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In the landmark judgment of Tenwow International Holdings (in liquidation) v PricewaterhouseCoopers Zhong Tian LLP [2025] HKCFA 17, the Hong Kong Court of Final Appeal (“CFA”) confirmed the jurisdiction of Hong Kong courts to issue a Letter of Request (“LoR”) to courts in other jurisdictions (including the Mainland) to assist in procuring documents in a party’s own possession for use in Hong Kong civil proceedings. The judgment also clarified the scope of the Arrangement on Mutual Taking of Evidence in Civil and Commercial Matters between the Courts of the Mainland and the Hong Kong Special Administrative Region (the “Mutual Arrangement”).
Background
The case concerned an audit negligence claim filed by the liquidators of Tenwow International Holdings Ltd and its wholly-owned subsidiary, Nan Pu International Ltd (collectively, the “Appellants”), against PricewaterhouseCoopers (the 1st Defendant), and PricewaterhouseCoopers Zhong Tian LLP (the 2nd Defendant, also known as the “Respondent”).
Pursuant to case management directions, the Respondent filed and served its List of Documents which enumerated its own working papers for the audits in question, but were stored in its Shanghai office (the “D2 Documents”). The parties disputed as to: whether, under Mainland laws and regulations, the Respondent could transfer the D2 Documents from the Mainland to Hong Kong without prior approval from the relevant Mainland authorities. The Respondent accordingly sought guidance from the Ministry of Finance (“MoF”) of the People’s Republic of China, who issued a letter directing that the D2 Documents should be obtained pursuant to the Mutual Arrangement.
In view of the MoF’s letter, the Respondent applied to the Court of First Instance (“CFI”) for a LoR to be issued to the Shanghai High People’s Court (“SHPC”) pursuant to the Mutual Arrangement, seeking assistance in procuring the D2 Documents for the proceedings in Hong Kong.
The CFI declined to issue the LoR, citing reasons including:
i. LoRs were generally issued to obtain evidence from overseas non-parties rather than documents already in a party’s own possession;
ii. Seeking assistance from a foreign court to enable document production was not within the scope of assistance contemplated under the Mutual Arrangement;
iii. Mainland law did not impose a blanket restriction on the transfer of all the D2 Documents; rather, it prohibited the transfer of documents containing confidential, sensitive, or other specifically proscribed information; and
iv. Given the delay in making the application for the LoR, issuing the LoR at this stage would adversely affect trial preparations and disrupt the trial schedule.
On appeal, the Court of Appeal (“CA”) reversed the CFI’s decision and ordered the issuance of the LoR. The Appellants appealed to the CFA.
The CFA’s Decision
The CFA dismissed the Appellants’ appeal, and affirmed the CA’s decision to issue the LoR.
Whether the Hong Kong court had jurisdiction to issue a LoR
The CFA recognised that the power of Hong Kong courts to issue an outgoing LoR (i.e. where Hong Kong courts request assistance from foreign courts, including those in the Mainland) derives from the court’s inherent jurisdiction, rather than from statute or the Rules of the High Court (Cap.4A) (“RHC”). This is in contrast to the statutory jurisdiction of Hong Kong courts to make an order pursuant to an incoming LoR issued by foreign courts, which is governed by Part VIII of the Evidence Ordinance (Cap.8).
The CFA also acknowledged the importance of considering the contextual circumstances surrounding the present appeal, namely:
Furthermore, the CFA rejected the “equivalence principle” advanced by the Appellants, who submitted that the court’s jurisdiction to issue an outgoing LoR should be confined to circumstances in which it would make an order pursuant to an incoming LoR. Whilst Hong Kong courts should refrain from issuing outgoing LoRs when there is no reasonable basis to believe the foreign court would be receptive to such request, in the present case the CFA was satisfied that the Mainland courts could be receptive to such a request.
The CFA also noted that the issuance of a LoR in the present case would not absolve the Respondent’s discovery obligations, which remain incumbent upon it as it is a party to the proceedings in Hong Kong.
