Dispute Resolution in Hong Kong SAR
Dispute Resolution in Hong Kong SAR
Hong Kong is one of the leading arbitration centres in Asia. This position has been achieved through:
- the adoption of a modern, sophisticated Arbitration Ordinance which includes the UNCITRAL Model Law on International Commercial Arbitration as an attached schedule;
- amendments to the statutory framework to enhance party autonomy in arbitration;
- the establishment of the Hong Kong International Arbitration Centre (HKIAC) in 1985; and
- the adoption in 1977 of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.
More recently, the People's Republic of China (PRC) and Hong Kong SAR (Special Administrative Region) concluded an agreement on the reciprocal enforcement of arbitration awards in accordance with the 'spirit' of the New York Convention (see Hong Kong and Mainland Agree to Reciprocal Enforcement of Awards).
Arbitration clauses are a familiar feature of commercial contracts in the construction, shipping and trade areas. In addition to sector-specific rules, the HKIAC has its own arbitration rules. The courts will enforce arbitration agreements. While party autonomy in arbitration is increasing, the scope for applications to court to interfere in the arbitration is decreasing.
Hong Kong's legal system is a legacy of its colonial past. On reunification with China on July 1 1997, Hong Kong became a special administrative region of the PRC. However, under the terms of Hong Kong's Basic Law, the judicial system was preserved largely intact. The Court of Final Appeal was established to replace the Privy Council as the highest appellate court, but in most other respects the hand-over of sovereignty has had little impact on litigation in Hong Kong.
The Basic Law expressly provides for the maintenance of the law that was in force in Hong Kong prior to the hand-over. This includes the common law and rules of equity (which are substantially the same as English law), together with Hong Kong's ordinances which, subject to certain significant differences, have in the past followed the pattern of English legislation. The differences between Hong Kong and English law will continue to increase, but for the moment Hong Kong's law would be broadly familiar to any English-trained lawyer.
It is also expected that more civil matters will be tried in Cantonese in future - which is rare at present. This is in contrast to criminal matters which are tried mainly in Cantonese.
Leaving aside cases for nominal amounts and those which are dealt with before specialist tribunals (eg, the Lands Tribunal and the Labour Tribunal), civil cases are commenced either in the Court of First Instance of the High Court or in the District Court, depending on the amount at stake.
While there is scope for significant delay, particularly if a matter is vigorously contested at the interlocutory stages, the system is not unduly slow. Generally, substantial commercial actions come to trial in no more than two or three years from the commencement of proceedings. On the other hand, summary judgment can be obtained within a much shorter timetable, and emergency ex parte injunctions can be obtained within a matter of hours.
The procedure of the Hong Kong courts is similar to that which was used by English courts prior to the institution of the Woolf reforms. Discovery, for instance, is made by way of exchange of lists of all relevant documents within each party's possession, with scope for further applications for specific discovery. Although widely viewed as being ready for some reform, the system works well, especially when compared to most other Asian jurisdictions. It seems unlikely that reform on the scale that was recently implemented in England will be adopted in the near future.
The legal profession in Hong Kong is split into two branches - barristers and solicitors. Hong Kong solicitors, however, do not enjoy the extended rights of audience recently allowed to their English counterparts.
The costs of litigation are relatively high. Barristers and solicitors fees are usually calculated on an hourly basis and tend to be higher than rates in London or New York. However, the courts have discretion to award costs to the successful party in litigation and will usually do so. A recovery of 60% to 70% of actual costs is common.
Enforcement of foreign judgments in Hong Kong will normally be done under the common law by issuing proceedings on the basis of the foreign judgment. However, Hong Kong has reciprocal enforcement arrangements with a number of countries (eg, France, Germany, Belgium, New Zealand), and is likely to conclude similar arrangements with other countries in future. A complete list of countries with which Hong Kong has such arrangements is contained in the Foreign Judgments (Reciprocal Enforcement) Order which can be accessed at the Hong Kong government's web site at http://www.justice.gov.hk/Home.htm.
For further information on this topic contact any of the following dispute resolution partners at Herbert Smith by telephone (+852 2845 6639) or by fax (+852 2845 9099) or by e-mail:
Nigel Francis ([email protected])
Mark Johnon ([email protected])
George Lamplough ([email protected])
Mark Lloyd-Williams ([email protected])
Frances Pryor ([email protected])
Martin Rogers ([email protected])
Henry Uscinski ([email protected]).
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