New Issue: SSRN Legal Studies Research Paper Series (HKU)

Vol. 7 No. 2: 14 April 2017

Table of Contents

1.  The Role of Hong Kong's Financial Regulations in Improving Corporate Governance Standards in China: Lessons from the Panama Papers for Hong Kong

Bryane Michael, University of Hong Kong Faculty of Law, University of Oxford

Say Hak Goo, The University of Hong Kong - Faculty of Law

2. Ex Turpi Causa: Reformation Not Revolution

Ernest Lim, University of Hong Kong - Faculty of Law

3. Establishing a Multi-Stakeholder Board for Multinational Corporations

Hugo Ho-Ting Chu, The University of Hong Kong - Asian Institute of International Financial Law, The University of Hong Kong - Faculty of Law, University College Dublin (UCD) - Michael Smurfit Graduate School of Business, Hong Kong Polytechnic University - Department of Applied Social Sciences

4. Overstating Moral Hazard: Lessons from Two Decades of Banking Crises

Douglas W. Arner, University of Hong Kong - Faculty of Law

Emilios Avgouleas, University of Edinburgh - School of Law

Evan Gibson, The University of Hong Kong - Asian Institute of International Financial Law

5. Sherman vs. Goliath?: Tackling the Conglomerate Dominance Problem in Emerging and Small Economies — Hong Kong as a Case Study

Thomas K. Cheng, The University of Hong Kong - Faculty of Law

RGC Awards $4 Million in Research Grant Funding to HKU Faculty of Law

The Research Grants Council awarded more than $4 million in funding to seven of the Faculty of Law's General Research Fund projects 2016-2017.  The projects cover a wide range of topics: director and shareholder accountability, competition law, cyberbullying and privacy, med-arb in China, trusts for mentally incapacitated persons, personal injury compensation reform, and regulation of trade in endangered wild animals.  Congratulations to the following colleagues:

• Ernest Lim, Rethinking Directorial and Shareholder Accountability, $352,500.
• Kelvin Kwok (with Thomas Cheng as Co-I), Buyer Power under Competition Law: A Theoretical Examination and a Case Study of Hong Kong, $508,496.
• Anne Cheung, Tackling Cyberbullying by Enhancing Privacy Protection: A Comparative and an Interdisciplinary Study, $1,072,190.
• Gu Weixia (with Anselmo Reyes as Co-I), When Local Meets International: The Delicate Art of Med-Arb in China and Its Prospective Reform in a Comparative Context in Asia, $460,000.
• Rebecca Lee (with Lusina Ho as Co-I), Special Needs Trusts for Mentally Incapacitated Persons in Hong Kong: A Proposed Framework, $825,800.
• Felix Chan, Further Reforms in Hong Kong’s Personal Injury Compensation: An Inquisitive Perspective, $590,500. 
• Amanda Whitfort,  A Comparative Evaluation of Hong Kong's Legislative Powers to Regulate Trade in Endangered Wild Animals, $370,500.

Ernest Lim Writes a Case Study on the Illegality Defence (J Business Law)

"Tensions in Private Law Judicial-Making: A Case Study on the Illegality Defence"
Ernest Lim
Journal of Business Law
2016, Issue 4, pp 325-334

Abstract: This article explores a recurring tension in judicial decision-making, thrown into sharp relief by recent jurisprudence—between the need for certainty and clarity in the law, and thus the need for clear articulation and enforcement of rules, with the equally important desire to achieve a fair and just result in each case, and thus the need to ensure that the rules are not uncritically applied—through the lens of illegality defence, a crucial, outstanding issue in private law.  Available on Westlaw or contact the author.

Ernest Lim on Attribution and the Illegality Defence (Modern Law Review)

"Attribution and the Illegality Defence"
Ernest Lim
Modern Law Review
May 2016, Vol. 79, Issue 3, pp. 476-487

Abstract: In Jetivia SA v Bilta (UK) Ltd (in liquidation) all seven judges of the Supreme Court affirmed the decision of the Court of Appeal by holding that the illegality defence could not be raised as a defence against the claim made by the company because the wrongdoing of the directors and shareholder cannot be attributed to the company. Although all the judges unanimously agreed on the outcome of the case, their reasoning concerning the approach to attribution and the different circumstances under which attribution should or should not take place differed. Further, the Supreme Court was divided on the issue of the correct approach to the illegality defence.

