Hong Kong’s legal system is based on a combination of the common law and statute. The legal process follows an adversarial system, and is conducted through both written submissions and oral argument.
The structure of Hong Kong’s court system comprises of:
Published judgments and writs of summons/originating summons are publicly accessible. Pleadings and other documents filed over the course of court proceedings are not publicly accessible, and can only be accessed with the court’s leave.
Court hearings are generally open to the public with some statutory exceptions. By reason of their nature, certain types of civil proceedings are not open to the public, including (among others):
Barristers have unlimited rights of audience in all courts, as do litigants in person, although a company is generally required to be legally represented before the court.
Solicitors have rights of audience in the District Court and Magistrates’ Courts and limited rights of audience in the High Court, but no such right in the Court of Final Appeal. However, solicitor advocates have higher rights of audience before the High Court and the Court of Final Appeal.
Foreign lawyers do not have any rights of audience in Hong Kong courts.
No legal representation is allowed in hearings before the Labour Tribunal and the Small Claims Tribunal.
Third-party funding for litigation is generally prohibited in Hong Kong as a tort and a criminal offence, save in exceptional areas as outlined in 2.2 Third-Party Funding: Lawsuits.
Third-party funding of litigation is only allowed in three exceptional areas:
Third-party litigation funding in practice is most commonly applicable to insolvency proceedings, in which the court may allow such funding arrangement if there is a legitimate commercial purpose for it.
However, third-party funding in arbitrations (including related court proceedings, see 13.1 Laws Regarding the Conduct of Arbitration) is allowed under the Arbitration Ordinance (Cap 609) (“AO”). The funded party must promptly disclose the existence of a written funding agreement, under which (among other things) the third-party funder will receive a financial benefit only if the arbitration is successful within the meaning of the funding agreement. The third-party funder need not have an interest in the arbitration other than under the funding agreement.
Third-party funding can be available for both the plaintiff and defendant, namely where the defendant has a counterclaim (and is therefore the plaintiff in counterclaim).
There is no minimum or maximum amount that a third-party funder can fund.
Subject to the funding arrangement as allowed by the court, a third-party funder may fund any and all legal expenses associated with pursuing the claim or defence.
Solicitors and barristers are both, pursuant to their respective conduct rules, prohibited from accepting any contingency fee arrangement when acting in contentious proceedings.
There is no time limit for a party to the litigation to seek third-party funding.
Hong Kong courts do not impose any rules regarding the parties’ pre-action conduct, although the courts have a general discretion to consider the parties’ pre-action conduct in costs determinations.
The only exception is a pre-action protocol set out under Practice Direction 18.1 in relation specifically to personal injury claims, where:
Non-compliance with such Pre-Action Protocol without good reason may lead to adverse costs consequences and/or sanctions and the exercise of the court’s power to stay proceedings.
The limitation periods in Hong Kong are prescribed in the Limitation Ordinance (Cap 347). Depending on the cause of action, the limitation periods generally vary from three to 12 years. Limitation periods for common causes of actions are as follows:
For actions based on fraud, where the right of action was deliberately concealed, or for relief from the consequences of a mistake, the limitation period would not begin to run until such fraud, concealment or mistake is discovered or could have been discovered with reasonable due diligence.
Hong Kong courts’ jurisdiction over a defendant can be conferred:
In the absence of the above, the court may nevertheless consider various factors to determine that Hong Kong is clearly the most appropriate and convenient forum for the proceedings against the defendant, even if it is a foreign defendant, see 3.5 Rules of Service.
Civil proceedings in Hong Kong are usually commenced by the filing and service of a writ of summons (where the dispute mainly relates to factual issues) or an originating summons (where the dispute mainly relates to points of law). Winding-up and bankruptcy proceedings are commenced by petition.
Writs, originating summons, petitions and pleadings generally may be amended at any stage of the proceedings with the court’s leave. Pleadings may be amended once, without the leave of the court, at any time before the close of pleadings.
The plaintiff is responsible for service of process papers, ie, the writ of summons, originating summons or petition (as the case may be).
