In a significant judgment, the Hong Kong Court of Final Appeal (CFA) has provided crucial guidance on obtaining evidence from Mainland China for use in Hong Kong litigation. In TENWOW INTERNATIONAL HOLDINGS LIMITED (IN LIQUIDATION) AND ANOTHER v. 普华永道中天会计师事务所(特殊普通合伙) PRICEWATERHOUSECOOPERS ZHONG TIAN LLP [2025] HKCFA 17, the CFA confirmed that Hong Kong courts can issue a Letter of Request (“LOR”) to a Mainland court to facilitate the production of documents held by a party in the Mainland, even where those documents are subject to local transfer restrictions.
The decision provides welcome clarity for litigants in cases where crucial evidence is located in the Mainland. It affirms the court’s commitment to a practical, cooperative approach to resolving cross-border disputes.
Background Facts
The liquidators of Tenwow International Holdings Limited has brought a negligence action in Hong Kong against its former auditors, including the Mainland-based firm PricewaterhouseCoopers Zhong Tian LLP (“PwC ZT”). During the normal course of discovery, PwC ZT provided a list of documents which included certain crucial audit working papers (“Subject Documents“) held in PwC ZT’s Shanghai office.
PwC ZT argued that Mainland laws prevented it from transferring the Subject Documents out of the Mainland without the prior approval from the relevant authorities in the Mainland. Following guidance from the PRC’s Ministry of Finance that the matter fell within the “judicial scope” and should be handled through the Arrangement on Mutual Taking of Evidence between Hong Kong and the Mainland (the “Mutual Arrangement“), PwC ZT applied for a LOR to be issued by the Hong Kong court to the Shanghai High People’s Court (“SHPC”) to assist in obtaining the Subject Documents to comply with its discovery obligations in Hong Kong. The liquidators opposed the application.
Court Decision
While the Court of First Instance initially declined to issue the LOR, its decision was reversed by the Court of Appeal. The liquidators appealed to the CFA.
The CFA unanimously dismissed the appeal, affirming the Court of Appeal’s decision to issue the LOR. The CFA answered the two key legal questions in the affirmative:
- Jurisdiction to Issue LOR: The CFA held that the Hong Kong court’s inherent jurisdiction to control its own processes and ensure justice allows it to issue a LOR to assist a party in producing its own discovery documents when faced with a legal prohibition in a foreign jurisdiction.
- Scope of the Mutual Arrangement: The CFA rejected a narrow interpretation of the Mutual Arrangement. It held that a request to facilitate regulatory approval for the production of documents for general discovery falls within the scope of the Mutual Arrangement. The Mutual Arrangement is designed to promote judicial cooperation, and its text should be read broadly to achieve that purpose.
Key Takeaways
This landmark decision has significant practical implications for document discovery in cross-border litigation between Hong Kong and Mainland China:
- A Clear Path for Cross-Border Discovery: The CFA’s broad interpretation of the Mutual Arrangement and the court’s inherent jurisdiction strengthens the mechanism for obtaining evidence from the Mainland. Litigants can now be more confident in their ability to access critical or sensitive documents located in the Mainland for use in Hong Kong litigation.
- LORs as a Gateway for Regulatory Compliance: The decision confirms that a LOR is the appropriate tool to engage the Mainland courts to help overcome regulatory barriers, such as prohibitions on the cross-border transfer of audit papers or state secrets. It formalizes a court-to-court process for managing these complex issues.
- Proactive Litigation Strategy: Companies or individuals facing litigation with a cross-border element should proactively identify documents located in the Mainland and assess any potential transfer restrictions early on. If any sensitive documents located in the Mainland are involved, they should plan to engage with both the Hong Kong courts (to apply for a LOR) and the relevant Mainland administrative bodies concurrently. This process may require time, and parties should factor potential delays and adjournments into their litigation timelines.
Ultimately, this judgment strengthens Hong Kong’s position as a premier hub for international dispute resolution by providing a pragmatic and effective framework for managing the complexities of cross-border evidence gathering. It underscores the commitment of Hong Kong’s judiciary to facilitating justice in cases involving evidence located in the Mainland, while respecting the sovereignty and regulatory framework of the Mainland. Businesses should consult with their legal advisors to understand how to leverage this precedent effectively in their litigation strategies.
