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22 July 2019 | by LexisNexis Hong Kong

Introduction

In Hong Kong Exchanges and Clearing Limited v Shi Huaifang [2019] HKCU 1961, Hong Kong Exchanges and Clearing Limited (“HKEX”) sought to continue an injunction against its former employee (“Defendant”) to restrain him from disclosing HKEX’s confidential information.

Facts

HKEX employed the Defendant, a PRC-qualified lawyer, as Senior Vice President through a qualified labour dispatching company on the Mainland called Beijing Foreign Enterprise Human Resources Services Company Limited (“FESCO”). A labour dispatching company acts as an agency which would enter into a contract with an employee, who would then be dispatched to the employer or host company. The employee so dispatched would undertake his work for and would be supervised by the host company, but he is employed by the dispatch agency which remains responsible for the administrative management of the employee in accordance with PRC laws and regulations. The duty of the Defendant was to perform services in a project involving the development of a reliable commodities exchange in the Qianhai – Hong Kong Modern Services Industry Cooperation Zone (“Project”) through a PRC joint-venture firm called Qianhai Mercantile Exchange Co. Ltd. (“QME”). HKEX held 90.01% of QME’s interest.

HKEX and the Defendant signed both a letter of agreement, which laid out the terms of his appointment, and a non-disclosure agreement (“NDA”), which set out the highly confidential information that the Defendant would receive during his employment relating to the Project.

During the first month of his employment, the Defendant refused to sign a written employment agreement with FESCO. He sought to renegotiate his employment terms, which was to change his title to Managing Director and to increase his monthly salary but was rejected by HKEX. The Defendant’s employment was subsequently terminated and he then threatened to disclose, inter alia, HKEX’s confidential information to the media in Hong Kong.

Judgment given in favour of HKEX

1. Whether the injunction should be continued

The court continued the injunction order by finding that HKEX had raised a serious question to be tried as to its claims against the Defendant for breach of confidence, which was independent of and separate to any claim based on an employment relationship between HKEX and the Defendant.

There was a duty on the Defendant’s part under the NDA to keep in confidence the confidential information imparted to him relating to the Project. The confidential information claimed by HKEX met the necessary quality of confidence as the information was produced and developed by HKEX, on its behalf, for the Project. The information was of significant commercial value to HKEX. If disclosed, it would potentially cause real and irreparable harm to HKEX.

2. Whether the court had jurisdiction and whether the injunction should be discharged for lack of jurisdiction

The legal principles established in Spiliada Maritime Corp v Cansulex Ltd [1987] AC 460 were clear. The objective of the court is to determine the forum in which the case can be tried more suitably for the interests of all parties. A stay will only be granted if there is some other appropriate forum which is clearly and distinctly more appropriate than Hong Kong. The court is to consider the forum with which the action has the most real and substantial connection, taking into consideration factors of convenience or expense, the law governing the relevant transaction, as well as the places where the parties respectively reside or carry on business. The court emphasized that the approach is not just an exercise in loading up factors which point to any particular jurisdiction in the abstract, the focus should be the appropriateness of a forum from the point of view of the trial of the action.

The court found that the action had real and substantial connections with Hong Kong. The fact that some relevant provisions or regulations of PRC law might have to be considered did not by itself render Hong Kong as not the natural and appropriate forum. The Hong Kong court could refer to expert evidence on PRC law. The Defendant had not discharged his onus of showing that Hong Kong was not the natural and appropriate forum for the trial of the action, and that some other court on the Mainland was clearly or distinctly more appropriate than Hong Kong to try HKEX’s claims.

For more information on related topics, please see:

Lexis Advance® Hong Kong

The Annotated Ordinances of Hong Kong

  • Employment Ordinances (Cap 57)
  • Employees’ Compensation Ordinance (Cap 282)
  • Employees Retraining Ordinance (Cap 423)

Butterworths Hong Kong Company Law Handbook – 21st Edition

Halsbury’s Laws of Hong Kong 2nd Edition

  • Civil Procedure: High Court, District Court
  • Conflict of Laws
  • Employment

Lexis Advance® Hong Kong Practical Guidance

Hong Kong Dispute Resolution

Hong Kong Employment

For enquiries about the above publications, please contact your Account Manager via sales.hk@lexisnexis.com

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