Hong Kong follows the common law system with a combination of statutory laws as well as laws developed through judgments. The system of stare decisis prevails where lower courts are bound by the decision of higher courts. Court proceedings are carried out in an adversarial manner where counsel of both parties present their respective cases (by way of both written submissions and oral arguments) and the judge decides.
Under the principle of “One Country, Two Systems”, Hong Kong SAR has its own judiciary which is separate from the Mainland. The jurisdiction of the non-appellate courts is limited by subject-matter, monetary value of the claim or nature and severity of the sentence.
The structure of the courts is as follows:
Regarding filings, the writ of summons and published judgments are open to the public. To access any other document, the leave of court is required.
Generally, court proceedings are open to the public unless statute provides otherwise (see 7.6 Extent to Which Hearings are Open to the Public). The court may order the whole or part of the public hearing to be in camera upon application or on its own motion.
The following category of legal professionals have rights of audience that vary as per their qualifications:
Foreign Lawyers, who are registered with the Law Society, can only advise on the law of the jurisdiction in which they are qualified. Foreign lawyers do not have rights of audience in the courts and are not entitled to practice the laws of Hong Kong.
No legal representation is allowed in the Small Claims Tribunal and the Labour Tribunal.
The legal system in Hong Kong allows third-party funding in limited areas.
The rationale against third-party funding arrangements is the prohibition against maintenance and champerty. The courts in Hong Kong are prepared to grant leave in certain circumstances. The principle is to balance public policy with access to justice and legitimate interest of parties.
Third-party funding is permitted in arbitration proceedings, liquidators of an insolvent company can assign the cause of action to third-party funders and trustees in bankruptcy proceedings are also permitted to enter into third-party funding arrangements.
Third-party funding is available to both plaintiff and defendant.
There is no statutory limit of the amounts of third-party funding. The entire cause of action can be assigned to a third-party funder.
The funding agreement is required to stipulate the type and extent of the costs that a funder is liable for. The costs could vary depending on the stage at which the agreement is executed. Some of the probable costs include:
Contingency fee arrangements are prohibited in Hong Kong.
There is no statutory limitation of time for obtaining third-party funding.
In Hong Kong, a specific Pre-Action Protocol is prescribed only in personal injury cases under Practice Direction 18.1. The requirements are as follows:
There are consequences of non-compliance. If the defendant fails to respond constructively within one month, the claimant is entitled to commence proceedings without the risk of adverse costs consequence arising from non-compliance.
In exercising its discretion on costs, the court takes into account all relevant circumstances. These would include any unreasonable failure of a party to comply with the Pre-Action Protocol. A defendant who fails to respond constructively may experience adverse costs consequence.
The Limitation Ordinance (Cap. 347) prescribes the time limits beyond which commencement of proceedings would be barred. The cause of action is vital to determine the application of the limitation period. The accrual of the cause of action triggers the limitation period. The limitation period stops running when the action is commenced. A limitation period may be shortened or extended by agreement between parties.
Limitation periods applicable to civil suits are as follows:
Courts in Hong Kong can exercise jurisdiction (hear and determine a matter) against a defendant.
If a defendant is present in Hong Kong such that it can be served with the proceedings within Hong Kong (even if the person is on transit at the airport), the courts can exercise jurisdiction. However, such jurisdiction would not vest in courts if the defendant was defrauded to be present in Hong Kong just for the purpose of service.
If the parties to a dispute have entered into an jurisdictional agreement conferring jurisdiction on courts in Hong Kong, jurisdiction can be exercised.
Jurisdiction can be established if the defendant by conduct accepts the jurisdiction of courts in Hong Kong courts. Thus, challenges to jurisdiction must be made cautiously to avoid submission to jurisdiction.
Forum conveniens if it can be shown to the court that Hong Kong is the most appropriate place to bring an action against the defendant. If the defendant is not present in Hong Kong, the plaintiff is required to seek the leave of the Court of First Instance to serve outside jurisdiction. Amongst other specific factors, the court would grant leave if it finds a sufficient connection with Hong Kong.
The above-mentioned basis of jurisdiction applies to all courts. However, whether the court has jurisdiction or not depends on the subject matter and the pecuniary value of the claim.
