{"id":7083,"date":"2026-06-03T15:00:06","date_gmt":"2026-06-03T07:00:06","guid":{"rendered":"https:\/\/www.boasecohencollins.com\/?p=7083"},"modified":"2026-06-03T15:00:12","modified_gmt":"2026-06-03T07:00:12","slug":"addressing-illegality-in-cross-border-disputes","status":"publish","type":"post","link":"https:\/\/www.boasecohencollins.com\/zh-hans\/%e7%bd%91%e8%aa%8c\/addressing-illegality-in-cross-border-disputes\/","title":{"rendered":"Addressing \u2018illegality\u2019 in cross-border disputes"},"content":{"rendered":"\n

By Alex Liu and Arthur Chan<\/strong><\/p>\n\n\n\n

Hong Kong, 3 June 2026:<\/strong> In a judgment<\/a> carrying huge significance for cross-border transactions, the Court of Final Appeal has ruled that claims for unjust enrichment should not be fatally undermined when an agreement between parties is tainted by illegality. The ruling makes clear that Hong Kong courts should adopt a flexible approach \u2013 and consider a \u201crange of factors\u201d \u2013 when dealing with such disputes.<\/p>\n\n\n\n

The case, Wong Chi Hung v Lo Wing Pun<\/em> [2026] HKCFA 14, arose from a currency exchange agreement in which the Respondent deposited RMB 1 million into a designated Mainland bank account in return for the Appellant agreeing to deposit the equivalent HK$ amount into the Respondent\u2019s Hong Kong bank account. But the Mainland account was frozen by the authorities in connection with an unrelated criminal investigation. As a result, no money was paid to the Respondent in Hong Kong.<\/p>\n\n\n\n

The Respondent sued the Appellant for breach of contract, or alternatively for unjust enrichment. The District Court ruled that since the exchange was unlawful under Mainland foreign exchange regulation, it was unenforceable as giving effect to it would involve or facilitate serious foreign illegality.  However, this would not affect the Respondent\u2019s separate claim for unjust enrichment, being conceptually distinct from a breach of contract, and aims to reverse the transfer but not to enforce the agreement. The Court of Appeal agreed, holding that the Respondent\u2019s claim for unjust enrichment was consistent with both policy and the principle of comity.<\/p>\n\n\n\n

The CFA backed the CA\u2019s decision. It declared that the \u201creliance\u201d approach to domestic illegality \u2013 adopted in the UK case<\/a> Tinsley v Milligan<\/em> [1993] UKHL 3 \u2013 should no longer be followed in Hong Kong. Instead, the \u201crange of factors\u201d approach that places emphasis on substance rather than form in the UK Supreme Court decision<\/a> Patel v Mirza<\/em> [2017] should be adopted. Applying that approach, it would be rare for any illegality to be so serious as to render an unjust enrichment claim unenforceable, since such a claim unwinds rather than enforces the underlying illegal contract.<\/p>\n\n\n\n

In the context of foreign illegality, the underlying consideration is whether granting restitution would constitute an unacceptable violation of the foreign law, breaching comity. In the present case, the grant of restitution would not involve a breach of comity since any illegality was of a peripheral nature. Accordingly, the CFA dismissed the appeal.<\/p>\n\n\n\n

It is worth pointing out that in a concurring judgment, Chief Justice Andrew Cheung reviewed the law in relation to the doctrine of stare decisis<\/em> \u2013 meaning \u201cto stand by things decided\u201d \u2013 which lays down when previous decisions are binding precedents.<\/p>\n\n\n\n

He clarified that UK Supreme Court decisions are only persuasive and corrected a Court of Appeal decision in Monat Investment Ltd v All Person(s) in Occupation of Part of No 16 Ma Po Tsuen<\/em> [2023] 2 HKLRD 1311 which, prior to the present case, erroneously treated Patel v Mirza <\/em>as binding.<\/p>\n\n\n\n

