Podcast S1E1 | Dispute Resolution: Key Issues About Litigation, Arbitration and Mediation in Hong Kong

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Podcast S1E1 | Dispute Resolution: Key Issues About Litigation, Arbitration and Mediation in Hong Kong

Podcast S1E1 | Dispute Resolution: Key Issues About Litigation, Arbitration and Mediation in Hong Kong 1920 700 Jonathan Gray
Reading Time: 29 minutes

Adam Hugill, Jonathan Gray and Matthew Love discuss Hong Kong’s civil litigation structure with Margaret Wo, including the topics of trials, costs, procedures and the crucial step of enforcing judgments. They also highlight the pros and cons of arbitration and mediation as alternative methods of dispute resolution.

01:14 – Commencing legal action
05:18 – The trial process
11:20 – Preparing for trial
14:50 – Enforcement of judgments
23:54 – Arbitration
39:54 – Mediation



0.01 Welcome to The HIP Talks podcasts, a series of discussions about current legal issues hosted by Hugill & Ip Solicitors. We are a young independent law firm but with decades of experience providing bespoke legal advice and exceptional client service to individuals, families, entrepreneurs and businesses, both in Hong Kong and internationally.

0.21 [Margaret Wo] Today we’re going to talk about dispute resolution and alternative dispute resolution with Hugill & Ip Solicitors. Okay, so I’m here with Adam Hugill to just to have a really, really brief introduction into what is dispute resolution.

So, Adam, what do we mean when we refer to dispute resolution?

0.39 [Adam Hugill] Dispute resolution is the means by which we formally resolve a dispute, often referred to as litigation, but it can take many forms. The most common form for people would be suing in either district court or High Court in Hong Kong, but it can also take place in many other forums, which relate to first resolving specific disputes and so for employment matters, they would be dealt with by the labour tribunal. There’s also the lands tribunal. And also, arbitration falls within dispute resolution as well, which is essentially a private dispute resolution system.

1.14 [Margaret Wo] So, if I wanted to commence a legal action, what would I have to consider? What should I be considering?

1.20 [Adam Hugill] Okay, the, the thing that most clients want to have answered up front is certainty. They want to know that if they bring a dispute that is going to be resolved in their favour.

1.32 And in certain cases, that that can be very easy to advise if it’s a contractual dispute, for example, and the contract is very clearly written, it’s been breached and we can give the client some certainty as to their success in the dispute resolution process. Often though, the reason why the matter has gone to court is because there is some uncertainty in it, and a dispute between the parties. And ultimately, the end of the day, this falls to be resolved by a judge and you can never advise a client that they have 100% chance of success. The other two key factors that most clients are concerned about is time, the dispute resolution process in Hong Kong, certainly if we’re in the High Court of the district court takes a long time, and from the start to the end of the matter of it goes all the way to trial could easily take three or four years, and it’s not unheard of the cases to go much longer than that. And then the final issue, which is a major concern for most clients is cost. Everybody is aware that lawyers are expensive, dispute resolution and the litigation process itself is incredibly expensive. And so one needs to keep in mind proportionality when it comes to incurring legal costs against what you might seek to recover.

2.47 [Margaret Wo] So, costs you’ve just mentioned, that seems to be a very important issue when you’re considering whether or not to take legal action. How can you go about managing costs?

2.56 [Adam Hugill] As I said, it’s important to be proportionate. There’s no point in running a million dollars of legal costs if you’re only going to be suing someone for $100,000. Similarly, a client must be advised that the litigation process itself is both proactive and reactive. And while we can anticipate what might happen during the litigation process, the other side will almost certainly be using various tactics either to improve their case or to try and break your case. And you can end up being sort of very reactionary in relation to that, and it incurs costs. The other thing that everybody needs to be aware of is that in most courts, certainly the district court and the High Court, the loser will end up paying the winners costs. And so from the winners perspective, that’s good because they get the substantial amount of their costs back about 70%. But obviously, from the losing party’s perspective, they will have to pay their own legal costs, and then a substantial amount towards the winning party as well.

3.53 [Margaret Wo] So it’s basically very unlikely that you’ll actually ever fully recovered your legal costs incurred in the proceedings.

3.59 [Adam Hugill] That the lends itself to the frustration of litigation, which is, even if you’re completely in the rights, and you have a very strong case against the defendant, but the defendant won’t pay up is essentially these claims are from money, then you have to pursue them. And whilst you will get some costs back, it’s never 100%.

4.18 [Margaret Wo] That’s unfortunate, but I guess must be done. That’s the process. Apart from the cause, and other things that we’ve mentioned so far, are there really any other key concern or anything you’d like to really emphasize?

4.29 [Adam Hugill] For clients going into litigation. It’s usually a long battle, you will have had pre litigation correspondence or discussions, and they obviously want to be successful, which is why you’re considering bringing your case at court. The process for both sides is very frustrating for the plaintiff. It’s a big leap. You’re spending a lot of money and you’re taking a lot of risks, even with a strong case. For defendant it’s not as much of a consideration because the defendant doesn’t get the choice, they have to defend themselves. But the key thing to manage with the client is that it’s usually a long process. It’s quite frustrating. And very rarely do you end up with a perfect resolution at the end of it.

