Posts

Wang Zhengyang joins Leaders in Law as the exclusive Arbitration Law member in China

Leaders in Law, the leading platform in its field, is delighted to welcome Wang Zhengyang as our exclusively recommended & endorsed Arbitration Law expert in China. Wang’s office is located in Shanghai.

Mr. Wang Zhengyang specializes in the areas of litigation, arbitration, and foreign investment. He has profound knowledge of Chinese law and more than 30 years of legal practice experience, including 5 years in Court.

In the field of civil and commercial affairs, Mr. Wang has provided high-quality advisory services and litigation & arbitration legal services for many state-owned and private enterprises in the fields of finance, oil and gas, construction and real estate, manufacturing, logistics, and trading. In the criminal field, Mr. Wang has successfully defended many companies and individuals in major and complex criminal cases involving loan fraud, illegal business operation, contract fraud, and bribery.

Mr. Wang also actively provides criminal compliance training services for corporate customers, member companies of the chamber of commerce, member companies of the industry association, to help companies prevent criminal legal risks. Furthermore, Mr. Wang also specializes in foreign legal services. He has successfully defended foreign-funded enterprises and individuals involved in intellectual property infringement disputes, labour disputes, shareholder disputes, contract disputes, debt recovery disputes, illegal personal detention, contract fraud, illegal possession of drugs, etc.

If you require any assistance in this area, please use the contact details provided in China’s profile below or contact us at info@leaders-in-law.com & we will put you in touch.

Court affirms need for unsatisfied tax claim to use tax gathering defence

Introduction

It is trite law that the Hong Kong courts will not enforce a foreign arbitral award if it amounts to indirect enforcement of foreign laws.(1) In the particular context of tax law, a defence known as the ‘tax gathering’ defence exists, under which a foreign award will not be enforced if it would, in effect, help foreign states to collect taxes.

However, the requirements of this defence have been unclear. There is case law that supports the argument that an unsatisfied tax claim of the state (ie, outstanding taxes owed to the state) is an essential feature,(2) but some of these authorities have been questioned.

The Hong Kong courts finally settled this issue in Organising Committee of the XXIII Olympic Winter Games v XI Paralympic Winter Games and Pico Projects ((2021) HKCFI 606), which affirmed and applied the principle of Re Reid for the first time – namely, that an unsatisfied tax claim is indeed a prerequisite for the tax gathering defence.

Facts

The plaintiff entered into various contracts with the defendant in order to rent structures, which were silent as to the obligation to pay profits tax to Russia. It transpired that, under Russian law, the plaintiff should have withheld 20% of the contract price and paid the same to Russia (Articles 24, 44, 45, 287 and 310 of the Russian Tax Code). However, the plaintiff failed to withhold the relevant profits tax. Nonetheless, the plaintiff paid the relevant amount to the Russian budget and sought to recover the amount from the defendant. Litigation proceeded, which ultimately led to the plaintiff’s success in the Russian Court of Cassation (the Russian judgment). In essence, the court held that the defendant was obliged to return the profits tax on the basis of unjust enrichment.

It was against this background that the proceedings to enforce the arbitral award were conducted in Hong Kong. The issue was whether the defendant was entitled to use the tax gathering defence such that the Russian judgment would not be enforced.

Decision

It was common ground that no Hong Kong precedent applied to this case. Therefore, it was necessary to turn to foreign case law.

The plaintiff placed heavy reliance on Re Reid, a case decided by the British Columbia Court of Appeal, the facts of which are similar to the present case. In that case, an English trustee of an estate of the executrix was accountable to Her Majesty’s Revenue and Customs for estate duty. The estate had insufficient assets in England and therefore the trustee paid the shortfall out of its own pocket. A remainderman under the will challenged the trustee’s entitlement to recover the shortfall of the taxes from the estate since foreign revenue law could not be directly enforced in British Columbia. The court rejected the remainderman’s argument since “whether or not the respondent trustees indemnified cannot affect the slightest degree the amount of estate duty collected in England”. Similarly, it was held in Williams and Humbert and Wahr-Hansen that an existing unsatisfied tax claim with the state is essential to the tax gathering defence.