The Chief Justice reiterated that only pre-1997 Privy Council decisions on appeal from Hong Kong are binding and that all other overseas decisions, including those of the UK Supreme Court, are persuasive only. Article 84 of the Basic Law places all overseas common law authorities \u201con the same footing\u201d and no particular jurisdiction has \u201cspecial status\u201d, he declared.<\/p>\n\n\n\n

In summary, the CFA judgment provides welcome clarity, particularly with regard to transactions between Hong Kong and the Mainland which are becoming more common and sometimes informal in nature. In particular, it means an unjust enrichment claim arising from a total failure of consideration can still be pursued even when the underlying contract may be unenforceable. Additionally, the Chief Justice\u2019s concurring judgment reaffirms Hong Kong\u2019s judicial independence and the CFA\u2019s role as our city\u2019s ultimate appellate body.<\/p>\n\n\n\n

Alex Liu is Managing Partner of BC&C. His key areas of practice include commercial and corporate litigation, investigations by governmental bodies such as the SFC, ICAC and Commercial Crime Bureau, insolvency and debt restructuring, intellectual property and employment matters. He can be contacted at <\/strong>alex@boasecohencollins.com<\/strong><\/a>.<\/strong><\/p>\n\n\n\n

Arthur Chan is a Partner with BC&C. He specialises in Criminal Litigation, being a Recommended Criminal Lawyer in the Doyles Guide rankings, and has a strong record in cyber fraud recovery claims. As well, he develops a broad range of civil and commercial litigation such as immigration, personal injuries and employment issues. He can be contacted at <\/strong>Arthur@boasecohencollins.com<\/strong><\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

By Alex Liu and Arthur Chan Hong Kong, 3 June 2026: In […]<\/p>\n","protected":false},"author":2,"featured_media":7080,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[54],"tags":[],"class_list":["post-7083","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-54"],"yoast_head":"\nAddressing \u2018illegality\u2019 in cross-border disputes - \u5e03\u9ad8\u6c5f\u5f8b\u5e08\u884c<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.boasecohencollins.com\/zh-hans\/%e7%bd%91%e8%aa%8c\/addressing-illegality-in-cross-border-disputes\/\" \/>\n<meta property=\"og:locale\" content=\"zh_CN\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Addressing \u2018illegality\u2019 in cross-border disputes - \u5e03\u9ad8\u6c5f\u5f8b\u5e08\u884c\" \/>\n<meta property=\"og:description\" content=\"By Alex Liu and Arthur Chan Hong Kong, 3 June 2026: In […]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.boasecohencollins.com\/zh-hans\/%e7%bd%91%e8%aa%8c\/addressing-illegality-in-cross-border-disputes\/\" \/>\n<meta property=\"og:site_name\" content=\"\u5e03\u9ad8\u6c5f\u5f8b\u5e08\u884c\" \/>\n<meta property=\"article:published_time\" content=\"2026-06-03T07:00:06+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2026-06-03T07:00:12+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.boasecohencollins.com\/wp-content\/uploads\/Remittance_PHOTO.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1920\" \/>\n\t<meta property=\"og:image:height\" content=\"905\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Niall Donnelly\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"\u4f5c\u8005\" \/>\n\t<meta name=\"twitter:data1\" content=\"Niall Donnelly\" \/>\n\t<meta name=\"twitter:label2\" content=\"\u9884\u8ba1\u9605\u8bfb\u65f6\u95f4\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 \u5206\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.boasecohencollins.com\/zh-hans\/%e7%bd%91%e8%aa%8c\/addressing-illegality-in-cross-border-disputes\/\",\"url\":\"https:\/\/www.boasecohencollins.com\/zh-hans\/%e7%bd%91%e8%aa%8c\/addressing-illegality-in-cross-border-disputes\/\",\"name\":\"Addressing \u2018illegality\u2019 in cross-border disputes - 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