Service within Hong Kong
If the defendant is an individual ordinarily domiciled in Hong Kong, the plaintiff may effect service personally on the defendant, alternatively by registered post, or by inserting the documents through the letterbox of the defendant’s usual or last known address.
If the defendant is a company incorporated in Hong Kong, service may be effected by leaving the documents at its registered office.
If service in the above manner is impracticable, the court may, on the plaintiff’s application, allow substituted service such as by way of newspaper advertisement, if the plaintiff can establish that the suggested mode of substituted service is likely to bring the proceedings to the defendant’s attention.
Service outside of Hong Kong
The court’s leave is required to serve process papers on a defendant out of the jurisdiction (including in Mainland China). The plaintiff is required to make an ex-parte application supported by an affidavit and satisfy the court that:
Once leave to serve out is granted, service must be effected in compliance with the local laws of the place of service.
Service in Mainland China
For effecting service on a party in Mainland China, the plaintiff must lodge with the Registry of the High Court of Hong Kong:
The Registry will then send the documents to the relevant judicial authorities of the Mainland, which will arrange for service.
The defendant must file, within 14 days after service of writ or originating summons, an acknowledgement of service with a notice of its intention to defend the proceedings. Otherwise, the plaintiff is entitled to apply for default judgment to be entered against the defendant, where the claim is for liquidated sums or the recovery of land.
For such claims, default judgment may also be entered against a defendant who fails to file a defence within 28 days after the prescribed time for acknowledging service or service of the statement of claim is effected, whichever is later.
In claims for unliquidated sums, interlocutory judgment may be entered against a defendant who fails to respond to the proceedings in the above fashion, whilst the quantum of damages would still need to be subsequently assessed.
Only representative proceedings are permitted in Hong Kong, as opposed to class actions. Where numerous persons have the same interest, one or several representatives can be nominated to conduct the proceedings if the court is satisfied that they have common interest, common grievance, and the remedy sought is beneficial to all.
There is no requirement to provide clients with a cost estimate of the potential litigation.
Nevertheless, under the solicitors’ conduct rules, a solicitor should give an estimate of the likely costs upon a client’s request. Where an approximate estimate cannot be given, the solicitor should give their client a general forecast by indicating the calculation basis of their fees and keep the client informed about the costs.
It is possible to make interim applications before trial. Such applications are not limited to case management issues but can be made to obtain various remedies, including (among others) for:
The plaintiff can apply for a summary judgment on the ground that there is no triable issue in the action, ie, the defendant has no credible or believable defence. However, summary judgment is not applicable for claims of libel, slander, and actions based on an allegation of fraud, among others.
Application for summary judgment is made by summons supported by affidavit. Such application may be made after the statement of claim has been served and the defendant has given notice of intention to defend.
At any stage of the proceedings, a party may apply by summons supported by affidavit, or the court can order on its own motion, to strike out a case or parts of a pleading on the grounds that it:
See 3.6 Failure to Respond.
See 4.2 Early Judgment Applications.
In addition, the court may, at any stage of the proceedings, on a party’s application or of its own motion, determine any question of law or interpretation of any document relevant to the action where it appears to the court that such question is suitable for determination without a trial: such determination will dispose of the case or an issue therein.
A defendant may, upon filing an acknowledgement of service, apply to challenge the jurisdiction of the Hong Kong courts over the action in favour of another jurisdiction that is clearly more appropriate and convenient for trial of the action.
Parties may be joined in one action as plaintiffs or as defendants, with the court’s leave, where:
The court may, on application by the defendant, order the plaintiff to make a payment to court as security for the defendant’s costs of the action, commonly on the grounds that a foreign plaintiff who is ordinarily domiciled outside of the jurisdiction has no assets in Hong Kong.
In considering such application, the court may consider a range of factors including (i) the plaintiff’s prospects of success in the action (where strong prospects of success reduces the likelihood of the court ordering security); and (ii) whether the plaintiff is unable to provide security and thereby the plaintiff’s claim would be stifled if an order for security is made, although such stifling will not be readily inferred and the plaintiff must disclose detailed information of its available resources (or lack thereof) as well as its inability to raise funds from other resources.
