Q1. What are the most common procedures and rules to resolve disputes?
In Hong Kong, the most common procedures to resolve civil disputes include litigation, arbitration, and mediation.
Litigation involves court proceedings. It requires the suing party (the “Plaintiff”) to issue and serve a writ or originating summons upon the opposing party (the “Defendant”), who must then acknowledge the service and indicate their intention to defend the suit. Subsequently, the parties will begin to exchange court documents and request relevant documentary evidence from each other. If a court hearing is required, the Court will make a final determination to resolve the dispute.
Arbitration is often used for commercial disputes as an alternative to litigation. Parties will usually include an arbitration clause in commercial contracts to require any dispute to be resolved in this manner. Arbitration can be institutional (i.e., following existing rules from arbitration institutions) or ad hoc (i.e., the parties will determine the rules to be followed in the arbitration). Reasons for choosing arbitration as a means for dispute resolution typically include the fact that it is often easier to enforce arbitral awards under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (also known as the “New York Convention”), the flexibility of the process, and the ability to choose one of the arbitrators (where a tribunal consists of three arbitrators). It should be noted that while arbitrations are more likely to be confidential, different jurisdictions and arbitral institutions have different laws and rules regarding the confidentiality of arbitration proceedings.
Mediation is the process whereby parties attempt to negotiate and resolve their dispute with the aid of a mediator. Unlike litigation and arbitration, mediators will not make any determination on the outcome of the dispute – their role is solely to facilitate communication between the parties. It is therefore up to the parties to reach a settlement between themselves.
Q2. Which are the different civil courts in Hong Kong?
The Court of Final appeal and the High Court (which includes the Court of First Instance and the Court of Appeal) has unlimited jurisdiction over all civil claims and can hear all claims which fall outside the jurisdiction of the District Court (e.g. claims for over HK$3 million).
The District Court handles civil claims between HK$75,000 and HK$3 million. The District Court also includes the Family Court, which handles family and matrimonial matters.
There are also various specialist tribunals which have exclusive jurisdiction to handle different types of disputes in the first instance. For example, the Labour Tribunal handles employment matters, the Lands tribunal handles matters relating to land, and the Market Misconduct Tribunal deals with market misconduct matters. The Small Claims Tribunal handles civil claims up to HK$75,000.
Q3. What is the average timeframe that one can expect from commencing proceedings to get to trial?
In our experience, civil claims generally take between 18 months to 2 years to get from the date of service of the summons to trial.
Q4. Are hearings held in public and are documents filed at court available to the public? Are there any exceptions? What, if any, are the relevant limitation periods?
Court hearings in Hong Kong are generally open to the public, however, pleadings (save for the writ of summons) and other documents that are filed over the course of proceedings will not be available to the public. These documents may nevertheless be referred to in open court.
Certain types of proceedings are commonly held in closed court – that is, not open to public. These proceedings include arbitration matters, matters relating to physical or mental disability or infancy, winding-up and bankruptcy proceedings, intellectual property proceedings, matters relating to representation in legal proceedings, matters relating to trustees, and matters relating to obtaining evidence for foreign court. Appeals concerning unpublished patent applications must be held in closed court.
The relevant limitation periods for bringing claims are as follows:
- Breach of contract: 6 years from the date of the breach
- Action based on a deed: 12 years from the date of the breach
- Torts (e.g., claims in negligence): 6 years from the time when the cause of action accrues
- Personal injury claims: 3 years from the date on which the cause of action accrued or the date (if later) of the claimant’s knowledge of the cause of action.
Q5. What are the main pre-action conduct requirements in Hong Kong and what consequences are there in case of non-compliance?
There are no hard and fast rules as to what is required in pre-action conduct. However, it is common practice for pre-action demand letters to be sent, setting out the factual and legal basis of the claim as well as any relief or remedies sought. Parties to disputes are encouraged to make every reasonable effort to settle their differences through negotiation and mediation. The Court has a wide discretion to make adverse costs orders against parties who fail to act reasonably in pre-action conduct, such as against parties who unreasonably refuse to participate in mediation.