In the present case, the defendant relied on Stringham v Dubois ((1993) 3 WWR 273), which did not follow Re Reid. The court opined that the mere fact that there was such a satisfied claim did not defeat the defence of indirect enforcement of foreign law. The defendant’s argument was rejected because:

• Williams and Humbert was not considered in Stringham;

• the statement was merely obiter; and

• Stringham gave no detailed analysis with regard to Re Reid – there was only a one-sentence reference.

The defendant also referenced the editor’s note in the International Law Reports to argue that Wahr-Hansen had been wrongly decided. The argument was also rejected since the editor merely criticised the application of the law in Wahr-Hansen, rather than the law stated therein.

In light of the above, the court affirmed that an outstanding tax claim is a requirement of the tax gathering defence. As shown in the Russian judgment, the plaintiff had already paid the taxes to the Russian budget. Therefore, the defendant could not avail the tax gathering defence and the Russian judgment was enforced in the plaintiff’s favour.

Comment

As rightly recognised by the court, the boundaries of indirect enforcement are obscure. Parties must be careful to distinguish the substance from the form of a claim. The Hong Kong courts have conveniently set out the requirements needed for the tax gathering defence as originated from the principle against indirect enforcement. This is beneficial for promoting legal certainty.

However, there was another issue which was raised but not decided in this case namely, whether the plaintiff should be considered an agent of the Russian budget (to collect taxes from the defendant) or an agent of the defendant (to pay taxes to the Russian budget for the defendant). The significance is that if the plaintiff is an agent of the Russian budget, it is arguably recovering taxes on behalf of the Russian budget. It follows that the ultimate recipient of the judgment debt would be the Russian budget and that enforcement of the judgment would amount to indirect enforcement of Russian tax law. Support can be drawn from case law(3) to argue that it amounts to indirect enforcement where a liquidator is appointed to recover tax. This could be a potential ground of appeal.

For further information on this topic please contact William Leung or Alicia So at William KW Leung & Co by telephone (+852 2810 6199) or email (leung@jwlw.com). The William KW Leung & Co website can be accessed at www.jwlw.com.

Endnotes

(1) Dicey, Morris & Collins, The Conflict of Laws, Rule 3.

(2) Re Reid (1970) 17 DLR (3d) 199 BCCA; Williams and Humbert v W&H Trade Marks (Jersey) Limited [1986] AC 368; and Wahr-Hansen v Compass Trust Co Ltd 10 ITLR

283.

(3) Peter Buchanan Ltd and Macharg v McVey [1955] AC 516 and QRS 1 APS v Fransden [1999] STC 616.

The materials contained on this website are for general information purposes only and are subject to the disclaimer.

ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.

Dr. Benno A. Packi joins Leaders in Law as the exclusive Real Estate Law member in Germany

Leaders in Law, the leading platform in its field, is delighted to welcome Dr. Benno A. Packi as our exclusively recommended & endorsed Real Estate Law expert in Germany. Dr. Benno’s office is located in Berlin.

Dr. Benno A. Packi advises clients on corporate and real estate transactions, project developments and from a legal perspective on financing. Dr. Packi advises stock corporations as well as medium-sized companies and successful start-ups on corporate and capital market law, restructuring measures including group law and transformation law, as well as foreign investors entering the German and European market.

In addition, Dr. Packi advises wealthy private individuals on corporate and asset succession, including foundation solutions. Dr. Packi represents clients in litigation including arbitration, in particular in post-M&A disputes and in liability matters of managing directors. His professional experience includes advising companies in the real estate, biotechnology and pharmaceutical, manufacturing, IT, energy, trade and logistics sectors.

If you require any assistance in this area, please use the contact details provided in Dr. Benno’s profile below or contact us at info@leaders-in-law.com & we will put you in touch.

