The Court of First Instance (“CFI“) has recently reaffirmed an employer’s right to terminate a contract of employment and agency without cause in the cases of Lam Siu Wai v Equal Opportunities Commission [2021] HKCFI 3092 and Cheung Li On v Sun Life Hong Kong Limited [2021] HKCFI 3784.

In Lam Siu Wai, the dismissed employee claimed wrongful dismissal in breach of the employer’s implied duty of mutual trust and confidence. The CFI ruled that such duty involves the maintenance of the employer-employee relationship, but is not applicable in the context of termination. Further, the employer’s contractual or statutory termination right can be exercised unreasonably or capriciously, so long as it is exercised in accordance with contractual and statutory rights.

In Cheung Li On, where a breach of the implied duty of good faith in the exercise of the contractual right was argued, the CFI similarly ruled that the very nature of the power to terminate a contract without cause is that its exercise does not have to be justified, and it cannot be overridden by the implied duty of good faith. A duty of good faith is implied to restrict an unqualified discretion only if the termination power may prevent a proper exercise of contractual discretion, but not to limit a right to terminate.

To avoid a dispute, employers must pay attention when deciding whether to give or stay silent on the reasons for termination.

On 2 December 2021 Hong Kong Exchanges and Clearing (HKEX) announced the publication of a Net-Zero Guide to sustainability and achieving net zero carbon for Hong Kong listed issuers, and other businesses looking for guidance and insight, and a partnership with leading environmental, social and governance data providers to display HKEX-listed companies’ ESG metrics.

This is important guidance for Hong Kong listed companies which now have enhanced ESG reporting obligations under the Listing Rules.

The Hong Kong Labour Department announced that on 9 December 2021 a Hong Kong contractor was fined HK$145,000 at Kowloon Magistrates’ Court for violation of the Factories and Industrial Undertakings Ordinance and the Construction Sites (Safety) Regulations arising from a fatal accident in May 2018 at a construction site in Ho Man Tin, Kowloon.

Prosecutions of this nature can have a serious adverse impact on contractors’ ability to tender for future projects, and highlight the importance of compliance with high safety standards and all applicable Hong Kong regulations.

On 26 November 2021 the Securities and Futures Commission issued restriction notices against two Hong Kong brokerages prohibiting dealing with assets in 17 trading accounts suspected to be related to an alleged social media ramp-and-dump scheme involving manipulation of the market price of shares in a Hong Kong listed company in late October 2021.

This continues the SFC’s campaign against alleged social media ramp-and-dump schemes in Hong Kong, and the likelihood is that we will see more SFC investigations and enforcement proceedings in this area.

On 25 November 2021, the UK Law Commission published an announcement, together with its paper titled “Smart legal contracts – Advice to Government”, confirming that the flexibility of the common law can accommodate and apply to smart contracts, in particular, “smart legal contracts”, without the need for statutory law reform. The analysis in the report may be of value to the businesses and legal practitioners in Hong Kong, which retains its common law system under the Basic Law.

As explained in the report, a smart legal contract is a legally binding contract, in which some or all of the contractual obligations are defined in and/or performed automatically by a computer programme. There are two main features of a smart legal contract, namely, (i) some or all of the contractual obligations under the contract are performed automatically by a computer programme, and (ii) the contract is legally enforceable.

The use of smart legal contracts is expected to help business increase the speed of contractual performance, reduce the costs of contract management via automation, achieve faster contract execution, etc. While there is a growing interest in smart legal contracts, there are legal questions relating to how current legal principles can apply to them, and the report provides an analysis of the current law in the UK as it applies to smart legal contract in respect of formation and enforceability, interpretation, remedies, vitiating factors, etc. Among other things, a number of issues were also identified for contracting parties to address in the terms of their smart legal contracts in order to reduce uncertainties and potential dispute.

For further details, please refer to UK Law Commission paper on smart legal contracts here.