Furthermore, there are practice directions setting out a pre-action protocol for personal injury claims. Claimants are required to send a letter of claim in the prescribed form no later than 4 months before commencing proceedings, and the Defendant must provide a constructive reply within a month of receiving the letter. If the Defendant fails to respond constructively within the time limit, the Claimant will be entitled to commence proceedings without the risk of adverse cost consequences arising from non-compliance.
Q6. How do parties usually commence proceedings?
Parties can commence proceedings by writ of summons, originating summons, originating motions, and petitions. Originating motions are mostly for commencing appeals, and petitions are mostly for applications for winding-up or bankruptcy or certain matrimonial matters.
The vast majority of cases are commenced by way of writ of summons or originating summons, and between the two, writs are more commonly used. This is because originating summons are mostly suitable for cases where there are little to no factual disputes; the parties raise only issues of law or the interpretation of terms in a legal document. Writs are used for actions which would involve a substantial dispute of facts, e.g., whether a Defendant owes money and if so, how much is owed.
Q7. How is jurisdiction and law determined for a claim that is brought over to court?
In contractual claims, Courts will first look at whether there are relevant clauses or agreements as to the jurisdiction of courts over disputes arising from the contract. In the absence of such clauses or agreements, the Court will need to determine in which court the matter will be most appropriately tried, taking into account the interests of all parties and the ends of justice.
The Court will also take into consideration whether there are available forums other than Hong Kong Courts which are more appropriate in which the dispute can be tried. If there is, the Court will then consider whether any of the parties might be deprived of any legitimate personal or juridical advantages if the dispute was to be tried in this other forum. The Court will then balance these considerations with respect to whether justice will be done in the other forum.
Q8. Can claims be settled without a full trial?
Yes – parties are encouraged to settle the dispute between themselves at any point during the legal proceedings. In this situation, they may either file a notice to discontinue the case or make an application to have the terms of the settlement made into an order by the Court.
A case may also be disposed of by way of default judgment or summary judgment – both of which involve a judgment being rendered in the absence of a full trial.
A default judgment is available to a plaintiff if a defendant fails to file an acknowledgement of service or a defence. Default judgments are generally only available for monetary claims, claims involving the detention of goods, or claims involving the possession of land; in the event of any default in defence against a claim falling outside these categories, a Plaintiff will have to apply by summons or motion to obtain an order for default judgment. A Defendant may apply to set aside a default judgment if it has good reason for its failure to file an acknowledgement of service or defence on time.
If a Defendant has indicated its intention to defend the claim, a plaintiff may – subject to certain exceptions – apply for summary judgment without having to go through a full trial if the Defendant has no real prospect of succeeding in its defence (i.e., where the defence is inherently unbelievable or “practically moonshine”). Conversely, in appropriate cases, defendants may apply to strike out a plaintiff’s claim on the grounds that there is no reasonable cause of action, if it is scandalous, frivolous or vexatious, if it may prejudice, embarrass or delay the fair trial of the action, or it is otherwise an abuse of the process of the court.
Q9. What interim remedies are potentially accessible?
Courts have a wide power to order interim remedies upon application by the parties– the most common of which are for interlocutory injunctions restraining particular acts being done by a respondent before the commencement of or during the proceedings. Other interim remedies include (but are not limited to): security for costs, specific discovery, interim payments, and Anton Piller orders.
Orders for security of costs are often made against plaintiffs (or counter-claiming defendants) who may be unable to pay any adverse costs order made against it. It involves the payment of security into court to ensure that a defendant will be able to recover its costs in the event that it is awarded costs.
A party may apply for specific discovery to obtain specific documents or a specific class of documents from the other party.
Courts may order interim payments to be made to the applicant in order to reduce monetary hardship or prejudice faced by the applicant in the period leading up to trial. These orders are most suitable for situations where there is no dispute as to liability and the only issue left to be determined is the amount of damages to be paid.
An Anton Piller order is a search order which permits the applicant to enter a respondent’s premises to inspect, remove, or make copies of documents and other items which might be used as evidence against the respondent in trial. Such an order will only be made if there is strong reason to believe that the respondent may destroy existing evidence.