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Litigation

Court system

What is the structure of the civil court system?

The Hong Kong judiciary comprises various courts and tribunals, and includes the following:

  • the Court of Final Appeal (CFA): the highest appellate court in Hong Kong, which hears appeals on matters from the High Court. The CFA may also seek interpretation from the Standing Committee of the National People’s Congress on certain matters pertaining to the Basic Law of Hong Kong. The CFA usually comprises five judges, including the Chief Justice, three permanent judges, and either one non-permanent Hong Kong judge or one judge from another common law jurisdiction;
  • the Court of Appeal (CA) is part of the High Court and mainly hears appeals on matters from the Court of First Instance and the District Court. It also hears appeals from the Lands Tribunal, and various other tribunals and statutory bodies. There are 13 justices of appeal of the CA, including the Chief Judge;
  • the Court of First Instance (CFI) is the other part of the High Court and has unlimited jurisdiction. It hears appeals from magistrates’ courts and various tribunals such as the Small Claims Tribunal and the Obscene Articles Tribunal. At present, there are 27 judges of the CFI;
  • the Competition Tribunal deals with competition related cases. All judges of the CFI are members of the Competition Tribunal;
  • the District Court (DC) has limited jurisdiction over civil disputes of a value up to HK$1 million. The DC has one Chief District Judge, one Principal Family Court Judge and 41 other district judges;
  • the Family Court deals mainly with divorce cases and related matters such as maintenance and the welfare of children;
  • the Lands Tribunal determines claims for compensation payable for resumption of land and appeals where provisions are made in specified ordinances for the tribunal to do so. It also makes orders for possession or ejectment, or for the payment of rent or any other money due under a tenancy under the Landlord and Tenant (Consolidation) Ordinance;
  • the Labour Tribunal deals with labour disputes and hears cases where the amount of the claim exceeds HK$8,000 for at least one of the plaintiffs in a claim or where the number of plaintiffs in the claim exceeds 10. Hearings are informal and no legal representation is allowed; and
  • the Small Claims Tribunal has jurisdiction over civil disputes of a value not more than HK$50,000. Hearings are informal and no legal representation is allowed.

The Chief Justice is empowered to provide for separate lists of particular types of proceedings in the High Court. The most relevant lists concerning commercial and financial matters are the Commercial List, which facilitates the disposal of actions involving commercial matters, and the Construction and Arbitration List, which is not restricted to cases involving only a construction element but includes all arbitration matters dealt with by the CFI. Corporate insolvency and shareholder disputes are generally handled in an informal ‘companies’ list headed by a judge experienced in such matters.

Judges and juries

What is the role of the judge and the jury in civil proceedings?

Hong Kong follows the common law adversarial system. Judges adopt a passive role in proceedings, listening to evidence and arguments presented by the parties. The judges’ inquisitorial role is limited.

Civil cases are usually heard by a judge sitting alone. A party to a civil action in the CFI can apply for an order for trial by jury where claims are made in respect of libel, slander, malicious prosecution, false imprisonment or sedition, or where otherwise prescribed by the rules of court, but even then an order will not be granted if the trial requires any prolonged examination of documents or accounts, or any scientific or local investigation that cannot conveniently be made with a jury.

Judges are appointed by the Chief Executive on the recommendation of the Judicial Officers Recommendation Commission, which is an independent statutory body composed of judges, persons from the legal profession and eminent persons from other sectors.

Judges are chosen on the basis of their judicial and professional qualities and may be recruited from other common law jurisdictions.

Limitation issues

What are the time limits for bringing civil claims?

Time limits for bringing civil claims are set out in the Limitation Ordinance, such as:

  • actions to recover land: 12 years from the date when the right accrued (60 years if the claim is brought by the government);
  • contract: six years from the date of breach;
  • deeds: 12 years from the date of breach;
  • fraudulent breach of trust: no limitation period; and
  • tort: six years from either the date of the wrongful act or when damage occurs as a result of the wrongful act.