A civil proceeding is initiated most typically by a writ or an originating summons. In specific types of cases, a motion or a petition may be used.
Proceedings are commenced by a writ of summons when the dispute primarily pertains to factual issues. A writ may be indorsed generally or specifically. A generally indorsed writ would be accompanied with at least the relief sought. A specifically indorsed writ contains a Statement of Claim setting out all material facts.
An originating summons is issued when the principal issue in the dispute involves construction of law, or instrument made under law, or deed, will, contract or other document.
Proceedings can be begun my motion only when authorised or required by law. They must contain a concise statement of the nature of the claim.
Petition can be used to initiate proceedings when the law so requires or authorises (eg, winding up proceedings). They must contain a concise statement of the nature of the claim.
Amendment of writ, originating summons, motion or petition is possible at any stage of the proceedings with the leave of the court.
The plaintiff is responsible for service (unless it is a counterclaim). Some general rules of service are that an originating process must be served personally, or by registered post, or by insertion through letter box at the usual or last known address within jurisdiction or, if the service of an originating process by the above means is impracticable, the court may make an order for substituted service such as through newspaper advertisement.
Service Outside the Jurisdiction
The courts have discretion to grant leave for service outside jurisdiction upon an application made by the plaintiff. An ex parte application is to be made by the plaintiff with a full and frank disclosure regarding anything that casts doubts on the merits of the case. The plaintiff must satisfy the court that there is a serious issue to be tried on the merit and a good arguable case that the claims fall within one of the jurisdictional gateways under O.11, r.1(1) of the Rules of the High Court or the Rules of the District Court.
If the leave to serve out is granted, service is to be effected in accordance with the local law of the place of service.
Once a claim has been served, the defendant may file an acknowledgement of service indicating its intention to defend by lodging it at the Registry within 14 days of service. A defendant is exposed to the risk of a default judgment entered against them if they fail to lodge an acknowledgement of service.
A plaintiff is entitled to obtain a default judgment if the writ had been duly served and the time for lodging an acknowledgement of service indicating an intention to defend has expired, the acknowledgement of service has been returned indicating an intention not to defend, or the defendant fails to file a defence within 28 days after the time limit for acknowledging service of the writ or a statement of claim is served.
If the defendant fails to serve notice of intention to defend within the stipulated time period, the plaintiff may enter into final judgment, when the claim is liquidated or is for recovery of land only, or interlocutory judgment in cases of unliquidated claims, claims for detention of goods only, claims for detention of goods and damages.
Hong Kong does not have a class action mechanism. Representative proceedings are enabled under the Rules of the High Court, Order 15, Rule 12. Unless the court orders otherwise, a representative action may be begun by or against one or more persons who have the “same interest”. The test for the same interest is threefold: common interest, common grievance and a remedy beneficial to all plaintiffs. On application by a plaintiff, the court may allow a defendant to act as a representative of other defendants. The judgment delivered in a representative proceeding is not enforceable against a person who is not a party to the action unless the court permits otherwise.
According to the Hong Kong Solicitors’ Guide to Professional Conduct, a solicitor wherever possible should when requested by a client give an estimate of the likely costs of acting in a particular matter. If a solicitor cannot give an approximate estimate of the costs and disbursements, they should inform their client accordingly and should give such a general forecast as they can, with the indication of the method by which their fees will be calculated.
Interim applications can be made before trial. These applications are not limited to case management purposes and are for remedies (even if not final) as well. Some of the common interim applications are:
The Summary Judgment procedure is a form of dispositive motion. It is a judgment without trial made by court either on its own motion or on the application of the plaintiff or the defendant (in a counterclaim). A summary judgment would be made either on whole or part of the claim at any stage where it is clear and obvious to do so. The essential ground is that there is no arguable defence to the claim or the counter claim, hence no triable issue. It can also be made when the cause of matter can be determined resolving a question of law or construction of a document arising therefrom.
For information on judgment in default, see 3.6 Failure to Respond.
A strike-out is an order made by the court to strike out pleadings or any part of it. It may be on application of parties or in the exercise of the inherent jurisdiction of the court. The possible grounds for striking out are:
Further, the court may order early trial in cases where application for injunction or receiver is made where it is considered just to do so. The court also has the power to limit the timings at trial.
