Cross-Border Interim Relief in Hong Kong (1): An Analysis of Preservation Order under Section 21M of the High Court Ordinance in Zong Qinghou Estate Dispute

2025-09-16

Case Reference:  [2025] HKCFI 3355

Foreword

The estate dispute concerning the late founder of the Wahaha Group, Zong Qinghou, has drawn widespread attention recently.  On 1 August 2025, the Court of First Instance, the High Court of Hong Kong Special Administrative Region,  delivered a judgment in case Jacky Zong v Kelly Fuli Zong [2025] HKCFI 3355, providing important reference for interim relief measures in cross-border disputes between the Mainland of China and Hong Kong.

Case Background

The Plaintiffs, Jacky Zong, Jessie Jieli Zong and Jerry Jisheng Zong applied for a Preservation Order and Disclosure Order in the High Court, seeking to preserve and disclose assets in the HSBC Account held by Jian Hao Ventures Limited (“Jian Hao”, the 2nd Defendant). The two applications were in aid of the Plaintiffs’ claim before the Hangzhou Intermediate People's Court. After hearing, the Preservation Order and Disclosure Order were granted by the Court of First Instance (with modification of the terms). 

Application to Hong Kong Courts for Preservation Order under s.21M of the High Court Ordinance (“HCO”) in Aid of Foreign Legal Proceedings

According to s.21M of the High Court Ordinance, in relation to proceedings which have been or are to be commenced in a place outside Hong Kong, parties can under specific circumstances apply for interim relief in aid of the foreign proceedings. The Court of Final Appeal in Compania Sud Americana de Vapores SA v Hin-Pro International Logistics Ltd^[1] set out the two-stage approach in section 21M application. The legal principles are summarised as follows at §48 Jiang Xi An Fa Da Wine Co. Ltd v Zhan King^[2]:

“(1) In the first stage, the court firstly asks whether, if the proceedings that have been or are to be commenced in the foreign court result in a judgment, that judgment is one that the Hong Kong court may enforce. If the judgment resulting from the foreign proceedings may be enforced by the Hong Kong court, then the court asks the same questions as it would if the interim relief were sought in support of a Hong Kong action, save that the strength of the plaintiff’s substantive claim against the defendant (if material) should be considered from the standpoint of the foreign court, and not under the law of Hong Kong.

(2) In the second stage, as required by s 21M(4), the court should consider whether the fact that the court has no jurisdiction apart from s 21M in relation to the subject matter of the proceedings concerned makes it unjust or inconvenient for the court to grant the application^[3].”

On What Basis did the Hong Kong Court Grant Preservation Order and Disclosure Order under Section 21M HCO

1. First Stage

For the first stage, both parties did not dispute the enforce-ability of the judgment that may be given by the Hangzhou Intermediate People’s Court. However, they differ on the threshold of granting the interim measures. In this case the interim relief applied by the Plaintiffs is a Preservation Order, not the more commonly seen Mareva Injunction. Although both are asset preservation orders,  their nature and threshold for application differ:

“[Mareva injunction] goes well beyond [a proprietary injunction or preservation order] and enables the court to grant the plaintiff an interlocutory injunction restraining the defendant from disposing of or even dealing with his assets, being assets over which the plaintiff asserts no proprietary claim but which after judgment may be attached to satisfy a money judgment…^[4]” 

For the above reasons, the Plaintiffs in the case applied for a preservation order, which involves a lower threshold. The applicable threshold in the case for determining whether a preservation order should be granted should be “serious issues to be tried”, rather than “the good arguable case” required for Mareva Injunction^[5]. The Court found there are serious issues to be tried regarding the Plaintiffs’ claim for breach of contract^[6].

Balance of convenience needs also be considered in the first stage. Since what the Plaintiffs sought is a preservation order, rather than Mareva injunction, the existence of real risk of dissipation is not a necessary condition (though still relevant). The appropriate test should be “whether there is a need for security, and where damages would be adequate, the Court may refuse to grant any preservation order.^[7]” Having considered the specific circumstances of this case, the Judge found it appropriate to grant the Preservation Order (subject to one modification).

2.Second Stage

Having passed the first stage, the second stage considers whether “it would be unjust or inconvenient to grant the order in aid”15. Each case must be assessed on its specific facts and context.

