Ask HN: What should you know before contracting with a Hong Kong firm?
4 comments
DISCLAIMER: I am not a lawyer and I'm assuming you live in the US, UK, Latin America, Africa, or some other countries which LACK a bilateral agreement with HK on enforcement of court judgments. Australia, Israel, Germany, & others HAVE such agreements with HK which invalidate the rest of what I'm saying. Look up Foreign Judgments (Reciprocal Enforcement) Ordinance. If you want more free advice, I'd suggest asking the guys at http://geoexpat.com instead, there's lots of HK lawyers there.
"Non-exclusive jurisdiction" clauses are put in because of problems with enforcement of foreign court judgments. If you sue someone in your country and win, but he has no assets in your country, you have to go to his country and convince a court there to enforce your country's judgment if you want to get your hands on any of his money.
Contract law differs a lot between countries, but any judge anywhere whom you ask to recognise a foreign court judgment wants to know at least three things: #1: the court which issued the original judgment actually has jurisdiction. #2: there's no more avenues of appeal above that court. #3: you informed the other guy before you sued him. If you can prove any one of those three is untrue, then you derail the enforcement of the foreign judgment. The "non-exclusive jurisdiction" clause makes it impossible to argue about #1.
Signing a contract for "non-exclusive jurisdiction" in HK doesn't restrict you or HKCorp trying to sue each other anywhere in the world you can convince a judge to listen. But it does mean that if HKCorp sues you in HK, wins, and then comes to your country to collect, you can't argue that the HK court was not a proper venue. While if you sue HKCorp in your country, win, and go to HK to try to get the judgment recognised, the HK judge will want to know why you didn't just sue in HK.
"Non-exclusive jurisdiction" clauses are put in because of problems with enforcement of foreign court judgments. If you sue someone in your country and win, but he has no assets in your country, you have to go to his country and convince a court there to enforce your country's judgment if you want to get your hands on any of his money.
Contract law differs a lot between countries, but any judge anywhere whom you ask to recognise a foreign court judgment wants to know at least three things: #1: the court which issued the original judgment actually has jurisdiction. #2: there's no more avenues of appeal above that court. #3: you informed the other guy before you sued him. If you can prove any one of those three is untrue, then you derail the enforcement of the foreign judgment. The "non-exclusive jurisdiction" clause makes it impossible to argue about #1.
Signing a contract for "non-exclusive jurisdiction" in HK doesn't restrict you or HKCorp trying to sue each other anywhere in the world you can convince a judge to listen. But it does mean that if HKCorp sues you in HK, wins, and then comes to your country to collect, you can't argue that the HK court was not a proper venue. While if you sue HKCorp in your country, win, and go to HK to try to get the judgment recognised, the HK judge will want to know why you didn't just sue in HK.
Thanks for the detailed response. I think my real question is whether if because of some disagreement, that my firm would be forced by law to fly to Hong Kong to argue with them in court. Clearly that seems like a ridiculous expectation, but I have no idea what kind of laws exist between countries about these things. It would seem to me that if they sued our firm in HK court, that our presence is at our own option. Not that we plan or look forward to such an occurrence, but we want to fully understand the risks.
This may be obvious to many, but with regards to the Legal system and contract law Hong Kong is nothing like China. The Legal System in HK is based upon English Law and is very robust. You can be assured of a fair and balanced legal system here but if you are signing a contract with a large HK corporation, I would be more worried about the specific terms of the contract. I believe fighting a large corporation in court, even in the US, is a time and money wasting exercise.
edit: insist on all English contracts as english is one of the official languages of HK.
edit: insist on all English contracts as english is one of the official languages of HK.
My practical advice is to get a lawyer who specializes in international business to cover your butt. If they say it's something that you can legally agree to, then you should also get a lawyer familiar with the laws of the Hong Kong SAR, preferably a bilingual one fluent in both Mandarin and English... or possibly trilingual, depending on how much Cantonese you'd be dealing with.
Get a Hong Kong law firm whose focus in Technology, they will be able to provide more details on the jurisdiction of the country. Maybe you want to go through the list of law firms listed with the Law Society of Hong Kong: http://www.hklawsoc.org.hk/pub_e/default.asp
"The construction, validity, performance and enforcement of this Agreement and the rights and obligations of the parties hereto shall be governed in all respects by the laws of the Hong Kong SAR. The parties hereto hereby agree to irrevocably submit to the non-exclusive jurisdiction of the Courts of the Hong Kong SAR."
What exactly does this mean? That if a Hong Kong court says my firm acted outside the agreement, that we'd have to high tail it over there, or what? I've not done business outside the states before, and I suppose a good lawyer should read this, but I was wondering if anyone had any practical advice to start with.