The Limitation Ordinance is silent as to whether parties may contract out of the statutory limitation periods by agreeing to vary the period (to be longer or shorter), or to suspend or extend it. However, if the period agreed is reasonable and does not fall foul of the Control of Exemption Clauses Ordinance, there is nothing to preclude limitation periods for contract and tort claims being varied. The Limitation Ordinance also sets out certain instances where limitation periods are subject to extension, exclusion or postponement; for example, where an action is based on fraud or for relief from the consequences of a mistake, or where the defendant has deliberately concealed facts relevant to the plaintiff’s cause of action. In those cases, the limitation period does not begin to run until the plaintiff has discovered the fraud, concealment or mistake, or could with reasonable diligence have discovered it.

Pre-action behaviour

Are there any pre-action considerations the parties should take into account?

No formal demand letter or mediation is required before issuing proceedings. However, failure to make such a demand before issuing proceedings might, in some circumstances, have costs implications. For example:

  • in personal injuries cases, the plaintiff should serve a demand letter on the proposed defendant and his or her insurer providing requisite information at least four months before commencing proceedings. The absence of a demand letter without good reasons may lead the court to grant an adverse costs order or a stay of proceedings; and
  • the Hong Kong courts encourage the use of mediation and may make an adverse costs order if a party refuses, on unreasonable grounds, to attempt mediation.

An application for an order for the disclosure of documents prior to commencement of proceedings might be made if:

  • the applicant appears likely to be a party to subsequent court proceedings;
  • the person against whom an order is sought appears likely to be a party to such proceedings; and
  • such latter person appears likely to have or have had in his or her possession, custody or power any relevant documents.

Starting proceedings

How are civil proceedings commenced? How and when are the parties to the proceedings notified of their commencement? Do the courts have the capacity to handle their caseload?

Generally, to commence civil proceedings, the plaintiff issues and serves on the defendant one of the following:

  • a writ of summons (where disputed questions of fact are involved);
  • an originating summons or motion (where there are no or few disputes of fact and the main issues are points of law, or the interpretation of certain terms in a legal document is raised for the court’s determination); or
  • a petition (which is required for particular matters, such as certain applications concerning companies and patents).

There are three principal methods of service of an originating process on a defendant who is in Hong Kong, namely by:

  • personal service on the defendant;
  • service by registered mail, addressed to the defendant at his or her usual or last known address (or, where the defendant is a limited company, by posting the notice or leaving it at its registered office address); or
  • insertion through the defendant’s letter box in a sealed envelope.

Service of originating process on defendants outside the jurisdiction may only be effected with the leave of the court.

Once leave is obtained to serve process out of the jurisdiction, service may be effected by personal service; by service in accordance with the law of the country or place in which service is effected; or pursuant to the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (Hague Convention).

To serve process in the People’s Republic of China (PRC), a request should be lodged with the Hong Kong court, which will send the documents to be served to the judicial authorities of the PRC for service on the defendant.

The courts have relatively limited means to address the problems encountered by their persistently heavy caseload. That said, the courts have extensive case management powers to ensure that a case is dealt with as expeditiously as is reasonably practicable, including but not limited to striking out a claim for want of prosecution on grounds of inordinate delay. In January 2016, the Chief Judge of the High Court issued a note setting out the High Court’s current administrative practice on notifying parties to a hearing at the conclusion of which judgment is reserved of the estimated time for handing down the reserved judgment. The note stipulates that, if judgment is reserved at the conclusion of a hearing and remains outstanding for 90 days or more, the court will provide an estimated handing down date to the parties which is expected to be realistic and adhered to by the court, and only revised in exceptional circumstances. The parties can request the court to provide an estimated handing down date if for some reason the court has not provided one in accordance with the practice note. In the event that there is serious departure from the estimated handing down date, the parties may bring the matter to the attention of the Chief Judge of the High Court. The note applies to reserved reasons for judgment, decisions, rulings, determinations, etc, and not just judgments. In 2017, the average waiting time for civil cases at the CFI, from application to fix date to hearing, was 163 days, an increase of eight days from the waiting period of 155 days in 2016.

