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Revisiting the issue of enforceability of mediation agreements in Hong Kong

Abstract

Introduction

Currently, there is no statutory framework governing the enforceability of mediation agreements and case law on this matter has been inconsistent.

Materials and Methods

While the traditional reluctance to enforce mediation agreements still prevails, judges and commentators are increasingly acknowledging the fact that mediation agreements are enforceable if the terms of the agreements are certain. This issue is particularly relevant considering the rapid development of mediation in Hong Kong and the introduction of the forthcoming Mediation Ordinance.

Conclusion

This paper suggests that at the current stage, it is not appropriate to impose statutory provisions on this issue which should be a matter for judges to decide based on the facts of each case, applying contract law principles. This paper will also consider the Civil Justice Reform in Hong Kong and discuss the possible effects of the reform with particular focus on the enforceability of mediation agreements.

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Notes

  1. 1.

    Chen (2003), pp. 257–287.

  2. 2.

    Hong Kong Government, Chief Executive’s Policy Address 2007–08 at http://www.info.gov.hk.

  3. 3.

    Department of Justice, The Government of the Hong Kong Special Administrative Region, Report of the Working Group on Mediation (hereinafter “Working Group Report”), February 2010.

  4. 4.

    Hilmer (2010), p. 139. See also Parker (1992), p. 339.

  5. 5.

    Cheong (2004), p. 532.

  6. 6.

    Suter (2009), p. 28; Lee (1999), p. 231; Katz (1988) p. 583.

  7. 7.

    Courtney & Fairbairn Ltd v Tolaini Brothers (Hotels) Ltd [1975] 1 WLR 297; Walford v Miles [1992] 2 AC 128.

  8. 8.

    Cable & Wireless plc v IBM United Kingdom Ltd [2003] BLR 89 (QBD).

  9. 9.

    Cable & Wireless plc v IBM United Kingdom Ltd [2003] BLR89 at 92.

  10. 10.

    Cable & Wireless plv v IBM United Kingdom Ltd [2003] BLR89 at 96.

  11. 11.

    Lee (2003), p. 166; Cheong (2004), p. 534.

  12. 12.

    This point will be further discussed below.

  13. 13.

    Carrel (2003), p. 547.

  14. 14.

    Cheong (2004), p. 535.

  15. 15.

    Cheong (2004), p. 534; Mackie (2003), p. 349.

  16. 16.

    Cheong (2008), p. 202.

  17. 17.

    Lee (2003), p. 167.

  18. 18.

    Courtney & Fairbairn Ltd v Tolaini Brothers (Hotels) Ltd [1975] 1 WLR 297.

  19. 19.

    Walford v Miles [1992] 2 AC 128.

  20. 20.

    Coal Cliff Collieries Pty Limited v Sijehama Pty Limited (1991) 24 NSWLR 1; Laing O’Rourke v Transport Infrastructure [2007] NSWSC 723; Elizabeth Bay Developments Pty Ltd v Boral Building Services Pty Ltd (1995) 34 NSWLR 709.

  21. 21.

    [1992] 28 NSWLR 194.

  22. 22.

    Hooper Bailie Associated Ltd v Natcon Group Pty Ltd (1992) 28 NSWLR 194 at 209.

  23. 23.

    Aiton Australia Pty Ltd v Transfield Pty Ltd [1999] NSWSC 996 at 45.

  24. 24.

    (1995) 36 NSWLR 709.

  25. 25.

    [2000] VSC 233.

  26. 26.

    (2009) 74 NSWLR 618.

  27. 27.

    Courtney & Fairbairn Ltd v Tolaini Brothers (Hotels) Ltd [1975] 1 WLR 297.

  28. 28.

    Walford v Miles [1992] 2 AC 128.

  29. 29.

    O’Connor (2010), p. 177.

  30. 30.

    In re Estate of Ferdinand Marcos Human Rights Litigation, 94 F.3d 539(9th Cir. 1996); Lorch Inc. v Bessemer Hall Shopping Center Inc., 294 Ala. 17, 310 So.2d 872(1975); Livoti v Elston 52 A.D.2d 444, 384 N.Y.S.2d 484 (App.Div.1976).

  31. 31.

