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Mandatory mediation in Hong Kong: a workable solution based on Australian experiences

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Abstract

It seems that with government’s guidance on mediation procedures—mediation obviously increased once parties are obliged to engage in mediation—statistics from other jurisdictions reveal that the parties not only resolved their dispute but they would also use mediation again. The Australian courts successfully use mandatory mediation in various courts and jurisdictions, state and federal. Hong Kong’s mediation system does not include mandatory mediation, although it has been discussed many times and it has been decided it might be preferable to introduce such a system at a later stage. Practice Direction 31, however, seems to be an indirect form of mandatory mediation. In addition to that, Hong Kong courts now tend to show a more reluctant approach in declaring mediation clauses invalid if those appear to be uncertain and unclear in order to indirectly mandate parties to mediate. The objective of this research paper is to explore and analyse whether mandatory mediation could be a workable solution for Hong Kong considering the current mediation development and situation. Further, the paper identifies whether mandatory, by way of court-annexed, mediation is generally suitable for Hong Kong by comparing Australia’s state and federal jurisdictions that already applied court-annexed mediation. It could be argued that a court-annexed mediation pilot project for Hong Kong is advisable in order to experience a mandatory mediation approach and by providing statistics at the end of such a project.

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Notes

  1. Alder (2004, pp. 87–89).

  2. Wong (2006).

  3. Speech of the Chief Justice of Court of Appeal, Kwok Nang Li at the Ceremonial Opening of the Legal Year 2007, Cover story, Hong Kong Lawyer, The Official Journal of the Law Society of Hong Kong, 2007 (February), at 34.

  4. The practice and civil procedure in the District Court reflect those in the High Court, so that it was directed in 2005 by the Chief Justice that the legislative amendment of the civil justice reform should also apply to the District Court; Consultation Paper on Proposed Legislative Amendments for the Implementation of the Civil Justice Reform, Steering Committee on Civil Justice Reform, Judiciary, Hong Kong Special Administrative Region People’s Republic of China, 2004, at 2, paras 1.7, 1.8.

  5. Queensland is also a state having an advanced system of mandatory mediation. All levels of the Queensland court system grant to the judges of the respective courts the power to order matters to mediation without the consent of the parties, section 29(3) of the Magistrates’ Courts Act 1921, section 97(3) of the District Courts of Queensland Act 1967, section 102(3) of the Supreme Court of Queensland Act 1991; see also Barrett v Queensland Newspapers Pty Ltd [1999] QDC 150, Stevenson v Landon Pty Ltd [2005] QDC 11.

  6. Other courts in New South Wales that implemented mandatory mediation are for example The Land and Environment Court, District Court, and Local Court.

  7. Chinkin and Dewdney (1992, p. 93).

  8. Chinkin and Dewdney (1992, p. 105).

  9. Section 164A of the District Court Act 1973 reflects the same terms in section 110k of the Supreme Court Act 1970, making mediation mandatory (section 110K of the Supreme Court Act 1970 (NSW) has been replaced by section 26 of the Civil Procedure Act 2005 (NSW)). Also section 26 of the Civil Procedure Act 2005 (NSW) is identical to sections 164A and 110k of the District Court Act 1973 and the Supreme Court Act 1970.

  10. See also Capolingua v Phylum Pty Ltd (as Trustee for the Gennoe Family Trust) [1991] 5 WAR 137 at 140 as per Ipp J.

  11. These are similar to Hong Kong’s amended Civil Procedure Rules of the High and District Court, Order 1A and Order 1B.

  12. See also NSW Supreme Court Rules Part 1, rule 3.

  13. See cases such as Idoport Pty Ltd and Anor v National Australia Bank Ltd and 8 Ors; Idoport Pty Ltd and Market Holdings Pty Ltd v Donald Robert Argus; Idoport Pty Ltd “JMG” v National Australia Bank Ltd [21] [2001] NSWSC 427, as per Einstein J at paras 5, 33, 34.

  14. Section 56 of the Civil Procedure Rules 2005 (NSW), NSW Supreme Court Rules, Part1, rule 3.

  15. Supreme Court Mediation of NSW http://www.lawlink.nsw.gov.au/lawlink/supreme_court/ll_sc.nsf/pages/SCO_mediation#10 Accessed 24 April 2012.

  16. Barlett (1993, p. 232).

  17. Golvan (2000, p. 140).

  18. Phillips (1997, p. 27).

  19. The Victorian Civil and Administrative Tribunal (VCAT) refers matters with or without consent of the parties to mediation (section 88 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic)); The Magistrates’ Court refers matters to mediation with the consent of the parties (section 108 of the Magistrates’ Court Act 1989 (Vic)).

  20. Law Institute of Victoria, Speech, ADR and a different approach to litigation, The Hon Marilyn Warren AC, Chief Justice, Supreme Court of Victoria, Melbourne, 18 March 2009.

