This day a year ago, we were writing about five Uber drivers being in hot water over local driving laws. The car-hailing company has had an interesting few years, with numerous challenges to its business being launched around the world. In 2015, Hong Kong police charged the five drivers for carrying passengers illegally for reward and for not having appropriate third party liability insurance coverage.
Last week the court convicted those same five Uber drivers on the charges the Hong Kong Police arrested them for a year ago. The ruling itself potentially spells disaster for Uber, who has launched appeals for its drivers in response to the convictions. This week, Kwiksure will discuss the outcome of the court case, what it means for Uber, and what passengers and drivers should be aware of in future.
Legal or illegal: Who’s on which side of local driving laws?
In passing its ruling last week, the Hong Kong justice system cited the Road Traffic Ordinance which sought to regulate illegal taxi drivers known as pak pai in 1977. Acting principal magistrate So Wai-tak found no significant difference between the Uber drivers and illegal taxis, explaining that the legislation's intent was to ensure the safety of passengers. Tech advances, while convenient, must still be safe.
And so the verdict was this: Uber, the company, remains a legal entity, but its drivers were operating private cars for hire or reward illegally, and thus were breaching their third party liability insurance. The five were fined HK$10,000 each, had the smartphones and devices used to carry out Uber activities confiscated, and were banned from driving for a year (although the ban has been suspended pending an appeals outcome).
In response, Uber Hong Kong and its general manager, Kenneth She Chun-chi, vowed to continue fighting for the legal status of its drivers as the ruling went against “the best interests of riders, drivers and the city”. The Transport and Housing Bureau welcomed the ruling, explaining that the government was open to new platforms but concerned about “encouraging illegal hire car services”.
So what does this mean for Uber?
With the appeals process underway, it means we’re still awaiting a final decision on the fate of Uber in Hong Kong. At the moment, the two problems for Uber drivers are:
Driving a vehicle for hire without a permit
Section 52(3) of the Road Traffic Ordinance (Cap. 374) states that no person may drive or use a private car for hire or reward unless a hire car permit is in place. The Commissioner for Transport may issue a hire car permit if an application is made, and the common types of permits are granted for:
Hotel hire car services - for the carriage of guests of a designated hotel
Tour hire car services - for the carriage of clients of a designated tourist agent
Private service (limousine) hire car - for the carriage of clients of a contracted company, or individuals requiring personalized high-end transportation
Private service (limousine - cross boundary) hire car - for the carriage of clients of a contracted company, or individuals requiring personalized high-end transportation crossing Hong Kong’s border
Private service hire car - for the carriage of residents of an area where there is no or inadequate transport
While the drivers’ defence team has previously challenged that local laws made it impossible to obtain permits, the South China Morning Post article following the convictions quoted a government source who said that the Transport and Housing Bureau had not received any applications from Uber drivers.
Using a vehicle without third-party insurance
Section 4 of the Motor Vehicles Insurance (Third Party Risks) Ordinance (Cap. 272) requires that all vehicle owners, and permitted users of their vehicles, must have third party insurance. The fines for contravening this section include a fine of HK$10,000 and an imprisonment of 12 months, with the possibility of driving disqualification for a period between one and three years.
Where Uber drivers may have trouble is where their Certificate of Insurance includes the clause in its Limitations as to use:
The policy does not cover:-
Use for hire or reward
Car insurance for private vehicles will have this clause included as they are not commercial or business vehicles. Insurance companies treat these various types of vehicles differently, so it’s important to note that private vehicle insurance holders will likely find their insurance companies will not honour coverage where an Uber driver has been driving for hire or reward.
Uber in the future
At the moment, it appears that Uber and its five drivers will continue to push for legal recognition through the current court process. The ruling suggests it will be difficult for drivers to operate legally in future. Unless they’re able to successfully seek a Court of Appeal or perhaps High Court ruling in their favor, the legal standing of Uber drivers may end up like that of the illegal taxis of the 1970s.
One reprieve for Uber, as well as its drivers and customers, may be in the recent Hong Kong Government’s tweaking of a premium taxi trial scheme, which has changed its requirement that an employment relationship with fleet drivers exist. This suits Uber’s business model and, if successful in applying, Uber could have a 200-fleet franchise that allows it to charge up to 50 per cent more in taxi fares.
Whether or not Uber sees this as a viable alternative to its current business model is entirely up to them, although it does remove them from competing with Hong Kong’s standard taxi services.
What can I do as an Uber passenger or driver?
As a passenger, it’s entirely up to you whether you continue to use the service. We’re not passing judgment on whether Uber is right or wrong. However, we would caution passengers to think about their own safety when it comes to an Uber ride.
If you’re involved in an accident while in an Uber and their third party coverage is voided for whatever reason, you will not find yourself covered if you suffer harm. Taxi drivers, by law, must have liability coverage that protects their passengers in the event something happens but this may not be the case for Uber drivers. Health insurance can cover you in these instances, so be sure to check you have medical coverage.
As a car owner, you need to be aware of the risks involved with being an Uber driver. If you have third party liability insurance already, check what the policy says about using the car for hire or reward. Most insurers will deny coverage if you’re found to have used your personally insured vehicle for this purpose.
Continuing to drive for Uber without valid coverage means you’re either risking the safety of your passengers, or you risk running afoul of the law. Contact Uber or your car insurance company if you have any questions about your coverage or the legality of being a driver under Hong Kong law.
Those of you who need insurance need look no further; Kwiksure has been providing Hong Kong drivers with third-party and comprehensive car insurance solutions for over 10 years. Their expert advisers keep up to date with current motor vehicle related news, and can help answer any tricky car-related queries you might have. For a great insurance deal with unbeatable service, call the advisers at Kwiksure today!