In addition to the forms of early judgment discussed at 4.2 Early Judgment Applications, some forms of dispositive motions in Hong Kong are as follows:
Joinder of interested parties is permitted with the leave of the court. Such leave to join two or more parties to a proceeding is given if there would be common question of law or fact in all the actions, if brought separately, and all the rights to relief claimed are in the same transaction or same series of transactions
On application by a defendant, where it is considered just, the court may order a plaintiff to provide security for costs. The defendant may apply on the following grounds:
If such an order is made, a plaintiff can proceed only upon the payment of the security. In the event of non-payment there is a risk of dismissal of the proceedings.
Costs and, the extent of them in any proceedings, fall under the discretionary power of the court. The matter of who pays the costs may also be agreed between the parties.
The general principle is that cost follows the event. If certain interim applications were improper or unreasonable, the court may also award wasted costs against the applicant.
The court is empowered to make a summary assessment of cost which is payable within 14 days or can order taxation of the costs at the end of the action.
There is no guaranteed timeframe for a court to deal with an application in Hong Kong. Such timeframe depends on the court’s and the legal representatives’ diaries. A party may make a written request to the Registrar with reasons for dealing with an application on an urgent basis. In cases of urgent ex parte injunction applications, the Hong Kong Court is able to grant an order on the day of application.
Discovery is an important step in civil cases and is administered by the litigants.
Discovery of Documents
Within 14 days after the deemed close of pleadings, the parties are required to disclose in a list the documents in their respective possession, custody or power relating to the matters in question in the proceedings (be in privileged or not).
The inspection of the documents disclosed in the list (excluding the privileged documents) is usually conducted within seven days and the parties can take copies of the documents and if documents are referred to in pleadings, affidavits or witness statements or experts’ reports, the other party is entitled to serve a notice for production of specified documents for inspection and for taking copies thereof.
Further, discovery is continuing obligation. If relevant documents come into a party’s possession, custody or power at any time, the new documents must be disclosed in a supplementary list of documents.
This has been introduced in complex commercial cases for electronically stored documents (Practice Direction SL1.2).
The exchange of witness evidence is not a part of discovery but a stage of exchange of evidence after the discovery.
Section 42(1) of the High Court Ordinance empowers the court to order discovery against a person who is not a party to the action. The summons must be served personally upon the third-party and upon every party to the action.
Norwich Pharmacal Discovery
This is an order for discovery against a third party who has "got mixed up in the tortious acts of others in order to facilitate their wrong-doing" under common law. The order for discovery of documents and disclosure of identity of wrongdoers may be made irrespective of the third party being willingly involved or not. The terms of any order must be specific to the case.
Additionally, under the Evidence Ordinance, the discovery of records held by banks may be sought by an application for inspection of bankers’ books.
Discovery is required for documents that are relevant to the issues, regardless of whether it may be prejudicial to one’s case. This enables both sides to evaluate their respective positions and may encourage early settlement.
A specific format is prescribed for the list of documents which contains two schedules. Schedule 1 contains a list of all the documents that are in the possession, custody or power of the client. The first part of Schedule 1 enlists the documents which the party does not object to produce, whereas the second part enlists those documents which the party objects to produce with the grounds of objection. The documents that have been but are no longer in the possession, custody or power of the party are enlisted in Schedule 2.
This is not applicable in our jurisdiction.
Legal professional privilege is a ground to protect documents from production based on legal advice privilege (advice given whether or not litigation was contemplated or pending) and litigation privilege (if made when litigation was pending or contemplated).
A document comes into existence as part of a process of communications with a lawyer for the dominant purpose of obtaining legal advice (including internal confidential documents produced for such a purpose) would be protected by privilege. There is no distinction between external and in-house counsel in Hong Kong.
Generally, a document that is not relevant to the issues (as discussed above) does not need to be disclosed. Other documents which are not required to be disclosed include:
The High Court and the District Court have the power to grant both interlocutory and final injunction in all cases where it appears just and convenient to do so. It may be applied by an ex parte or inter parte application. Injunctions may be prohibitory, imposing a negative obligation abstaining from an act, or mandatory imposing a positive obligation on the person. An injunction order may be made with or without conditions.