Where the plaintiff is a company, its ordinary domicile is by reference to the location of its central management and control.
The court has a wide discretion in determining costs orders for interim applications. The general rule is that costs should follow the event, ie, the losing party should pay the costs of the winning party.
All sorts of costs orders may be made by the court. For instance, the court may order that the amount of costs to be paid be determined by the court in a separate taxation process, or be summarily assessed and order the same to be paid forthwith. The court may also order costs in the cause, whereby the costs of an interim application will be awarded to the party who is ultimately successful in the action.
The timeframe for the court to deal with an application/motion is subject to (i) the time taken by the parties for filing their respective affidavit evidence relevant to the application/motion; and (ii) when the hearing date for the application/motion will be, which, in turn, is subject to the diaries of the court and the parties’ legal representatives.
A party may request in writing with reasons to the Registrar of the High Court that the application/motion be dealt with on an urgent basis, for instance ex-parte applications for injunctive relief, including Mareva injunctions, ie, orders to restrain a defendant from dealing with its assets. The court may determine such applications on the same day as the application is made.
Discovery is a mandatory obligation of the parties in civil cases, and is a continuing obligation throughout the course of proceedings. Discovery is administered by the parties, who must produce documents (whether physical or electronic) in their possession, custody or power that are relevant to any matter in question in the action.
There are two types of discovery: automatic discovery and specific discovery.
The parties must, within 14 days after the close of pleadings (unless the court otherwise directs), file and serve a list (in a prescribed form) of the relevant documents in their possession, custody or power that they agree to produce, and those which they object to produce on stated grounds (such as the documents being privileged).
The documents agreed to be produced may be inspected, and copies of such documents may be taken.
If satisfied that discovery is necessary for disposing fairly of the cause or matter or for saving costs, the court may, on application by a party, order the other party to produce certain documents or classes of documents as identified by the applicant and which are relevant to any matter in question in the action.
Scope of Discovery
The scope of discovery is very broad. The parties must produce all documents that (i) are relevant to the matter in question regardless of whether the documents will advance or damage their own case; or (ii) will fairly lead to a train of inquiry which may have either of the above consequences.
Any documents referred to in pleadings, affidavits, witness statements or expert reports shall be produced voluntarily or upon the other party serving a notice for production of such documents.
Presently, the parties’ discovery obligations are discharged by producing documents in hard copy, save only as to high-value commercial cases before the High Court involving at least 10,000 documents to be searched for the purposes of discovery. In such cases, the High Court introduced a pilot scheme for discovery and provision of electronically stored documents (Practice Direction SL1.2).
Disclosure Order against Third Parties to the Proceedings
The court may order discovery against a third party not named as a party to ongoing proceedings (Section 42 of the High Court Ordinance (Cap 4) (HCO) and Order 24, rule 7A of the RHC). The applicant for such order must show that the third party is likely to have in their possession, custody or power any documents which are relevant to an issue of that claim; "relevance" in this sense is limited to documents which affects a party’s case in the proceedings, excluding those which may merely lead to a train of inquiry.
Norwich Pharmacal Order
Under common law, the court may make a Norwich Pharmacal order for discovery against a third party, an innocent party caught up in the tortious or wrongful acts of others and facilitated the wrongdoing. The scope of such discovery is limited to documents and information necessary for the purpose of obtaining the identity of the wrongdoers (and thereby commence proceedings against them) or tracing the passage of funds or other assets (for facilitating the preservation of assets).
A Bankers Trust order is a kind of Norwich Pharmacal order made upon banks holding or having dealt with the funds or other assets over which the applicant claims a proprietary interest, requiring banks to disclose information on the accounts of the wrongdoers third-party accounts, including account opening information and bank statements.
The applicant must be able to establish that:
Order for Bankers’ Records
A party to ongoing proceedings may also apply under Section 21 of the Evidence Ordinance (Cap 8) for an order to inspect and take copies of entries in a banker’s records, such as account information, for the purpose of such proceedings (including the tracing and preservation of assets). Such banker’s records could even be information on accounts of third parties, if it can be established that the account has a close connection with the wrongdoer or the subject matter of the proceedings.