Vanja Mugoša joins Leaders in Law as the exclusive Commercial Law member in Montenegro

Leaders in Law, the leading platform in its field, is delighted to welcome Vanja Mugoša as our exclusively recommended & endorsed Commercial Law expert in Montenegro. Vanja’s office is located in Podgorica.

Experienced Managing Partner with a demonstrated history of working in the legal services industry. Skilled in Commercial Law, Negotiation, Business Planning, Legal Writing, Corporate Law, and Intellectual Property. Strong business development professional graduated from University of Montenegro, Law Faculty Podgorica.

If you require any assistance in this area, please use the contact details provided in Vanja’s profile below or contact us at info@leaders-in-law.com & we will put you in touch.

Maja Drakulovic joins Leaders in Law as the exclusive Employment Law member in Montenegro

Leaders in Law, the leading platform in its field, is delighted to welcome Maja Drakulovic as our exclusively recommended & endorsed Employment Law expert in Montenegro. Maja’s office is located in Podgorica.

From the very beginning we have been recognized as a successful and highly respected law office, with diverse portfolio of legal services and also as a reliable, loyal and competent partner of our clients. Between 1992 and 2009 we had worked in Montenegro and Serbia under the name law firm Jovović & partners, and since January 2010 we are working under the name law firm Jovović, Mugoša & Vuković.

If one measure success of a law firm by the size of workforce, then our law firm is the biggest in Montenegro. In addition to that, our law firm shall be between three biggest legal services providers in Montenegro, if one apply criterion of size of client database and annually generated revenues.

If you require any assistance in this area, please use the contact details provided in Maja’s profile below or contact us at info@leaders-in-law.com & we will put you in touch.

Avisen Legal Partner Kimberly Lowe Reappointed to the Commission on Uniform State Laws

Avisen Legal Partner Kimberly Lowe Reappointed to the Commission on Uniform State Laws

Prestigious appointment made by Governor Tim Walz, Chief Justice Lorie Gildea, and Attorney General Keith Ellison

As of June 1, 2021, Avisen Legal partner Kimberly Lowe has been reappointed for a fourth term to the Commission on Uniform State Laws (ULC). The reappointment was initiated by Minnesota Governor, Tim Walz, Minnesota Supreme Court Chief Justice Lorie Gildea, and Minnesota Attorney general, Keith Ellison. We recently had the opportunity to talk with Kim about her work on this important Commission.

Q.  How many two-year terms have you served on the Commission on Uniform State Laws?

A.  I was first appointed in 2016, so I have served 3 terms and this is my 4th appointment. I am very pleased to continue the important work of our Commission and am honored to have been reappointed.

Q.  What are some of the projects you worked on over the past couple of years?

A.  You can visit our website to see the different projects I have been involved in through my work on the Commission on Uniform State Laws.

Q.  What do you enjoy most about your Commission work?

A.  The ULC provides states with non-partisan, carefully conceived uniform laws. The ULC’s work simplifies life for people who live, work, or travel in multiple states and improves local economies by facilitating interstate commerce. Each uniform act is drafted in an open and deliberative process that draws on the expertise of state-appointed commissioners, legal advisors and observers.  As a commissioner, I work with lawyers from around the country on drafting laws and then I come back to Minnesota and work with our law makers to enact these laws.  Clear and practical laws benefit all citizens and I am fortunate to be part of that process.

For more information please read the news release distributed by the ULC.

Richard Grogan joins Leaders in Law as the exclusive Employment Law member in Ireland

Leaders in Law, the leading platform in its field, is delighted to welcome Richard Grogan as our exclusively recommended & endorsed Employment Law expert in Ireland. Richard’s office is located in Dublin.

Richard Grogan BCL, AITI, TEP, CEDR, Solicitor and Accredited Mediator. Richard specialises in Employment Law, and Taxation of Employment Law Awards and Settlements. Richard provides mediation services, both in employment disputes as an alternative to Court proceedings or claims to the WRC and workplace mediation. Richard also heads up our Reputational Risk and Crisis Management practice for Senior Executives and Senior Managers.