Accordingly, subject to the scope of the Mutual Arrangement, the CFA held that there was no good reason to limit the inherent jurisdiction of Hong Kong courts from issuing the LoR in the present case.
Whether the LoR fell under the scope of the Mutual Arrangement
The CFA noted that the Mutual Arrangement is an administrative framework which does not have any force of law, and its purpose is to foster judicial cooperation between Mainland and Hong Kong courts. Thus, it should not be interpreted in a strict or overly formalistic manner. Whilst Hong Kong courts may theoretically issue a LoR to a Mainland court in the absence of the Mutual Arrangement, the CFA held that such authority would only be exercised if the request fell within the scope of the Mutual Arrangement. Otherwise, there would be no reasonable basis to believe that LoR would be executed by the Mainland court.
The CFA further observed that whether the present LoR fell within the scope of assistance contemplated under the Mutual Arrangement must be assessed in light of the CA’s findings on Mainland law. In particular, the CA noted that the Respondent had demonstrated a real risk of being penalised in the Mainland if it simply transferred the D2 Documents to Hong Kong without approval from the relevant Mainland authorities. Furthermore, the MoF letter clearly stated that the request to provide the D2 Documents to the Appellants fell “under the judicial scope” and that Hong Kong courts could request Mainland courts to assist in obtaining the documents in accordance with the Mutual Arrangement.
Thus, as there was sufficient basis to suppose that the Mainland court would be receptive to the LoR, the CFA was satisfied that the LoR sought in the present case fell within the scope of the Mutual Arrangement.
Matters after the appeal hearing
Subsequent to the appeal hearing, the SHPC returned the LoR to the Hong Kong court, and stated in a letter that it could not order the production of the D2 Documents for use in Hong Kong due to incomplete approval procedures required for their export from the Mainland. However, the SHPC reiterated that the said documents could still be obtained through judicial assistance channels.
The CFA noted the apparent inconsistency between the contents of the SHPC letter and the MoF letter, as each appeared to suggest that the other is responsible for granting the requisite export approval of the D2 Documents to Hong Kong. The CFA thus opined that the two letters collectively indicate that the provision of audit working papers in the present case fell within the scope of the Mutual Arrangement, but acknowledged that the Mainland court may first need to be satisfied that requisite approvals from relevant authorities to export the documents have been obtained before proceeding under the Mutual Arrangement. Regardless, the return of the LoR did not alter the CFA’s conclusions as it was not strictly relevant to the questions on appeal.
Implications and Significance
This is the first case before the CFA that involved the issuance of a LoR to facilitate a party’s discovery obligations to disclose relevant documents, namely its own audit working papers located in the Mainland, for use in Hong Kong civil proceedings. The CFA’s decision demonstrates a more flexible interpretation of the Mutual Arrangement, which may facilitate a greater issuance of LoRs in cross-border disputes between Hong Kong and the Mainland, thereby strengthening judicial cooperation and the practical resolution of disputes when crucial evidence is located across the border.
The full judgment can be accessed here: legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=173457
The Hong Kong Court of Appeal in Chiu Mei Cherry v Yip Ngan Yuk and anor [2025] HKCA 677 allowed the Defendants’ appeal against a summary judgment awarded in favour of the Plaintiff to propound a will in solemn form, and reaffirmed that summary judgment in such actions will only be awarded in rare cases.
Background
The Deceased and the 1st Defendant were married in January 1981. Their son, the 2nd Defendant, was born in December 1981. In around 2019, the Deceased entered into an extra-marital relationship with the Plaintiff, who later gave birth to their son in November 2021 (the “Younger Son“).
The Deceased passed away on 8 September 2022. During his lifetime, the Deceased made three wills:
Both the First Will and Second Will were prepared by a solicitor, Ms. Cho, who managed the Deceased’s property transactions for many years.