The test for granting an injunction is whether there is a serious issue to be tried (the claim should not be struck out as frivolous), whether the balance of convenience lies in the favour of granting an injunction and whether irreparable damage would be suffered if the injunction is not granted.
Some of the available injunctions are listed below:
The Practice Direction 11.1 provides for situations where immediate orders may be required.
In case of emergencies during the court working hours, the solicitor is required to contact the Clerk of the court who would direct the matter to the Judge or Deputy Judge who is available.
In extreme cases, there is a possibility of hearing after court hours before the Duty Judge.
Injunctive relief such as Mareva injunction and Anton Piller order can be obtained on an ex parte basis (either based on urgency and/or secrecy).
Undertaking and Fortification
If an interlocutory injunction (be it ex parte or not) is granted in favour of the plaintiff, the plaintiff is often required to provide an undertaking as to damages suffered by the defendant if it is subsequently found that the order ought not have been made. Additionally, the plaintiff may be required to fortify the undertaking by giving security.
Injunctive relief may be granted against worldwide assets of the respondent.
In appropriate cases, injunctive relief can be granted against third parties. The Chabra jurisdiction developed in case law enables the court to extend the ambit of the Mareva injunction to non-parties in order to support the plaintiff’s claim against the defendant.
If there is a non-compliance of injunction orders, the respondent or a third party who knowingly assists or permits such non-compliance can be held liable for contempt of court. The consequences may include imprisonment, fine, or seizure of assets.
Hong Kong follows an adversarial process in trial. The trial is conducted by way of oral arguments and examination of witnesses rather than being primarily conducted in writing. The following is an approximate structure of stages of a trial:
On a case by case basis, the judge may dispense with the opening submissions and the trial may begin with the examination of witnesses.
Interim or interlocutory applications are usually heard in chambers. Written skeleton arguments will be filed by the parties before the hearing. At the hearing, the applicant will make its oral argument in support first, then followed by the respondent’s oral argument in opposition. The Applicant can make reply submissions.
Case Management Hearings
The court takes an active role in managing the timetable of every procedural step in case management hearings in every civil case. Below are the procedural steps:
Jury trial are available in matters of malicious prosecution or defamation. The parties may choose trial by jury over trial by a judge.
The test of relevance is the primary rule for evidence to be admissible in court. Evidence is relevant if it assists in proving or disproving a fact thus making a matter requiring proof more or less probable. Both direct and circumstantial evidence are admissible if relevant.
Generally, all relevant evidence is admissible unless excluded due to remoteness from the issues.
Hearsay evidence is only admissible where, having regard to the circumstances, the court concludes that the evidence is not prejudicial to interests of justice.
The court has the discretion to exclude evidence obtained unlawfully in order to protect the integrity of the judicial process.
The Evidence Ordinance (Cap 9) considers expert evidence to be admissible. The party seeking to adduce expert evidence must establish that the expert is qualified in that expertise to give expert evidence and that the evidence is relevant as it would assist in arriving at a decision on one or more of the issues.
The court is also empowered to appoint a single joint expert if it would be in the interest of justice to do so, to control costs and reduce delays.
The general rule is that open justice requires open proceedings, however there are statutory exceptions. The court may on an application or on its own motion order that the whole or part of the proceedings will be held in camera. In case of proceedings held in camera, no reporting of the proceeding or the judgment can be made without the approval of the judge or master. If the judge considers it appropriate for reporting, the parties should be afforded an opportunity to be heard before any such order is made.
Practice Direction 25 provides that certain proceedings are generally not open to the public. This includes those regarding:
The trial judge has the responsibility and necessary authority to administer the trial and can exercise judicial power over any issue that may arise during a hearing or trial.
The judge will only intervene and ask questions of witnesses or counsel when it is strictly necessary to clarify points or to develop any points that may have been overlooked, or to ensure that complicated issues or submission of law are clearly presented.
Generally, a judgment must be handed down by the judge in open court. The judgment is required to be reasoned. There is no specific rules as to the circumstances in which a judgment must be given at the hearing, or at a later date.
