Hong Kong has always stood tall in the region due to its freedom of expression and the rule of law. As a result of Hong Kong’s role as an international trading and shipping hub, participants in the shipping industry have recourse to a range of legal channels through which to seek resolution of claims and disputes. This article provides an overview of litigation, arbitration and other forms of mediation available in the territory.
Hong Kong has long had an Admiralty Court to deal with claims and disputes of a maritime nature. At the head of the Admiralty Court is a dedicated Admiralty Judge a situation that is not shared in other jurisdictions such as the US.
Shipping disputes frequently involve parties from different countries, Hong Kong maritime law is based upon English maritime law, which is widely agreed to be the best body of law for international contracts.
Sadly, many companies find at some stage they will have to resort to litigation. But on a positive note Hong Kong is home to many of the best international maritime legal practices: For a comprehensive list of international Maritime firms with offices in Hong Kong please refer to the directory on this website.
Following the lobbying of prominent, local business and professional people, the Hong Kong International Arbitration Centre was established in 1985. In the intervening years it has come to be compared favourably with the other prominent international arbitration centres in London and New York.
The purpose of the HKIAC is to provide an alternative method for resolving disputes effectively, efficiently and at reduced costs. As such its doors are open to all businesses and has been found to be particularly effective in helping to resolve disputes that frequently arise out of contracted shipping activities i.e. charterparty disputes.
Through the increasing acceptance of the concept of alternative dispute resolution, the HKIAC has grown both in stature and physical size. In October 2012 the HKIAC moved to new premises in Exchange Square at the heart of the territory’s business district. The new site is, at 13,000 sq ft, nearly double the space afforded to the first centre. More importantly HKIAC now boasts around 400 arbitrators of whom about 40 are experienced maritime arbitrators with impeccable experience of the subject.
The Hong Kong Maritime Arbitration Group
The Hong Kong Maritime Arbitration Group was established within the HKIAC specifically to cater for the needs of Hong Kong’s rich shipping community. Specifically the HKMAG has been instrumental in encouraging those involved in the shipping industry to become arbitrators.
In line with practices and procedures conducted by the London Maritime Arbitrators Association, the HKMAG successfully proposed to the HKIAC that it adopt documents-only procedures and small claims procedures.
Under the small claims procedures, arbitrators’ fees are limited to HK$15,000, the HKIAC’s fees for appointment is HK$1,500 and recoverable costs are limited to HK$30,000. The application of a small claims procedure is realistically only applicable where neither the claim nor counterclaim exceeds US$50,000 (HK$387,500). In the case of larger claims the HKIAC administrative fees are HK$16,500 where claim amounts do not exceed HK$400,000. The upper limit is HK$292,580 for cases where claim amounts exceed HK$4m.
In addition to providing a fully equipped physical location where the parties and arbitrator can meet to consider the dispute, the HKIAC offers a selection of support services including, transcription, translation, video conferencing, document storage and catering where required.
For the uninitiated, HKIAC offers a free information service on alternative dispute resolution. For HKIAC contact details please go to the directory pages of this website.
A third way of resolving disputes is Mediation. Formal mediation procedures have become increasingly popular in recent years and it seems to resonate with a cultural proclivity in Asia to resolve disputes by non-confrontational means.
Among the more obvious advantages of mediation, are that it is relatively inexpensive when compared with the alternatives; the parties have the control of the outcome; and it is private and therefore a useful restraint on bad publicity. At its best mediation fosters good relations where cooperation, workable solutions and mutual gain are the end game.
But these advantages have to be weighed against some disadvantages: the success of mediation will always depend on the willingness of the parties to take part in and commit to the process.
It should also be taken into account that mediation is not an appropriate process where the dispute is centred on matters of law rather than on facts. As mediation does not call upon a formal discovery participants must be entirely honest and open about the relative strengths and weaknesses of their case, qualities that are not always found in parties in opposition.
Four institutions linked to mediation are:
- The HKIAC: to connect click: www.hkiac.org
- The Hong Kong Institute of Arbitrators: To connect click: www.hkiarb.org.hk
- The International Chamber of Commerce: To connect click: www.icchkcbc.org
- The East-Asia Branch of the Chartered Institute of Arbitrators: To connect click: www.ciarbasia.org
Address and contact details for all these institutions may also be found in the directory on this website.