5.18 [Margaret Wo] I’m here now with Jonathan Gray to talk about what takes place during a civil trial here in Hong Kong, and what witnesses who are called to give testimony at a trial can expect to encounter. So Jonathan, how long does it usually take before a case will proceed to trial?

5.36 [Jonathan Gray] Well, it depends to a large degree on the issues involved, the complexity of the case, and any type of interlocutory applications made along the way. So that is, applications related to the case that need to be decided before it gets to trial. It also depends on the courts availability. In particular, if the case is being heard by a specialist judge, say, the company’s judge, or a construction judge, you really need to fit in with his or her availability.

6.16 As a very rough guide, however, cases in the High Court typically take around two to four years from start to finish. But, you know, in complex cases, they can, in fact, take much longer than that. So do all cases then have to proceed to trial? Well, no, in fact, a very high percentage of cases, probably, I would say at least 80% never get to trial at all. And this is usually because they’re settled, either for commercial reasons, or, or very often it can be because simply because people don’t want to wash their dirty laundry in public,

6.58 [Margaret Wo] no airing of dirty laundry.

7.00 That’s probably a good policy. So what should people expect when a case does go to trial?

7.05 [Jonathan Gray] Courts now require parties to file written opening submissions in support of their respective cases, which would be within a specified timeframe before the start of the trial. And as a result of that, less time is now typically required for what we would call oral opening submissions or arguments made by the barristers. And similarly, courts again, now typically require the parties to file written closing submissions, rather than making oral closing submissions. So, what this means is the main part of the trial actually involves the examination and cross examination of witnesses.

7.48 [Margaret Wo] What exactly does cross examination mean or refer to?

7.52 [Jonathan Gray] A cross examination is where the barristers on the other side get to ask questions of the other side’s witnesses. Witness statements now are usually ordered to stand as what’s called a party’s evidence in chief, meaning that the witnesses no longer required to be examined by his own side’s barrister before cross examination. So, normally now, what happens is a witness may be asked by his own side’s barrister, you know, perhaps to correct something in his statement, if necessary, that would be fairly short, and then he would be handed over, he or she handed over to the other side’s barrister to face questions.

8.40 [Margaret Wo] So, basically the cross examination will in fact be based on that witnesses original witness statement. That’s right. So, what happens after they’ve been processed by the other side’s barrister?

8.53 [Jonathan Gray] Well, then, after they’ve been cross examined by the other side, the witness then is usually re-examined by their own side’s barrister. And this gives the witness an opportunity to clarify certain things that they have said or to provide further context to answers that they’ve given under cross examination, which he or she may not have had the opportunity to do while they were being cross examined.

9.21 [Margaret Wo] So what kind of questions would a barrister asked during their cross examination or the re-examination?

9.27 [Jonathan Gray] The other side’s barrister what they’re seeking to do and the cross examination is to undermine the witnesses evidence and possibly also his or her credibility. Normally, they’ll be asking tightly focused questions, and in most cases, the barrister will know or expect the answer. And so he or she will be framing his or her questions to arrive at or to establish certain points. And often many of the questions that they’re asking may only permit a yes or no answer.

10.00 [Margaret Wo] So it sounds like cross examination or re examination as well. It’s going to be a very unpleasant process.

10.06 [Jonathan Gray] Yes, it’s fair to say cross examination is, is a difficult, nerve wracking and fairly unpleasant experience. Witnesses often feel that the barristers examining them as seeking to trip them up and to twist their words, which of course, in in most cases is exactly what they’re seeking to do.

10.25 [Margaret Wo] So, witnesses who are involved in a trial, can they watch the trial as they proceed or listen to the other witnesses while they are giving their evidence?

10.35 [Jonathan Gray] Witnesses allowed to sit in and watch the trial, but only after they’ve given their own testimony before then they’re not allowed to sit in or watch. The exception to that is if the part if the witness is also a party to the proceedings. And in that case, as a party to the litigation, they have the right to sit in and watch the entire trial.

10.56 [Margaret Wo] Is there any particular order in which witnesses must give their evidence?

11.00 [Jonathan Gray] Generally, the witnesses for the plaintiff will go first, followed by the defendant witnesses, although exceptional cases normally say, in the case of an elderly or an infirm witness, for the defendant, they may be allowed to get their testimony first, but that’s pretty rare, to be honest.

11.20 [Margaret Wo] So as a potential witness, what can they do to prepare for the trial?

11.24 [Jonathan Gray] Well, preparation for trial is extremely important. Before the trial, any witness should read and familiarize himself or herself with the pleadings and the evidence, including the evidence of the factual witnesses on both sides, and at least as far as their own evidence is concerned. It’s very important to understand however, that while preparation is permissible, and in fact, very important witness coaching that is the coaching of pet answers to anticipate to questions, or the putting of words into a witnesses mouth is not permissible.

10.06 [Margaret Wo] So do you have any advice for witnesses who are preparing themselves for trial?

