impact on the market but in the longer term it may create a more competitive advocacy environment. It could also make Hong Kong a more satisfying environment for ambitious litigation lawyers, and a more attractive place for them to stay and practise.”

Independence

While law firms will become more involved in advocacy work in court cases, the development is unlikely to lead to the end of the independent bar in Hong Kong.

“Any responsible professional lawyer acting in the interest of their clients will make a judgement on whether or not to retain barristers for advocacy,” says Gary Seib, the Hong Kong-based chair of Baker & McKenzie’s global dispute resolution practice group. “There will still be responsible allocation of work between the two branches of the ­legal profession.”

Seib and fellow Bakers partner Kareena Teh have both been granted higher rights.

“Law firms will gradually hold more advocacy work, similar to the trend in other jurisdictions,” adds Seib. “This will probably affect junior barristers more than QCs or SCs. Overall, it enhances Hong Kong’s position as a dispute resolution centre. The more advocacy litigation lawyers do, the better they become. This will help improve the legal profession as a whole.”

To better facilitate the growing number of complex and high-profile litigation cases, Hong Kong plans to construct a mega-court facility, known as the West Kowloon Law Courts Building. The development is expected to complete in 2015 and will house 32 courts.

Revenue growth

According to Seib, the growth in dispute resolution work in Asia is phenomenal. Bakers’ Hong Kong and China practice, which consists of 50 fee-earners and nine partners, saw near-30 per cent year-on-year revenue growth, compared with 10 per cent for the whole firm. Commercial arbitration and contentious regulatory are two main areas driving growth, he says.

While Hong Kong is already an established international arbitration seat and its caseflow remains strong, Singapore’s arbitration sector has seen stellar growth. The Singapore International Arbitration Centre (SIAC) reported that it handled 235 new cases in 2012, a 25 per cent increase on the previous year, while the total sums in dispute for the same year reached a new record of S$3.6bn (£2bn).

“The real story for litigation departments in Singapore is the continuing growth in arbitration work,” says Cavinder Bull, a director of Singaporean firm Drew & Napier, and deputy chairman of SIAC. “The actual growth rate of cases handled in Singapore is even higher if ad hoc arbitration is included.”

According to a SIAC report, parties from 39 jurisdictions were involved in cases at SIAC in 2012, with mainland Chinese, Indian, Indonesian and American parties featuring as the most frequent users.

“Most disputes arbitrated in Singapore involve regional issues and the average size is in millions of dollars – much higher than other Asian seats,” says KC Lye, an arbitration partner at Norton Rose in Singapore. “Singapore’s popularity as an arbitration seat has increased significantly among Indian companies – in the past they preferred to have their disputes resolved in London.”

Hogan Lovells’ Singapore arbitration team has also experienced growth, as the total value of the international arbitrations it advised on in 2012 was in excess of US$4bn (£2.7bn).

“Mostly, the contracts involved in arbitration cases are governed by English or Singaporean law. Many of the disputes arose from the energy and resources, infrastructure and international trade sectors,” says Hogan Lovells Singapore arbitration partner Jonathan Leach.

“Foreign investors are also becoming more willing to arbitrate against the government of the country they are investing in,” says Leach.

For example, his Singapore team recently acted for a South East Asia government in its defence of two investment arbitration claims by foreign investors under the UN Commission on International Trade Law (UNCITRAL) rules.

Exciting times

Last year the excitement in Singapore’s disputes resolution practices involved the government’s move to make it easier for English QCs to appear in the Singapore courts on an ad hoc basis. This year, the buzz will continue as the possibility of establishing a Singapore International Commercial Court (SICC) is expected to create a tremendous opportunity for the profession.

“We’ve seen signs that a lot more international firms will enter Singapore and look to set up international arbitration practices,” says Lye. “But I don’t know if the increase in work will support the expanded legal profession here. If a firm sets up shop in Singapore it will need to take a long-term view on profitability, as few can make money within two or three years in this market.”

Indeed, Asia is an exciting and growing region for disputes resolution practices but law firms should be mindful of the intensifying competition and potential pitfalls.

Hong Kong’s first 15 solicitor-advocates

Name Firm Proceedings granted
Geoffrey Nigel Booth Haldanes Criminal
Denis Brock King & Wood Mallesons Civil
Christopher Dobby Hogan Lovells Civil
Matthew Gearing Allen & Overy Civil
Nicholas Hunsworth Mayer Brown Civil
Jason Karas Karas Lawyers Civil
Tak Hong Kwan Kwan & Chow Civil
Jonathan Midgley Haldanes Criminal
Paul Mitchard Skadden Civil
Ludwig Ng ONC Lawyers Civil
Sanjay Sakhrani Herbert Smith Freehills Civil
Gary Seib Baker & McKenzie Civil
Kareena Teh Baker & McKenzie Civil
Richard Tollan Mayer Brown JSM Civil
Yang Ing Loong Latham & Watkins(formerly Sidley Austin) Civil