EN
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