INDUSTRY INSIGHT: LEGAL
Legal firms boost maritime practices in step with government’s hub goals Hill Dickinson is amongst the firms that have recently expanded global maritime practices.
Monthly subsidies are given to law firms and barristers who wish to specialize in maritime law (Photo from Shutterstock)
PROFESSIONAL SERVICES/LEGAL
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he maritime law sector is poised for growth this year, as legal firms increase their endeavors of attracting new talent and potential clients in response to Hong Kong’s ambitions of becoming a global shipping hub. Damien Laracy, partner and head of Hill Dickinson Hong Kong, said the firm fortified its maritime legal team with 10 new hires in 2023, including ship finance practitioners. “There has been rising demand for ship sale and purchase and ship finance, as shipowners are increasingly looking to decarbonise by finding or commissioning greener vessels to comply with new international regulations and market ESG standards,” Laracy said. “We believe that the recent expansion of our transaction and ship finance practice will enable us to increase our service base to meet these enhanced demands,” Laracy added. The government has made it a priority to nurture homegrown maritime legal talents with the creation of the Taskforce on Maritime and Port Development Strategy. In September 2023, the government also launched the “Maritime Services Traineeship Scheme – Legal” which Laracy said “provides a monthly subsidy to law firms and barristers with maritime business to provide traineeship for those who aspire to a career in maritime law.” 28
HONG KONG BUSINESS | Q1 2024
Hong Kong’s status as the only common law jurisdiction in China has always made Hong Kong a uniquely attractive forum for resolving disputes
Keeping maritime hub status afloat Apart from building a strong maritime legal presence, Hong Kong has also established tax regimes to enhance the region’s core strength as an international maritime hub. At present, Hong Kong’s half-rates profit tax regime covers carriage and chartering, ship agency, ship management or ship broking activities, and ship leasing activities. Experts, however, suggest that government also look into incentivising and strengthening other areas of shipping. Dr. Eugene Wong from The Hang Seng University of Hong Kong said there’s a need for arbitration and operation activities such as vessel planning and container flow planning because these activities actually happen in Hong Kong. Wong said Hong Kong could learn from Nansha, Guangzhou in the Mainland, which awards shipping enterprises that have routes passing through its port, or having achieved a certain throughput level. Whilst there are more that Hong Kong can do to attract shipping players, Wong underscored that the city’s current half-rates profit tax has also been beneficial to the industry. Willy Lin, chairman of the Hong Kong Shippers’ Council, shared a similar sentiment saying the half-rates profit tax regime can help Hong Kong in its goal to encourage flagging.
Data from the United Nations Conference on Trade and Development showed that as of September 2023, Hong Kong is the fifth-largest ship-owning market in the world. With 2,537 vessels flying its flag, Hong Kong accounts for 2.4% of the world fleet in terms of vessel numbers. In terms of value, Hong Kong ranks sixth, with vessels flying its flag representing a 6.27% share in the world fleet. More than the incentives, Lin said Hong Kong is working to make maritime services of “quality” to attract ship owners to come to the city. “We [do] not only want them to come, but we want them to utilise Hong Kong’s quality service. In the past couple of years, actually, Hong Kong [has] embarked on not only trying to maintain a maritime center, we’re always trying to support the higher value added maritime services like maritime arbitration, shipping financing, [and] shipping insurance,” Lin said. High-end maritime services Apart from maritime arbitration and dispute resolution and ship financing and leasing, and marine insurance, InvestHK said Hong Kong is also developing high-end maritime services for ship brokers and ship agents, and on ship management and chartering. Making all other maritime services of quality and of high standard alongside a tax regime will be a good package to attract shipowners to register their ships in Hong Kong, added Lin. According to InvestHK, What could help Hong Kong further sail as a top player in the maritime industry is if it begins bunkering of sustainable fuels. In the 2023 Policy Address, Chief Executive John Lee said Hong Kong will press ahead with the provision of liquefied natural gas (LNG) bunkering for ocean-going vessels (OGVs).