On 16 October 2025, Hong Kong's Court of Final Appeal, in an audit negligence case, Tenwow International Holdings Limited & Anor v PricewaterhouseCoopers Zhong Tian LLP [2025] HKCFA 17, considered the jurisdiction of the Hong Kong courts to issue a letter of request to a court in another jurisdiction for the production of audit working papers located in that jurisdiction for litigation in Hong Kong, and examined the scope of the Arrangement on Mutual Taking of Evidence in Civil and Commercial Matters between the Courts of the Mainland and the Hong Kong Special Administrative Region. This decision provides clarity on how parties to proceedings in Hong Kong may apply for the Hong Kong courts to engage with Mainland authorities for the exchange of evidence between the two jurisdictions and in particular, resolves the long tension between a party's obligation to give discovery against bars to disclosure under another jurisdiction's law which binds the party.
Background
Tenwow International Holdings Ltd, was an investment holding company listed in Hong Kong and engaged in the manufacturing and distribution of beverages, food and snacks in the Mainland. Tenwow sued big four auditing firm PwC, and its Mainland entity, PwC Zhong Tian LLP, alleging negligence and breach of duty in respect of the audits for the years 2013 to 2017. In those proceedings, Zhong Tian provided a list of documents which listed some audit working papers held in their Shanghai office.
Parties disagreed on the relevant procedure for producing those documents in Hong Kong. On whether Zhong Tian was able to transfer the documents to Hong Kong without seeking approval from relevant Mainland authorities, Zhong Tian submitted that approval should be obtained via a letter of request issued by the Hong Kong court to the Shanghai High People's Court. In support of this position, Zhong Tian sought guidance from the Supervision and Evaluation Bureau of the Ministry of Finance of the PRC as to the requirements and interpretation of relevant Mainland laws and regulations on the transfer of audit working papers to Hong Kong. The Ministry responded with a letter stating that such documents should be obtained through the mutual arrangement. Accordingly, Zhong Tian applied to the Court of First Instance for a letter of request to be issued to the Shanghai High People's Court and an order for provision of the documents for use in the action.
Lower court decisions
The Court of First Instance dismissed the application for a letter of request on four grounds. Firstly, letters of request were typically used to obtain evidence from non-parties or overseas parties, not for discovery of documents already under a party’s control and the court’s authority should not be subordinated to foreign laws such that the use of letters of request was inappropriate. Secondly, obtaining approval of the Mainland authorities in the way envisaged by Zhong Tian did not fall within the taking of evidence in any of the categories referred to under Article 6 of the mutual arrangement1 hence it did not apply. Thirdly, there was insufficient evidence explaining why the relevant documents could not be transferred or which laws applied prohibiting the same. Fourthly, the application was delayed without justification, potentially impacting the scheduled trial, warranting a discretionary refusal to grant the application.
Zhong Tian, appealed to the Court of Appeal which reversed the first instance decision and was of the view that: (1) it was not necessarily inappropriate in principle for a party to apply for a letter of request to aid in its own discovery and production of documents located beyond the jurisdiction, (2) there was a real risk that Zhong Tian would be prosecuted and penalised for a breach of Mainland law if the relevant documents were produced without the prior authorisation of relevant Mainland Authorities; and (3) the assistance proposed through the letter of request fell within the scope of the mutual arrangement.
Subsequently, the liquidators of Tenwow appealed to the Court of Final Appeal questioning whether the Hong Kong courts' jurisdiction to issue letters of request extended to the production of the party’s own discovery documents and whether a Hong Kong court’s request to a Mainland court to facilitate regulatory approval for production of documents in Hong Kong proceedings as part of general discovery fell within the scope of the mutual arrangement.
The Court of Final Appeal's landmark ruling
The Court of Final Appeal dismissed the liquidators' appeal and upheld the Court of Appeal's decision.
Jurisdiction of a Hong Kong court to issue a letter of request
The Court of Final Appeal ruled that the context of a case was crucial in considering whether a Hong Kong court had jurisdiction to issue a letter of request and affirmed the Hong Kong court’s jurisdiction to issue such a letter to a Mainland court. This was on the basis of (1) the existence of a blanket prohibition against the transfer of documents out of the Mainland without approval of relevant authorities along with the letter from the Ministry confirming the appropriateness for Hong Kong court to seek assistance from Mainland court pursuant to the mutual arrangement and (2) the underlying objectives of the Rules of the High Court to secure just resolution of disputes in accordance with the substantive rights of parties.
The documents were crucial to assist with the determination of whether the audit had been performed with the care and skill of a reasonably competent auditor coupled with the parties' wishes to seek their production. It was held that the Mainland court was the appropriate channel to seek the necessary approval, as the Hong Kong court could be satisfied that the Mainland court would be receptive to the request and there was no good reason why there should be a limit placed on the inherent jurisdiction of the Hong Kong courts to preclude the issuance of a letter of request in this case.
Scope of the mutual arrangement
The Court of Final Appeal also examined whether a letter of request issued by the Hong Kong courts fell within scope of the mutual arrangement. It was argued that Article 6 distinguished between what the Hong Kong courts could request as opposed to documents generally which a Mainland court may request and the words "provision of documentary evidence" under Article 6 merely covered the obtaining of material and admissible evidence. Any letter of request for the purposes of general discovery should fall outside its scope.
The Court of Final Appeal took the view that the mutual arrangement is an administrative framework that facilitates civil and commercial evidence requests through designated authorities rather than having the force of law. The text of the mutual arrangement should therefore be interpreted broadly to promote judicial cooperation between Mainland courts and Hong Kong courts. In doing so, the Court of Final Appeal took into account the real risks of penalisation in the Mainland faced by the auditors if the documents were to be transferred to Hong Kong without prior approval. It was clear from the Ministry that the appropriate channel to obtain requisite approval was via the mutual arrangement. The Court of Final Appeal therefore concluded that the scope of the letter of request fell squarely within the four corners of the mutual arrangement.
Implications
This judgment clarifies the ambit of the Hong Kong courts' inherent powers to issue a letter of request to a Mainland court for assistance in obtaining the necessary approval to produce documents in Hong Kong and the scope of the mutual agreement. The absence of any settled procedure for the production, in Hong Kong, of documents located in the Mainland has long been relied upon by defendants as somewhat of a bar against the production of such documents.
The new clarity provides parties with assurance that so long as the relevant procedure is followed, parties can avoid criticism or sanction where, for example, discovery is delayed or documents are ultimately unable to be produced as a result of the actions and decisions of relevant authorities. This is in contrast to the liquidators' initial stance that no approval was necessary, a position that would have exposed the defendants to sanction in either event – by the relevant authorities for the unapproved removal of documents or by the courts in Hong Kong for failing to provide access to those documents.
The facts of this judgment were limited to existing legal proceedings and parties' related discovery obligations, however it is not implausible that these principles may extend to liquidators' s286A and s286B powers under the Companies (Winding Up and Miscellaneous Provisions) Ordinance.
[1] Article 6 of the mutual arrangement provides, inter alia: “The scope of assistance that may be requested by a court of the HKSAR in seeking the taking of evidence by the People’s Courts of the Mainland under the Arrangement includes:
(1) obtaining of statements from parties concerned and testimonies from witnesses;
(2) provision of documentary evidence, real evidence, audio-visual information and electronic data;
(3) conduct of site examination and authentication.”