One of the key factors affecting court waiting times in the High Court is the shortfall in judicial manpower. In an attempt to address this issue, the judiciary has created additional judicial posts and appointed deputy judges. The judiciary has also looked at other ways in which to shorten waiting times, such as reviewing the retirement ages and conditions of service for judges, and embarking on regular recruitment exercises to entice new blood into the judicial ranks.

Timetable

What is the typical procedure and timetable for a civil claim?

The documents to be served and their time limits, and the typical procedure and timetable for a civil claim are as follows:

  • assuming a writ of summons has been duly served on a defendant within Hong Kong, the defendant will have a period of 14 days to acknowledge service and give notice of intention to defend the claim;
  • the plaintiff must then serve on the defendant the statement of claim, in cases where it was not endorsed on the writ, within 14 days after the defendant has acknowledged service;
  • if the defendant intends to defend the claim, it must file and serve a defence within the later of 28 days after the time prescribed for acknowledging service of the writ or from receipt of the statement of claim;
  • the plaintiff may then file and serve a reply to that defence within 28 days, setting out additional facts in answer to the defence;
  • if the defendant counterclaims, a plaintiff wishing to dispute the counterclaim must file and serve a defence to the counterclaim within 28 days; and
  • the pleadings are deemed to be closed at the expiration of 14 days after service of the reply or the defence to counterclaim, or if neither a reply nor a defence to counterclaim is served, at the expiration of 28 days after service of the defence.

The subsequent proceedings are as follows:

  • discovery (see question 8);
  • exchange of witness statements and (if applicable) the filing of experts’ reports; and
  • listing for trial: after the court has given directions for setting down, the parties should file an application to set the case down for trial and provide notice of setting down.

Case management

Can the parties control the procedure and the timetable?

The parties and the court will usually set the procedure and timetable in the following manner:

  • the parties are required to try to agree directions with each other;
  • with the agreement of all parties, the plaintiff should procure and file agreed directions on procedure and timetable for the court’s consideration and approval; and
  • if no agreement has been reached, parties should file with the court ‘timetabling questionnaires’ that contain the proposed directions, and attend a hearing at which the court will give directions on case management.

Courts may impose sanctions for non-compliance with orders and rules on case management and directions, unless the party in default provides a good reason for non-compliance. Generally, sanctions are self-executing unless an application is made to the court to obtain relief within 14 days.

Parties may control the timetable by applying to vary non-milestone dates (in the absence of agreement), but the court will only grant the application if sufficient grounds are shown. Milestone dates (ie, the dates of the case management conference, pretrial review and the trial) can only be moved in exceptional circumstances.

Evidence – documents

Is there a duty to preserve documents and other evidence pending trial? Must parties share relevant documents (including those unhelpful to their case)?

Parties must disclose and are entitled to discovery of relevant documents in civil cases. Documents relevant to pending trials must be preserved intact as from the time litigation is contemplated. There are two main categories of discovery:

  • automatic discovery: the parties have a continuing duty to disclose all documents in their possession, custody or power relevant to the issues in dispute, including those that may be unhelpful to their case. According to the Rules of the High Court (and the Rules of the District Court), each party must prepare and submit a list of all such documents. This process is administered by the parties. The court may, on the application of a party, order discovery where a party who is required to make automatic discovery fails to do so; and
  • specific discovery: the court may also order a party to disclose specific documents or classes of documents upon the application of another party, if those documents are relevant and discovery is necessary for either disposing fairly of the cause or matter or saving costs. This process is administered by the court.

Documents disclosed in parties’ lists of documents are generally subject to production and inspection by other parties. However, privileged documents (see question 9) have to be disclosed as to existence only, but not as to contents.

Evidence – privilege

Are any documents privileged? Would advice from an in-house lawyer (whether local or foreign) also be privileged?

Documents may be privileged on various grounds, including:

  • legal professional privilege (LPP) - the concept of LPP is well recognised in Hong Kong. There are two main categories of LPP:
  • legal advice privilege: applies to communications between clients and their lawyers made for the purpose of giving or receiving legal advice. Advice from in-house lawyers is also privileged, provided that the in-house lawyer was performing a legal function in entering into such communications; and
  • litigation privilege: applies to communications between lawyers (and in some circumstances their clients) and third parties made for the dominant purpose of obtaining legal advice or collecting evidence in respect of existing or contemplated litigation;
  • ‘without prejudice’ correspondence created for the purpose of settling an existing dispute;
  • documents covered by ‘common interest’ privilege (documents exchanged between parties who have a common interest in the subject matter of the document or litigation); and
  • public interest grounds.