See 5.1 Discovery and Civil Cases.
This is not applicable in Hong Kong.
Legal privilege is a recognised ground for protecting documents from being disclosed in proceedings.
Legal advice privilege applies to communications between client and lawyer for the purpose of giving or receiving legal advice, regardless of whether litigation was contemplated or pending. Such privilege also attaches to internal confidential documents created by a company for the dominant purpose that it will be used for obtaining legal advice.
In the context of legal advice privilege, there is no distinction between external or in-house counsel, so long as the in-house lawyer was acting as a lawyer and giving legal advice within a relevant legal context.
Litigation privilege applies to communications between client and lawyer, or either of them and a third party, for the dominant purpose of giving or receiving legal advice in relation to, or for collecting evidence for, pending or contemplated litigation.
In addition to 5.5 Legal Privilege, documents may be protected from disclosure if they are:
Injunctive relief of a restrictive or mandatory nature may be awarded before trial if the court is satisfied that:
Mareva injunctions, ie, orders to restrain a defendant from dealing with its assets, may be made where the applicant can establish that:
Section 21M HCO
Under Section 21M HCO, an injunction order may be granted over assets held by a defendant in Hong Kong in aid of substantive proceedings that:
Accordingly, the court may make such order even though the dispute has no connection with Hong Kong but only that the defendant has assets in Hong Kong.
Section 45 AO
Under Section 45 AO, the court may grant an injunction in relation to arbitral proceedings which have been or are to be commenced in or outside Hong Kong; if outside Hong Kong, the arbitration must be capable of giving rise to an arbitral award enforceable in Hong Kong. The court may decline to grant such injunction if it considers it more appropriate for the arbitral tribunal to determine the interim measure application.
"Anti-suit" injunctions may be made under common law, Section 45 AO or Section 21L HCO, restraining a party from pursuing any foreign proceedings based on a jurisdiction agreement between the parties in favour of Hong Kong courts, or from pursuing local or foreign court proceedings based on an arbitration agreement in favour of arbitration in Hong Kong.
Anton Piller Orders
Anton Piller orders are used for the preservation of evidence in order to prevent their destruction. Such orders permit a party to enter the wrongdoer’s premises (but not forcibly) to search for and seize documents that are relevant to the infringement of the applicant’s rights. However, such orders are not granted lightly.
In case of urgency, injunctive relief can be obtained on the same day of the application, ie, upon the filing of the summons together with affidavit evidence in support and the draft order. It is possible to have such an urgent hearing within or after-hours before a duty judge.
Injunctive relief such as Mareva injunctions are usually obtained on an ex-parte basis where the case is one of urgency or secrecy, since prior notice to the respondent may prompt the respondent to take steps which may defeat the purpose of the application.
In an ex-parte application, the applicant must make a full and frank disclosure of all material matters relevant to the application, including matters which may adversely affect the merits thereof.
The injunction applicant (whether applying ex-parte or not) can be held liable for damages suffered by the respondent if the court later finds that the injunction ought not to have been granted in the first place.
Such liability likely arises from the applicant having provided an undertaking as to damages in such circumstance. Such undertaking is given to the court and is required to be given as part of the injunction application. If the court directs, the injunction applicant may also be required to give security to fortify such undertaking.
Mareva injunctions may be granted to restrain the respondent from dealing with their assets worldwide, where it can be shown that the respondent has assets outside Hong Kong and has insufficient assets within Hong Kong to meet the judgment.
The court may invoke its Chabra jurisdiction under common law to make orders for freezing the assets of a third party if it is satisfied that there is good reason to suppose (ie, a good arguable case) that the third party’s assets are in truth the assets of the defendant, for instance if they are held as nominee or trustee for the defendant as ultimate beneficial owner; this is often established by showing the substantial control the defendant has or is entitled to have over the third party’s assets.
A respondent failing to comply with the terms of an injunction may be liable for contempt of court and be subject to imprisonment, a fine or seizure of assets.
