In the 2018 Policy Address, the Chief Executive of Hong Kong indicated support for funding the development of an online arbitration and mediation platform so that Hong Kong can provide efficient and cost-effective online dispute resolution (“ODR”) services. In this regard, the Secretary for Justice of Hong Kong has commented that “the establishment of a safe, reliable and credible platform to provide enterprises in various economies along the Belt and Road with convenient and cost-effective online dispute resolution will become a new trend”.
The initiative has been accelerated since the Financial Secretary of Hong Kong announced in the 2019-2020 Budget that HKD150 million will be provided for the development and initial operation of the online platform. Subsequently, on 25 March 2019, the Department of Justice put forward a proposal in a paper to the Hong Kong Legislative Council Panel on Administration of Justice and Legal Services (the “LegCo Paper”) for one-off funding support for the development of the Electronic Business Related Arbitration and Mediation (“eBRAM”) Platform by a non-governmental organisation called the eBRAM Centre (the “Centre”).
The Centre has been formed by a combination of members from both the legal and technology sectors – arbitrators, mediators and legal practitioners and technology specialists from the Logistics and Supply Chain MultiTech R&D Centre. With the Centre’s administration based in Hong Kong and the expected use of Hong Kong as the seat of arbitration, it is hoped that the eBRAM Platform will enhance Hong Kong’s position as a leading international dispute resolution centre. In addition to ODR, the Centre also aims to provide deal-making services to parties using a secure and user-friendly online platform.
The LegCo Paper discusses at length the objectives and benefits of the eBRAM Platform. The underlying philosophy is that disagreements emerging from cross-border online activities can be better resolved online, rather than through domestic courts or traditional in-person arbitration which can be time consuming and expensive.
By using an internet-based online alternative dispute resolution (“ADR”) platform employing state-of-the-art technologies, the Centre aims to provide low-cost and fast dispute resolution solutions for micro, small and medium-sized enterprises, particularly those operating in the Belt and Road region and the Greater Bay Area. From the perspective of the Hong Kong Government, this would facilitate business operations and improve access to justice.
In summary, the eBRAM Platform will:
- Dispense with the need for physical presence at a meeting or hearing, saving legal and travel costs;
- Use Artificial Intelligence (“AI”) applications for text translation in place of conventional natural language translation. “Deep learning” is expected to be employed to train the eBRAM Platform’s “deep neural engine”. The initial focus will be on translations in Chinese, English, Russian, Arabic and Spanish. AI will also be used for translation of real-time online chat style sentences and transcription of online hearings. This is likely to enable faster and more cost-effective translation and transcription and cut through difficulties posed by parties speaking different languages;
- Dispense with the need for physical documents by providing a secure cloud-based platform and IT infrastructure for case materials stored on the eBRAM Platform. Access to materials would be case and role-based, so that documents will be accessible only to the relevant parties for particular tasks;
- Support modern and convenient payment methods such as credit cards, online bank payments, PayPal and e-Cheque; and
- Ensure that proper security systems and handling procedures are put in place to guard against hackers and other threats to internet-access. For example, the Centre proposes to use AI for continuous user authentication, facial recognition, silhouette tracking and multi-factorial authentication.
The eBRAM Platform is intended to facilitate negotiation, mediation and arbitration. Users will be able to nominate “neutrals” (an individual to assist them in settling or resolving disputes) or select them from panels to be maintained by the eBRAM Platform.
Further details regarding the conduct of proceedings are not yet available. However, according to the United Nations Commission on International Trade Law (“UNCITRAL”) Technical Notes on Online Dispute Resolution published in 2017, which the United Nations recommends all States and other stakeholders to use in designing and implementing ODR systems, the process of an ODR proceeding may typically consist of: (i) technology-enabled direct negotiation between the claimant and respondent using the ODR platform; (ii) if that negotiation fails/does not result in settlement, the process may move to a “facilitated settlement” stage using a neutral; and (iii) if that facilitated settlement also fails, there may be a third and final stage of ODR proceedings in a form to be specified by the ODR platform.
The average fee for an arbitration conducted through the eBRAM Platform is estimated to be HKD38,000, which is significantly less than the fees involved in, for example, Hong Kong International Arbitration Centre (“HKIAC”) arbitration proceedings. However, the eBRAM Platform is expected to complement and enhance existing dispute resolution services, rather than competing with bodies such as the HKIAC which does not have an ODR platform of its own. The Legco Paper proposes that existing arbitral institutions, including the HKIAC, the Hong Kong Maritime Arbitration Group etc, should be able to utilise the eBRAM Platform. It will be interesting to see how this works in practice because the eBRAM Platform is likely to have its own rules or protocols which parties will need to incorporate in their dispute resolution clauses when entering into contracts.
While ODR mechanisms are typically intended for use in disputes emerging out of cross-border low-value sales or service contracts concluded using electronic communications (e.g. the EU’s ODR platform which was launched in 2016), the eBRAM Platform aims to also cover higher value transactions in the “longer run”. It will be interesting to see how it will be applied to high-value disputes emerging out of Belt and Road related infrastructure projects where established arbitral institutions will be competing for the work.
It is understood that the Hong Kong Government will sign a memorandum of understanding with the Centre on specific areas in relation to its operation (including possible appointment of members to the Board of Directors by the Government) and the utilisation of any funding provided, including a progress reporting mechanism.
The Centre aims to provide a prototype of the eBRAM Platform by August 2019 with the target roll-out by the end of 2019. Overall, the eBRAM Platform is an initiative in the right direction.