Evidence – pretrial

Do parties exchange written evidence from witnesses and experts prior to trial?

Parties exchange written statements of fact from witnesses prior to trial. Written evidence may occasionally be in the form of an affidavit sworn by the witness instead. A witness will not be allowed, without the court’s leave, to give evidence at trial where a witness statement has not been served beforehand.

No expert evidence can be adduced without the court’s leave or the parties’ agreement. Where the court grants leave or the parties agree to adduce expert evidence, the nominated experts prepare joint or separate reports (depending on circumstances) prior to trial to be exchanged between the parties. Parties usually appoint their own experts but are also entitled to agree on the appointment of a single joint expert. Further, the court may, on its own initiative, or on the application of a party, order two or more parties to appoint a single joint expert.

Evidence – trial

How is evidence presented at trial? Do witnesses and experts give oral evidence?

In general, witnesses must attend trial to give evidence to prove all the facts in their statements. Without the court’s leave, where a witness statement has not been served beforehand, a witness will not be allowed to give evidence at trial. The CFI will generally direct that the witness statement will stand as the witness’s evidence in chief. The opposing party can cross-examine the witness and the witness can then be re-examined by the party calling him or her on matters arising out of the cross-examination.

Experts are also usually called to give oral evidence and be cross-examined at trial.

Interim remedies

What interim remedies are available?

Interim remedies that the court may order include:

  • Anton Piller orders: mandatory injunctions requiring a defendant to provide access to its premises to allow documents and materials to be removed and preserved pending trial, in order to preserve the subject matter of a cause of action and of related documents;
  • interim injunctions: orders directing a defendant to do or refrain from doing something pending the trial may be issued where there is a serious issue to be tried and the balance of convenience lies in favour of granting an injunction;
  • interim payments: a party may be required to pay a sum of money into court on account of damages, debts or other sums that he or she may be held liable to pay the other party. A party may also be required to pay a portion of the sum claimed by the other party if the court is satisfied that, if the action proceeded to trial, the other party would obtain judgment for substantial damages against that party;
  • provisional liquidators may be appointed by the court at any time after the presentation of a winding-up petition to preserve the assets of the company pending the hearing of the petition in company winding-up proceedings; and
  • receivers and managers may be appointed by the court when it appears just and appropriate to do so to receive, manage or preserve property, or to restrain other parties from taking such property pending the trial.

The court also has jurisdiction to grant pre-action interim relief in support of foreign proceedings. Pursuant to the High Court Ordinance, the CFI may appoint a receiver or grant other interim relief in relation to proceedings that have been or are to be commenced outside Hong Kong, and that are capable of giving rise to a judgment that may be enforced in Hong Kong.

Remedies

What substantive remedies are available?

The substantive remedies generally available in commercial disputes include:

  • damages: generally compensatory in nature under Hong Kong law. Punitive damages are available, but only in very limited circumstances and are rarely awarded;
  • declarations: may be made under the discretionary power of the courts. Binding declarations of a right can be made, in circumstances where the plaintiff seeks the judge’s determination of the parties’ rights, under a contract or a statute, so that he or she can take appropriate action;
  • injunctions: may be granted where it is just and convenient to do so; and
  • specific performance: may be awarded where damages are not an adequate remedy.

Interest may be awarded on money judgments. The CFI and the DC can award interest to a successful party in proceedings (at such rate as it thinks fit) on all or any part of the debt or damages, in respect of which judgment is given for all or any part of the period between the date when the cause of action arose and the date of the judgment. Thereafter interest runs on the judgment debt from the date of the judgment until payment.

Enforcement

What means of enforcement are available?