Richard brings over 30 years experience, specialist knowledge and expertise  as a Solicitor and Chartered Tax Advisor to provide a quality and value for money service to his clients. Richard is one of the best known and respected Employment Law Solicitors in Ireland. Richard is ranked as one of the top Employment Lawyers in the country. Richard writes and lectures extensively on Employment Law and Taxation. You can see some of Richards publications and lectures in our publications section.

If you require any assistance in this area, please use the contact details provided in Richard’s profile below or contact us at info@leaders-in-law.com & we will put you in touch.

Kimberly Lowe joins Leaders in Law as the exclusive Corporate Law member in Minnesota, USA

Leaders in Law, the leading platform in its field, is delighted to welcome Kimberly Lowe as our exclusively recommended & endorsed Corporate Law expert in Minnesota, USA. Kimberly’s office is located in Minneapolis.

“You will find Kim to be one of the most pragmatic, straightforward and competent lawyers you’ve ever met. Kim is the kind of attorney who nerds out over crafting statutes and standards but also has a personality. She is amazing and super well respected. Her firm Avisen helps taxable and tax-exempt entities so she’s well versed.  If you need a source to refer out to, I can’t think of a more capable attorney than Kim.” -Jessica Birken

Kim has laid the groundwork for social business to thrive in Minnesota. She serves as an unmatched thought leader in Minnesota when supporting innovative business models, and it is because of her leadership that my company, Fair Anita, has been able to incorporate as a Public Benefit Corporation. She has provided incredible ideas, connections, and legal counsel, and I am forever grateful for her support. She brings passion and energy to every project, which makes working with her an absolute delight. I highly recommend Kim as the premiere lawyer in the Twin Cities, and I look forward to working with her in the future.” – Joy McBrien, Women’s Rights Advocate and Entrepreneur

If you require any assistance in this area, please use the contact details provided in Kimberly’s profile below or contact us at info@leaders-in-law.com & we will put you in touch.

Philip Lopatka joins Leaders in Law as the exclusive Commercial Law member in Canada

Leaders in Law, the leading platform in its field, is delighted to welcome Philip Lopatka as our exclusively recommended & endorsed Commercial Law expert in Canada. Philip’s office is located in Alberta.

Philip has been a practising Lawyer since 2005, providing expertise, advice and legal services clients can trust in a cost-effective manner for over 16 years of practice.

Philip has a diverse clientele with an expansive range of legal transactions, documentation, issues and disputes, and in part due to the breadth of his practice, he is fortunate to have had the time and opportunity to forge long lasting relationships with many of his clients.

Philip has also seen the Laws and practice of Law evolve, and he continues to strive to provide expertise, advice and service his clients can trust that is cost-effective, and this challenge has also helped to make the practice of Law engaging and enjoyable throughout his 16 years of practice.

If you require any assistance in this area, please use the contact details provided in Philip’s profile below or contact us at info@leaders-in-law.com & we will put you in touch.

Omar Bassiouny joins Leaders in Law as the exclusive M&A Law member in Egypt

Leaders in Law, the leading platform in its field, is delighted to welcome Omar Bassiouny as our exclusively recommended & endorsed M&A Law expert in Egypt. Omar’s office is located in Cairo.

Omar S. Bassiouny is Partner of Matouk Bassiouny in both offices: Dubai and Cairo. He is consistently ranked in top tiers and bands by legal periodicals in the areas of corporate law and mergers and acquisitions for his considerable expertise in setting-up joint ventures and new projects in Egypt and Dubai, as well as ensuring compliance with local laws and corporate governance.

Omar is also recognized for his negotiations skills and business sense, which enabled Matouk Bassiouny’s reputation to float globally and maintained a substantial degree of efficiency and ethics.

If you require any assistance in this area, please use the contact details provided in Omar’s profile below or contact us at info@leaders-in-law.com & we will put you in touch.