12.09 [Jonathan Gray] Yes, absolutely. First and foremost, witnesses should tell the truth. They shouldn’t attempt to lie, or to embellish their evidence in any way to suit their case. Any efforts to do so, invariably will be exposed by a skillful opposing advocate. And a witness who’s shown to have lied or embellished certain matters, ends up losing credibility, and that would often result in them they’re not being believed, even when they are telling the truth. And I would also advise witnesses, if they don’t know the answers to a question, they should just say so often, they’re being asked about events that took place quite a long time before the trial, and it’s entirely natural that they may have forgotten certain details or become confused about certain details.

13.02 [Margaret Wo] So what I’ve actually really forgotten something, then I should just say something right? Absolutely. However, witnesses should avoid seeking refuge from difficult questions by claiming in response to all such questions that they can’t remember, particularly if this is about significant events that they would be expected to recall. Otherwise, they just end up looking evasive.

13.17 [Margaret Wo] So how formal will these proceedings be as a prospective witness and I’m looking around me what should I be expecting?

13.35 [Jonathan Gray] Well, trials in Hong Kong still are very formal proceedings. The barristers and the judge will be in their full regalia wearing gowns and wigs. Witnesses have to give their evidence on oath and a formerly sworn in before giving their evidence. Court proceedings also require a certain etiquette to be followed. Barristers and witnesses are expected to be courteous to the court and to each other, even if they’re on opposing sides.

14.13 Just in terms of a another piece of advice that I often give to witnesses, particularly if they hadn’t had previous experience of court proceedings, is that sometimes it’s a good idea to visit a courtroom beforehand, where another trial is taking place, just so that they can get an idea of what’s happening, what happens. Trials are generally open to the public. And, you know, they wouldn’t need to observe for too long, you know, maybe half an hour, one hour will just give them an idea of what goes on.

14.50 [Margaret Wo] So I’m here with Jonathan Gray and Matthew Love to look at some of the more commonly used methods for enforcing judgments in Hong Kong. So, if I have managed to obtain a judgment in Hong Kong through court proceedings. How would I go about enforcing it if the judgment debt toward the defendant fails to pay?

15.07 [Jonathan Gray] Well, there are various ways of enforcing judgments in Hong Kong. One of the main methods is getting what is called a garnishee order over the judgment debtors bank account. That is an order compelling the bank to pay the judgment creditor, a sum equal to the judgment debt plus any costs awarded to the judgment creditor, which are included in the terms of the garnishee order. Another common method is getting and registering what is called a charging order over certain property such as land or shares, securities, with the result that in effect, they then cannot be freely disposed of.

15.47 [Matthew Love] Yeah, so just to jump in here I think another less common forcing method is a form of execution against the judgment debtors personal property, personal chattel necessary known as a writ of FIFA, and this involves the court bailiffs attending the judgment, debtors property, and seizing his personal and movable property to sell at a public auction to repay the judgment debtor.

16.12 [Magaret Wo] So of the methods you just mentioned, which one is the best?

16.16 [Jonathan Gray] Well, there really depends on what assets are available, and what assets are known to the judgment creditor against which the judgment can then be enforced. Garnishee orders are probably among the most favoured methods of enforcement, as these result in money being paid directly to the judgment creditor, but the judgment creditor can only apply for garnishee order if he or she knows the bank account details of the judgment debtor and this may not always be the case.

16.45 [Margaret Wo] So, you’d also discussed charging orders earlier. What about the charging orders then?

16.53 [Matthew Love] Yeah, so charging orders can be effective but they don’t in themselves granted power of sale. A separate application for an order for the sale is still required. And you know significant difficulties can arise if the charge property is co-owned by a joint owner and effectively you know a sale of a charged beneficial interest is not practicable. However, there may be alternatives such as the appointment of a receiver to receive a judgment debtors share of rental income for example, you know seizure of chattels of personal property is less common and partly because item seized may not be valuable enough to pay off judgment debt, if the judgment debt is for a large sum for example, also procedurally it is more time consuming than other methods of enforcement. So, ultimately, the best method will really depend on what assets are available.

17.47 [Margaret Wo] So what if you do not know what assets are available? It been mentioned before for example, that you need to know a judgment debtors bank account details to apply for garnishee order.

17.57 [Jonathan Gray] Yes, so a very useful tool to assist with the enforcement of judgments is obtaining what is called an order for oral examination. Here, the judgment data has to appear before the court where he or she is then questioned about the nature and extent of assets that he or she owns. And they’ll have to disclose, for example, details of their income bank accounts held any real property, shares or securities, and indeed any other assets or property owned, for example, cars or boats or even airplanes. The judgment debtor will also usually have to swear an affidavit swearing or knows about his or her assets. If the judgment debtor fails to attend the court, that is after they’ve been properly served with the order requiring them to attend. The judgment debtor is liable to be found in contempt of court and indeed at risk of imprisonment. So, as a result, oral examination can be quite a persuasive tool for assisting with enforcement and quite often can lead to a voluntary settlement, as the judgment debtor may see that one way or another payment is inevitable.