There are several means of enforcement available, including:

  • a writ of fieri facias: requiring the bailiff to seise such of the goods, chattels and other property of the judgment debtor as are reasonably sufficient to satisfy the judgment debt together with interest and incidental expenses of execution;
  • charging orders: an order imposing, for the purpose of securing the payment of a sum of money, a charge on the property of the judgment debtor; and
  • garnishee orders: where a third party (the garnishee) owes money to the judgment debtor, the court may order the garnishee to pay the owed sum directly to the judgment creditor instead of the judgment debtor. This is only available if the garnishee is within the jurisdiction.

A judgment creditor may apply to the courts for the oral examination of a judgment debtor. Such examination is available in respect of money judgments, and where any difficulty arises in or in connection with the enforcement of any judgment or order. Following an oral examination, the court may order the imprisonment of the judgment debtor for a period not exceeding three months in certain circumstances.

Where, by a judgment, a person is directed to do an act within a specific time or abstain from doing an act, that order can be enforced by committal proceedings (for an individual judgment debtor) and a writ of sequestration (for a corporate judgment debtor). Such methods of enforcement are usually adopted as a penalty for contempt of court.

Public access

Are court hearings held in public? Are court documents available to the public?

In accordance with the principle of open justice, hearings in Hong Kong are generally held in open court where the public and press may attend. There are, however, certain exceptions. For example:

  • arbitration proceedings;
  • matters relating to children and applications for financial provision and ancillary relief;
  • intellectual property; and
  • obtaining evidence for foreign courts.

Court documents available to the public include writs of summons filed to initiate civil suits and the related court judgment, but other documents used in the proceedings remain private and confidential unless or until they are referred to in open court.

Costs

Does the court have power to order costs?

The court has discretion to order the payment of costs by one party to another. The general rule is that the unsuccessful party will be ordered to pay the costs of the winning party. If the party who bears costs disputes the amount of costs claimed, he or she may proceed to taxation (an assessment by the court of the appropriate quantum of costs to be awarded). Costs in an action can be taxed on the following bases:

  • common fund: the court will allow a reasonable amount in respect of all costs reasonably incurred;
  • indemnity: all costs shall be allowed except insofar as they are of an unreasonable amount or have been unreasonably incurred;
  • party and party: all costs that were necessary or proper for the attainment of justice or for enforcing or defending the rights of the party whose costs are being taxed will be allowed; and
  • trustee: no costs will be disallowed unless they should not, in accordance with the duty of the trustee or personal representative, have been incurred or paid.

In lieu of taxation, the court also has the power to assess costs summarily and to award a gross sum.

A plaintiff is not generally required to provide security for the defendant’s costs, but a defendant may apply for such an order on various grounds, including where the plaintiff is ordinarily resident out of the jurisdiction; is (not being a plaintiff suing in a representative capacity) a nominal plaintiff who is suing for the benefit of some other person, and there is a reason to believe that the nominal plaintiff will be unable to pay the costs of the defendant if ordered to do so; or is a company incorporated under the Companies Ordinance and there is reason to believe that the company will be unable to pay the defendant’s costs if the defendant succeeds in the defence.

There are no new rules governing how courts rule on costs.

Funding arrangements

Are ‘no win, no fee’ agreements, or other types of contingency or conditional fee arrangements between lawyers and their clients, available to parties? May parties bring proceedings using third-party funding? If so, may the third party take a share of any proceeds of the claim? May a party to litigation share its risk with a third party?

Contingency or conditional fee arrangements are generally not permitted in Hong Kong in respect of contentious business. Section 64 of the Legal Practitioners Ordinance provides that such fee arrangements shall not be valid, and disregard of these rules is covered by section 101I of the Criminal Procedures Ordinance, which states that failure to comply could attract a fine and a prison sentence of up to seven years.

Parties are also generally not permitted to bring proceedings using third-party funding in court litigation, but they may in limited circumstances do so, such as in insolvency proceedings, to enable liquidators to pursue claims. Arrangements where third parties (as maintainers) act for a share of the proceeds of the action in question are generally illegal at common law and can constitute criminal offences (maintenance or champerty, or both), but there are certain exceptions, such as in insolvency proceedings.