Trials in Hong Kong are conducted by oral arguments and witness/expert examinations. Written submissions may be submitted pre and post-hearing.
Interim or interlocutory applications are predominantly determined on affidavit evidence alone, ie, without witness/expert examination, and on written and oral arguments presented to the court.
The courts are empowered to actively manage the conduct of the parties and the timetable leading up to trial.
Within 28 days after close of pleadings, parties must file a Timetabling Questionnaire informing the court their past conduct and intended future conduct in the case. The parties may thereafter agree on directions and timetable for future conduct up to a subsequent Case Management Conference (CMC), or request a case management summons for the court to give such directions.
Before the CMC, the parties must file a Listing Questionnaire setting out their intend future conduct (if any) up to trial, and the court will give directions for the same at the CMC, including directions for a pre-trial review (PTR).
At the PTR, the court will give further directions for setting down the case for trial.
Jury trials are not available in civil cases, save for limited circumstances such as defamation claims.
Any evidence, whether direct, circumstantial or hearsay, is admissible at trial so long as it is:
Expert testimony is permitted at trial. Parties can introduce expert testimony upon establishing that the expert is qualified in a relevant area to an issue in dispute and the expert evidence would assist in the court’s determination of that issue. The court may order the parties to appoint a single joint expert.
See 1.3 Court Filings and Proceedings.
During a hearing or trial, whilst a judge may intervene and ask questions addressed to counsel and/or witnesses, the hearing is largely driven by the parties’ legal representatives pursuant to adversarial nature of Hong Kong’s legal process (see 1.1 General Characteristics of the Legal System).
Judgment or decisions are usually reserved to a later late after trial or the hearing, and will be reduced to writing with reasons. Decisions on simple interim or interlocutory applications may be given at the hearing, with or without a reasoned written decision.
It generally takes at least one year from commencement of proceedings to trial for commercial disputes. The length of trial depends on the complexity of the case and the number of witnesses to be examined, whilst the timeframe for the entire proceedings depend also on the parties’ conduct (eg, the number of interlocutory applications made) and the court’s availability for hearings and trial.
Generally, court approval is not required to settle an action, save for limited circumstances such as where:
Terms of the parties’ settlement agreement would generally remain confidential if such terms are set out in a separate agreement.
If such terms are set out in a Consent Order, the order (and thus the settlement terms) is publicly accessible.
The parties may also choose to suspend the proceedings save for the purpose of enforcing the terms of settlement, in which case the parties would enter into a Tomlin Order and the settlement terms would be set out in a schedule appended to the order; only the order itself, and not the schedule, would be publicly accessible.
Settlement agreements may be enforced as a contract by way of civil action, ie, a party may be sued for breach of a settlement agreement, and a judgment of such action may then be enforced by applicable mechanisms set out in 9.4 Enforcement Mechanisms of a Domestic Judgment.
A settlement agreement, as a contract, may be set aside by the court if it is satisfied that there are vitiating factors such as mistake, misrepresentation, undue influence, duress, fraud, incapacity or illegality.
A wide range of remedies are available to, and may be sought by, a litigant including (among others):
In civil actions, a damages award is compensatory by nature, ie, to compensate the plaintiff’s direct or consequential loss suffered.
Punitive damages (ie, exemplary damages), which are intended to punish rather than to compensate, are rarely granted and are only available in extreme cases of outrageous conduct by the wrongdoer such that compensatory damages are inadequate.
Aggravated damages may be awarded to compensate for additional injury to the plaintiff’s feelings, and are thus unavailable to corporate plaintiffs.
There is no rule limiting the maximum damages, but the aggrieved party is obliged to mitigate their loss. Where liquidated damages are imposed as a term in a contract, the enforceability of such term depends on whether:
Under Section 48 HCO, the court may award pre-judgment interest for recovery of debt or damages, at a rate of simple interest as the court thinks fit (eg, at a rate of 1% above the prime rate, or at a rate as agreed between the parties by contract), from the date of breach until the date of judgment.
Under Section 49 HCO, post-judgment interest accrues from the date of the judgment, at a rate of simple interest as the court thinks fit, and the court would usually adopt the "judgment rate" as determined by the chief justice from time to time, which is currently 8% per annum.