The Third Will was prepared by another solicitor’s firm and was executed in the presence of a solicitor (“Mr. Lin”) and a clerk from the same firm. On the same day, prior to the execution of the Third Will, a psychiatrist purportedly certified that the Deceased was of sound mind, and was mentally fit to make the Third Will.
After the Deceased passed away, the Plaintiff commenced the present probate action to propound for the force and validity of the Third Will. The Defendants challenged the Third Will on, inter alia, the following grounds:
The Court of First Instance dismissed the Defendants’ defence as being insufficient to challenge the Plaintiff’s clear evidence, and that the Defendants failed to raise any issue that ought to be tried or that for some other reason there ought to be a trial. Thus, the Plaintiff successfully obtained summary judgment, and the force and validity of the Third Will was pronounced in solemn form. The Defendants appealed against the summary judgment.
The Court’s Findings
The Court of Appeal allowed the appeal, set aside the summary judgment and granted the Defendants unconditional leave to defend.
The Court of Appeal held that the Defendants should be given an opportunity to challenge the evidence of the witnesses relied upon by the Plaintiff at trial by reason of the following distinctive features of the case:-
Significant modifications to the estate distribution: The Second Will and the Third Will were executed just over a month apart, but the latter will fundamentally altered the distribution of the Deceased’s estate, resulting in the complete disinheritance of the 1st Defendant (the Deceased’s wife for 41 years), the 2nd Defendant (the Deceased’s eldest son), as well as the Younger Son. The Court of Appeal disagreed with the judge at first instance that there was nothing suspicious at all about this, and noted that the Deceased was careful in making provisions for the Younger Son under the Second Will (a similar provision of which was not present in the Third Will). As the Defendants seriously disputed the Plaintiff’s allegation that they failed to care for the Deceased and/or pay for his medical/living expenses, the Court of Appeal considered that the Defendants should be allowed a full and proper opportunity to challenge the Plaintiff’s assertion that they were completely disinherited by reason of the lack of care for the Deceased at trial.
Refusal of previous solicitor to prepare another will for the Deceased: The 1st Defendant filed an affirmation stating that Ms. Cho declined the Deceased’s request to prepare a further will based on concerns about the Deceased’s mental state, as (i) the request came shortly after the Second Will was executed, and (ii) the proposed contents significantly departed from the previous two wills. The judge at first instance did not give weight to the 1st Defendant’s evidence, as he took the view that without any affirmation evidence made directly by Ms. Cho, what the 1st Defendant stated was simply her own belief. Moreover, Ms. Cho’s doubts about the Deceased’s testamentary capacity were immaterial, as she did not verify the rationale behind the Deceased’s complete change of mind regarding the distribution of his estate. The judge at first instance placed significant weight on the fact that the Deceased’s testamentary capacity was supported by the psychiatrist’s assessment and Mr. Lin’s evidence. The Court of Appeal noted that Ms. Cho was well-acquainted with the Deceased, having managed most of his property transactions over the years and previously prepared the First Will and Second Will for him. Given her neutrality in the disputes between the Plaintiff and Defendants, Ms. Cho would unlikely have refused the Deceased’s request save for compelling reasons. Accordingly, Ms. Cho’s refusal to prepare a new will for the Deceased was an issue that warranted closer scrutiny and should not have been summarily dismissed without further inquiry.
The circumstances in which the drafter of the Third Will was instructed is unclear: The Defendants relied on the second rule in Barry v Butlin (1838) 2 Moo PC 480 to invite the Court to be vigilant and jealous in examining the evidence in support of the due execution of the Third Will, by reason that the Third Will was prepared by Mr. Lin, who was introduced to the Deceased by the solicitor eventually acting for the Plaintiff in the probate action. The judge at first instance rejected this argument and considered that the second rule in Barry v Butlin was inapplicable as there was no evidence that the Plaintiff (the beneficiary under the Third Will) referred Mr. Lin to the Deceased. The Court of Appeal took the view that the circumstances in which Mr. Lin was engaged was far from clear, especially when there was no evidence that he previously acted for the Deceased. Hence, whether the second rule in Barry v Butlin has any application ought to be determined in a trial instead of summarily.