The general time frames for proceedings would vary depending on facts and circumstances peculiar to a matter. It depends on the complexity of the matter, whether the defendant would defend the claims, make counterclaims, the number of interlocutory applications by the parties, etc. The courts in Hong Kong are also very busy and thus, the time frame would also be affected by the court’s diaries.
In general, court approval is not required to settle a lawsuit. There are a few exceptions. For instance:
Generally, the terms of settlement would be confidential unless disclosure is required by law or court order. The terms of Consent Order based on parties’ agreement would be open to the public and can be accessed upon request. In case the settlement agreement is executed through a Tomlin Order, it would be appended to a schedule in the Order. The access to the order may be possible by an application to the Registrar with adequate reasons.
Settlement agreement may be enforced by way of a civil action, if a Consent Summons or Consent Order is executed, the agreement can be enforced by normal modes of execution of judgment and, if a Tomlin order is executed, all further proceedings be stayed except for the purpose of carrying the agreed terms into effect.
A consent order or a “Tomlin” order can only be set aside where the consent given was procured under misrepresentation or fraud.
The remedy or the relief sought must be specifically set out in the Statement of Claim, although costs do not need to be claimed specifically.
The common types of awards made by court are as follows:
Punitive damages are also known as exemplary damages and are awarded for a deterrent effect in exceptional cases. Aggravated damages are awarded, in addition to general damages, in special circumstances where evidence is given to show aggravated mental suffering. This form of damages in not awarded to corporations.
For penalty or liquidated damages, the position in Hong Kong is that liquidated damages must be a genuine pre-estimate of loss or else it will be disallowed for being a penalty.
Regarding the restriction of amount of damages, there is no rule limiting the maximum damages, but the underlying principle is that the award of damages must be justified.
Pre-judgment interest is payable in Hong Kong until the date of the judgment. Section 48 of the High Court Ordinance empowers the court to award pre-judgment interest in money claims, ie, for debt or damages. Under Section 48(3) HCO, the defendant “shall” be liable to pay pre-judgment interests where the damages for personal injury or death claims exceed HKD30,000. Otherwise, the court has discretion to decide whether to award interest. The usual practice is as follows:
In non-personal injury claims, the norm is to award pre-judgment interest at a commercial rate ie, prime rate plus 1% (as a starting point) unless evidence can be shown to differ from the norm.
Post-judgment interest accrues from the date of judgment and carries a simple interest at such rate as the court may order, or in the absence of such an order, at the rate fixed by the Chief Justice from time to time. The court would generally adopt the judgment rate which is revised from time to time in absence of special circumstances.
Statutory Limits to the Award of Interest
Interest in respect of a debt is not awarded for a period during which, for whatever reason, interest on the debt already runs. In personal injury cases, a scale is provided to limit the available interest. In other cases, the judgment rate would determine the interest available.
The following means are available for enforcement of domestic judgments:
There are three mechanisms for recognition and enforcement of foreign judgments in Hong Kong:
To be recognised the foreign judgment should be for a fixed sum of money, should be final and conclusive on the merits of the case, should not be wholly satisfied, should be made by a court with jurisdiction and should not be the exercise of sovereign functions of a foreign state or be against public policy.
Once the judgment is recognised under any of the above mechanisms, it can be enforced as a Hong Kong judgment.
The hierarchy of the court structure has been discussed at 1.1 General Characteristics of Legal System.
The civil appeal structure in Hong Kong is governed by statute and can be divided as follows:
Application for judicial review can only be made with the leave of the court before the Court of First Instance. If the decision to which the application relates is quashed by the CFI, it would remit the matter to the court, tribunal or authority concerned, with a direction to reconsider it and reach a decision in accordance with the findings of the Court of First Instance.
Review of Interlocutory Decisions
The CFI has no power to review interlocutory decisions and appeal is the only recourse.
The District Court may on sufficient cause being shown review the interlocutory order made at or before trial in connection with which the application was made.
Appeals can be made either as a matter or right or with the leave of the court, as determined by statute.
Appeal from the decision of the Master is generally as of right.
