A Hong Kong eDiscovery snapshot in the company of Epiq Systems

On the surface, my area of professional interest looks pretty narrow. When I launched the eDisclosure Information Project, its proposed scope was implied by the word “eDisclosure” – only the civil jurisdiction of England and Wales uses the term “disclosure”, and I set myself the task of carrying information between courts, lawyers, clients and providers in that narrow context. That proved limiting very quickly: civil litigation is only one of the reasons why parties need to identify, analyse and review electronic information, and England and Wales is only one of several jurisdictions which impose such requirements. The US, Australia, Singapore, Hong Kong, Canada, New Zealand and Ireland have relevant obligations in civil litigation and they – the US in particular – export those obligations by expecting foreign parties to comply with their domestic rules when they litigate in US courts or fall within the powers of a regulator or state enforcement body.

That brings in countries with no discovery tradition, including EU countries and those of the Asia-Pacific region, such as China, who have increasing amounts of trade with the US but whose data protection and privacy laws, as well as culture, are inimical to common law discovery demands.

I could purport to cover all this by sitting at home in Oxford distilling what I find on the Internet, and communicating with people around the world by email and video-conferencing calls. That would certainly be easier than what I actually do, which is to get on a plane to go and see things for myself. I don’t kid myself that I become expert in a jurisdiction by dropping in from time to time, but the “carrying messages” part of my role is better fulfilled if I go occasionally to talk with (not just talk to – the listening matters more) people who practice in other places. That took me to Hong Kong for a quick visit to Epiq Systems there earlier this month.

Epiq Systems

Epiq Systems has three business activities, of which the eDiscovery solutions component (the others are bankruptcy solutions and class-action solutions) plays an ever-bigger part in each succeeding year’s accounts. It has grown from being a software-led company (with its processing tool eDataMatrix and review tool DocuMatrix), to being a broadly-based eDiscovery consulting company offering forensics and collections, processing, document prioritisation and document review services. Its first non-US office was in London, which is where I came across it, and it subsequently opened an office in Hong Kong. Epiq uses Equivio’s Relevance product (now part of Equivio Zoom) for predictive coding and document prioritization, and recent acquisitions bring it a wide range of review tools, including kCura’s Relativity, iCONECT and Concordance FYI together with expansion of its managed review services. Epiq’s most recent development has been the opening of a document review service in Hong Kong, allowing it to offer a full range of consultative, technology and review services in the Asia-Pacific region.

Hong Kong

Hong Kong is a common law jurisdiction, with rules of civil procedure based on earlier versions of the rules of England and Wales. It is also, of course, part of the People’s Republic of China, and so at an interesting junction both between East and West and between very different systems of law. One hears from time to time of China-led initiatives to understand US civil procedure, seen by some as an essential element in the development of trade between China and the West. Obvious conflicts exist between the obligations which are automatically assumed by foreign companies listed on the New York Stock Exchange on the one hand and, on the other, a culture of state secrecy which severely limits disclosure. The overriding conflicts (which, in practice, can only be resolved at a diplomatic level) are perhaps one of the reasons why Hong Kong civil procedure is frozen in the pre-electronic age and with a set of rules recognisable to anyone who practised litigation in England before 1999. Hong Kong is a major dispute resolution centre, and faces competition, not least from Singapore, although opinions vary as to the significance of this competition. I say more on this below.

My visit

Epiq set up a series of meetings with some of the best-known law firms in Hong Kong, and I spent two days going partly to talk to them about developments in the UK and elsewhere, and partly to hear from them about their view of developments in Hong Kong and the region. I went in the company of Senior Director Anthony Riha, Business Development Manager Karen Chon, and the new Director of Epiq’s Document Review Services Asia, Celeste Kemper. What follows is a summary of the impressions I formed during those two days.

Whilst the precise requirements of any one jurisdiction’s rules are important, the broad commonality between them is perhaps of more significance, particularly in a jurisdiction whose rules predate the development of electronic discovery and which must necessarily look elsewhere for examples. In other jurisdictions, and particularly in the US, the UK and Australia, the focus is on increasing the management role of the judge, on cooperation and proportionality, on the early identification of the data sources likely to be relevant and on informed decisions based on the sharing of that information. None of these things form an express part of the present Hong Kong rules, nor is there any sign that this will change.

Specifically, the judges are seen by many to have no interest in improving the management of electronic discovery or in understanding the problems or the solutions. Scotland is the only other important common law jurisdiction apart from Hong Kong where the subject is not even discussed; everywhere else can point to recent or pending rule changes or, at least, to interested discussion at a judicial level. In Scotland, this closing of judicial eyes seems to be judicial policy; in Hong Kong it looks more like judicial lethargy.

There was little unanimity as to any of this between the firms which we visited, beyond a generalised view that both clients and justice could be better served by the courts in a place which is well served by strong dispute resolution services. What I heard about the lack of judicial active involvement in Hong Kong found curious echoes a few days later in Prague. In both jurisdictions, the point is not that courts should be imposing rules for their own sake, but that the inadequate structure for controlling electronic discovery means that crucial evidence can be lost and that time and expense is wasted. These things affect the willingness of commercial parties to choose a jurisdiction to litigate in.

