Mediation in Hong Kong: the Civil Justice Reforms two years on

Mediation has been a particular focus in Hong Kong over the last year. In April 2009 the Civil Justice Reform (CJR) was introduced, following the appointment by the Hong Kong Chief Justice of a Working Party to recommend improvements in access to justice, particularly in respect of the speed and cost of civil litigation. In part the CJR represented a 'cherry picking' of the aspects of the English Civil Procedure Rules of 1999 which were viewed as having been successful. In addition, there was a greater focus on the use of ADR in civil disputes and it was made explicit that not only would facilitation and encouragement of ADR be an aspect of the courts' case management powers, but that parties and their advisors would be expected to seriously consider using ADR to resolve their disputes. It was envisaged that judicial "encouragement" would, as in England and Wales, take the form of a stick as well as a carrot, the former in the shape of cost sanctions against parties who unreasonably refuse or fail genuinely to engage in or consider ADR.In practice, ADR has been little used in Hong Kong. For that reason, the Practice Direction on Mediation published as part of the CJR did not come into effect until 1 January 2010, to allow practitioners more time to become familiar with the mediation process.

In addition to introducing the possibility of adverse costs orders where there has been an unreasonable refusal to mediate, the Practice Direction introduced the requirement to file a Mediation Certificate at an early stage in litigation. In the Certificate, which must be signed by both the parties and their legal representatives, a party must confirm that it has been advised as to the use of mediation (including the relative costs benefits and possible sanctions for non-use), whether it has considered ADR, and if not, why not.

Now, one year on from the PD coming into effect, it is clear that, whilst the use of mediation by civil litigants has increased in Hong Kong, it remains in its relative infancy compared to more mature jurisdictions, both in levels of use and sophistication. Julian Copeman, a London-based disputes partner recently seconded to our Hong Kong office found that "while many cases are now being mediated, it is often the case that these are the first mediations undertaken, not just by the parties, but also by their legal advisors. There is a lot of interest, and as cases are successfully settled, litigators' confidence will increase."

The Hong Kong Law Society issued a circular in late 2010 stating that parties should not engage in unnecessary tactical manoeuvring by, for example, engaging in extensive correspondence contesting logistical issues, and reminded solicitors that they have a duty to advise clients in appropriate cases to engage in genuine attempts to settle through mediation. However, more positive trends are emerging and knowledge within both the practitioner and user community is increasing. In light of recent developments in this area Herbert Smith plans to host a client academy seminar on the subject in Hong Kong later in 2011.