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The new Apology Ordinance will come into operation in Hong Kong on 1 December 2017.

Currently, an apology is admissible as evidence in civil, regulatory and disciplinary proceedings and may be relied on to determine legal liability. The potential prejudicial effect may deter parties from making apologies to aggrieved claimants. The Apology Ordinance will change this position by making evidence of an apology inadmissible for determining fault or liability in civil, regulatory and disciplinary proceedings.

Key features of the Apology Ordinance

What is the aim of the Apology Ordinance?

The Apology Ordinance aims to encourage the making of apologies with a view to preventing the escalation of disputes and facilitating their amicable resolution.

What is an “apology”?

The Apology Ordinance defines “apology” made by a person as an expression of regret, sympathy or benevolence in connection with the matter. The expression may be oral, written or by conduct. The “apology” also includes any part of the expression that is an express or implied admission of fault or liability or a statement of fact in connection with the matter.

For example, in the context of handling complaints received by financial institutions, a response with any expression of regret, sympathy or benevolence provided to an aggrieved complainant together with the explanation of the circumstances of the matter would fall within the definition of “apology” for the purposes of the Apology Ordinance.

Restrictive admissibility

The Apology Ordinance provides that evidence of an apology is not admissible in any judicial, arbitral, administrative, disciplinary and regulatory proceedings for determining fault or liability. This includes disciplinary proceedings, proceedings before the Securities and Futures Appeals Tribunal and proceedings before the Market Misconduct Tribunal conducted under the Securities and Futures Ordinance.

The only proceedings excluded from the application of the Apology Ordinance are criminal proceedings, proceedings of the Legislative Council and proceedings conducted under the Commissions of Inquiry Ordinance, the Control of Obscene and Indecent Articles Ordinance and the Coroners Ordinance.

It is important to note that the Apology Ordinance does not affect the investigation powers of regulatory bodies such as the Securities and Futures Commission and the Hong Kong Monetary Authority. Financial institutions will remain under the duty to disclose all relevant information (including any statements of apologies) in regulatory investigations.

When is an apology admissible?

In exceptional cases, the Apology Ordinance allows a statement of fact contained in an apology to be admissible as evidence in applicable proceedings at the discretion of the decision maker (the person having the authority to hear, receive or examine evidence in the proceedings, e.g. a court). If the decision maker is satisfied that it is just and equitable to do so, having regard to the public interest or the interests of the administration of justice, the decision maker may exercise a discretion to admit a statement of fact contained in an apology. The Apology Ordinance cites the situation where there is no other evidence available for determining the issue as an example.

What apology does the Apology Ordinance apply to?

The Apology Ordinance applies to an apology made on or after 1 December 2017. This is regardless of whether the apology relates to a matter which arose before, on or after 1 December 2017.

Actions to take

Given that statements of apology are not exempted from disclosure in regulatory investigations, financial institutions should remain cautious before making apologies. It is particularly common for financial institutions’ frontline staff (such as relationship managers) who at times wish to express sympathy for clients’ investment losses to manage their client relationships.

The commencement of the Apology Ordinance provides a good opportunity for financial institutions to review their existing complaint handling procedures.

Financial institutions should consider taking the following steps:

  • review the existing complaint handling policies and procedures;
  • provide training and clear guidance to staff, in particular frontline staff and complaint handling officers, on the application of the Apology Ordinance and the implications of making apologies;
  • ensure that staff will seek proper internal authorization before making apologies on behalf of the financial institution;
  • all responses to complaints should be reviewed carefully by the relevant departments to ensure that statements of fact are correct and the financial institution’s position is protected; and
  • ensure that records are kept properly
Author

Cynthia Tang is the head of the Dispute Resolution Group for the Firm’s Hong Kong and China offices. She has over 25 years of experience in Hong Kong and Asia. Chambers Asia Pacific, PLC Which Lawyer? and Asia Pacific Legal 500 have ranked her as one of the leading lawyers in the Financial Services/Regulatory field for 5 consecutive years. She previously served on a number of committees in the Securities and Futures Commission and is currently appointed by the Hong Kong Government as a Member of the Standing Committee on Company Law Reform and Disciplinary Panel A of the Hong Kong Institute of Certified Public Accountants. She is also a China-Appointed Attesting Officer.

Author

Karen Man is a partner in Baker McKenzie’s Financial Services group, leading the non-contentious Financial Services Regulatory practice. Her clients include global, Chinese and local banks, fund managers, brokers/dealers, money service operators and fintech firms. Karen is admitted to practice in Hong Kong, the UK, and Australia.

Author

Bryan Ng is a partner in Baker McKenzie's Hong Kong office and a member of the Firm's Dispute Resolution Group. He has written articles and delivered trainings and seminars on topical issues including regulatory enforcement matters. Mr. Ng’s practice focuses on disputes related to financial services, regulatory investigations, commercial disputes, and insolvency-related matters. He advises and represents clients from the financial industry in regulatory investigations and disciplinary proceedings. Mr. Ng also represents clients in arbitration and court proceedings, including shareholders' disputes and judicial review.

Author

Grace Fung is a Special Counsel in Baker McKenzie's Hong Kong Office.

Author

Jannice Lau is an associate in Baker McKenzie's Hong Kong Office.