Apparent errors in the assessment of the Deceased’s testamentary capacity: The Defendants complained that there were errors in the psychiatrist’s assessment of the Deceased’s testamentary capacity, as points were awarded to the Deceased despite his failure to complete certain tasks. The judge at first instance rejected such criticisms, by reason that the Defendants were not medical experts and did not have the relevant assessment marking scheme, and thus were not in a position to challenge the psychiatrist’s evaluation. The Court of Appeal disagreed, and took the view that the errors (or possible errors) made by the Deceased were readily evident on the assessment sheet completed by him. It was therefore reasonable to afford the Defendants with an opportunity to seek clarifications and cross-examine the psychiatrist at trial.
In light of the above contentious distinctive features, and taking into account the Deceased’s age and health conditions when the Third Will was executed, the Court of Appeal was satisfied that there were issues or questions in dispute which ought to be tried at trial. Hence, the Court of Appeal set aside the summary judgment by the Court of First Instance.
Implications and Significance
This case is a reminder that in contentious probate actions, where the Court’s jurisdiction is in rem and inquisitorial, summary judgment will only be reserved in the most unequivocal cases. Where there are allegations involving multiple wills with significant changes to the disposition of an estate, disinheritance of close family members, and/or lack of testamentary capacity, it would be appropriate for such allegations to be explored in a full trial.
The full judgement can be accessed here: https://legalref.judiciary.hk/lrs/common/ju/ju_frame.jsp?DIS=170771&currpage=T
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Introduction
The Stablecoins Ordinance (Cap. 656) (the “Ordinance“) came into effect on 1 August 2025, which primarily regulates activities related to the offering, issuance and marketing of specified stablecoins. This marks a significant step in Hong Kong’s strategy to position itself as a global hub for digital finance. The Hong Kong Monetary Authority (“HKMA“) has issued the following documents (“HKMA Guidelines“) to set out further detailed requirements and practical guidance for the implementation of the stablecoin licensing regime in Hong Kong:
The scope of regulated stablecoin activities under the Ordinance
A “specified stablecoin”, as defined under the Ordinance, primarily refers to a stablecoin[1] that purports to maintain a stable value with reference wholly to official currencies (commonly referred to as a “fiat-referenced stablecoin”), or other units of account or stores of economic value specified by the HKMA. The Ordinance primarily regulates the following types of regulated stablecoin activities:
(i) issuing specified stablecoins in Hong Kong;
(ii) issuing specified stablecoins outside Hong Kong referencing the Hong Kong dollar; and
(iii) actively marketing, whether in Hong Kong or elsewhere, the issuance of specified stablecoins to the Hong Kong public (or a class of that public).
As set out in the Explanatory Note on Licensing of Stablecoin Issuers, subject to the facts and circumstances of each case, a specified stablecoin is typically considered “issued” (or “minted“) when it is first recorded on a distributed ledger (or similar information repository), and assigned to a digital wallet address.
In determining whether a specified stablecoin is “issued in Hong Kong“, the HKMA will take a holistic approach and consider all relevant factors, including but not limited to: (i) where the day-to-day management and operations of the issuer take place; (ii) where the issuer is incorporated; (iii) where the minting and burning of the specified stablecoin take place; (iv) where the reserve assets are managed; and (v) where the bank accounts for processing the cash flows arising from minting or redemption requests are maintained.
Further, in determining the scope of “actively marketing” to the Hong Kong public, the HKMA will also take a holistic approach and consider all relevant factors, including but not limited to: (i) what language is used in the marketing messages, e.g. does it include Chinese; (ii) whether it is targeted at a group of people residing in Hong Kong; (iii) whether a Hong Kong domain name is used; and (iv) whether there is a detailed marketing plan to promote the activity.