Procedural developments in the US and UK are closely monitored in Hong Kong law firms, and important case law is shared between offices in different jurisdictions. The motives may vary – US developments are followed because most of the disputes litigated in Hong Kong emanate from the US, whereas the UK developments are followed because of the shared rules heritage, so that arguments about, say, the scope of discovery, may be resolved in part by reference to the rules of England and Wales.

We came across evidence of this jurisdictional cross-permeation at several levels – the Hong Kong case management rules may be frozen in a pre-1999 time-warp, but lawyers are referring to eDiscovery / eDisclosure protocols and questionnaires from other places, notably Australia and England and Wales. The attraction is presumably their practical usefulness, since few if any Hong Kong judges would expect such a thing, still less impose one.

We also found some interest in the UK’s West African Gas Pipeline case – one of those cases which people think must be important without really being able to work out why. That is because it is not very important, really – the giving party is responsible for disclosure and can be punished in costs if something goes wrong which involves opponents in wasted costs; things do go wrong in big projects and major eDisclosure exercises are big projects, so minimise your risk with strong project management and risk assessment skills, as well as with the occasional glance at the rules. We don’t need close study of long judgments to tell us any of that.

Whether as a consequence of judicial lethargy or for other reasons (notably confidentiality) parties increasingly choose arbitration over civil litigation as a means of resolving disputes. The confidentiality point apart, it is far from obvious to me that arbitration offers a better route than a properly-managed court process – it is hardly inexpensive, depends entirely on the quality of the arbitrator, and in practice raises the same issues about the scope and method of discovery as does litigation. This, I should stress, is my own observation, and not something said by any of the people to whom I spoke.

There were mixed views as to whether other jurisdictions, and particularly Singapore, provided jurisdictional competition. Singapore is certainly more focused on encouraging effective dispute resolution in the civil courts, but the nature of arbitration is that no one knows how much work is being done under this heading. It may seem likely that China-related arbitration will nearly always go to Hong Kong, but that assumption could be dangerous – it encourages firms to rest on their laurels whilst Singapore may be playing a long game. We heard, for example, of Singapore-based lawyers working in China to encourage the inclusion of Singapore jurisdiction and forum clauses. If I were a Hong Kong based lawyer, I would be hedging my bets by working to encourage practices and procedures in Hong Kong which compete with those of Singapore. I sense the feeling that this may be a lost cause.

China’s state secrets regime is a significant block which, whilst it finds its strongest focus in disputes, applies across wider aspects of commercial relationships. There are rumours of foreign companies thinking of abandoning Chinese business for this reason, and of law firms who are finding the burden not worth the effort. It is said that Hillary Clinton raised this at a diplomatic level on a recent visit to Beijing and, as noted above, there is growing awareness at some levels in China that this is a potential stumbling block on which they should be better informed. China is a big ship to turn, however, and there is little evidence of willingness at a high political level to intervene, whatever the commercial incentives both for the state and for its businesses.

Serious conflicts emerge between the demands of openness from, for example, US regulators and authorities and the restrictions of Chinese state secrets law. There are high-profile cases involving two of the Big Four which have serious implications, and not just for the affected firms. In practice, there is no alternative but to defer to local rules, and this will drive up the growth of locally-based legal services and of data hosting and review services. There is an obvious conflict between this assertion and the anecdotal evidence that firms are thinking of backing away from Chinese businesses. As in everything else, you have to play to win.

I found some interest in my report of the Sedona International Principles which urge greater US respect for the laws of other nations and a focus on the documents which really matter in place of the standard US-type demands for everything which is possibly relevant. That, however, has to be a two-way street, requiring a matching willingness on the part of the other jurisdictions to work towards a compromise solution, both case-by-case and generally. The rumours of Chinese missions to understand the US requirements and procedures are not yet matched by any overt signs of compromise from their end.

Conclusion

The blocking statute point is not going to be overcome in the short term, and whatever you make of the “threat” from Singapore, it seems to me that there is much work to be done to enhance Hong Kong’s already strong position as a place where parties will positively choose to go to settle their disputes.

My own view (which I modified in the course of my visit) is that it is pointless waiting for the courts to do something. The rules do not, I think, prevent parties from agreeing amongst themselves as to a method of giving discovery provided that express rules of evidence and local laws are complied with. The law firms have a common interest, it seems to me, in agreeing protocols and procedures which borrow from the developments in other jurisdictions and which make the best use of technology and techniques which have evolved there. It was encouraging to find local interest in what those developments are and, in some places, actual evidence of them being applied to local purposes.

This was an exploratory visit, intended to top up both my acquaintance with Epiq’s operations in the region and the wider developments there – one busy conference per year is not enough to claim more than cursory knowledge. Some of the firms were kind enough to invite me to go back on my next visit, and I will certainly return in the first part of next year.

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