China or Hong Kong? Some Key Considerations in Cross-Border Matrimonial Disputes

PROCEDURAL CONSIDERATIONS

Insofar as procedural law is concerned, the following points may need to be considered:

Length of time

• Hong Kong lawyers would be all too familiar with the general pace of Hong Kong litigation including matrimonial proceedings and how various delaying tactics are available to prolong the same. A contested set of proceedings could take years in Hong Kong. By comparison, the general understanding is that by reason of the specific statutory time limit for litigation to end, PRC courts generally hear cases in a more expeditious manner. If a divorce is heard in PRC, it is more likely to conclude earlier.

Costs

• Without contingency fees or conditional fees and the general higher hourly rate, legal costs are generally higher in Hong Kong, especially for cases with modest amount of assets in dispute or clients with limited means. Such a difference, however, is relatively insignificant for high value disputes.

Courts

• The legal system and environment in PRC has improved substantially over the past decades; however, there is still an appreciable distance from that of Hong Kong. Experience tells us that PRC courts and judges are more easily accessible to litigants and correspondingly easier to be subject to influences outside the court, whereas such contact or influence is almost impossible in Hong Kong.

Trial

• One important feature of trial in Hong Kong is the live evidence given by witnesses under examination. Such exercise is an important part of the Hong Kong legal system to test and explore the veracity and, in turn, the weight to be given to the evidence of witnesses. On the contrary, it is only in exceptional cases that witnesses would be called and examined before PRC courts, and even in those circumstances the witnesses would only be expected to answer very limited questions. Without a systematic examination procedure, there is no way to properly test the veracity of the evidence of those witnesses. As a result, PRC courts generally give very little, if any, weight to witness statements and would rely predominantly on documentary evidence to decide cases. The party relying heavily on oral evidence, therefore, would naturally benefit much more to have the case heard and tried in Hong Kong.

Language

• Both Chinese and English are official languages and may be adopted by Hong Kong courts. However, by Chinese, it is referred to Cantonese for oral language and traditional Chinese for written language. The difference between traditional Chinese and simplified Chinese does not impose much difficulties for either Hong Kong or mainland clients. However, Cantonese is markedly different from Mandarin, which is commonly used in the mainland. Hence, people speaking Mandarin, even with translations, may find it less convenient in Hong Kong.

One aspect of procedural law needs particular attention—the discovery process, which is perhaps the single most important factor that one needs to consider.

Under Hong Kong law, there is a comprehensive set of rules regulating the discovery procedure, including general discovery, specific discovery and interrogatories. By comparison, the discovery system under PRC law is very primitive, generally governed by the principle that the burden lies with the party raising the allegation. There is no general discovery, which means the party with evidence adverse to his case would not be obliged to produce the same, and there is limited specific discovery available, making it difficult for the party not in possession of the relevant information and evidence to discover the same from the other side and to raise or prove his case. This is particularly important for disputes on ancillary relief and division of assets.

This rather eminent deficiency in PRC discovery procedure is referred to by the PRC scholars as “imbalance of evidence” (證據偏在) and has been subject to much criticism amongst the PRC academia especially in the area of matrimonial proceedings. There is an abundance of PRC cases whereby housewives who were focused on family matters during the currency of the marriage found it very difficult to locate and prove the assets of the husband hence suffered much prejudice in the process of division of assets in matrimonial proceedings.

Such difference has been repeatedly recognized by Hong Kong courts. For example, in ZJW v. SY FCMC 7824/2015, unrep., 21.9.2016 it was commented by the family judge HH Judge Bruno Chan at §88:

“More importantly, Mr Wong submits, that it is clear that the Husband would not be prepared to provide any information about his assets and income unless compelled to do so, as evidenced by the very limited information disclosed by him in either of his 2 affirmations filed in these proceedings, there is a real concern that he would do whatever possible to hide, conceal or dispose of his assets beyond discovery and reach of the Wife in order to defeat her financial claims, and hence discovery of assets controlled by him necessarily takes centre stage in ensuring justice between the parties, and in this regard the Wife's PRC legal opinion has clearly identified significant weaknesses in the discovery procedure in the PRC justice system [B5/1016-1021] which can be summarised as follows:

• there is no general duty on the part of the parties to disclose evidence and information;

• there is no specific discovery procedure or any procedure similar to interrogatories in Hong Kong;

• each party bears his own responsibility to produce evidence in order to prove his case, which has resulted in what PRC academia called imbalance of evidence whereby the party with control power or custody over evidence prejudicial to himself would be in a position to withhold the same and prevent the other party from obtaining or producing the relevant evidence in legal proceedings, with such resultant unfairness which has been the subject of repeated criticism of PRC academia and the judiciary;

• the absence of any practical arrangement for the Shenzhen Court to collect evidence located in Hong Kong.”