Insurance

Is insurance available to cover all or part of a party’s legal costs?

There is no established practice of insuring for litigation costs.

Class action

May litigants with similar claims bring a form of collective redress? In what circumstances is this permitted?

There is technically no mechanism available for class actions in Hong Kong. The sole mechanism for litigants with similar claims to bring a collective action are the rules on representative proceedings contained in the Rules of the High Court, which state that, where numerous persons have the same interest in any proceedings, one or more litigants may, as representatives, represent all the persons (or all of them with one or more exceptions).

Appeal

On what grounds and in what circumstances can the parties appeal? Is there a right of further appeal?

Parties may appeal on matters of law or fact, or against the court’s exercise of its discretion. Appellate courts are generally reluctant to reverse judgments based on findings of fact, particularly where such findings depended on the sitting judge’s view of the credibility of the witnesses who gave oral evidence before the CFI.

Appeals from judgments of the CFI and the DC are to the CA. No leave is required for appeals against final judgments of the CFI. Leave is required for appeals against interlocutory decisions of the CFI or decisions made in the DC.

Parties can also seek leave to appeal to the CFA on the grounds set out in section 22 of the Hong Kong Court of Final Appeal Ordinance.

Foreign judgments

What procedures exist for recognition and enforcement of foreign judgments?

Not all foreign judgments will be recognised or can be enforced in Hong Kong. Foreign judgments (excluding those from mainland China) are recognised and enforced via two methods in Hong Kong:

  • statutory registration scheme. By virtue of the Foreign Judgments (Reciprocal Enforcement) Ordinance, judgments from designated countries with which Hong Kong has reciprocal agreements may be registered and enforced in Hong Kong. Designated countries include Australia, Austria, Belgium, Bermuda, Brunei, France, Germany, India, Israel, Italy, Malaysia, Netherlands, New Zealand, Singapore and Sri Lanka; and
  • common law. For non-designated countries, which include, for instance, England and Wales and the United States, an action may be brought by writ on the foreign judgment. The judgment creditor may apply for summary judgment.

The Mainland Judgments (Reciprocal Enforcement) Ordinance provides for the reciprocal enforcement of money judgments (not being a sum in respect of taxes or a fine or similar penalty) of designated courts in mainland China and Hong Kong, where the dispute arises from civil or commercial contracts and where the parties concerned have agreed in writing (on or after 1 August 2010, being the commencement date of the Ordinance) that the courts of mainland China or Hong Kong have exclusive jurisdiction to resolve such disputes. The mainland China judgment must be final and conclusive between the parties to the judgment and be enforceable in mainland China.

Foreign proceedings

Are there any procedures for obtaining oral or documentary evidence for use in civil proceedings in other jurisdictions?

Where the witness is willing to attend to give evidence, there are no restrictions on the taking of evidence from a witness in Hong Kong for use in existing foreign proceedings. If a witness is unwilling to give evidence voluntarily, the foreign court must issue a letter of request to the Hong Kong courts requiring the witness to give evidence.

Part VIII of the Evidence Ordinance sets out circumstances in which the Hong Kong court will render assistance to foreign courts by ordering the taking of evidence within the jurisdiction. The application is made ex parte, and supported by an affidavit exhibiting the letter of request and explaining the issues in the foreign proceedings and the evidence to be sought.

The courts will ordinarily give effect to such a request insofar as is proper and practicable and to the extent that is permissible under Hong Kong law.

On 1 March 2017, the Arrangement on Mutual Taking of Evidence in Civil and Commercial Matters between the Courts of the Mainland and the Hong Kong Special Administrative Region which was signed on 29 December 2016 (the Arrangement) came into effect. The Arrangement aims at assisting litigants in mainland China and in Hong Kong to obtain evidence in civil and commercial matters more speedily and with greater certainty as to the scope of assistance available to them. Pursuant to the Arrangement, a litigant in Hong Kong may make a request for the taking of evidence through the Administration Wing of the Chief Secretary for Administration’s Office of Hong Kong by submitting a letter of request.

Arbitration

UNCITRAL Model Law

Is the arbitration law based on the UNCITRAL Model Law?

