Jurisdiction - Hong Kong
Reports and Analysis
Hong Kong – An Insight Into International Arbitration And Litigation.

9 April, 2015

 

Legal News & Analysis – Asia Pacific – Hong Kong – Dispute Resolution

 

With the rise of cross-border litigation and an increase in demand for alternative dispute resolution (ADR) to resolve large and complex cases, businesses find themselves in greater need of attorneys who can thoughtfully navigate the murky waters of sophisticated, multinational disputes. We caught up with the International Arbitration and Litigation Group of Skadden, Arps, Slate, Meagher & Flom’s Hong Kong office. With leading lawyer Rory McAlpine at the helm, the team operates a robust no-nonsense practice, representing clients locally and on the international stage, in and outside of the courtroom. In discussing their practice, selecting the optimal dispute resolution vehicle for a client, how business’ can best protect themselves and what we can expect to see in 2015, here is what they had to say.


 

Dispute resolution has come to include more than traditional court room litigation, and as a result law firms are having to offer a more diverse dispute resolution practice.  What types of dispute resolution services does your practice offer?

 

We have broad experience in all the recognised forms of dispute resolution. The group currently advises on, and directly represents, clients in Hong Kong and international litigation. In addition, we have represented clients in arbitrations under virtually all of the major arbitration rules and in mediations.

 

Globally, litigation has been gradually giving way to alternative dispute resolution options as a way to first resolve parties’ disputes. What advantages does arbitration, mediation, adjudication and other forms of ADR have over litigation?

 

Alternative dispute resolution can offer a degree of flexibility that litigation does not. Parties have greater influence in driving the ADR procedure, and can agree to a process that accommodates their needs and the nature of the dispute. Basic, but important logistical considerations such as scheduling hearings and deadlines, determining where the hearings are located or allowing written submissions instead of oral hearings can be agreed to by the parties before and after proceedings have commenced. This flexibility can be used strategically to minimise costs and ensure the dispute resolution procedure is conducted efficiently.

 

Confidentiality is another primary benefit of ADR. Litigation involves court proceedings that are conducted in a public forum. By contrast, ADR proceedings are held in a private setting, and parties can agree to be contractually bound to keep confidential the existence and substance of the dispute, any evidence that emerges during the course of the proceeding and the eventual settlement or award.

 

ADR, also, is especially suitable for resolving international commercial disputes that involve cross-border transactions. Often these disputes benefit from professionals who have expertise in more than one legal tradition, and parties may select arbitrators, mediators and other adjudicators based on criteria such as sensitivity to different cultures or fluency in multiple languages. ADR provides an avenue for the resolution of disputes in a neutral forum that is not grounded in the jurisdiction or home state of either party. In the case of arbitration, the New York Convention, to which over 150 nations are parties, enables the winning party to enforce the arbitral award in a jurisdiction where the debtor’s assets are located. By contrast, it often is more difficult to enforce the judgments of a national court in a foreign jurisdiction.

 

Finally, another important benefit of ADR is the ability for parties to select arbitrators, mediators or adjudicators with the competencies suitable to the particular dispute. For instance, parties can specify credentials such as reputation, experience, availability and professional qualifications.

 

Despite these advantages, it nevertheless is important to examine each advantage carefully in the context of every individual transaction. For instance, although an arbitral tribunal has the ability to determine claims and defences summarily, in practice they are often less willing than a court to do so. Another disadvantage to ADR options such as mediation or conciliation is that its usefulness in resolving disputes often depends on the willingness of parties to compromise. In these circumstances, litigation may be the more appropriate forum to meet a party’s interests. 

 

As a practitioner, how would you advise your commercial clients entering into a new business contract to best manage potential disputes between the parties?

 

Parties to a commercial contract should give thought to a thoroughly negotiated dispute resolution clause. The clause should be tailored to the circumstances of their particular commercial relationship.

 

We recommend that parties seek professional legal advice and consider which ADR procedure would adequately protect their legal and commercial interests. For example, parties operating in certain industries may anticipate disputes that are highly technical in nature and, therefore, would benefit from an adjudicator with suitable technical expertise. In such a case, parties may consider including expert determination as a preferred dispute resolution mechanism. Alternatively, if parties are concerned about trade secrets and intellectual property, a forum such as arbitration or mediation, coupled with a suitably drafted confidentiality clause, may be advisable.

 

What changes can we expect to see in 2015 in dispute resolution and ADR that will have an impact on your practice?

 

It is expected that 2015 will see the publication of a Law Reform Commission committee report on third-party funding for arbitration in Hong Kong. Unlike other common law jurisdictions, Hong Kong continues to regard maintenance and champerty as criminal offences under local law, and thus third-party funding of litigation generally is not permitted. The law with respect to third-party funding of arbitration is, however, less clear, since it occurs in a private setting at the consent of the parties involved. It is hoped that the Law Reform Commission report will make recommendations for reform that clarify the position with respect to arbitration and allow parties with meritorious arbitration claims, but with limited financial resources, to use third-party funding to enable those claims to be successfully pursued.

 

Skadden 

 

For further information, please contact: 

 

Rory McAlpine, Partner, Skadden 

[email protected]

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