19.12 [Margaret Wo] Very interesting, would there be any other methods of persuasion so to speak, or of putting pressure on a judgment debtor and to compel them or encourage them to pay up?

19.22 [Matthew Love] Yeah. Now, there are several other methods to try to get a judgment debtor to pay his debt. And one method that is commonly used is obtaining what is called a prohibition order. And what that is it’s an order preventing the judgment debtor from leaving Hong Kong until the judgment some is paid. Now, this can be useful if the judgment debtor is taking evasive action, you know, for example, evading service of an order for oral examination, which requires personal service, and it’s believed that the judgment debtor is about to leave Hong Kong and likely to cause difficulties and enforcing the judgment against him.

20.00 This is a very powerful and can be quite persuasive method, particularly if the judgment debtor needs to travel and is restricted from leaving Hong Kong because of that.

20.09 [Jonathan Gray] Another method of persuasion, rather than strictly being a method of enforcement is presenting or threatening to present a bankruptcy petition. That is if the judgment debtor is a is an individual or winding up petition, or if the judgment debtor as a company. In both cases, this needs first of all, a statutory demand to be made, and a failure to settle the judgment debt within 21 days, then provides grounds for the presenting that the that the petition.

20.45 The disadvantages here are, however, that the judgment creditor then loses control of the process. Once the bankruptcy order or the lining up order is made, because then what happens is a trustee in bankruptcy or liquidators are appointed. They then take control over the judgment, debtors assets, and the judgment creditor takes his or her place as an unsecured creditor, meaning that they will typically recover less than the full amount of the judgment debt. But in certain cases, the threat of presenting a winding up or bankruptcy petition can be quite effective. In bankruptcy cases, bankruptcy orders potentially can have an impact on a professional person’s career. So, for example, a bankrupt may not be able to practice and certain professions for example, a lawyer or an insurance agent and bankruptcy working in the in the banking sector, are required under the Banking Ordinance to inform his or her employer of his or his or her bankruptcy while companies the presentation of a winding up petition often acts as a trigger for certain matters. For example, in most if not all financing documents, it will be a trigger for default and making any sums loaned immediately repayable. So, in both of these cases, the mere threat of presenting either a bankruptcy petition or a winding up petition can be quite persuasive.

22.23 [Margaret Wo] What about the situation where you as the judgment creditor or the plaintiff has evidence or you have knowledge or you suspect really strong suspicions that the debtor is now dissipating their assets in order to avoid enforcement? Or that you there’s a severe, there’s a really strong risk that that is in fact the case. What is if there anything can the judgment creditor do?

22.45 [Matthew Love] Yeah, so if the judgment creditor has compelling evidence to show either that the judgment debtor is dissipating the assets to avoid enforcement, or that there is a real risk that the judgment debtor may dissipate his assets to avoid enforcement, the judgment creditor may apply for what is called a Mareva injunction to prevent disposal or dissipation of assets. And that may include an order freezing the bank accounts up to the amount of the judgment debt, and perhaps an order prohibiting the disposal of specified assets, including real property and other property. However, there must be really compelling evidence of dissipation or the risk of imminent dissipation of assets. You know, Mareva relief is not available for you know, for example, simply because funds in the bank accounts can be transferred out of the jurisdiction easily.

23.54 [Margaret Wo] And now we’re going to talk about arbitration. In particular, we’ll be discussing some of the key differences between arbitration and litigation, as well as some of the main pros and cons of arbitration. I think many if not most people have now heard about arbitration as an alternative litigation for resolving disputes. Could either of you maybe tell us about some of the key differences between arbitration and litigation?

24.16 [Jonathan Gray] The key difference is that arbitration is a private process. So instead of the dispute being heard before a judge in a courtroom, the dispute is decided by an arbitrator or tribunal, which would normally be three arbitrators, who are appointed by the parties, and it’s heard in a private venue.

24.36 [Matthew Love] Yeah, I think another key difference between the two is that arbitration is meant to be flexible and arbitrations can take many forms, which allows the parties to choose the forms and procedures that suit the nature and complexity of their disputes. And you know, this can range from relatively simple streamline procedures and short timelines for an expedited process to more complex rules and procedures that are better suited to more complicated disputes. I know, for example, many online shopping businesses and travel websites often refer disputes to an expedited form of arbitration. Another key difference is that arbitrations are usually conducted under the rules of various arbitral institutes around the world. For example, here in Hong Kong, we have the Hong Kong International Arbitration Centre. In Singapore, there’s the Singapore International Arbitration Centre. There’s the International Chamber of Commerce, as well as the Stockholm Chamber of Commerce, for example.

25.33 [Margaret Wo] So, it sounds like arbitration would be very good for international type of transactions or dispute.

25.39 [Matthew Love] Yeah, it certainly can be.