The Hangzhou Proceedings are mainly concerned with the declaratory relief that there has existed a trust over the HSBC Account Assets.  The Court sees no reason why there would be any inconsistency with the Hangzhou jurisdiction or interference with case management of the Hangzhou Proceedings, if a preservation order is granted.  Such a preservation order would assist the Court in Mainland of China by making sure that the subject asset would still be available so that the Hangzhou Proceedings would not be rendered redundant.  Such a preservation order would also clearly mean comity to the Courts in Mainland of China – by ensuring that the assets located in Hong Kong would still be available for the disposition of the Courts in the Chinese Mainland^[8].

Application for Interim Relief under Section 21M HCO: No Need to First Apply to a Foreign Court

Another issue in this case is whether application for interim relief under s.21M HCO requires a prior asset preservation application to the foreign court.  The case authorities referred by the Plaintiffs suggest no such prior application is necessary. With reference to the Plaintiffs’ expert opinion, while the Courts in the Mainland of China have jurisdiction to grant the preservation order in respect of the assets outside the jurisdiction, as a matter of practice and policy, they very rarely grant such order. The Plaintiffs’ expert also asserts that after having checked the cases accessible by the public, he cannot find any such preservation order^[9]. The Defendants’ expert referred to one case where such a preservation order was granted. The case was handled by himself. According to the expert, it is a confidential case and therefore the case report exhibited is heavily redacted. Important information cannot be ascertained from the case report. As such, the Hong Kong Court preferred the Plaintiffs’ expert opinion^[10]. For reasons above, the Court sees it just and convenient to grant the Preservation Order (with modification of terms) in favour of the Plaintiff^[11]. Although the Hong Kong Court granted the Preservation Order, it expressly stated that “if there are material changes of circumstances like some decisions made by the Court [of Mainland of China] touching on the merits of the parties’ respective cases that would render the preservation no longer just or convenient, the parties should promptly inform the Hong Kong Court and there and then for the Hong Kong Court to consider how to proceed with the preservation order^[12].” Further, since the Preservation Order was granted, there must be disclosure about HSBC Account Assets.  

Hong Kong Court Granted Disclosure Order

A disclosure order is usually made hand-in-hand with a preservation order. This is because at the time of the preservation order, the subject property may have already been removed to somewhere else. The Court believes, “if the preservation order is to serve its purpose, the applicant has to know the whereabouts of the subject property, hence the necessity for the disclosure order^[13].” Preservation Order is therefore granted. The Hong Kong Court at the same time made it clear that: (1)  “The disclosure order is made here solely for the purpose of ensuring that the preservation order … is effective, and by this, the subject asset can still be preserved for the PRC Court to conduct the Hangzhou Proceedings meaningfully.  The order is thus in this sense reflective of the Hong Kong Court’s comity to the PRC Court” (2) “The disclosure order is by no means made upon any consideration of the merits of the parties’ respective cases … and is by no means related to the merits for seeking Relief 2 in the Hangzhou Proceedings whatsoever.  The PRC Court can and should by no means be affected by this disclosure order …^[14]”

Conclusion

An application for interim relief under Section 21M HCO is an ancillary measure. Its purpose is to facilitate “the process of execution or enforcement of the foreign judgment, which may potentially have to move to Hong Kong because of the location of the judgement debtor’s assets in Hong Kong^[15]”. As for the specific interim relief to be applied for, it requires analysis based on specific facts and context. In the present case, the preservation order granted involves a relatively low threshold and is only applicable to assets over which the plaintiff asserts proprietorship. In contrast, a Mareva injunction has broader effect. Once granted by the court, it may restrict the defendants from dealing with their assets, even if the plaintiff makes no proprietary claim over them. Consequently, obtaining a Mareva injunction entails a higher evidentiary threshold. In cross-border disputes where the substantive proceedings are conducted in another jurisdiction, but the debtors’ assets are located in Hong Kong, seeking a preservation order under section 21M can substantially enhance the protection and enforcement prospects available to the creditor.

Disclaimer

This article and the information contained within it are provided for educational and general informational purposes only. It is intended to provide the public a general understanding of the cases or issues discussed, and shall not be construed as legal advice provided by the author or DeHeng Law Offices. Readers should not act upon this information without seeking professional legal advice. The views expressed do not necessarily reflect the official policy or position of any court or legal authority. Reproduction or citation of any content from this article requires proper attribution to the original source.

NOTE：

[2](2016) 19 HKCFAR 586

[3][2019] HKCFI 2411

[5]See Judgment §40

[7]See judgment §42

[10]See Judgment §47

[11]See Judgment §49 

[13]See Judgment §57

[15]See Judgment §64

[17]See Judgment §65

[22]See Judgment §76

[23]See Judgment §77

[24]See Judgment §80

[25]See Judgment §81

[28]See Judgment §86

[29]See Judgment §87

[31]See Judgment §67