  21. Mediation in the Supreme Court and County Courts of the Victoria, Research Project http://www.justice.vic.gov.au/wps/wcm/connect/DOJ+Internet/Home/Courts/Research+and+Statistics/JUSTICE+-+Mediation+in+the+Supreme+and+County+Courts+of+Victoria+Research+Project to find report Accessed 24 April 2012.

  22. The mediation processes led to the settlement of disputes particularly in some of the more intractable and difficult disputes (by reference to age of dispute and number of court events). In addition, it is likely that some matters were settled by negotiation once a referral to mediation had been made and that others may have been finalised by a negotiation following the mediation.

    Mediation may also have assisted in narrowing issues regarding matters that were not finalised in mediation and this can lead to cost and other savings if a matter is then litigated. The disputes dealt with at mediation had a range of intractable features and it seems clear that in many instances the mediation process reduced costs that might otherwise have been expended at a hearing. In this regard, some mediators indicated in interviews that the mediation process saved ‘months of court time’ in complex and intractable disputes.

  23. See cases such as Biota Scientific Management Pty Ltd & Anor v Glaxo Group Ltd & Ors [2008] VSC 110 (10 April 2008); BHP Billiton Ltd v Oil Basins Ltd [2006] VSC 402 (1 November 2006); Gunns Ltd & Ors v Marr & Ors (No 5) [2009] VSC 284 (20 July 2009).

  24. The Assisted Dispute Resolution Program of 1987 which operated within the Court until 1997 required the consent of the parties to mediate.

  25. [2002] FCA 1134.

  26. [2001] FCA 600.

  27. An explanation of the distinction between conciliation and mediation can be found in, Hilmer (2009, p. 5–7).

  28. Altobelli (1996, p. 11).

  29. Approval for external mediators was sought by the Family Law Reform Act 1995 (Cth) which included a reporting requirement.

  30. Sections 34-34H, Division 3 Administrative Appeals (Amendment) Act 2005 (Cth).

  31. North J, letter from Federal Court of Australia to Law reform Committee Victoria, Alternative Dispute Resolution, 27 February 2008, 7.

  32. North J, letter from Federal Court of Australia to Law reform Committee Victoria, Alternative Dispute Resolution, 27 February 2008, at 7.

  33. Ibid.

  34. [2001] NSWSC 209.

  35. [2001] NSWSC 427 at 40 as per Einstein J.

  36. for example Waterhouse v Perkins [2001] NSWSC 13, Levine J, mediation ordered; Morrow v chinadotcom [2001] NSWSC 209, Barrett J, mediation not ordered; Hopcroft v Olsen [1998] SASC 7009, Perry J, mediation ordered; Baulderstone Hornibrook Engineering v Dare Sutton [2000] SASC 159, Perry J, mediation ordered.

  37. [2001] NSWSC 1208 at para 3 as per Hamilton J; see also Higgins v Higgins [2002] NSWSC 455.

  38. [2004] NSWSC 128 at paras 5–6 as per Bryson J.

  39. [2002] NSWSC 585.

  40. Morrow v Chinadotcom Corp [2001] NSWSC 209.

  41. [2002] NSWSC 898.

  42. [2002] NSWSC 27.

  43. George Harrison v Delcie Schipp [2002] NSWSC 27 at paras 18, 19 as per Mason P.

  44. (1992) 28 NSWLR 194.

  45. Id. para 206.

  46. In force since 2 April 2009; Order 1A, rules 1(e), 3, 4(2)(e) and (f) of the Rules of the High Court.

  47. In force since 1 January 2010; PD 31 (Mediation).

  48. Chief Justice’s Working Party on Civil Justice Reform, Civil Justice Reform: Final Report, Hong Kong Special Administrative Region Government (3 March 2004) paras 828–831 and 840; Chief Justice’s Working Party on Civil Justice Reform, Civil Justice Reform: Interim Report and Consultative Paper, Hong Kong Special Administrative Region Government (21 November 2001) paras 623–645.

  49. Order 1A, rules 1(e), 3, 4(2)(e),(f) of the Rules of the High Court.

  50. Final Report, at 426, para 790; see also Hurst v Leeming [2003] 1 Lloyd´s Rep 379 at 380 per Lightman J.

  51. Interim Report, at 237 para 638; see also Final Report, at 433, para 803.

  52. Final Report, at 432, para 801.

  53. Final Report, at 433, para 804.

  54. Id. at 434, para 806.

  55. Final Report, at 434, para 807.

  56. The Report highlighted that ADR should become part of the standard curriculum in university, professional and continuing legal education programmes.