25.40 [Jonathan Gray] but otherwise, in general, the arbitration process, in fact, involves many of the same components as litigation. So you have the formal pleadings, where the parties set out their respective cases, in terms of the claims that they’re making, their defenses, counterclaims, and replies, then witness statements and evidence is dealt with more or less in the same way. You have hearings, which are, you know, very similar in nature to trials, which would involve the presentation of legal arguments, calling of witnesses, and their cross examination and so forth. And then finally, the rendering of a decision, which and arbitrations is usually called an award by the arbitrator or the tribunal.

26.26 [Margaret Wo] So in this kind of a situation, then can parties be forced to arbitrate instead of to litigate?

26.32 [Jonathan Gray] No, arbitration is a consensual process. And so that means that the parties must agree to it, whether that’s before the dispute arises, by providing in their contracts, that in the event that a dispute arises, they must take those disputes to arbitration. And that would be the more usual scenario or sometimes after dispute has a reason the parties can then decide or agree that they will arbitrate the dispute. That’s actually slightly more unusual because by the time the parties are in dispute, they normally can’t agree on anything. That said, if parties have contractually agreed to resolve their disputes by arbitration, then they can be held to their contractual promise. And so, say a party who has who’s agreed to resolve future disputes by arbitration if in violation of that agreement, they go off and litigate in court instead, generally, the other party can then apply for a stay, or even dismissal of the litigation to require that the dispute be resolved by arbitration as the parties have agreed.

27.44 [Margaret Wo] I have heard that one of the advantages of arbitration is that arbitration proceedings are confidential, is that in fact, correct?

27.52 [Matthew Love] That is generally correct. Arbitration is a private process which is conducted in private venues, which are closed off to the public. In contrast to litigation, which in most cases is conducted in open hearings, which are open to the public. The privacy afforded by arbitrations is often seen as a key advantage over litigation as parties rarely welcome the publicity that comes with court proceedings.

28.22 So to answer your question, arbitrations are generally confidential. However, when drafting the arbitration agreement, it’s always a good practice for the parties to include an express provision for confidentiality in the agreement.

28.35 It’s often assumed by not only clients but even some practitioners and I’ve in my experience encountered it with even some arbitrators, they believe that confidentiality is a given, but this is not necessarily the case. And that will depend on the applicable laws and rules that govern the arbitration proceedings. For example, here in Hong Kong, the Arbitration Ordinance provides for a status duty for confidentiality in arbitrations. But this is also subject to certain statutory exceptions, which permit disclosure, where it’s made to protect or pursue legal right or to enforce or challenging award before court or other judicial authority in or outside of Hong Kong. So, despite these protections contained in the Arbitration Ordinance parties often need to go through the public court system to enforce an arbitral award, in which case confidentiality can sometimes be lost.

29.28 [Margaret Wo] So aside from confidentiality, then what other advantages would arbitration have over litigation?

29.36 [Jonathan Gray] People do often draw comparisons between arbitration and traditional litigation, but to an extent these comparisons really depend on the nature of the dispute concerned and the and the perspective of the individuals or companies involved.

29.54 In terms of these perceived advantages, neutrality is often seen as one. In international contracts, parties are very often reluctant to submit to the jurisdiction of foreign courts for fear of bias. And obviously, whether or not this fear is justified depends on the jurisdiction concerned, but that said, neutrality offered by arbitration is often an attractive alternative to local courts and an attractive feature for clients.

30.23 [Matthew Love] Yeah, I think in addition to the neutrality aspect, another key advantage that, you know, we discussed just a moment ago is the flexibility. You know, this flexibility afforded by the arbitration process, you know, it really gives the parties a large degree of autonomy and flexibility and deciding how to resolve their disputes, which they wouldn’t get otherwise through the traditional litigation system.

30.55 Another main advantage is that the parties themselves usually get to the side who will serve as the arbitrator, also known as the arbitral tribunal, and this allows the parties to ensure that the arbitrator that they select is suitably experienced and can be trusted to arrive at a sound and fair decision. You know, this enables the parties to appoint specialists who in many circumstances will have a better understanding of the industry involved, you know, more so than a commercial judge would. And this can be particularly valuable for international contracts in certain industries such as shipping construction, intellectual property, banking, finance, you know, etc. where the local courts may not necessarily have specialist courts or judges who are equipped to handle those sort of matters.

31.46 I think finally, another key advantage is the language. You know, through the arbitration process, parties are allowed to choose the language in which the proceedings will be conducted, and that can often be of a great significance if it involves a cross border dispute, for example, where the parties don’t speak the same language, you know, a party forced to litigate in a foreign country where the proceedings are conducted in the language of that country can often be at a serious disadvantage. So the choice of language can be tailored to suit the common language of the parties.

32.18 [Margaret Wo] Okay, so it sounds like there’s quite a few advantages. I’m one of you early had mentioned that arbitration is actually in fact, procedurally quite similar to court proceedings, but what about in terms of evidence, because in court proceedings that can become quite complicated. Is it the same for arbitration?