    Coben and Thompson (2006), p. 105.

  32. 32.

    No. 98-CV-4183(JG), 1998 WL 903495 (E.D.N.Y. Dec 4, 1998).

  33. 33.

    276 F.Supp.2d 891(M.D. Tenn. 2003).

  34. 34.

    9 U.S.C. §§ 1–16.

  35. 35.

    For a review on the enforcement of mediation agreements in the United States, see Schmitz (2006), p. 55; Tochtermann (2008), p. 685; Katz (2008), p. 183.

  36. 36.

    HIM Portland, LLC v Devito Builders, Inc., 317 F.3d 41, 44 (1st Cir. 2003); Kemiron Atlantic v Aguakem International, Inc., 290 F.3d 1287, 1291 (11th 2002).

  37. 37.

    [2003] BLR 89.

  38. 38.

    Lande (2008), p. 110.

  39. 39.

    Jones (2009), p. 197.

  40. 40.

    [2004] 3 HKLRD 1 (at first instance) and [2005] 3 HKLRD 723 (on appeal).

  41. 41.

    [2005] 3 HKLRD 723.

  42. 42.

    [2002] EWHC 2059.

  43. 43.

    (2003) HKCFI 568.

  44. 44.

    Lee (2007), p. 3; Alexander (2010), p. 286; Cheong (2008), p. 207.

  45. 45.

    Hilmer (2010), p. 139; Parker (1992), p. 339.

  46. 46.

    Wolski (2003), p. 1–2.

  47. 47.

    [2004] EWCA Civ 576.

  48. 48.

    Suter 2009, p. 33.

  49. 49.

    Suter 2009, p. 34.

  50. 50.

    For examples, see Dunnett v Railtrack Plc [2002] EWCA Civ 303; Hurst v Leeming [2002] CP Rep 59; The Golden Eagle International (Group) Limited v GR Investment Holdings Ltd (Unreported, HCA 2032/2007, 25 June 2010); iRiver Hong Kong Ltd v Thakral Corp (HK) Ltd [2008] 6 HKC 391. For academic commentary, see Alexander (2010), p. 286; Suter (2009), p. 36; Lee (2003), p. 166.

  51. 51.

    The Golden Eagle International (Group) Limited v GR Investment Holdings Ltd (Unreported, HCA 2032/2007, 25 June 2010).

  52. 52.

    Chun Wo Construction & Engineering Co Ltd v China Win Engineering Ltd [2008] HKCU 904.

  53. 53.

    [2008] 6 HKC 391 at para 99.

  54. 54.

    [2002] 2 All ER 850, at para. 14.

  55. 55.

    Cheong (2008), p. 216.

  56. 56.

    Tochtermann (2008), p. 708.

  57. 57.

    Leung (2009), p. 300.

  58. 58.

    Suter (2008), p. 1563.

  59. 59.

    Practice Direction-31: Mediation, Part A.4, http://legalref.judiciary.gov.hk/doc/prac_dir/html/PD31.htm.

  60. 60.

    Lee (2003), p. 166.

  61. 61.

    Cheong (2004), p. 535.

  62. 62.

    Newmark (2003), p. 3.

  63. 63.

    Alexander (2010), p. 285; Cheong (2004), p. 535.

  64. 64.

    Starr and Ma (2009), p. 130.

  65. 65.

    Some scholars provide guidance on drafting of mediation clauses. See for example Katz (2008), pp. 206–209.

  66. 66.

    Suter (2009), p. 32, referring to a paper written by Boulle L and Angyal R on this topic.

  67. 67.

    [1999] NSWC 996, at 69.

  68. 68.

    Cheong (2008), p. 202.

  69. 69.

    Carrel (2003), p. 562.

  70. 70.

    Cheong (2004), p. 538.

  71. 71.

    See for example, Lee (2001), pp. 81–101.

  72. 72.

    Clarke (2008), p. 419. See also Suter (2009), p. 33.

  73. 73.

    Working Group Report, at 93. See also Cheong (2008), p. 211.

  74. 74.

    The measure of damages include the expectation measure, reliance measure and measure of restitution. See Cheong (2008), p. 2010 and Schmitz (2006), p. 95.

  75. 75.

