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Mis-selling claim rebuffed; contractual estoppel recognised

10 May 2013

The Hong Kong court has handed down a landmark ruling on the mis-selling of financial products in Hong Kong, rejecting a customer's various allegations of breach of duty against the bank: DBS Bank (Hong Kong) Ltd v San-Hot HK Industrial Company Ltd. Allen & Overy acted for the bank in these proceedings.

Of particular significance is the court's robust recognition of the existence of contractual estoppel as part of Hong Kong law, rejecting a call (based on recent Singapore authority) to limit this doctrine to sophisticated counterparties.

This ruling should bolster the confidence of banks facing mis-selling claims before the Hong Kong courts that the typical no-reliance and no-advice clauses in their financial products documents would be upheld as precluding claims inconsistent with these clauses. Caution is warranted, however – the court in this case may have drawn comfort that its exhaustive review of the facts showed the customer's loss was due to its own "over-confidence" and "bullish view of the market"; it remains to be seen whether the court would be willing to be as robust if the facts were less favourable to the bank.

The customer has appealed.