The Licensing Regime: Key requirements
Any person who carries on, or holds out as carrying on, a regulated stablecoin activity (a “stablecoin issuer“) must be licensed by the HKMA and fulfil the minimum criteria set out in Schedule 2 of the Ordinance on an ongoing basis. The Supervisory Guideline further elaborates on the minimum criteria by setting detailed regulatory expectations and guidance for licensed stablecoin issuers (“licensees“). Please click here to access a summary of the key requirements.
Application procedures
Preliminary consultation
Entities interested in applying for a license are encouraged to proactively engage with the Stablecoin Licensing Team of the HKMA to express their interest, present their business models, and demonstrate a solid understanding of the licensing criteria.
Where an interested entity is headquartered or conducts business overseas, the HKMA may consult with the relevant overseas regulators on whether the entity and/or its parent company is financially sound, stable, and suitable to undertake regulated stablecoin activities in Hong Kong. Accordingly, any foreign interested entity is advised to coordinate with its parent company and consult its home regulators prior to consultation with the HKMA to avoid any unnecessary delay in its application.
Submission and completion of application
At present, the licensing application form is not publicly available and may only be obtained directly from the Licensing Team after the preliminary consultation with the HKMA.
In addition to the application form, applicants are required to submit supporting documentation to demonstrate an applicant’s due incorporation and capacity, business plans and projections, policies and procedures and systems of control, financial soundness, and readiness to comply with the minimum criteria and other regulatory requirements. The HKMA may also request for further supplemental information from time to time. A comprehensive list is set out in Annex B of the Explanatory Note on Licensing of Stablecoin Issuers.
The HKMA invites interested entities to express their intent by 31 August 2025 and to submit formal applications by 30 September 2025. Nevertheless, the HKMA has indicated that the bar for licensing is high, and it only expects to grant the first licenses to a “handful” of applicants at the initial stages.
Transitional arrangements for pre-existing issuers
As explained in the Explanatory Note on Transitional Provisions for Pre-existing Stablecoin Issuers, the HKMA sets out transitional arrangements for entities that were carrying on regulated stablecoin activities prior to 1 August 2025 (the “Pre-existing Issuers“). Pre-existing Issuers who wish to continue to carry on regulated stablecoin activities should submit the following documents (“Relevant Documents“) to the HKMA by 31 October 2025:
Pre-existing Issuers that have submitted the Relevant Documents and have received a written acknowledgement from the HKMA may be granted a provisional license to continue to carry on regulated stablecoin activities for a transitional period of six months (i.e. until 31 January 2026). Thereafter, if the HKMA grants a full license to that Pre-existing Issuer, its provisional license will cease to be in force, and as a licensee, it must continue to comply with all regulatory requirements.
Alternatively, if a Pre-existing Issuer does not wish to apply for a license or fails to submit the Relevant Documents by 31 October 2025, or Pre-existing Issuers whose application was subsequently withdrawn, or was rejected or refused by the HKMA, it will enter a 1-month closing-down period (commencing on 1 November 2025 or from the date of withdrawal, rejection or refusal) to wind down its business according to the specific requirements imposed by the HKMA. Any non-compliance with the regulatory requirements during the closing-down period constitutes an offence under the Ordinance.
Next steps
The implementation of the stablecoin licensing regime in Hong Kong marks a pivotal development in the global regulatory framework for digital assets, establishing robust standards for transparency, prudence, and investor protection in the offering, issuance and marketing of specified stablecoins in Hong Kong. However, the HKMA has also emphasized the need for continued vigilance as the regulatory landscape continues to evolve. Stakeholders are strongly recommended to proactively engage with the HKMA and align their operations with regulatory requirements and expectations to ensure the sustainable development of stablecoins in Hong Kong.
For further information or advice regarding the stablecoin licensing regime, please do not hesitate to contact us.
