In the context of cross-border litigation, particularly for fraud claims, the Mareva Injunction, a worldwide asset freezing order, is a nuclear weapon of the law in the fight against international fraud. But commercial litigation lawyers in Hong Kong and other common law jurisdictions are aware of and often faced with practical difficulties in serving the relevant court documents to foreign defendants. These difficulties are exacerbated when trying to serve urgent court documents to alleged fraudsters who are in foreign jurisdictions.
In the case of Hwang Joon Sang and Future Cell Plus Co. Ltd. v. Golden Electronics and others  HKCFI 1084, The Honourable Mr Justice Coleman (“Coleman J”) introduced a novel mode of service to Hong Kong service by way of granting access to a data room to address some of the high costs and inefficiencies associated with fraud claims.
Decision to Allow Service by Data Room
Prior to Hwang Joon Sang decision, plaintiffs applying for a worldwide Mareva Injunction order in complex fraud cases involving multiple defendants were required to pay the bill for service of hard copies of documents (usually by courier), which can run from tens to hundreds of thousands of dollars. Moreover, when serving court documents in foreign jurisdictions, the plaintiffs need to engage foreign counsel to effect service, which is time-consuming and expensive.
Service by granting access to a data room offers a promising alternative to existing methods. In his Reasons for Decision, Coleman J remarked at §36 that:
“In some ways, the provision of the link to the data room might be regarded as akin to an envelope or package containing documents, and the access code or password to use the link akin to the method by which to open the envelope or package. Clearly, the link and the access code together will provide ready access to the documentation in a form which many, if not most, would find more convenient than hardcopy. It would do so in a way which is quick, efficient, and cost-effective...” (emphasis added)
Hong Kong courts have already permitted service to be effected by the use of email. Coleman J has in a small number of other cases permitted service using Facebook Messenger or WhatsApp Messenger, which are both private service channels used either to send documents or a link to documents. But the use of a data room is a distinct and innovative method, as Coleman J noted:
“In this case, Mr Park submitted that I should go further. He referred me to the English decision of HHJ Waksman QC (sitting as a judge of the High Court) in CMOC Sales & Marketing Ltd v Persons Unknown and 30 others  EWHC 2230 (Comm) at §191. In that paragraph, the Judge identified that he had earlier approved a system of effecting service on the defendants which involved use of a data room. He described it as “an innovative feature” of the litigation.”
Coleman J was satisfied that in an appropriate case, a similar mode of service can be justified in Hong Kong. His Lordship notes that under Order 1A rule 2, the Court is mandated to give effect to the underlying objectives of the rules when it exercises any of its powers, and by virtue of Order 1A rule 1(1), the Court is mandated to further the underlying objectives by actively managing cases.
Brief Background of the Case
The plaintiffs in this case claim that they have been tricked by a number of fraudsters in moving assets of the plaintiffs out of Hong Kong. The plaintiffs assert proprietary claims over the funds in bank accounts held by the defendants.
The action was commenced by a writ in August 2019, and interim injunction orders were first granted against the first six defendants and later against 20 other defendants. Disclosure orders were also obtained, which identified the transactions involving several defendants. At the time of writing, there are currently 28 defendants and it is expected that the number will grow. Most of the defendants are living in foreign jurisdictions and there was a clear indication that a number of these defendants are trying to avoid and/or refuse service of the court documents.
Unsurprisingly, given the nature of the case, an incredible volume of documents has been produced, printed, re-printed and exchanged among various parties, including the banks; and trying to serve such a large volume of documents to each foreign defendant has been costly (and not environmentally
How Service by Data Room Works in Practice
It must be noted that this novel method of service still requires a plaintiff to first serve each defendant by another Court-approved method. As noted by his Lordship in his Reasons for Decision, “it remains important and necessary to ensure that the proposed method of service on each occasion is or remains authorised by the Court.”
Once the Court authorises service by use of a data room, lawyers will need to write a letter to relevant parties (defendants) explaining the nature of the legal letter and providing detailed steps to access the data room, including a link to the web address of the data room. Such a letter can then be delivered by the following Court-approved methods:
- Hard copies by post/registered post;
- Soft copies by email known to have been used by the addressee; and/or
- Soft copies through instant messenger services (eg Facebook Messenger, WhatsApp Messenger, WeChat), if leave of the Court has been granted to use private messenger services
Studies have shown that in recent years the number of cyber fraud cases has skyrocketed and an increasingly larger proportion of the subject matter of legal disputes concerns virtual dealings. And in the years to come, we can expect a dramatic increase in the number of cross-border commercial fraud cases similar to Hwang Sang Joon.
Coleman J’s decision in this case illustrates the Hong Kong courts’ willingness to adapt to the increasingly virtual nature of legal disputes and to provide flexibility in coping with the increasingly cross-border nature of commercial fraud claims.
Of course, there may be no ‘one size fits all’ approach when it comes to allowing service by use of a data room. But the decision has paved the way for the new mode of service to be employed, more technology to be integrated in our court practice and more trees to be saved.
– Joshua Chu, Solicitor, Hong Kong
– Moses Park, Counsel, Liberty Chambers
– Billy Mok, Counsel, Liberty Chambers