32.32 [Jonathan Gray] Well, the different way in which disclosure of documents is handled in arbitration proceedings is one of the things that can make it an attractive alternative to litigation. So, in standard disclosure and litigation conducted in Hong Kong would require parties to disclose all documents which are relevant to all of the issues in dispute, and that is whether or not they’re helpful or prejudicial to your own case, or support and other parties case, and parties also may be required to set out details of all of the searches that they’ve done to look for relevant documents. And so this can be quite an onerous process, especially when there are lots of emails and electronic documents involved. Arbitration, on the other hand, is much more flexible. And in fact, many arbitration rules only require a party initially to disclose those documents which they rely on to support their case, which is obviously those that helpful to this case. It’s them to the other side, to make specific and very focused requests for documents or categories of documents and explaining why their production is necessary.

33.51 So this more flexible approach to document disclosure is often seen as an advantage, but of course, there can be disadvantages to limited disclosure, because while it can keep costs down, it can also omit, in fact make it more difficult to try the case effectively. And a party who maybe doesn’t have access to material documents, may well be at a disadvantage.

34.16 [Margaret Wo] Very good to know. Are there any other key or main big advantages that arbitration has over litigation?

34.23 [Matthew Love] Yeah, I think one of if not the biggest key advantage of arbitration or litigation is the final and binding nature of the award.

34.38 Generally speaking, arbitration awards are by their nature final and binding. And depending on the jurisdiction, there’s normally only a very limited amount of time for a party to appeal and very limited grounds for the appeal. So, depending on the circumstances, this can be an advantage or a disadvantage and the finality of an arbitral award prevents further delay and additional costs that will be incurred, you know, by going through the appeal procedure. You know, however, this can be a disadvantage if the arbitrator makes serious errors in the award.

35.09 [Jonathan Gray] Another key advantage and for me probably the key advantage is when it comes to enforcement. Arbitral awards can be enforced under what is called the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, and is commonly referred to as the New York Convention. And this provides a relatively straightforward mechanism for the enforcement of foreign arbitral awards in signatory states. And enforcement can only be refused on very limited grounds, mainly relating to procedural unfairness.

35.45 [Margaret Wo] So, after all of this, what about the cost of arbitration before I even begin an arbitration, I would Well no, but that costs because I have heard some people say that it is cheaper than litigation while others have told me it is much more expensive. So which is it?

36.57 [Matthew Love] Well, unfortunately, there is no clear cut one size fits all answer for that. It is often said that arbitration is quicker and cheaper than litigation. And while this might be true in some cases, you know, for relatively simple matters, which can be dealt with, you know, fairly quickly, in many instances, arbitrations can actually be as protracted and even more expensive than litigation.

36.25 And there are several reasons for this, for example, in litigation, the parties only pay their legal advisors costs. They don’t have to pay the cost of the judge or the court. You know, these are provided at public cost. Whereas in arbitration the parties do have to pay the fees of the arbitrator or the tribunal, which can typically be up to three arbitrators, and that’s not including any administrative fees that could be incurred if the arbitration is being conducted under the rules of an Arbitral Institute, such as the HKIC here in Hong Kong. You’re also looking at fees to book a venue to conduct the hearings, as well as the cost to have a tribunal secretary present, you know, poorly drafted contracts and arbitration agreements, which fail to provide an adequate framework for the conduct of the proceedings can also increase the time and costs involved.

37.19 You know, another issue is tribunals can sometimes be unwilling to control the timetable and the party’s conduct for fear of challenges to any subsequent award on the grounds of unfairness.

37.27 [Margaret Wo] So after hearing about all the advantages of arbitration or litigation proceedings, are there in fact, any disadvantages that we need to be aware of?

37.35 [Jonathan Gray] Yeah, certainly there are some disadvantages. One is that arbitration very often isn’t suitable, whether multi parties are involved and so while with careful drafting of arbitration agreements, it is possible to have multi party disputes in arbitration.

38.01 But in many transactions where there are several parties involved, problems can often arise where the contracts or some contracts stipulate arbitration, but others don’t. And parties can then end up in parallel disputes in different forums with potentially different results. Another disadvantage is that you don’t really get precedents in arbitration proceedings. And this can be important in some cases, because the parties may want a precedent that will be followed. In a very similar case, an example might be certain types of banking dispute, given the private and largely confidential nature of arbitration that we’ve already talked about, rewards generally are not published. This means that similar disputes involving say a bank with different parties may be decided differently in different arbitration proceedings, which obviously is not necessarily what the bank is looking for, because they’re looking for some kind of certainty in terms of how these cases are going to be determined.

39.04 Those two for me are the main disadvantages, but disadvantages that some people talk about is sometimes there’s a perception that in arbitration proceedings, the arbitrator or the tribunal may split the difference when making an award. To me this risk is more perception than reality. And certainly it can be mitigated by ensuring the appointment of an experienced arbitrator or tribunal. And then, as we’ve already discussed, it’s either impossible or difficult to appeal if the arbitrator or the tribunal makes serious errors in its award. And so, if you’re on the losing end of that, that can be a disadvantage.

39.54 [Margaret Wo] I’m here speaking with Matthew Love today about got talking about mediation as a form of alternative dispute resolution and what someone who’s considering mediation should expect from this process. So Matthew, what exactly is mediation?

