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Dispute Resolution in Hong Kong

In Hong Kong, there are a variety of ways to resolve disputes, and the HKIAC is available to assist parties in choosing the best method to resolve their disputes. Some of the options are described below.

The most common form of dispute resolution is negotiation. By this means alone, nearly all disputes are solved. If negotiations fail, it is necessary to seek the assistance of a neutral third party or several neutral third parties to facilitate a solution.

Conciliation and Mediation are two terms which are frequently used interchangeably.  Together, Conciliation and Mediation are referred to as Mediation. Both involve the appointment of a third party to help disputing parties reach a settlement.  The mediator is not given any power to impose a settlement. His/Her role is to try to break any impasse.  In commercial disputes, an impasse most often arises from either a lack of trust in the integrity of the other party, or a genuine good faith difference of opinion on the facts underlying the dispute.  The probable outcome of the case were it to go to court may also cause an impasse in commercial disputes.  The mediator may act as a shuttle diplomat, or one who acts as a channel for communication between the two parties and help filter out the emotional elements to allow the parties to focus on their main objectives.  He/She will encourage the parties to reach an agreement during mediation so that the parties do not have one imposed upon them by an arbitrator or a judge.  Mediation has proven to be a very successful management tool for resolving difficult disputes and should always be considered before proceeding to arbitration or litigation. As well as being a tool to solve current disputes, mediation helps parties re-learn the basis of communication so that they can resolve future disputes on their own. This is particularly important in family disputes where invariably there are ongoing issues to be resolved e.g. arrangements for children.

For an arbitration to take place, the disputing parties must agree to take their dispute to arbitration. In practice, this agreement is often made before the dispute arises as companies will often include an arbitration clause.  By signing a contract with an arbitration clause, the parties are agreeing that their dispute will not be heard by a court, but will instead be heard by a private individual or a panel of several private individuals. If parties have agreed to arbitration, they will generally have to proceed with an arbitration rather than litigating since courts will normally force the parties to honour their agreement to arbitrate.

Arbitration is a legal process which results in an award being issued by the arbitrator or arbitrators. Arbitration awards are final and binding on the parties and can only be challenged in very exceptional circumstances. An award has a status very like a court judgment and is enforceable in a very similar manner. Arbitration awards made in Hong Kong are enforceable through the courts of most of the world's trading nations.

In the absence of an arbitration agreement or other consensual means of dispute resolution, the parties may commence proceedings in the courts. Litigation in Hong Kong courts is handled very competently. The decision of the Court of First Instance is not, however, final as an aggrieved party has an automatic right of appeal to the Court of Appeal and, if the amount in dispute exceeds HK$1,000,000, they have an automatic right of appeal from the Court of Appeal to the Hong Kong Court of Final Appeal.