HONG KONG SAR, CHINA Law and Practice Contributed by: Edwin Northover, Jan Buschmann and Tony Dymond, Debevoise & Plimpton
Limitation Period Pursuant to the Limitation Ordinance (Cap 347), the insured generally has six years from the date on which the cause of action accrued to issue proceedings against the insurer. The insurance policy will typically specify periods during which claims must be made following the occurrence of the insured event or the insured’s awareness of such event (as applicable). Enforcement of Insurance Contracts by Third Parties See 6.5 Multiple Insured or Potential Beneficiaries regarding the enforcement of insurance contracts by third parties. 9.2 Insurance Disputes Over Jurisdiction and Choice of Law In practice, insurance contracts typically include juris- diction and governing law provisions. Hong Kong courts will generally recognise and enforce these provisions, which rarely give rise to disputes if they are clearly drafted. Where the contract does not contain a governing law clause, the court will apply the usual common law principles. The court will consider a range of factors in order to decide which law has the closest and most real connection with the insurance contract. In general, Hong Kong courts will have jurisdiction to hear claims against a defendant in the territory, including a foreign corporation operating in the terri- tory. Where the defendant is outside the territory, the court will hear a claim only where: • one of the jurisdictional gateways in Order 11, Rule 1 (1) of the Rules of the High Court (Cap 4A) (RHC) is open; • there is a serious issue on the merits to be tried; and • Hong Kong is the most convenient forum. 9.3 Litigation Process Depending on the nature of the claim and the amount involved, insurance claims are generally heard in the District Court or the High Court of Hong Kong. The main stages in civil proceedings include:
greater role than in consumer insurance policies given the technical and industry nature of reinsurance. 8.2 Warranties Contractual terms can become warranties on the basis of express identification as warranties or by implica- tion, commonly by virtue of “basis of the contract” clauses, which are provisions set out in the proposal form or in the insurance contract to the effect that all answers to the questions in the proposal will form the basis of the contract. Warranties are different from other contractual terms in that they require strict compliance, and any breach permits the insurer to disclaim liability, whether or not the breach was material to the insured risk. Hong Kong is still subject to the common law approach to insurance warranties and has not imple- mented reforms that have been undertaken in other jurisdictions, including England and Wales. 8.3 Conditions Precedent Contractual terms need not be expressly described as conditions precedent in order to be treated as such. While express designation as a condition precedent is a common approach, the classification may also be derived from the contractual wording – eg, a provision that the insurers have the right to refuse a claim if a particular condition is not complied with. The consequences of a breach of a condition prec- edent depend on the contractual wording and the nature of the condition. Failure to comply with a con- dition will typically preclude the insured from bringing a claim; it may also, if sufficiently fundamental, entitle the insurer to terminate the policy. 9. Insurance Disputes 9.1 Insurance Disputes Over Coverage Disputes over coverage under an insurance contract are typically settled through the Insurance Complaints Bureau (in the case of consumer contracts) or through litigation or arbitration (see 9.7 Alternative Dispute Resolution for further details).
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