The following common mechanisms are available for the enforcement of a domestic judgment:
Foreign judgments may be enforced under:
A foreign judgment is registrable under the FJREO, if the foreign judgment:
A registration application under the FJREO must be made within six years of the date of the foreign judgment, supported by an affidavit which must provide evidence and particulars in satisfaction of the requirements stated above.
A judgment rendered by designated courts in Mainland China are registrable under the MJREO, if the Mainland judgment:
A registration application under the MJREO must be made within two years from the date from which the Mainland judgment take effect, supported by an affidavit which must provide evidence and particulars in satisfaction of the requirements stated above.
A foreign judgment for which neither the FJREO nor MJREO applies can be recognised at common law, if the foreign judgment is:
The judgment creditor will need to commence fresh proceedings by way of writ of summons before the High Court, with the enforcement of the foreign judgment being the cause of action, which would not require the underlying merits on which the foreign judgment is based to be revisited.
Once a foreign judgment is registered or recognised pursuant to the above, it may be enforced in the same way as a Hong Kong judgment.
See 1.2 Court System.
In addition, a party may apply for judicial review to the Court of First Instance (CFI) for the review of decisions made by various government/statutory authorities, tribunals and inferior courts. The review pertains to the way in which a decision was made, for instance if the decision-maker:
Leave from the CFI is required for appealing against decisions of certain tribunals before the CFI. The appellant may file an application for leave to appeal within the time limit specified in the respective ordinances. A hearing will be fixed before a judge of the CFI, and the refusal of the judge to grant leave to appeal is final.
Appeals against decisions made by a master of the High Court or District Court may be made as of right (ie, without first requiring leave to appeal) to a judge of the respective court.
Court of Appeal (CA)
Leave is required for appealing against judgments of the District Court or Lands Tribunal before the CA. The application for leave should be made within 28 days (or within 14 days for interlocutory judgments) of the date of judgment, and made firstly to the District Court judge who rendered the judgment. If leave is refused, the appellant may then apply, within 14 days from the date of refusal, to the CA for leave to appeal.
Appeals against judgments of the CFI or Competition Tribunal before the CA may be made as of right, save where the judgment pertains to an interlocutory matter or costs, in which case an application for leave should be made within 14 days of the judgment to the judge who rendered the judgment, and if leave is refused, the appellant may then apply, within 14 days from the date of refusal, to the CA for leave to appeal.
Where an appeal before the CA may be made as of right, the appellant should file and serve a notice of appeal within 28 days of the date of judgment.
Applications for Leave to Appeal
Applications for leave to appeal must be made, pursuant to Section 14AA(4) HCO, by summons and supported by a statement setting out the reasons why leave should be granted; if the application is filed out of time, the statement should also set out the reasons why the application was not made within time. The application should also be accompanied by a draft grounds of appeal, and written skeleton arguments in support of leave.
Leave will be granted if the court is satisfied that (i) the appeal has a reasonable prospect of success; or (ii) there is some other reason in the interests of justice why the appeal should be heard.
If leave is granted, the appellant should file and serve a notice of appeal within seven days of the grant of leave.
Court of Final Appeal (CFA)
Appeals against judgments of the CA and CFI may be heard by the CFA. However, such appeals are subject to leave being firstly granted by the CA or the CFA, and such leave will only be granted if, in the opinion of either court, the question involved in the appeal is one which, because of its general or public importance, or otherwise, ought to be submitted to the CFA for decision.
Application for leave to appeal to the CFA must be filed within 28 days from the date of the judgment to be appealed from. If such application was made to the CA and the CA refuses to grant leave, the appellant may further apply for such leave from the CFA within 28 days from the date of refusal.
See 10.2 Rules Concerning Appeals of Judgments.
Parties may appeal against a judgment/decision to challenge:
Generally, an appeal is not a re-hearing in the sense of a fresh trial, but rather a review of the judgment being appealed and the evidence relevant to the grounds of appeal (which could comprise of all evidence that were before the court/tribunal below). An exception is where appeals are made against decisions of a master of the High Court or District Court, for which the judge of the respective court will hear all of the evidence afresh in a re-hearing.
