09 June 2022
The rule of law and fundamental principles of justice and fairness are the cornerstone of the success of Hong Kong. They are meant to apply equally to everyone regardless of its background.
In the recent two judgments of the BVI Court in JSC VTB Bank v. Alexander Katunin BVIHC (Com) 2014/0062 (15 & 22.3.2022), Jack J. refused to grant leave to a law firm acting for Russian clients to come off the record. In support of the application, the applicant law firm argued, among others, that its continued representation would (a) cause reputational damage; (b) contravene the sanctions imposed by the UK; and (c) not be monetarily rewarding for the Russian clients would not be able to remit monies due to the sanctions.
Jack J. dismissed the application. In his two judgments, he stressed, with reference to Lord Pearce’s judgment in Rondel v. Worsley, the importance of making legal representation available to “unpleasant, unreasonable, disreputable” clients and held that the legal system afforded a party being stigmatised as a pariah the right to legal representation to advise them and to advocate in Court. Also, the Judge, while noting the applicant law firm’s contractual right to terminate the retainer, stressed the overriding importance of a party’s access to justice underpinned by the rule of law. As to the risk of the Russian client not being able to pay the applicant law firm, Jack J. recognized that it might potentially be a ground but held it was premature to decide.
While the unilateral sanctions imposed by other States have no legal force in Hong Kong (and are considered to be impermissible under international law), they make legal practitioners hesitant to accept instructions from parties who are subject to, or exposed to, such sanctions. Insofar as the author is aware of, there have been a few occasions over the past few months that parties subject to unilateral sanctions had difficulty in obtaining legal representation (or appointing an arbitrator) to commence court or arbitral proceedings in Hong Kong. A practical concern is that the legal practitioners’ banks may take a dim view on the business connection between the legal practitioners and the sanctioned parties, and may refuse to accept funds originated from such parties.
Denying sanctioned parties’ access to justice is inconsistent with rule of law and Hong Kong’s status as a hub for international dispute resolution. It is time for the legal professional bodies and the banking (and other relevant) sector to work out a feasible solution to cope with the challenge.
1: See UNGA’s Resolutions e.g. A/RES/51/22 (27.11.1996), A/RES/53/10 (16.10.1998), A/RES/57/5 (16.10.2002); The report of Asian-African Legal Consultative Organisation on “Unilateral and Secondary Sanction: An International Law Perspective”