Hong Kong: Third party funding for mediation delayed

Hong Kong has published its long-awaited Code of Practice for third party funders and announced that amendments to the Arbitration Ordinance, which permit funding of Hong Kong arbitrations, will come fully into force on 1 February 2019.   However, proposed amendments to the Mediation Ordinance (Cap. 620) regarding non-Hong Kong mediations, costs and disclosure of mediation communications have been deferred for further consultation.

The Department of Justice has announced that commencement of these New Mediation Ordinance provisions will be deferred to a future date following further deliberation at the Steering Committee on Mediation. The DoJ will continue to engage the mediation community and relevant shareholders, so that the New Mediation Ordinance provisions may be brought into operation as soon as practicable with the necessary code of practice to complement it.

Section 7A of the Mediation Ordinance remains in effect and therefore Hong Kong mediations can in theory be funded. No code of conduct is required. However, the deferral of the amendments regarding disclosure of mediation communications may present a practical road block. Given the tight confidentiality provisions under the Mediation Ordinance, disclosure of details to a funder would mean breaching the Mediation Ordinance. Only when the deferred amendment on disclosure is enacted would this become permissible. So, in practice, funding of mediations in Hong Kong may remain theoretical.

In contrast, mediation conducted under the Arbitration Ordinance is permitted and will be covered by the new code. However, there has been little mediation under the Arbitration Ordinance and we do not expect this to change. We will keep appraised of developments and update subscribers accordingly.

For more information, please contact Briana Young or Anita Phillips.