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February 2015: Victory for Megaupload

February 2015

The firm obtained a major victory on behalf of its client, Megaupload Limited, in setting aside a restraint order that had been entered in the Hong Kong Special Administrative Region.

Following a criminal indictment filed in the United States against Megaupload Limited, the Secretary for Justice of Hong Kong, acting as an agent for the United States Department of Justice, submitted an ex parte application with the Court of First Instance of the Hong Kong High Court (the “Court”) to freeze the client’s assets located in Hong Kong. In January 2012, the Court granted the application and issued a restraint order freezing HK$330 million (approximately US$43 million) of the client’s assets.

In April 2014, Quinn Emanuel, through local counsel, filed an application with the Court to set aside the restraint order. The grounds for the set aside application included among other things that the Secretary for Justice breached its duty to make full and frank disclosure and duty of candor in relation to the Department of Justice’s inability to serve the criminal summons on the client in conformity with United States federal laws.

On December 4, 2014, the Court held that the failure to disclose such circumstance amounted to a material non-disclosure and thus set aside the restraint order. Further, the Court ordered that the costs of the application to set aside shall be paid by the Secretary for Justice. A new restraint order was granted, pending a new full trial on this issue, so the fight continues but the new restraint order should be subject to conditions much more favorable to Megaupload than the previous conditions.