AGENCY FOR POLICY COORDINATION ON STATE PROPERTY AND OTHERS v. BATBOLD SUKHBAATAR AND OTHERS

HCMP 2153/2020

[2022] HKCFI 3322

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

MISCELLANEOUS PROCEEDINGS NO. HCMP 2153 OF 2020

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REASONS FOR DECISION

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1.  On 13 October 2022, I made orders striking out the Originating Summons in these proceedings against the 1^st, 2^nd to 4^th and 6^th to 12^th Defendants (“the Defendants”) alongside a number of other ancillary orders. As indicated at the hearing, I would hand down reasons at a later date. These are brief reasons given for the discharge of the injunctive relief and the striking out of the Originating Summons.

2.  The present proceedings were initiated in 2020 in the names of the three Plaintiffs.  The proceedings in Hong Kong were one of a number of injunctions obtained worldwide (in the UK, New York, Singapore and New Jersey) against various defendants.

3.  The proceedings in Hong Kong invoked the Section 21M, High Court Ordinance jurisdiction, whereby injunctive relief was sought (originally ex parte) in relation to the assets of the Defendants within the jurisdiction. The underlying proceedings were in Mongolia (and subsequently, substantive proceedings were also undertaken in the BVI), the key contention being that the 1^st Defendant had engaged in unlawful self-dealing and/or received unauthorized profits in relation to 2 state-owned mining projects in Mongolia, with the other Defendants said to have played various roles within or around the wrongful dealings.

4.  Interlocutory relief in the form of an injunction order was granted in November 2020, and later amended on 4 December 2020.  At the time, the Plaintiffs were represented by Zhong Lun Law Firm (“Zhong Lun”), who were themselves apparently taking instructions from the London office of King & Spalding.  King & Spalding indicated that they were instructed by “the Government of Mongolia (through the Prosecutor General of Mongolia and the Independent Authority Against Corruption)”.

5.  On 18 November 2021, the underlying proceedings in Mongolia were dismissed.  There was no appeal and the Mongolian proceedings were not otherwise revived.

6.  From about February 2022 onwards, various inquiries were made with the law firms above as to whether they had authority to act in the name of the Plaintiffs.

7.  At the same time, from late 2020 until 2022, correspondence had been sent to the three Plaintiffs directly on a number of occasions and written confirmations had been obtained that each of the Plaintiffs had not made any request for litigation to be brought against the Defendants.  The Defendants had also obtained a number of written confirmations from the Prosecutor General and Deputy Prosecutor General of Mongolia, as well as the Mongolian Independent Authority Against Corruption, to the effect that King & Spalding did not have any authority to pursue legal proceedings.

8.  Eventually, the various legal representatives all ceased to act in the litigation worldwide. In Hong Kong, by summons dated 11 July 2022, Zhong Lun applied to cease to act for the Plaintiffs.  According to the correspondence that is available, the application was made because King & Spalding (and therefore Zhong Lun) were unable to obtain meaningful instructions from the Prosecutor General of Mongolia.  By order dated 1 September 2022, Master Matthew Leung granted an order in terms of Zhong Lun’s summons.

9.  On 30 August 2022, the Defendants applied by two summonses to discharge or strike out the present proceedings.  The summonses and supporting evidence were served on Zhong Lun prior to the cease to act order.  The submissions and relevant application papers were also delivered to the Plaintiffs by the time of the hearing on 13 October 2022.  At no point did the Plaintiffs indicate any opposition. Nor did they appear at the hearing.

10.  In view of the dismissal of the Mongolian proceedings, there is little question that the S.21M proceedings in Hong Kong ought to be discharged.

11.  Insofar as striking out is concerned, the Defendants’ position is that the Mongolian proceedings had been initiated (by the Capital City Prosecutor’s Office, “CCPO”) without authority in the first place and contrary to the relevant requirements under Mongolian law.

12.  The above contention was supported by the expert evidence of Baigal Enkh-Amgalan, which in essence set out the position as follows:

(1)  Under Mongolian law as at 14 October 2020 (when the Mongolian claim was commenced) a prosecutor could only bring a claim in the name of the government authority against private defendants upon the request of the government authority in question (Article 31.1 of the Mongolian Law of Civil Procedure).

(2)  Those acting in the names of the Plaintiffs sought to rely on Article 20 of the Law on Prosecutor, but this was not applicable. Whilst there is a select category of claims which may be initiated by the Prosecutor himself of his own initiative, the type of claim in question in the underlying Mongolian proceedings was not one of those claims.

(3)  It was only in January 2021 that statutory amendments to Article 31.1 of the Law of Civil Procedure were enacted, empowering a prosecutor to act on his own initiative, and it was only in July 2022 that such amendments came into effect.

13.  There is no evidence before this Court to counter the expert evidence of Mr Baigal.

14.  From the available papers, it would also appear that there was no request from any of the Plaintiffs to the CCPO to bring the Mongolian proceedings.  There is, further, a considerable amount of correspondence from various organs of the prosecutorial arm indicating that they had not given instructions to King & Spalding, as well as from the Plaintiffs themselves indicating that they had not given instructions to initiate the proceedings.

15.  Because of the way in which matters developed, the authority issue was never fully argued or placed before the Court in Hong Kong.  I would note that there has been a similar issue raised in Singapore in respect of another defendant (not any of the defendants concerned in Hong Kong), and in those proceedings, it would appear that only the Plaintiffs had filed expert evidence.  On such basis, the Singaporean court came to the conclusion that the challenge to authority to sue would be determined in the Plaintiffs’ favour.  However, the Singaporean Court did not have the benefit of Mr Baigal’s evidence, nor any other expert evidence from the defendants’ side.  In those circumstances, the decision is of limited assistance.

16.  On the basis of the circumstances summarized above, I considered that there was sufficient evidence upon which to conclude at this juncture that there was a want of authority to sue, and thus the proceedings were struck out.

17.  I would further note two particular points as to material non-disclosure:

(1)  It would appear that at the very least there was a clear question as to whether there was authority to sue at the outset when the S.21M proceedings were initiated in Hong Kong.  Whilst at the ex parte stage this was lightly touched on in the evidence, it does not appear to have featured heavily in the disclosure to the Court. This was certainly a matter which ought to have been placed front and centre given the importance of the issue.

(2)  Moreover, no steps were taken after the dismissal of the Mongolian proceedings in November 2021.  It is trite that insofar as interlocutory injunctive relief is concerned, a party must update the Court as to any material change in circumstances. This was not done and it fell upon the Defendants to apply for discharge subsequently.

18.  For the above reasons, I agreed that it was appropriate to discharge the injunctive relief and strike out the Originating Summons.  The Defendants had initially proposed that they should be able to retain liberty to apply, including in respect of enforcement of the cross-undertaking in damages.  However, as indicated to the Defendants at the hearing, the enforcement of such cross-undertaking must take place within the extant proceedings themselves, and if they are struck out, then it would not be possible to retain such right to enforcement (HKCP 2022, §29/1/25; Wingames Investment Ltd v Mascot Land Ltd [2013] 1 HKLRD 1186).  The Defendants confirmed that they would nonetheless invite the Court to strike out the proceedings.

19.  I thank counsel for their assistance.