New Law Projects Funded by HKU Seed Funding for Basic Research

Congratulations to our nine colleagues who recently obtained grants from the HKU Seed Funding for Basic Research.  A total of more than $0.5 million was awarded in funding.  The project topics range from crowd-funding, China's anti-monopoly law to the law and policy of creative industries and innovation in Hong Kong.  The details of the awarded projects are as follows (in no particular order):

1.  The Case for Crowd-Funding in Hong Kong, Alexa Lam

2. Dispute Resolution in China: Litigation, Arbitration, Mediation, and their Cross-Interactions, Weixia Gu  

3. Analysis of Intellectual Property Licence Refusals under the Chinese Anti-Monopoly Law, Kelvin Kwok 

4. Should Directors Be Accountable to Shareholders?: A Critical Reassessment, Ernest Lim

5. How Can Copyright Law Best Promote the Public Interest? Perspectives from the Google Digital Library Litigations in China and the United States, Haochen Sun

6. Asian Courts in Dynamic Democracies, Po Jen Yap 

7. A Comparative Study of Civil Sanctions Against Money Laundering, Simon Young

8. Professionalism, gender and culture - empirical and comparative study of professional attributes using standardized clients in professional legal education, Wilson Chow

9. A Study of the Law and Policy for Creative Industries and Innovation in Hong Kong, Richard Wu

Winners of the HKU Law Faculty Research Output Awards 2014-2015

Congratulations to Michael Ng who has been awarded HKU's Faculty Research Output Prize 2014-2015 for his book, Legal Transplantation in Early Twentieth-Century China, published 2014 by Routledge, 188 pages. 

     Endorsements by other scholars:

'This book provides a readable and clear account of the legal practices in the first three decades of the Republican era, which fills a gap in the legal history of China, and therefore much welcomed. Its archival research provides a new understanding of the period, by drawing attention to its process of assimilation of the traditional and Western legal systems.' —Song-Chuan CHEN, Assistant Professor, School of Humanities and Social Sciences, National Technological University, Singapore

‘Michael Ng's important study of the legal institutions of early twentieth century Beijing makes a major contribution to our knowledge of the legal order of Republican China. At the same time, it illuminates the complex interactions between the late imperial tradition, surviving in unexpected ways, and the transplanted institutions of liberal legal modernity.’ — Teemu Ruskola, Professor of Law, Emory University, U.S.A.

Three research output prizes were also awarded at the Faculty level for the following publications:

• Cora Chan, "Implementing China and Hong Kong’s Preliminary Reference System: Transposability of Article 267 TFEU Principles" [2014] Public Law 642-661.

• Kelvin Kwok, "The New Hong Kong Competition Law: Anomalies and Challenges" (2014) 37 World Competition Law and Economics Review 541-567.

• Ernest Lim, "Of 'Landmark' or 'Leading' Cases: Salomon's Challenge" (2014) 41 Journal of Law and Society 523-550.

Ernest Lim on Corporate Law, Private Law and Instrumentalism

"Corporate Law, Private Law and Instrumentalism"
Ernest Lim
[2015] Lloyd's Maritime and Commercial Law Quarterly 541-574

Abstract: This article seeks to enrich our understanding of corporate law and private law. Deploying insights from the rights-based analysis in private law, this article argues that corporate law, in its instrumentalist conception, is unable to properly account for a defining feature of private law disputes, its bipolar structure consisting of the correlative and personality elements. Through a critical examination of certain corporate law cases, this article shows that the rejection of instrumentalist considerations by the rights-based thesis is unwarranted; it demonstrates how judges in private law disputes can accommodate instrumentalist considerations in a structured, coherent and restrained fashion.  Click here to download the full article.

Ernest Lim on Contracting Out of Fiduciary Duties (CLWR)

"Contracting out fiduciary duties"
Ernest Lim
Common Law World Review

Dec 2015, Vol. 44(4), pp. 276-297

Abstract: A significant implication arising out of an increasingly influential view that fiduciary duties are terms expressed or implied into voluntary undertakings is that all express or implied fiduciary duties can be excluded. This article critiques this implication by advancing the argument that this implication is doctrinally unjustified and normatively questionable through an analysis of the circumstances in which directors’ fiduciary duties have been contracted out under English law.

Congratulations to Faculty of Law Research Output Awardees 2014

Congratulations to Cora Chan, James Fry and Ernest Lim on being awarded Faculty of Law Research Output Awards 2013-2014.  Each receives HK$10,000 to further their research.