    Schmitz (2006), p. 98; Alexander (2010), p. 242.

  76. 76.

    Schmitz (2006), p. 99.

  77. 77.

    Schmitz 2006, p. 104.

  78. 78.

    Suter 2009, p. 35.

  79. 79.

    Schmitz (2006), p. 101; Tochtermann (2008), p. 707.

  80. 80.

    Pryles (2001), p. 159; Jones (2009), p. 188.

  81. 81.

    Cheong (2004), p. 539.

  82. 82.

    ICC case No. 10256, Interim Award of August 12, 2000.

  83. 83.

    Kayali (2010), p. 573.

  84. 84.

    HIM Portland LLC v. Devito Builders, Inc., 317 F. 3d 41, 44 (1st Cir. 2003).

  85. 85.

    Smith v Martin [1925] 1 KB 745.

  86. 86.

    Rajah (2006), p. 3.

  87. 87.

    Jones (2009), p. 188.

  88. 88.

    Wilson and McLean (2008), p. 33.

  89. 89.

    Kayali (2010), p. 551; Berger (2006), p. 1; Wilson and McLean (2008), p. 33; Cheong (2004), p. 530.

  90. 90.

    Arbitration Ordinance, Cap. 609, s 33(2).

  91. 91.

    23–30 July 1999 Annual Meeting Draft, §5(i). See also Schmitz 2004, pp. 12–14.

  92. 92.

    Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters.

  93. 93.

    Working Group Report, Recommendation 36.

  94. 94.

    Working Group Report, at 92.

  95. 95.

    NADRAC A Framework for ADR Standards (Canberra, Apr 2001), Recommendation 11.

  96. 96.

    Carroll (2002), p. 189.

  97. 97.

    Leung (2009), p. 301; Cheong (2008), p. 201; Schmitz (2006), p. 57.

  98. 98.

    Working Group Report, Recommendation 36. One author has submitted that the requirement to stay proceedings brought in breach of mediation agreements should be incorporated into domestic law to give effect to the trend in enforcing mediation agreements. See Cheong (2008), p. 213.

  99. 99.

    Cheong (2008), p. 213.

  100. 100.

    CPR 1.4.

  101. 101.

    Explanatory Memorandum, Civil Dispute Resolution Bill 2010, The Parliament of the Commonwealth of Australia.

  102. 102.

    [2002] 2 All ER 1041.

  103. 103.

    [2005] 3 HKLRD 723.

  104. 104.

    Meggitt (2008), p. 109.

  105. 105.

    [2005] HKCU 258 at 29.

  106. 106.

    The Rules of the High Court, Cap. 4A, Order 1A, Rule 1(e).

  107. 107.

    PD 31, Paragraphs 4 and 5.

  108. 108.

    PD 31, Paragraph 16 and The Rules of the High Court, Cap. 4A, Order 1B, Rule 1(2)(e).

  109. 109.

    Leung Catherine v Tary Limited [2009] HKCU 1529; Gurung Lachhaman v Gurung Chandra Prakesh, Unreported, 18 March 2010, HCPI 672/2008; The Golden Eagle International (Group) Limited v GR Investment Holdings Ltd (Unreported, HCA 2032/2007, 25 June 2010), [2010] HKCU 1405.

  110. 110.

    The Incorporated Owners of Shatin New Town v Yeung Kui [2010] HKCU 314.

  111. 111.

    Hui Ling Ling v Sky Field Development Ltd, Unreported, 22 July 2009; HCA 35/2009; Resource Development Ltd v Swanbridge Ltd [2010] HKCU 1189.

  112. 112.

    Alexander (2010), p. 299.

  113. 113.

    Hilmer (2010), p. 141.

  114. 114.

    Coleman (2003), p. 311.

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Acknowledgment

This article is fully supported by a research grant from the Research Grants Council of the Hong Kong Special Administrative Region, China (Project No. 755109).

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Correspondence to Yun Zhao.

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Zhao, Y. Revisiting the issue of enforceability of mediation agreements in Hong Kong. China-EU Law J 1, 115–133 (2013). https://doi.org/10.1007/s12689-012-0014-0

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Keywords

  • Mediation agreement
  • Enforceability
  • Legislation
  • Certainty
  • Contract law