[1] A “stablecoin” is defined under the Ordinance as a cryptographically secured digital representation of value that—
(a) is expressed as a unit of account or store of economic value;
(b) is used, or intended to be used, as a medium of exchange accepted by the public for any one or more of the following purposes: (i) payment for goods or services; (ii) discharge of a debt; (iii) investment;
(c) can be transferred, stored or traded electronically;
(d) is operated on a distributed ledger or similar information repository; and
(e) purports to maintain a stable value with reference to (i) a single asset; or (ii) a pool or basket of assets.
However, the definition excludes central bank issued digital currencies, limited purpose digital tokens, certain securities or futures contracts, float stored in stored value facilities (SVF) or SVF deposits, and bank deposits, which are subject to other existing regulatory regimes.
On 30 July 2025, the Hong Kong Insurance Authority (“IA”) issued the Practice Note on Remuneration Structures of Authorized Insurers for Licensed Insurance Intermediaries for Participating Policies (“Practice Note”) to ensure fair customer treatment throughout the insurance life-cycle.
The IA has reminded the market and the public on various occasions1 that intermediary commission structure is important in ensuring fair customer treatment. A commission structure purely focusing on the volume of business with most of the commission paid out in the first year of the policy term may incentivise aggressive sales practices and poor on-going servicing, resulting in unfair customer treatment. The Practice Note serves to address this issue.
The Practice Note supplements GL16: Guideline on Underwriting Long Term Insurance Business (other than Class C Business) (“GL16”). Pursuant to it, for participating policies2, insurers must pay no more than 70% of the total commission during the first policy year3. The remaining commission must be spread evenly over a period of at least 5 years, or the premium payment term, whichever is shorter.
Applicability of the Practice Note
This Practice Note applies to participating insurance policies with regular premium payment terms and will take effect from 1 January 2026.
Key Requirements
Pursuant to GL16, when designing remuneration structure for intermediaries, insurers must seek to align (i) the interests of policyholders in receiving pre- and post-contract servicing with (ii) the incentive for intermediaries to provide both servicing. Pursuant to the Practice Note, to satisfy such requirement, as a minimum, the commission payable to intermediaries in respect of participating policies must be prorated such that (“Spreading Requirement”):
(a) no more than 70% of the total commission payable is paid to the intermediary during the first policy year; and
(b) the remaining commission after the first policy year must be paid at least over a minimum of 5 years or the premium payment term, whichever is shorter, and must be spread evenly over this period.
The IA also encourages insurers to go beyond the above minimum requirements by (i) paying less than 70% of the total commission during the first policy year; and (ii) spreading the remaining commission over a period longer than 5 years.
Exceptions
In summary, an insurer may depart from the Spreading Requirement in the following situations:
(a)Where the value of the commission payable to an agent is determined based on factors including objective non-financial metrics (such as positive customer feedback and persistency rate of insurance policies produced) to evaluate the agent’s performance in complying with the “treating customers fairly” principle;
(b) Where the insurer pays the agent a fixed remuneration package i.e. such remuneration is contractually payable irrespective of whether any policy is arranged and serviced or the volume of premium;
(c) Where the insurer distributes its products via banks, provided that the overriding principles governing appropriate remuneration structures in GL16 are met; and
(d) Where the policyholder is a Professional Investor4, provided that in structuring the commission, the overriding principles governing appropriate remuneration structures in GL16 are met.
Practical Tips
In anticipation of the Practice Note taking effect in a few months’ time (1 January 2026), insurers are reminded to:
(a) Review the Practice Note thoroughly;
(b) Revisit their existing remuneration structures and put in place proper controls and procedures to ensure compliance;
(c) Arrange proper training and communication with their intermediaries in respect of the new requirements; and
(d) Have appropriate systems in place to enable them to maintain sufficient records to demonstrate compliance. For example, insurers relying on non-financial metrics to justify their departure from the Spreading Requirement must retain relevant documentation for 7 years and produce it upon the IA’s request.
The full Practice Note can be accessed here.
Notes:
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