Their award winning research outputs were as follows: 

• Cora Chan, "Proportionality and Invariable Baseline Intensity of Review" (2013) 33 Legal Studies 1
• James Fry, Legal Resolution of Nuclear Non-Proliferation Disputes (CUP 2013)
• Ernest Lim, "Directors' Fiduciary Duties: A New Analytical Framework" (2013) 129 Law Quarterly Review 242

New Issue: SSRN Legal Studies Research Paper Series (HKU)

Vol. 5, No. 3, 24 April 2015

1. Attribution and the Fraud Exception

Ernest Lim, University of Hong Kong - Faculty of Law

2. Independence Referendum, State Sovereignty and International Law: International Legal Review of Independence Referendum from the Perspective of Theoretical Foundation and Global Practice

Anlei Zuo, The University of Hong Kong, Faculty of Law, Students

3. Can International Law Help Resolve the Conflicts Over Uninhabited Islands in the East China Sea?

Michael C. Davis, The University of Hong Kong - Faculty of Law

4. The Shadow Banking System — Why It Will Hamper the Effectiveness of Basel III

Emily Lee, The University of Hong Kong - Faculty of Law

5. Comparing Hong Kong and Chinese Insolvency Laws and Their Cross-Border Complexities

Emily Lee, The University of Hong Kong - Faculty of Law

Ernest Lim on Attribution and the Fraud Exception

"Attribution and the Fraud Exception"
Ernest Lim
Lloyd's Maritime and Commercial Law Quarterly
[2015], pp. 14-18

Should the fraud of the company’s management be attributed to the insolvent company so as to deny the latter’s application for refund of the excess tax paid out by the company to the Inland Revenue authority? That was in short the central issue which the Court of Final Appeal in Hong Kong in Moulin Global Eyecare Trading Ltd (in liq) v Commissioner of Inland Revenue had to address. Lord Walker of Gestingthorpe, sitting as a non-permanent judge, gave the leading judgment for the court and answered the question in the affirmative. The facts can be briefly stated. The fraudulent directors of the company deliberately inflated the company’s profits and, as a result, it paid excess tax amounting to, according to the liquidator, almost HK$89m (approximately £7m) to the Commissioner of the Inland Revenue. The liquidators submitted an application, which was rejected by the Commissioner, for a refund of the excess tax under the Inland Revenue Ordinance Cap 112 (“IRO”) on the ground that the excess tax was paid because of an error in the tax return. Whether there was an error depends on whether the fraud of the company’s management should be attributed to the company. That in turn depends on whether the fraud exception (sometimes referred to as the Hampshire Land principle)—where the agent commits a fraud or breach of duty, the knowledge of the agent should not be attributed to the principal—is applicable. After a detailed and extensive survey of the cases, Lord Walker emphatically concluded: “The fraud exception must be limited to its proper, limited role, that is of barring an unmeritorious defence in claims by corporate employers against dishonest directors or employees, or accomplices who have conspired with them.” In a remarkable and unequivocal admission, Lord Walker said: “I should state clearly that I now see that I was wrong, in para.145 [of Stone & Rolls Ltd (in liquidation) v Moore Stephens (a firm)], to regard the fraud exception as being of general application, regardless of the nature of the proceedings… .”  In other words, the fraud exception applies only to a “redress” situation whereby a company sues its directors, employees or their accomplices for wrongdoing committed against it but not to a “liability” situation under which a company is liable to a third party for the dishonest conduct of a director or employee...  Click here to download the paper.

Articles in the Oxford Journal of Law and Religion

Oxford Journal of Law and Religion

Vol. 3, Issue 3, October 2014

"Pluralism, Religion, and the Moral Fairness of International Law"

James Fry, pp 393-418

Abstract: This article criticizes Thomas Franck’s theory of moral fairness for refusing a possible voice for religion in the fairness discourse. After deconstructing the theory and explaining its relationship to Rawls's notion of overlapping consensus, this article explores how religion plays a role with the implementation of international law. This article concludes by observing how the current inclusion of religion at the implementation stage injects a measure of regionalism and pluralism into the discourse. Such regionalism and pluralism alleviate the tension between universalism and localism associated with globalization and improve social stability throughout the world.

