For parties engaged in cross-border investigations or disputes in Asia, as of September 1, 2014, civil litigants in Hong Kong must follow new rules that govern the discovery of electronically stored information (ESI) set forth in Practice Direction SL 1.2, “Pilot Scheme for Discovery and Provision of Electronically Stored Documents in Cases in the Commercial List.”
Before this Practice Direction, the rules did not distinguish between paper and electronic documents, so the handling of discovery was inconsistent and often burdensome. The Practice Direction proclaims its goal is “to provide a framework for reasonable, proportionate and economical” e-discovery. The Practice Direction applies to all commercial cases that meet two criteria: (1) the claim (or counterclaim) exceeds HK $8 million, and (2) the case requires the parties to search at least 10,000 documents. Courts can also impose the Practice Direction on other cases, and parties can agree to its terms as well.
Here are some highlights of the new Practice Direction:
- Proportionality: The Practice Direction requires e-discovery costs to be proportionate to the value of the claims at issue, and it encourages parties to use technology to improve efficiency.
- Scope of discovery: Discovery is limited to ESI that is “directly relevant to an issue.” Any “background” documents that could lead to a “‘train of enquiry’ with the potential result of directly or indirectly supporting . . . or undermining” claims are excluded from discovery absent an application to the court.
- Privilege protection: The Practice Direction suggests that parties agree that the inadvertent production of privileged documents does not waive the attorney-client privilege or work-product protection.
- Preservation: Counsel must notify their clients of the duty to preserve ESI as soon as litigation is contemplated.
- Communication and cooperation: Parties must discuss certain items before their first Case Management Conference (CMC), including the categories of ESI for disclosure, document retention policies, the form of production, and cost allocation. In addition, parties should be prepared to discuss tools and techniques to reduce the burden and cost of e-discovery, including keyword searches, concept searching, data sampling, and technology-assisted review (TAR).
- Reasonable search: Parties must conduct a reasonable, proportionate search for ESI. Keyword searches supplemented by other automated searches with advanced techniques, including TAR, may be deemed reasonable. Phased discovery is also acceptable.
- Early preparation: Parties must serve a draft of an Electronic Documents Discovery Questionnaire (EDDQ) with their initial pleadings; the final questionnaire, accompanied by an affidavit, must be filed with the court at least seven days before the first CMC. The questionnaire addresses document custodians, forms of electronic documents, and preservation practices, among other things. The person who signs the affidavit must be available for the CMC and discovery hearings; the person can be a party or its employee, a technical specialist in electronic documents, or an e-discovery expert.
Although the Practice Direction is a “pilot scheme” that could be revised within the next year, organizations doing business in Hong Kong should take the following steps now to avoid liability under the new rules:
- Shore up information governance protocols: Organizations should ensure they have a rigorous document retention program and that they follow it religiously. They should also have a plan for disseminating litigation holds that suspends the automatic and manual destruction of documents.
- Create a data map: It is critical that organizations know their data, as they must file a draft of the EDDQ early in the case. Maintaining an up-to-date map can speed the identification and collection of relevant data and facilitate preparation for the CMC.
- Improve litigation readiness: Organizations should establish a plan of attack to follow when litigation is anticipated. A team that consists of legal and IT representatives should collaborate to ensure that proper forensic techniques are followed to avoid spoliation claims.
- Establish relationships with e-discovery experts: Given the front-loaded nature of e-discovery under the Practice Direction and the technical expertise required to participate in the CMC, organizations should be prepared to call on a trusted advisor as soon as litigation commences. Organizations should vet potential e-discovery specialists thoroughly and ensure they have the necessary project-management skills and technological expertise.
Parties that follow these steps will be better equipped to satisfy the Practice Direction and manage e-discovery in a cost-efficient manner.
About the AuthorMore Content by Rachel Teisch