Hong Kong's arbitration law expressly provides for arb-med/med-arb

Hong Kong's Arbitration Ordinance came into force on 1 June 2011.  One of its enhanced features is that, provided the parties consent in writing, an arbitrator sitting in Hong Kong is permitted to mediate a dispute.  In those circumstances, the arbitral proceedings will be stayed pending the mediation.  In addition, the legislation expressly prevents a party from challenging an arbitrator solely because they have engaged in mediation proceedings.

However, in the event that the mediation fails, the Ordinance requires an arbitrator to disclose to all parties any confidential information learned during the mediation which he or she considers to be "material" to the arbitration.  This provision may well serve to discourage parties from engaging in frank and open exchanges during a mediation, in turn reducing its chances of success.  Practitioners would need to advise their clients of this disclosure obligation under Hong Kong's arbitration law, and to deal with any concerns that are likely to arise as a result.

Notwithstanding the particular nuances of the arb-med regime, the Ordinance is in line with the spirit of Hong Kong's Civil Justice Reform in actively promoting mediation as well as global trends towards ADR.  (According to Hong Kong's amended civil procedure rules, a litigant who fails to engage in mediation without reasonable justification, faces potential adverse cost consequences.)

Interestingly, however, the Hong Kong Mediation Council was opposed to retaining the arb-med provisions in the Ordinance.  The Council argued that they were not consistent with the traditional practice of mediation in Hong Kong, which generally favours a facilitative approach.  The extent to which the provisions will be adopted in practice is debatable.  However, since the regime appears to militate against interest-based, facilitative mediation by requiring the disclosure of material confidential information, the practice of arb-med in Hong Kong is likely to develop (if at all) in the direction of the evaluative style.

A version of this article originally appeared in the September 2012 issue of the Newsletter of the Mediation Committee of the Legal Practice Division of the International Bar Association, Vol 8 No 1, published by the International Bar Association, London, UK. © International Bar Association.