Key Points:

  • Encourages active case management by judges
  • Encourages parties to settle out of court

Hong Kong Civil Justice Reform (“CJR”), effective April 2, 2009, is embodied in detailed changes to the courts’ rules and practice directions. The objective of CJR is to make litigation in Hong Kong fairer, more efficient and more cost-effective. The reform requires more work of judges, particularly in respect to active case management, and also requires lawyers to change their attitudes and approaches to litigation. Ultimately, the CJR changes the entire landscape of Hong Kong’s civil litigation system.

The major changes to the system include:

  1. Active Case Management.. The courts have traditionally left the parties to decide how to conduct their litigation in terms of defining the issues and setting the pace. With the implementation of CJR, the courts can be expected to take a greater degree of control, both in terms of the issues that are being litigated and the time that is allowed for parties to put their case across and bring it to trial. Cases will be managed proactively, and the proliferation of unnecessary interlocutory applications, which take up time and constitute a heavy drain on the resources of both the courts and the parties, will be discouraged.
  2. Sanctioned Offers and Sanctioned Payments. Under the new court rules, not only defendants can make sanctioned payments into court and sanctioned offers to the plaintiffs, but plaintiffs will also be able to make sanctioned offers in respect of their own monetary and nonmonetary claims to the defendants. Another important change is that severe financial penalties may be imposed on a party that rejects a sanctioned offer or sanctioned payment and then fails to achieve a better result at trial. The rules clearly encourage parties to settle the case, rather than conducting a full trial.
  3. Mediation. The courts have a duty to encourage the parties to use an alternative dispute resolution procedure if the court considers it appropriate. The parties to any proceedings and their legal representatives are also under a duty to assist the courts to further this objective. The new court rules make it clear that unreasonable failure to engage in mediation could potentially entail adverse consequences.
  4. Pre-Litigation Preparation. Under the new rules, it is to the advantage of both the lawyers and the parties involved to identify the real issues in a case at a relatively early stage, as opposed to the situation under the pre-CJR rules. This inevitably will increase front-end costs, because some legal work that might not have been done previously until quite late in the proceedings will need to be done earlier. The judges believe this change will encourage parties to focus on what the real issues are and what their case is really all about at an early stage. In turn, this will cut out wasted costs incurred due to lack of focus on the issues, unnecessary interlocutory appeals.
  5. Statements of Truth. To confirm the proper function of pleadings, pleadings must now be verified by a statement of truth. The new rules introduce this requirement by identifying the persons who may sign a statement of truth, setting out the effect of a statement of truth and also outlining the consequences of failing to verify a document for which a statement of truth is required. In principle at least, quasi-criminal sanctions (orders for committal for contempt of court) may be imposed on parties that provide an untruthful or fraudulent statement of truth.
  6. Wasted Costs. The wasted costs regime has now been expanded to cover legal representatives and to allow the court to make such orders on its own motion. Wasted costs will be dealt with in a two-stage procedure and should not be used to threaten the other side’s legal representatives.  

Although the changes above are not comprehensive, they make it clear that after implementation of the CJR, the court will be more proactive in case management and will encourage out-of-court dispute settlement. This is not only because the court system is an expensive dispute resolution forum, but because settlement by amicable agreement is always preferable to resolution by court judgment. Since parties in a court dispute will now be required to clarify their issues at an early stage of the proceedings, early involvement of barristers and solicitors will be important to litigants in all cases in Hong Kong.