In limited circumstances, fresh evidence may be allowed to be adduced on appeal where the party seeking to adduce such evidence can satisfy the "Ladd v Marshall test" and establish that the fresh evidence:
The court, in considering the grant of leave to appeal, may:
After hearing an appeal, the appellate court may allow or dismiss the appeal, as well as grant appropriate relief and costs orders.
Generally, the court will order the losing party in an action to pay the winning party’s costs incurred in the action, which may include fees of solicitors, barristers and expert witnesses, court fees, copying charges and other expenses.
Absent of the parties agreeing on the amount of costs to be paid, the amount of costs will be assessed by the court (ie, by a taxing master) in a separate taxation process. The taxing master will adopt a "broad-brush" approach in the exercise of his discretion to determine a reasonable amount of costs payable under a costs order, on the basis of (among other things) the standard allowable hourly rates for solicitors’ fees as approved and updated by the court from time to time.
The taxing process is adversarial in nature, where the receiving party of the costs will submit a bill of costs, which the paying party may challenge by submitting a list of objections to the bill, and there will usually be a hearing before the taxing master where the parties may argue items within the bill.
Whilst a taxing master’s assessment of the amount of costs to be paid may be appealed, the court will rarely interfere with the exercise of discretion in such costs assessments, save where the exercise of discretion was clearly wrong as a matter of law or principle.
The court may consider a wide range of factors when awarding costs, including (among others):
Unless stipulated otherwise, simple interest on costs is awarded, at the "judgment rate" as determined by the chief justice from time to time (which is currently 8% per annum), from the date of the costs order.
Mediation is a popular and, by now, an established form of alternative dispute resolution (ADR) in Hong Kong.
A regulatory framework for the conduct of mediation in Hong Kong, and protection of the confidentiality of mediation communications, is provided under the Mediation Ordinance (Cap 620).
The RHC requires the courts, as part of its active case management powers, to encourage parties to consider whether it is appropriate to attempt mediation. Under Practice Direction 31, legal representatives are also expected to advise their clients to consider the same, and the consequences of any unreasonable failure to engage in mediation.
The parties are also required under the RHC to stipulate, during the course of proceedings, whether they are willing to attempt mediation for settling the proceedings. Although mediation is not compulsory, a party’s unreasonable refusal to attempt mediation may lead to adverse costs consequences being imposed against the party by the court.
See 12.1 Views of Alternative Dispute Resolution within the Country.
The major institutions offering and promoting ADR in Hong Kong, including the Hong Kong International Arbitration Centre:
The legislation governing arbitration in Hong Kong is the AO, which is based upon the UNCITRAL Model Law.
Regarding the conduct of arbitrations, the AO:
Under the AO, arbitral awards made in domestic or foreign arbitrations are enforceable as a judgment of the High Court, with the court’s leave, and the award debtor may apply to court to set aside such leave (see 13.3 Circumstances to Challenge an Arbitral Award).
Emergency relief granted by an emergency arbitrator, whether in or outside Hong Kong, are also enforceable as an order of the High Court with the court’s leave.
Certain matters may not be referred to arbitration, such as:
Under Section 81 AO, the court may only set aside an arbitral award on limited and exclusive grounds, as follows:
All of such grounds relate to the structural integrity of the arbitral proceedings, or the procedural fairness in the arbitral process. Consistent with the court’s strong pro-enforcement bias, the party seeking to set aside the award must show a real risk of prejudice and that his rights have been violated in a material way, and the conduct complained of must be serious, even egregious, so as to have undermined due process. The court is not concerned with the merits of the underlying arbitration.
The award debtor may also apply to set aside the court’s grant to leave to enforce the award, on substantially similar grounds as those set out above.
Under Section 34 AO, a party may apply to the court to hear an appeal against an arbitral tribunal’s ruling that it has jurisdiction, and the court will conduct a re-hearing and determine the matter afresh, including the consideration of any fresh evidence.
