Dechert’s new Hong Kong managing partner expects increase in disputes

Dechert appoints Maria sit
Maria Sit

Dechert appoints litigation and regulatory enforcement lawyer, Maria Sit, as the Hong Kong office’s managing partner, filling a position that was vacant since former head David Cho left in January to lead Milbank’s Seoul office.

“Hong Kong continues to generate opportunities for Dechert’s global clients and the legal industry,” Sit told Asia Business Law Journal.

“For example, on the regulatory front, the SFC has introduced a new regulatory framework regarding virtual assets and a consultation paper to extend the SFC’s enforcement powers. With the appointment of the new enforcement head, we are likely to see an uptick in enforcement actions in the next 12 to 24 months.”

Sit, who is also the Asia head and global co-leader of Dechert’s white collar, compliance and investigations practice, joined the firm in 2019 and was a legal counsel at the Securities and Futures Commission (SFC) of Hong Kong from 2013-2014.

She has more than two decades of experience, focusing on financial services regulation and complex civil litigation and dispute resolution in mainland China and Hong Kong.

Sit also expected more disputes relating to digital assets to emerge, especially following the Hong Kong government’s newly announced policies to develop the virtual assets industry.

Hong Kong courts have heard cases involving digital assets, granting proprietary injunction over bitcoins (Nico Constantijn Antonius Samara v Stive Jean Paul Dan, 2022), and summarised the features of Bitcoin and digital keys in judgment (Yan Yu Ying v Leung Wing Hei, 2022).

“Generally, in times of economic downturn, disputes arising from distressed assets are expected to increase,” said Sit. “Currently, we are seeing a wave of defaults on debts by PRC property developers, but a similar impact may spread to other industries.”

As the structure of these financing deals is often complex, involving entities in various jurisdictions, Sit saw more disputes occurring with parallel proceedings in different jurisdictions or in court and arbitration. Recently, the jurisdiction of the court hearing winding-up petitions when an arbitration clause or an exclusive jurisdiction clause is in place has also become a hot legal area.

Additionally, with the rising interest in environmental, social and governance (ESG) investments, Hong Kong regulators have implemented a number of new regulatory frameworks, including the SFC’s requirements on risk management and disclosures for ESG funds.

“With these added requirements, and considering the volatility in the equity markets, we expect to see more cases of investors litigating against ESG funds for mis-selling claims, particularly to seek compensation for the losses suffered as a result of a fund’s non-compliance with regulatory requirements,” Sit added.

In the dispute resolution landscape, Sit noted that the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Bill, which was passed on 26 October, and is now awaiting to be gazetted, will be a real game changer once it is in force. Some 90% of mainland civil and commercial judgments may be directly recognised and enforced in Hong Kong.