As Hong Kong railway operator MTR Corporation spreads its wings internationally, the legal team is facing a new set of compliance challenges. Jeremy Bennett talks to Elizabeth Broomhall about managing his team's expanding remit and the fall-out from a serious derailment in the region

Jeremy Bennett is what you might call a typical Hong Kong expat. Having moved to the city from London in 1994 with a plan to stay for two years, he quickly took to its work-hard, play-hard lifestyle, and two decades later still finds himself there. 

"It's the usual story," he explains from his office in Kowloon Bay. "You come out here with the plan of staying two years and don't find a reason to go back.

"I came here on holiday first and fell in love with the place. I met up with some friends in the Captain's Bar in the Mandarin Oriental hotel, and, having a beer in a silver tankard, I thought, this is smart."

As the legal manager for MTR Corporation, the operator of Hong Kong's metro system, Bennett (pictured, below) is now very much a part of his adopted city. The company, which is majority owned by the Hong Kong Government and part-listed on the city's stock exchange, currently operates all of Hong Kong's subway lines and overground rail networks, and has built its subway network. In addition, it develops for sale properties around some of the stations in conjunction with other developers and owns several nearby shopping malls and office premises.

Internationally, it operates the London Overground rail franchise (through a joint venture with Arriva UK Trains), the Melbourne train system in Australia and the Stockholm Metro. It is also involved in the operation of four rail lines in China located in Beijing, Shenzhen and Hangzhou.

However, before taking up the role, Bennett had more experience in other forms of transportation, including aviation and shipping. After moving to the region with Richards Butler, specialising in shipping litigation, he completed stints at Johnson Stokes & Master (JSM) as the head of shipping and at Morrison & Foerster as a commercial litigation partner, before completing a master's degree in aviation and moving in-house to become general counsel for the Hong Kong Airport Authority. Six years and some networking later, he wound up as head of MTR's legal function.

Team dynamics

Given the non-executive nature of his position, Bennett is primarily concerned with the day-to-day running of the legal department, overseeing a team of 30, including 10 support staff and 20 in the legal function. He reports into Gill Meller, legal director and secretary.

The team is broken down into five sections, each led by partner-level lawyers, covering contentious, non-contentious, China projects, international projects and construction work. Contentious is by far the biggest team with 10 staff, mainly due to the high volume of prosecutions work.

"We prosecute more than 3,000 criminal cases a year in relation to fare evasion and other offences, such as eating on trains and stations. More serious offences such as sexual offences are dealt with by the police," Bennett explains.

"Other work includes construction and civil litigation. We have some potential for civil disputes with our retail tenants in stations and other developments, if for instance they are unable to pay their rents, but we have ways of managing that short of taking them to court."

Another key part of the team's work, Bennett says, is insurance claims. A major case for the company last year arose after the derailment of a light-rail train in Yuen Long, which saw 77 out of 150 travelling passengers taken to hospital. Responsibility is yet to be resolved, meaning that MTR Corporation still faces fines of up to HK$15m (£1.18m) over the incident – which local media dubbed the most serious derailment in the light-rail network's 25-year history.

"If incidents happen on the railway, we may have a liability in relation to those incidents, so we have to deal with personal injury claims – that's a major element to what we do," he explains.

"Last year we had the light-rail incident. The driver will be prosecuted under our own ordinance – the ordinance has provisions related to negligent acts by employees, which say they can be subject to criminal proceedings. We're also dealing with the civil claims that arise from that."

Aside from contentious work, the team is also involved in negotiations with governments in relation to line operations and in bidding for new projects. Earlier this year the company conducted a review into the terms of its operating agreement with the Hong Kong Government, which included a review of the amount by which it is allowed to increase fares. The team was also involved in discussions with Government on how to address ending a 10 cents surcharge on Octopus (the pre-pay transport pass) users – imposed to partially fund the fitting of platform screen doors. 

On the projects side, MTR is currently bidding to operate railway lines in the UK, to build and operate a PPP rail extension out of Sydney known as the North West Rail Link, and also in new China projects. In Hong Kong it is in the process of building or extending five lines, due for completion between next year and 2020. 

Compliance concerns

But perhaps the biggest achievement for the legal department last year was its efforts in relation to compliance requirements. One example was its involvement in the inspection of MTR's new CCTV systems. Over a nine-month period from summer 2012, the Hong Kong commissioner inspected everything from notices in stations and trains to the way in which the company handled recordings, manuals and guidance for its staff. The company relied on the legal team to respond to questions and to be present at inspections and during interviews. 

It has also since been given the task of managing the strict new Personal Data Privacy Ordinance in Hong Kong, governing the companies' use of personal information, and the region's incoming Competition Ordinance.

"Because we are majority government-owned and a high-profile business in Hong Kong, we have to be seen to be legally compliant and adopt best practices in all our operations," Bennett elaborates. 

Outside help

As for external lawyers, Bennett echoes the views of most general counsel in the current economic climate when he says he wants to do more with less, handling most of the work in-house.

"We will go to external counsel for specialist advice or for second opinions to ensure the advice we're giving is going to be supported later on, and also for manpower reasons and local experience. 

"We have a PRC lawyer in the group and other lawyers with significant PRC experience, but in China we will still team up with local lawyers when bidding for new projects, and it's a similar case in Australia.

"In the UK we rely on Dentons quite extensively. The rail franchise environment in the UK is quite specialised – you need to know quite a lot about the requirements of the railway authorities and regulators." 

But given the limited amount of work that is outsourced and the selective approach to the use of firms, Bennett insists there is no need for a panel. "We have long-term relationships with a couple of firms in Hong Kong, which has several advantages – first, the fee structure is well established and very competitive, and second, they know the business so we don't have to educate them… but we haven't felt the need to have a formal beauty parade of law firms because the system works quite well currently.

"Our preferences are heavily driven by individuals, which can be problematic when those individuals leave.

"Primarily we look at Slaughter and May for our corporate work [in Hong Kong] and we use Deacons quite heavily for general work and some of our criminal litigation work. We also use local Hong Kong firm Munros for litigation, criminal and claims work.

"Internationally we use Henry Davis York for our Australian work, Dentons in the UK and King & Wood Mallesons for China work. I will also go to Mayer Brown JSM in Hong Kong for very specific advice, typically on property-related matters." 

Ultimately however, Bennett says his aim is to be "an in-house law firm for MTR", keeping external legal advice to a minimum.

As a result, he says the biggest challenge for the legal team in recent years has been keeping up with compliance and other legal issues as the company has grown internationally, and it is an area that will continue to be critical in the coming years.

"One of the biggest changes for MTR over the last four or five years is that we've essentially gone from a local railway operator to a global railway operator.

"The main pressure on the legal team now will be that, as we increase our presence and network in Hong Kong and get these projects up and running and in operation, there will be an inevitable increase in the amount of related legal work, because our network is simply getting bigger. The challenge will be to deal with an ever-expanding network both here and overseas, but to aim to do it without substantially increasing our resources."

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Career timeline

• 1990 – qualified with Richards Butler in London and began work in shipping litigation
• 1994 – moved out to Hong Kong office of Richards Butler
• January 1998 – joined Johnson Stokes & Master in Hong Kong as head of shipping litigation
• October 1998 – made up to partner
• 2003 – joined Morrison & Foerster's commercial litigation practice in Hong Kong
• 2006 – completed master's degree in aviation management and appointed general counsel of Hong Kong Airport Authority
• 2012 – appointed legal manager – general for MTR Corporation