40.10 [Matthew Love] Mediation is a form of dispute resolution in which two or more parties in dispute, meet with a mediator who is a neutral third party to help the parties try to reach a mutually agreeable resolution of their dispute. Importantly, the mediation process is private, voluntary, informal and also non-binding.

40.29 [Margaret Wo] So how does mediation differ than from other forms of dispute resolution, such as arbitration or litigation?

40.37 [Matthew Love] Yeah, so one of the main differences between mediation and the other forms of dispute resolution, such as arbitration or litigation, is that a mediator, unlike an arbitrator or judge does not have any power or authority to issue judgments or awards or even to oppose a settlement on the parties. In fact, the role of a mediator is not to decide who is right or wrong in a dispute. Instead, the mediator is there to help the parties identify the issues in dispute, to help facilitate communication between the parties, you know, which is often times broken down as the dispute has progressed, and help the parties identify and explore, you know, possible solutions so that the parties themselves can reach an agreement, you know, regarding the resolution of the dispute.

41.25 [Margaret Wo] Okay, but you mentioned just now that mediators don’t have any power to decide who is right and who is wrong, or even to issue judgments or awards. So if that’s the case, then why should anyone actually attempt to mediation? Wouldn’t they be better off using arbitration or litigating the dispute?

41.42 [Matthew Love] Yeah, no, I think that’s a good question, but there are a lot of good reasons why parties should consider mediation before resorting to arbitration or traditional litigation.

41.55 You know, for starters, mediation is, you know, generally but not always faster and cheaper than other forms of dispute resolution. And this is because there are no set rules as to how mediation should be conducted. And this in turn gives the parties a great amount of flexibility to decide for themselves, how to address their specific issues as they attempt to resolve their dispute.

42.23 Also, as mediation is voluntary, and no settlement can be forced on the parties, they are more likely to comply and follow through with any agreement that they’re able to reach. Not only can this lead to a faster or final resolution of the parties’ dispute, which of course can also save on costs. The parties are also able to reach settlement terms that can often times be more practical and creative than the limited range of legal remedies courts can grant.

42.45 [Margaret Wo] So, it sounds like there’s actually quite a few advantages to proceeding with mediation. Are there any other benefits to doing a mediation?

42.55 [Matthew Love] Yeah, I think another huge benefit to mediation is that the voluntary and non-binding nature of the process itself is usually less adversarial and other forms of dispute resolution. And this in turn allows the parties you know, at least the opportunity to repair their damaged relationship, which can be especially invaluable in commercial settings where the parties tend to benefit, you know, often financially from the restoration of their business ties.

43.26 And, you know, the informality of the mediation process can also have numerous benefits for the parties. You know, for example, instead of taking place in a courtroom, which can be quite intimidating. You know, mediations generally take place in a neutral location, such as the mediators office, and this more relaxed atmosphere can help the parties feel less anxious and defensive and more willing to consider and appreciate the perspectives and positions of the other parties. And when people open their minds new ideas and ways of thinking, this in turn can increase the chances that the parties will come out of there and transpositions and start to negotiate with each other in good faith.

44.01 [Margaret Wo] So it sounds like mediation would actually also be very good for disputes between family members as well. Yeah, definitely can be. Sounds good.

44.15 Um, we’d also touch briefly before on the role of the mediator, but how in fact is actually the meteor so he selected. This is done by the parties themselves or someone else nominate the mediator?

44.21 [Matthew Love] So more times than not, at least initially, the parties themselves will nominate and appoint the person or people who will serve as the mediator or the tribunal if there’s more than one. And this usually starts with a party, requesting the mediation, nominating a mediator and then sending the nomination to the other party or parties for their agreement.

44.50 It’s also possible for the parties to delegate this process to someone else, you know, an independent third party, but this is rare and usually limited to instances where the parties have attempted to select a mediator on their own, but found themselves deadlocked and unable to come to an agreement.

45.01 [Margaret Wo] Okay, so out of curiosity, though, does a mediator have to be a solicitor or someone in the legal profession?

45.07 [Matthew Love] No, not at all. While it certainly helps more times than not to have a mediator who is, you know, a lawyer or has a legal background, anyone can mediate.

45.20 [Margaret Wo] Good to know. So in your own experience, why do parties sometimes find it difficult to agree on a mediator?

45.27 [Matthew Love] Yeah, so I found that most disagreements over who should be selected to act as the mediator, you know, boils down to a single issue, and that is lack of trust. You know, for example, a party who receives another party’s nomination for the mediator might think that, you know, as the nominated mediator was selected by the other party, that that person must be biased and you know, inclusion with the party that nominated him/her.

46.00 The receiving party might then reject the original nomination and make their own nomination. And then of course, the cycle can repeat itself over and over again. And the parties gained going back and forth until someone relents and agrees to one of the parties’ nominations, or the parties find themselves deadlocked, as we discussed earlier and decide to submit the issue to a third party for resolution. You know, and I find it unfortunate when I see this scenario play out. You know, I do appreciate that the parties in dispute might not trust each other, you know, especially when the dispute has been simmering for some time. But those people who hold themselves out as mediators are usually experienced professionals. You know, many are former or current lawyers, who are very skilled at objectively reviewing the facts, and taking into account each party’s point of view and position. You know, and this is one area where it really pays for parties to be assisted by an experienced attorney. You know, not only can an attorney help with nominating mediators who are knowledgeable and experienced with the subject matter at issue to dispute, a season, you know, lawyer can also help reassure nervous or sceptical clients, that just because a mediator is nominated by another party, you know, doesn’t mean that they’re biased against them or that they will treat them unfairly during the proceedings.

