Five Hong Kong Uber (UBER) drivers were found guilty of illegally using their vehicles for commercial purposes by a local court on Friday, dealing a potential blow to Uber Technologies Inc’s operations in the Asian financial hub.
The ruling is seen having a chilling effect on Hong Kong drivers working for the San Francisco-based company, which is battling similar issues with regulators across Asia, experts said. Uber pulled out of Taiwan less than a month ago.
Uber said it was disappointed with the verdict.
“We think it is against the interest of several million Uber passengers, drivers and the collective interest of Hong Kong people. We think ride-sharing should not be a crime,” said Kenneth She, General Manager for Uber in Hong Kong, adding the firm would continue to promote ride-sharing services in the city.
The Hong Kong drivers were convicted of driving a motor vehicle for carriage of passengers for hire or reward, and that their insurance excluded commercial use leaving passengers unprotected.
“I do not see the act the defendants have displayed as having any significant or material difference from that of … pirate taxi drivers in the past,” Judge So Wai-tak said in the judgement.
The drivers, who were arrested during a police raid on the firm in August 2015 after complaints by local taxi drivers, were fined HK$10,000 ($1,287.91) and had their driver’s license suspended for 12 months. The charges had carried a punishment of up to 12 months in prison.
Lawyers for the drivers said they planned to appeal.
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“The court’s ruling today is likely to have a short-term deterrence effect on Uber drivers in Hong Kong, as we have seen recently in Taiwan,” said Mimi Zou, a law professor with the Chinese University of Hong Kong.
“Hong Kong is one of the rare cases in jurisdictions around the world where the drivers have taken on this criminal liability instead of civil claims,” she added.
The pressure against Uber in the China-ruled former British colony stems in part from local taxi drivers mounting protests against the online service for hurting their livelihoods.
While Hong Kong is often dubbed one of the world’s freest economies, it has a tightly regulated taxi sector that is known for its relatively low fares compared with other global cities like London and New York.
Uber hasn’t officially released figures on the size of its business in Hong Kong, but analysts believe more than one million rides have so far been given with tens of thousands of registered drivers.