"Religious Exemptions in England"

Ernest Lim, pp 440-461

Abstract: This article argues that there are key issues comprising theoretical and institutional matters arising from the questions of whether courts should exempt religious conduct from laws of general applicability, and how courts should strike the balance between religious freedom and equality policies, which proponents of religious exemptions have neglected and it suggests ways in which these issues may be addressed.

What Makes a "Landmark" or "Leading" Case?

"Of 'Landmark' or 'Leading' Cases: Salomon's Challenge"
Journal of Law and Society
Vol. 41, Issue 4 (December 2014)
Ernest Lim

Abstract: This article seeks to question the two dominant conceptions of ‘landmark’ or ‘leading’ cases in English legal scholarship, using the House of Lords decision in Salomon v. Salomon Co Ltd. – the most famous case in corporate law – as a case study. It argues that neither the first dominant conception of ‘leading’ or ‘landmark’ cases, characterized by the analysis of the intrinsic merits of a case, nor the second, which looks at the historical contexts in which cases were decided, appears sufficient by itself to determine whether a case is landmark or canonical. Rather, we have to look at how the canonicity of a case is constructed by subsequent courts. The article seeks to advance the debate concerning the formation of landmark cases and aims to challenge certain prevailing views on the canonicity of corporate law's arguably most significant case.

New Issue: SSRN Legal Studies Research Paper Series

Vol. 4, No. 7: Oct 27, 2014

Table of Contents

1. Interpretation of Tax Law in China: Moving Towards the Rule of Law?
Dongmei Qiu, University of Hong Kong

2. Thin Capitalization Rules in China
Dongmei Qiu, University of Hong Kong

3. The Concept of 'Beneficial Ownership' in China's Tax Treaties – The Current State of Play
Dongmei Qiu, University of Hong Kong

4. The Cost of Antitrust Law to Malaysia's Financial Services Sector
Bryane Michael, University of Hong Kong Faculty of Law, University of Oxford, Columbia Law School - Centre for the Advancement of Public Integrity
Mark Williams, Hong Kong Polytechnic University
Susila Munisamy, University of Malaya

5. Attribution in Company Law
Ernest Lim, University of Hong Kong - Faculty of Law

Article: Attribution in Company Law

"Attribution in Company Law"
The Modern Law Review
Vol. 77, Iss. 5, pp. 794-807
Sept 2014
Ernest Lim, Associate Professor, Faculty of Law, HKU

Abstract: In Bilta (UK) Ltd (in liquidation) v Nazir (No 2), the Court of Appeal held that the ex turpi causa defence was inapplicable by refusing to attribute the fraud of the directors and the sole shareholder to the company in connection with the company's claim against them and third party co-conspirators. It is significant that the court has not only clarified the law in relation to attribution, but it did so by rejecting the majority's reasoning and endorsing the dissenting judgment in the House of Lords decision in Stone & Rolls (in liquidation) v Moore Stephens (a firm). This article evaluates the decision in Bilta by critically examining the fundamental principles and policies that apply to the three distinct circumstances under which corporate attribution should or should not take place.  SSRN

New Issue of Law Faculty's SSRN Legal Studies Research Paper Series

Vol. 4, No. 5: Aug 14, 2014

Table of Contents Introduction to the Hong Kong Basic Law Danny Gittings, College of Humanities and Law, School of Professional and Continuing Education, University of Hong Kong, Faculty of Law, University of Hong Kong Can the Hong Kong ICAC Help Reduce Corruption on the Mainland? Bryane Michael, University of Hong Kong Faculty of Law, University of Oxford, Columbia Law School - Centre for the Advancement of Public Integrity Sponsors’ Prospectus Liability in Initial Public Offerings in Hong Kong Ernest Lim, University of Hong Kong - Faculty of Law Unreasonable Refusal to Mediate: The Need for a Principled Approach A. K. C. Koo, University of Hong Kong - Faculty of Law A Bolder Step Towards Privacy Protection in Hong Kong: A Statutory Cause of Action Jojo Mo, City University of Hong Kong (CityUHK) A. K. C. Koo, University of Hong Kong - Faculty of Law Lessons for the US System of Financial Arbitration: A Responsive Empirical Exploration of Arbitration and Ombudsman Services Shahla F. Ali, Deputy Director, Program in Arbitration & Dispute Resolution, University of Hong Kong Judicial Construction of Hong Kong's Basic Law: Concerns, Organization and Findings P. Y. Lo, University of Hong Kong