The much-awaited pilot scheme on discovery of electronic documents was rolled out by the Hong Kong Judiciary in June 2014 in the form of a practice direction. It took effect on 1 September 2014 with a review scheduled to take place within a year. Although the application of the pilot scheme is initially restricted to cases in the Commercial List, it will surely be a game changer in how litigation is conducted in Hong Kong.
Scope of the Application
Practice Direction SL 1.2 (the Practice Direction) is applicable to actions commenced in, or transferred into, the Commercial List on or after 1 September 2014 where:
- the claim/counterclaim exceeds HK$8 million AND there are at least 10,000 documents to be searched for the purposes of discovery; or
- the parties agree to be governed by the Practice Direction or the Court so directs.
The Practice Direction may also apply to actions not in the Commercial List in some circumstances.
Relatively restrictive scope of discovery
In line with the purpose of the Practice Direction, which is to provide a framework for reasonable, proportionate and economical discovery and supply of electronic documents under Order 24 of the Rules of the High Court, the scope of discovery of electronic documents is limited to those directly relevant to an issue arising in the proceedings. Background electronic documents which might lead to a “train of enquiry” with the potential result of directly or indirectly supporting of undermining one party’s case need not be disclosed. This is to be welcomed, given the amount of electronic documents generated in modern day commerce, with emails being the most prevailing means of communications.
It must however be stressed that the test of relevancy in Peruvian Guano sense continues to apply to discovery of hardcopy documents.
Electronic Documents Discovery Questionnaire
To make sure that the parties consider and discuss e-discovery at an early stage of the proceedings, the parties are required to complete an Electronic Documents Discovery Questionnaire (EDDQ). A draft EDDQ should be filed together with the parties’ respective Statement of Claim and Defence. A finalized EDDQ must be filed with the Court no later than 7 days before the 1st Case Management Conference.
The parties are required to provide inter alia the following information in the EDDQ:
- the creators/custodians of the electronic documents;
- the forms of electronic communications used;
- the forms of electronic documents created;
- whether the electronic documents are in the custody or control of third party;
- whether there is a document retention policy, if so, outline the same or attach a copy; and
- whether instructions in relation to the preservation of electronic documents have been given, if so, when and what instructions were given exactly.
It is expressly stipulated in the Practice Direction that the finalized EDDQ must be verified by a Statement of Truth. Whoever signing the Statement of Truth may be the party, its employee or an electronic discovery specialist or technical specialist in Electronic Documents, and must make himself/herself available to attend the hearing of the 1st Case Management Conference and any interlocutory applications concerning discovery.
The parties are required to discuss e-discovery as early as possible. The issues to be discussed are broad- ranging, including the scope of reasonable searches for electronic documents, whether paper documents should be digitized, whether metadata should be disclosed and how to handle unintentional disclosure of privileged
As regards what constitutes a “reasonable search”, the following factors will be taken into account in deciding the reasonableness of the extent of a search for electronic documents:
- the number of electronic documents involved;
- the nature and complexity of the proceedings;
- the ease and expense of retrieving any particular electronic document;
- the availability of electronic documents or contents of the electronic documents from other sources; and
- the significant of any electronic document which is likely to be located during the search.
The Practice Direction has recommended a “staged approach” – with discovery initially being given of limited categories of documents. Depending on the results initially obtained, the scope of search may subsequently be varied.
Duties of legal representatives
The parties’ legal representatives should advise their clients in respect of preservation as well as management of electronic documents as soon as litigation is contemplated.
In terms of document preservation, instructions must be issued to the party/its employees or any other custodians of electronic documents to ensure that potentially relevant electronic documents which might otherwise be deleted in the ordinary course of business or under a document retention policy, are preserved until the conclusion of the litigation.
In terms of document management, as the definition of electronic documents includes documents which have been deleted, but not yet overwritten, the parties should therefore take an “image” copy of the relevant hard drives or digital media as soon as litigation is contemplated.
Financial institutions and other corporations must make sure that they are “e-discovery ready” by implementing appropriate information governance systems that cater for the preservation and identification of electronic documents.
As soon as litigation is contemplated, parties should familiarize themselves with the technical aspects of e- discovery and may as a result need to retain an external service provider specialized in e-discovery or data management early on in the proceedings. Whilst this may leading to a front-loading of costs, for cases with voluminous documents to search, operating under the new framework will likely to be an overall cost-saving exercise.