Such difference was found to be a juridical advantage in that case would have dictated the result of the forum non conveniens considerations if the court had jurisdiction to hear the divorce proceedings in the first place.

See also: Shenzhen Futaihong Precision Industry Co Ltd & Anor v BYD Co Ltd & Ors HCA 2114/2007, unrep., §80-81, LS v AD (Forum: discovery in the PRC) [2012] HKFLR 376 § 49-53

SUBSTANTIVE CONSIDERATIONS

The basis for divorce is rather similar between the two jurisdictions. Both require an irretrievable breakdown of the marriage, and even the basis for proving this ground are also similar though not identical. A quick comparison is listed below:

On the other hand, the whole rationale for ancillary relief and asset division is rather different under PRC law. PRC law denotes that all assets (apart from a few exceptions) obtained by the married couple during the currency of the marriage are “joint assets,” no matter who actually obtained the same, these assets are owned by the couple jointly. By comparison, assets obtained by either party prior to the marriage or those obtained during the marriage but fall within certain exceptions are referred to as “personal assets.” Upon divorce, these joint assets would be divided between the parties on a half-and-half basis, whereas the personal assets would not be affected. As a result, the financial part of the PRC divorce proceedings focuses upon the identification of joint assets which may be divided and personal assets which may not be divided.

As a result of such difference in rationale, division of assets under PRC divorce proceedings differ from ancillary relief proceedings in Hong Kong in that:

• There is a strict distinction between “joint assets” and “personal assets” under PRC law and no pre-marriage assets would be characterized as “joint assets.” By comparison, no such division is made under Hong Kong law. Whilst Hong Kong courts would take into account the timing as to when and how the assets were obtained, there is no strict rule that assets obtained pre-marriage could not be divided upon divorce. Hong Kong courts would have much more discretion to regulate and redistribute assets of the couple compared with their PRC counter-parts;

• There is no alimony or periodical maintenance payable to the former partner under PRC law.

Special provisions were made under PRC law for the maintenance of the children (art 37 PRC Matrimonial Law). However, research shows that the amount of maintenance that may be ordered by PRC courts is significantly lower than that ordered by Hong Kong courts. PRC courts tend to refer to the average living expenses rather than the expenses needed for the particular minor in question. In practice, such amount rarely exceeds Rmb5,000 per month per child.

Insofar as child custody is concerned, the considerations of both jurisdictions are similar: the best interests of the minor (s.3 Guardianship of Minors Ordinance (Cap 13)); the interest of the minor and the situations of the parties (“根据子女的权益和双方的具体情况判决” art 36 PRC Matrimonial Law). However, one may readily observe that in addition to the interest of the minor, PRC law also requires consideration of the “situations of the parties,” hence giving more weight to other considerations.

Such difference is reflected in practice. One salient difference is that, under Hong Kong law, it is generally considered that it is in the best interest of the children for siblings to be raised together by one party. However, PRC courts' general practice is to divide the siblings between the parties equally. Another difference that may be observed is that, under PRC law, a mother enjoys absolute priority to the custody of the minors during the lactation period (art 36 PRC Matrimonial Law); however, no priority is enjoyed by the mother beyond that period. By comparison, under Hong Kong law, there is no such absolute priority, but the mother generally enjoys an advantage in custody disputes when the children are relatively young and is not limited by the lactation period.

CONCLUSION

In short, there are quite a few differences between divorces in Hong Kong and divorces in mainland PRC, both in terms of procedural law and substantive law, and one should consider carefully before deciding on the litigation strategy.

The importance would be elevated even higher when the “Arrangement on Reciprocal Recognition and Enforcement of Civil Judgments in Matrimonial and Family Cases by the Courts of the Mainland and the HKSAR,” signed on June 20, 2017, was implemented, so that most of the matrimonial judgments and orders of both jurisdictions would be recognized and enforceable mutually.

As a rule of thumb, it is generally more advisable for financially less advantaged party to litigate in Hong Kong and correspondingly for the financially more advantaged party to litigate in PRC.