The Arbitration Ordinance (Chapter 609) (the Arbitration Ordinance) is based on the UNCITRAL Model Law (save for modifications and supplements expressly provided for in the Arbitration Ordinance).

Arbitration agreements

What are the formal requirements for an enforceable arbitration agreement?

Arbitration agreements must be made in writing or recorded in any written form (including, for example, electronic communication or the reference in a contract to any documents containing an arbitration clause) to be enforceable in Hong Kong.

Choice of arbitrator

If the arbitration agreement and any relevant rules are silent on the matter, how many arbitrators will be appointed and how will they be appointed? Are there restrictions on the right to challenge the appointment of an arbitrator?

Where the arbitration agreement and relevant rules are silent on the matter, the number of arbitrators will be either one or three, as decided by the Hong Kong International Arbitration Centre (HKIAC) or the ICC as appropriate (depending on which body is charged with administering the arbitration), taking into account the circumstances of the case.

Parties are generally free to agree on the procedure for appointing the arbitrator or arbitrators. The Arbitration Ordinance provides for the procedure to be adopted where the parties are unable to agree on the arbitrator or arbitrators.

An arbitrator may be challenged if justifiable doubts exist as to the arbitrator’s impartiality or independence, or if the arbitrator does not possess the requisite qualifications. Parties are free to agree on a procedure for challenging an arbitrator. Otherwise, the Arbitration Ordinance provides for the procedure to challenge an arbitrator.

Arbitrator options

What are the options when choosing an arbitrator or arbitrators?

Parties are entirely free to choose arbitrators with the qualifications required to meet the needs of their disputes, which might include expertise in the subject matter, a particular nationality, specific language skills, etc. While there is a large pool of candidates available locally in Hong Kong to act as arbitrators, parties are free to choose arbitrators from around the world. The HKIAC maintains a panel and a list of arbitrators to assist users to search for appropriate arbitrators for their disputes. The pool of candidates is large and experienced, and more than sufficient to meet the needs of complex arbitration.

Arbitral procedure

Does the domestic law contain substantive requirements for the procedure to be followed?

Hong Kong domestic law does not contain substantive requirements for the procedure to be followed in arbitration proceedings. Generally speaking, the arbitral tribunal has the power to adopt suitable procedures for the conduct of the arbitration in order to avoid unnecessary delay or expense. In exercising such power, the arbitral tribunal is required to be independent, fair and impartial. Parties have the right to be treated equally, and to have a reasonable opportunity to present their cases.

Court intervention

On what grounds can the court intervene during an arbitration?

The Arbitration Ordinance states that the court cannot intervene in arbitration proceedings, except as provided for in the Arbitration Ordinance. The court’s role is limited to matters such as ruling on challenges to the appointment of an arbitrator and assisting in taking evidence.

Interim relief

Do arbitrators have powers to grant interim relief?

Arbitrators have powers to grant a wide range of interim protective measures in the form of an award or in another form by which a party can be ordered to:

  • maintain or restore the status quo pending determination of the dispute;
  • take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral process itself;
  • provide a means of preserving assets; or
  • preserve evidence that may be relevant and material to the resolution of the dispute.

Award

When and in what form must the award be delivered?

Generally speaking, there is no set time limit or form in which the award must be delivered unless otherwise agreed by the parties. The time, if any, limited for the making of an award may be extended by order of the court on the application of any party. The award must be in writing and signed by the arbitrator or arbitrators.

Appeal

On what grounds can an award be appealed to the court?

Arbitral awards are usually not subject to appeal on the merits. However, parties may expressly agree in the arbitration agreement (as provided for in opt-in provisions in Schedule 2 of the Arbitration Ordinance) that awards may be challenged on the grounds of serious irregularity and appeals to court be allowed on questions of law.

Generally, the recourse for a party dissatisfied with an award in an international arbitration is to apply to the tribunal for a correction or interpretation of the award, or for an additional award, or to apply to the court to set aside the award under the limited grounds set out in Part 9 of the Arbitration Ordinance.