As a general rule, the following decisions require leave:
An application for leave to appeal should be made to the judge or master of the respective court who gave that decision.
The test for leave to appeal (except to the CFA) is stipulated in section 14AA(4) of the High Court Ordinance, which provides that leave to appeal shall not be granted unless the appeal has a reasonable prospect of success, or there is some other reason in the interests of justice why the appeal should be heard.
Where appeal is a matter of right, the appellant should serve a notice of appeal on the respondent and the court below within 28 days of the decision. Where leave is required, an application for leave should be made to the Judge handing down the decision within 14 days of the decision, failing which to the Court of Appeal.
Leave to appeal to the Court of Appeal must be made by summons. The application must be supported by a statement of the reasons why leave should be granted, accompanied by a bundle with draft grounds of appeal.
In the case of appealing from the decision of the Court of Appeal, if leave to appeal is refused by the Court of Appeal, a further application can be made to the Court of Final Appeal within 28 days.
Appeal can be made on the following grounds:
The general rule is that there is a rehearing of the first instance decision unless when there are statutory exceptions. Rehearing does not imply a fresh trial but a consideration of the entire evidence and the trial.
The leave of the court is required to raise for the first time in appeal, new points which were not considered in the court below. Fresh evidence can be adduced on appeal if it could not have been procured at trial with reasonable diligence, if it could crucially impact the outcome if considered and on the understanding that it must not be inherently improbable.
While granting the leave to appeal, the court may restrict the grounds of appeal. The grant of leave to appeal against an interlocutory decision to the Court of Appeal may be restricted to a "a particular issue arising out of the interlocutory judgment or order".
Further, leave to appeal may also be subjected to conditions for securing just, expeditious and economical disposal of the appeal. The conditions may include security for costs, a timetable to be followed by the parties to avoid delay, and/or include the grant of a stay of the order pending the appeal.
An appellate court has the power to seek further evidence on question of fact, to draw inferences of fact, to affirm, vary or discharge the decision of the court from which the appeal lies or may remit the matter with its opinion to that court, or may make such other order in the matter as it thinks fit, and to order a fresh trial.
As a general rule, the losing party has to pay for the costs of the winning party. If the amount is not agreed, it is decided by a taxation of costs by a taxing master.
The taxation of costs is usually on one of the following bases. On a party and party basis, the usual basis of costs where all costs that were necessary and proper for enforcing or defending the rights of the party whose costs are being taxed, are awarded, on an indemnity basis, all costs are allowed, except when they are unreasonable, and on a trustee basis, a trustee is entitled to be paid out of the fund it holds. No costs would be disallowed unless it is contrary to the duties of the trustee.
Regarding appeal or review, the award of costs can be challenged in appeal. If the procedure for taxation of costs has taken place, a dissatisfied party may apply for review of the costs by the taxing master or to the judge for an order.
The court has discretion and full power to determine by whom and to what extent the costs are to be paid. Conventionally, costs follow the event. However, the court has the discretion to depart from the general rule. The court tends to consider the following matters while exercising discretion:
Simple interest is levied on costs, being a form of judgment debt. The rate of interest is either that ordered by the court or the rate fixed by the Chief Justice. The rate of interest may vary for different periods. Interest on costs runs from the date of the order as to costs.
If the receiving party fails to do better than the sanctioned payment, such party may be ordered to pay costs of taxation on an indemnity basis and the rate of interest on costs could be up to 10% above the judgment rate.
If a party does better than the sanctioned offer, then the paying party may be ordered to pay interest on the whole of the allowed costs at a rate not exceeding 10% above judgment rate.
Alternative Dispute Resolution (ADR) is highly promoted in Hong Kong. ADR is viewed as a flexible, time and cost-effective way to enable parties to resolve disputes. The popularity of ADR is growing rapidly by way of statutes, practice directions and the approach adopted by the courts.
Arbitration and mediation are the most popular forms of ADR. The Arbitration Ordinance and the Mediation Ordinance provide for the regulatory frameworks in the respective areas. Hybrid approaches of arb-med are also adopted.
ADR is viewed as a voluntary mechanism rather than compulsory, though it is strongly encouraged. If there is a valid arbitration agreement between parties, they are bound by the same.
