The Hong Kong Court of First Instance delivered an important judgment in Jacky Zong v Kelly Fuli Zong [2025] HKCFI 3355, providing crucial guidance for applications for interim reliefs under s.21M of the High Court Ordinance (Cap. 4).
Case Background
Following the passing of Wahaha Group founder Mr Zong Qinghou in February 2024, disputes arose among his children over assets of value exceeding US$1.8 billion held with HSBC in Hong Kong. The Plaintiffs sought preservation and disclosure orders in aid of their litigation against the Defendants in the Hangzhou Court.
The dispute centred on three key documents: the Handwritten Instructions in January 2024, a Letter of Entrustment dated 2 February 2024, and an Agreement between the parties dated 14 March 2024. The Plaintiffs contended that these documents established the 1st Defendant’s obligation to use the HSBC Account Assets to set up offshore trusts for them, while the 1st Defendant maintained she had not breached her obligations and duties.
Legal Framework for s.21M Applications
DHCJ Gary CC Lam applied the two-stage test set out in the Court of Final Appeal case of Compania Sud Americana de Vapores SA v Hin-Pro International Logistics Ltd (2016) 19 HKCFAR 586.
The first stage is to consider whether the judgment rendered by the foreign court is one that the Hong Kong Court may enforce; if it is so enforceable, the application is governed by the usual principles determining whether interlocutory relief should be granted in domestic proceedings, with the modification that the Court is to consider the strength of the parties’ case before the foreign court, instead of the domestic Court.
The second stage is to consider whether the fact that the Court has no jurisdiction apart from this section in relation to the subject matter of the proceedings concerned makes it “unjust” or “inconvenient” for the Court to grant the application, and the Court has a wide discretion to refuse to make the order sought.
Key Legal Issue Regarding s.21M: Prior Application to Foreign Court Not a Precondition
The Defendants argued that when Plaintiffs seek interim relief under s.21M of the High Court Ordinance to assist foreign proceedings, it is or is virtually a condition that they must first seek such relief from the primary foreign court.
The court determined this is not a precondition for exercising s.21M jurisdiction, although in ex parte applications, failure to explain why no prior application was made could constitute material non-disclosure.
Analysis
After summarising and analysing the parties’ respective evidence before the Court, DHCJ Gary CC Lam found that the Plaintiffs had established at least serious issues to be tried regarding both breach of contract and breach of trust/fiduciary duties claims.
Regarding the balance of convenience, the court emphasised that where there is a serious issue to be tried on proprietary claims, the balance normally favours the preservation of relevant assets to maintain the status quo. The substantial value of assets in the account (US$1.8 billion) and the 1st Defendant’s refusal to provide account information further reinforced the need for interim relief. Additionally, whether mainland courts would grant similar interim measures regarding overseas assets was a relevant consideration.
The court further determined that granting relief would assist rather than interfere with the Hangzhou Proceedings, ensuring that disputed assets would remain available pending the Hangzhou Court’s determination of the substantive dispute.
The court ultimately granted both the preservation order and disclosure order (with some adjustments to the wording).
Key Implications
Overall, this important judgment clarifies several issues regarding Hong Kong courts’ jurisdiction to grant interim relief in aid of foreign proceedings:
- Prior Application to Primary Court: While whether applicants have first sought relief from the primary court (the foreign court hearing the substantive proceedings) can be a factor relevant to whether s. 21M relief should be granted, it is not a mandatory precondition to make a prior application to the primary court.
- Tailoring the Terms of the Preservation Order: When establishing specific terms of preservation orders, courts may balance asset protection with practical management needs based on the specific nature of the assets
- Disclosure Order Considerations: When granting disclosure orders, Hong Kong courts may consider whether their orders might impact the primary court’s adjudication of substantive disputes
Read the judgment here at: https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=171062&currpage=T
The Plaintiffs are represented by William Wong SC, Sharon Yuen and Charlie Liu, instructed by Karas So LLP.