The AO provides a simplified procedure for enforcement of domestic and foreign arbitral awards, as consistent with the object of the AO to facilitate the fair and speedy resolution of disputes by arbitration.
The applicant for enforcement would make an ex-parte application to court for leave to enforce the award, supported by an affidavit which will include:
Since this is an ex-parte application, the applicant has a duty to make full and frank disclosure of points which may be adverse to the grant of leave; failure to make full and frank disclosure may result in the ultimate refusal of leave.
The court applies a presumption that leave to enforce should be permitted, and generally will only refuse leave where there are real grounds for doubting the validity of the award. The court’s aim is to be "as mechanistic as possible" with respect of enforcement of arbitral awards and treat it as "almost a matter of administrative procedure".
The order granting leave to enforce the award must be served on the award debtor by the usual modes of service under the RHC. Upon such service being effected, the award debtor will have 14 days to apply to court for setting aside the order.
Awaiting Enactment of a New Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of Hong Kong and Mainland China (the “New Arrangement”)
Whilst the New Arrangement was signed in January 2019 between the Supreme People’s Court and the HKSAR Government, it has not yet been enacted into law in Hong Kong, such that the previous similar arrangement from 2006 (enacted as the MJREO, see 9.5 Enforcement of a Judgment from a Foreign Country) remains in force.
Whilst only money judgments on disputes arising from commercial contracts may be enforced under the MJREO, the New Arrangement (once enacted into law) allows both monetary and non-monetary judgments (eg, an award of property, or an order for specific performance) to be enforced. That said, the New Arrangement does not cover judgments from certain types of matters, such as:
The New Arrangement (once enacted into law) will also relax the requirement under the MJREO that the Mainland judgment must only relate to a commercial contract which designates either Hong Kong or the Mainland courts as the exclusive jurisdiction for resolving such disputes. The New Arrangement only requires some connection between the place where the Mainland judgment was rendered and the defendant (eg, the defendant’s place of residence or business) or the dispute itself (such as the place of performance of the contract, or where the infringing act was committed).
Electronic Filing of Court Documents Soon to Come
In July 2020, the Court Proceedings (Electronic Technology) Bill (the “Bill”) was passed before the Legislative Council. However, there is no information as yet on when the Bill will become law.
The Bill provides for the implementation of an integrated court case management system where (among other things) court documents may, if the parties choose, be filed or served electronically through the use of electronic signatures.
Case Settlement Conference (CSC) Pilot Scheme
The CSC Pilot Scheme will be launched in January 2021 at the District Court. The CSC Pilot Scheme, which will form a part of the requisite procedure in civil proceedings, introduces the concept of assisted settlement as part of the court’s active case management powers.
At a CSC (ie, a hearing before a CSC master), the court will attempt to narrow down the disputed issues in the proceedings, as well as review any settlement negotiations that may be taking place. The CSC is intended to be a platform for parties to engage in communications for the purpose of achieving a settlement of the proceedings.
As a result of COVID-19, the Hong Kong courts implemented various precautionary measures to manage health risks, most notably a period during which the courts adjourned all court proceedings (known as the General Adjournment Period, which lasted from late-January to early-May 2020), save for urgent and essential hearings and/or matters. This caused further backlog to the courts’ already saturated diaries.
Consequently, the courts issued guidance notes on the use of remote hearings for civil business, such as hearings for interlocutory applications and appeals at various levels of court which are determined without oral testimonies from witnesses, as well as trials or parts thereof. Parties may apply for a remote hearing to be held, or the courts may on its own volition decide as to which hearings will be held remotely.
In addition, the courts also expanded its use of telephone hearings, particularly in respect of short hearings and for giving routine directions to the parties.
The HKSAR government has also launched a COVID-19 Online Dispute Resolution Scheme, providing small-to-medium sized enterprises in particular with speedy and cost-effective means to resolve disputes, where the claim amount is below HKD500,000 arising directly or indirectly from the COVID-19 outbreak, through a mechanism where the parties will only pay a HKD200 registration fee and:
No legislation has been passed, or orders issued, to suspend the operation of limitation periods as a consequence of COVID-19.