Enforcement

What procedures exist for enforcement of foreign and domestic awards?

An award made in or outside Hong Kong is enforceable in the same manner as a judgment of the Hong Kong courts, with the leave of the court.

Arbitral awards are divided into several categories:

  • Convention award. A Convention award (made in a country that is a party to the New York Convention, other than mainland China) is enforceable either by an action in the court or with the court’s leave under the general provision of section 84 of the Arbitration Ordinance;
  • mainland China award. An arbitral award made in mainland China by a recognised arbitral authority pursuant to the Arbitration Law of mainland China can be enforced in Hong Kong in the same manner as a Convention award. The Arbitration Ordinance contains provisions to guard against double recovery where enforcement proceedings are taken in both mainland China and Hong Kong; and
  • other awards. Any other awards are enforceable with the court’s leave under the general provisions of section 84 of the Arbitration Ordinance.

Parties seeking to enforce an award under the Arbitration Ordinance must produce certain documents, including the duly authenticated original award and the original arbitration agreement, or duly certified copies of the award and the arbitration agreement.

Hong Kong remains an arbitration-friendly jurisdiction and there is a strong presumption in favour of enforcement of Convention awards.

Costs

Can a successful party recover its costs?

In general, a tribunal has full discretion in awarding costs, including to award a successful party its costs. Where an award has been made as to costs, the tribunal will generally fix the amount of costs to be paid by one party to the other. If the tribunal does not fix the quantum of costs to be paid, the parties may agree on the sum payable or, failing this, may agree to have costs taxed by the court.

As it currently stands, third-party funding of arbitrations is not expressly permitted in Hong Kong, notwithstanding the enactment of the Arbitration and Mediation Legislation (Third Party Funding) (Amendment) Bill 2016 on 23 June 2017. The main objective of the Bill is to amend the Arbitration Ordinance to clarify that third-party funding of arbitration and mediation is not prohibited by the common law doctrines of maintenance and champerty; but the provisions permitting (i) third-partying funding of arbitrations and (ii) parties to an arbitration to communicate confidential information to third-party funders so as to obtain funding, have still yet to be implemented. It is expected that such provisions will be brought into effect after the finalisation of a funders’ code of practice. Non-compliance with the code of practice will not automatically render a person liable to judicial or other proceedings, but compliance (or a failure to comply) with a provision of the code of practice may be taken into account by any court or arbitral tribunal in considering the matter.

Once implemented, the amendments to the Arbitration Ordinance will provide that third-party funding can be in the form of money, or any other financial assistance, in relation to any costs of the arbitration. Any such funding agreement between a funded party and a third-party funder must be in writing.

The tribunal’s power to award costs against third-party funders, however, remains uncertain: while in its October 2016 report the Law Reform Commission agreed, in principle, that a tribunal should be given the power under the Arbitration Ordinance to award costs against a third-party funder in appropriate circumstances, it considered it premature at that stage to amend the Arbitration Ordinance to provide for this power.

Alternative dispute resolution

Types of ADR

What types of ADR process are commonly used? Is a particular ADR process popular?

Arbitration remains the most popular ADR method in Hong Kong. Aside from arbitration, the following processes are common alternatives to litigation: negotiation, mediation, privately constituted tribunals and statute-based or public tribunals.

Requirements for ADR

Is there a requirement for the parties to litigation or arbitration to consider ADR before or during proceedings? Can the court or tribunal compel the parties to participate in an ADR process?

Courts actively encourage settlement and the use of ADR, in particular the use of mediation, but generally cannot compel parties to participate in an ADR process. However, the court has issued a practice direction requiring parties to file a mediation certificate early on in court proceedings stating whether they are willing to attempt mediation before proceeding to trial and, if not, the reasons for refusing to do so. The court may impose costs sanctions if a party unreasonably refuses to attempt mediation.

Miscellaneous

Interesting features

Are there any particularly interesting features of the dispute resolution system not addressed in any of the previous questions?

No.

Update and trends

Update and trends

Are there any proposals for dispute resolution reform? When will any reforms take effect? (Please also mention any ground-breaking recent cases, etc.)

No updates at this time.