47.11 [Margaret Wo] Um, you mentioned is now getting your lawyer to help with finding yourself a mediator for mediation. Do your lawyers have to be involved with the entire mediation process?

47.21 [Matthew Love] Yeah, and that’s one of the benefits of mediation is that you don’t need a lawyer at all actually. While I would always recommend a party, be assisted by an attorney, if lawyers aren’t required to participate in the process.

47.36 [Margaret Wo] so after all of this settle your mediator and you’ve finally agreed to mediation with the other side, how long will the whole entire process last?

47.44 [Matthew Love] Yeah, again, as with many aspects of mediation, you know, there is no one size fits all standard, when it comes to how long and mediation will last, you know, that will very much depend on factors like the nature and complexity of the dispute, the number of parties involved, you know, etc. However, it’s not uncommon for mediations to last only about one to two days, as this is often enough time for the parties to hear each other’s positions and try to find common ground in order to come to a, you know, mutually agreeable settlement.

48.18 I usually don’t advise clients to agree to only a half day mediation session. You know, in theory, a half day session is certainly possible. But in practice, it usually takes most of the morning for the parties to warm up to the negotiating process and start to move away from there, you know, in transpositions. That’s why I always advise clients to schedule at least one full day for the mediation session. In my experience, it’s much better to schedule a full day and then be done early then to have to end the session prematurely and then go through the process again at a later date. You know, no one likes that.

48.54 [Margaret Wo] So what if even after the one full day of mediation there’s still more to discuss. Could you go and do multiple sessions or further sessions?

48.58 [Matthew Love] Yeah, you definitely can, you know, assuming the other parties agree. But you know, again, the mediation process is not something that most people enjoy. And so if you’re going to do it, you should try to knock it out, you know, as soon as possible and as few sessions as possible.

49.14 [Margaret Wo] As opposed to mediators’ job would also be part of trying to help time management for the party. Exactly. Good to know. So we talked about some of the advantages of mediation now, but what if the parties are not able to resolve their dispute via the mediation session or sessions, and they proceed in that instead to traditional litigations? Can the parties use what was said during the mediation against each other in court proceedings?

49.37 [Matthew Love] Yeah, that’s a really good question. You know, as civil litigation cases in Hong Kong can generally take about two to four years, you know, on average to complete the courts want to encourage parties in dispute to try to resolve their issues by other means. You know, not litigation. And that’s why with a party saying discuss at the mediation are on a without prejudice basis and are confidential. You know, specifically the Hong Kong Mediation Ordinance states that any what they call mediation communications, and that includes, you know, anything that is said or done. Any documents prepared and produced, or any information provided for, or in the course of the mediation are confidential. And what this means is that, with some exceptions, parties generally can’t use what was discussed or produced at the mediation against each other later on, such as during litigation proceedings. And this is done to encourage more parties to attempt to mediation first before turning to the courts, as it gives the parties at least the option to try to resolve their dispute without, you know, in theory, having to worry that making a good faith effort during mediation will result in their good faith being turned and used against them later on.

51.00 [Margaret Wo] Okay, so given everything we’ve discussed just now about mediation, what any other pieces of advice that you would like to have for our listeners who may be considering mediation to know about things they need to know, to maximize a chance with successful outcome.

51.12 [Matthew Love] Yeah. So just in addition to what we’ve already discussed, you know, one thing that still surprises me is the number of companies that send representatives to the mediation where the party is a business, who don’t have the decision making authority to actually enter into any settlement agreement on behalf of the party they’re representing. And frankly, that’s just a big mistake. You know, sending a representative with actual decision making authority not only shows the other party or parties that you’re taking the mediation seriously. It also allows for resolutions to be achieved on the spot. You know, while the parties have the advantage of a neutral and skilled mediator present to help with negotiations.

52.00 [Margaret Wo] So thank you everyone for tuning in to listening to this episode on dispute resolution and we hope you join us for our future episodes.

52.05 [Matthew Love] Be sure to catch our other episodes of the hip talks podcast by checking the insights section of our website at www.hugillandip.com and please send us your comments by writing to our email address hello@hugillandipcom. Also, please feel free to share this episode of The HIP Talks podcast with your friends, family and associates.

For the hearing impaired you can find the notes and the transcript of this episode on our website. This podcast is for informational purposes only. Its contents do not constitute legal or professional advice.

Jonathan Gray

Jonathan specialises in dispute resolution, acting for clients in a wide range of general commercial disputes covering both litigation and arbitration. He also advises on both contentious and non-contentious employment law matters.

All articles by : Jonathan Gray
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