The Practice Direction 31 on Mediation aims to facilitate voluntary settlement of disputes. In every civil claim commenced by a writ of summons, parties are required to file a mediation certificate indicating its willing to mediate.
The failure to reach a settlement does not adversely affect court proceedings. However, an unreasonable refusal to make an attempt to participate in mediation may lead to cost sanctions irrespective of the outcome in ligation.
Hong Kong is an international hub for ad-hoc and institutional arbitrations given the pro-arbitration outlook of courts. The arbitration institutions in Hong Kong receive tremendous support making Hong Kong an attractive seat for arbitration. As a recent development, there is an exclusive arrangement with Mainland China, whereby interim measures can be obtained in China in support of institutional arbitral proceedings seated in Hong Kong prior to the issuance of the award.
The mediation institutions in Hong Kong play an important role in the publicity of mediation and training of mediators. The system of accredited panel of mediators enables parties to appoint specialised and qualified persons.
The law on arbitration in Hong Kong is governed by the Arbitration Ordinance (Cap. 609). It incorporates a unified regime for domestic and international arbitrations. The Ordinance adopts the UNCITRAL Model Law in its entirety with modifications and supplements. Party autonomy is a key feature and courts can interfere in the dispute only where expressly provided in the Ordinance.
Some features of the Arbitration Ordinance are that the competence-competence doctrine of the Model law is further expanded by listing out matters where the tribunal can rule on its competence. Further, if the tribunal decides that it lacks the jurisdiction, such decision is not subject to appeal; the Arbitration Ordinance contains provisions for appointment of "emergency arbitrator" before the constitution of the arbitral tribunal for emergency relief in or outside Hong Kong. This order is enforceable as a court order with the leave of the court.
Further to this, the Ordinance has "med-arb" provisions. Parties are enabled to appoint the arbitrator as the mediator as well. This is a progressive step for mediation.
Moreover, confidentiality is secured with the provision on closed court proceedings and amendments have been made to allow third-party funding in arbitration.
The Ordinance provides four regimes for recognition and enforcement of awards:
Awards include interim award and subject to the leave of the court, they are enforceable as an order of court.
The general principle is that matters that are enforceable against the world at large or administrative matters, are excluded from arbitration. This includes criminal proceedings, divorce proceedings and custody disputes, competition and anti-trust disputes, winding-up orders and matters such as tax which are reserved for state determination.
By way of a recent amendment, disputes over intellectual property is made arbitrable and such awards are enforceable.
The Arbitration Ordinance adopts the exhaustive list of the Model law and the burden of proof lies on the party seeking to set aside. An application to the court of First Instance is to be made on any of the following grounds:
Award may also be set aside by the court on finding that:
Additionally, under Schedule 2 of the Arbitration Ordinance challenges can also be made on the grounds of serious irregularity and on questions of law. Schedule 2 would be applicable if parties opt into these provisions.
Apart from the specific grounds of challenge, an award may also be set aside if the application to challenge an arbitrator is upheld by the court.
Apart from exceptional circumstances, the court imposes indemnity costs on nsuccessful applicants for setting aside. Thus, maintaining the finality and integrity of the arbitral process.
Hong Kong is a pro-enforcement jurisdiction with a unified system for domestic and foreign arbitration. Subject to the leave of the court, the awards are enforceable in the same manner as a court judgment. There are two stages in the enforcement of an award.
In the recognition stage, the court decides whether leave should be granted to enter into judgment in terms of the award. This is a purely mechanistic stage.
In the execution stage, the application for enforcement may be made ex parte but a court may direct the issuance of an originating summons. At this stage, the court hears the difficulties in enforcing the award. The grounds for the challenges to enforcement overlap with the grounds for setting aside an award. However, the court may refuse to enforce if it thinks it is just not to do so.
The grounds for refusal to enforce the non-Convention awards are largely similar to grounds of setting aside and the grounds of refusal to enforce Convention awards, Mainland awards and Macao awards.
There is no requirement for reciprocity between Hong Kong and another foreign jurisdiction for an award to be enforceable.
The New York Convention Awards, Mainland and Macao awards are enforced under similar, but three distinct regimes.