  57. Final Report, at 435–437, paragraphs 809–812.

  58. Id. at 437, para 813.

  59. Final Report, at 437, para 813.

  60. Id. at 439, 440, para 819.

  61. Final Report, at 440, para 820.

  62. Id. at 440, para 821.

  63. Id. at 441, para 825.

  64. Report of the Working Group on Mediation, Department of Justice, Hong Kong Special Administrative Region Government, February 2010, 125: 126.

  65. Rules of the High Court, Order 1A, rule 1.

  66. The provided rules only refer to specific provisions that deal with alternative dispute resolution; the complete set of rules is provided in Appendix 2 (Relevant Civil Procedure Rules).

  67. [2004] 1 WLR 3002.

  68. Unreported, 22 November 1999.

  69. [2002] 1 WLR 803.

  70. [2002] 1 WLR 2423; see also Hurst v Leeming (2003) 1 Lloyd’s Rep 379; Wethered Estate Ltd v Davis (2005) EWHC 1903; Daniels v Commissioner of Police of the Metropolis (2005); EWCA Civ 1312; Hickman v Blake Lapthorn (2006) EWHC 12 (QB); Burchell v Bullard (2005) EWCA Civ 358; Nigel Witham v Smith (2008) EWHC 12 (TCC).

  71. The ‘unreasonably’ requirement was established in the case of Halsey v Milton Keynes General NHS Trust [2004] 1 WLR 3002.

  72. This approach is in line with English authorities, see Dunnett v Railtrack [2002] 1 WLR 2423 and Halsey v Milton Keynes General NHS Trust [2004] 1 WLR 3002.

  73. Order 62, rule 5(1)(e), and Order 62, rule 5(2) of the Rules of the High Court; 44.3(4) and 44.3(5) of the English Civil Procedure Rules.

  74. Similar approaches are indicated in PD 6.1, paras 41–44; PD 18.1, paras 29–31; PD 18.2, paras 17–19; PD 3.3, paras 16–17; LTPD, paras 2 and 12.

  75. Unreported, 18 March 2010; HCPI 672/2008; Leung Catherine v Tary Limited [2009] HKCU 1529, (unreported, 8 October 2009); HCPI 805/2007; Leung Ping Yeung & Ors v Jetour Holiday Limited & Ors [2008] HCPI 858; [2010] HKCU 316; Supply Chain & Logistics Technology Ltd v NEC Hong Kong Ltd. [2009] HKCU 123; and The Incorporated Owners Of Shatin New Town v Yeung Kui [2010] HKCU 314, (unreported 5 February 2010; CACV 45/2009).

  76. The current Hong Kong Mediation Bill is pending in the Legislative Council, however the Bill does not contain a mandatory mediation element.

  77. Order 1A, rules 1(e), 3, 4(2)(e), (f) of the Civil Procedure Rules of the High and District Court.

  78. Report of the Working Group on Mediation, Department of Justice, Hong Kong Special Administrative Region Government, February 2010, Recommendation 45 at 125, 126.

  79. David (1994, p. 32–33).

  80. Dearlove (2000, p. 16).

  81. See Morrow v Chinadotcom (2001) NSWSC 209; Idoport Pty Ltd & Anor v National Australia Bank Ltd & 8 Ors; Idoport Pty Ltd v Donald Robert Argus; Idoport Pty Ltd “JMG” v National Australia Bank Ltd (2001) NSWSC 427; Lewis v Nortex Pty Ltd (In Liq), Lamru Pty Ltd v Kation Pty Ltd (2005) NSWSC 1127.

  82. In New South Wales, Victoria, Queensland, South Australia, Tasmania and Western Australia, as well as on a federal level, courts can order mandatory mediation if it considers the circumstances appropriate with or without the consent of the disputing parties.

  83. [1990] unreported, Supreme Court of Queensland, 12 March.

  84. [1992] 28 NSWLR 194.

  85. Id. para 206.

  86. [1995] 36 NSWLR 709.

  87. Courtney & Fairbairn Ltd v Tolaini Bros (Hotels) Ltd (1975) 1 All ER 716; Mallozzi v Carapelli Spa (1976) 1 Lloyds Rep 407; Walford v Miles (1992) 1 All ER 453; Hooper Bailie Associated Ltd v Natcon Group Ltd (1992) 28 NSWLR 194; Con Kallergis v Calshonie (1998) 14 BCL 201; Elizabeth Bay Developments Pty Ltd v Boral Buildings Services Pty Ltd (1995) 36 NSWLR 709; Hyundai Engineering & Construction Co Ltd v Vigour Ltd (2005) HKCA 64 at para 33 per Rogers VP; Kenon Engineering Ltd v Nippon Kokan Koji Kabushiki Kaisha (2003) HKCFI 568 at para 7 per Muttrie J.

  88. Triarno Pty Ltd v Triden Contractors Ltd (1992) 10 BCL 305.

  89. Hooper Bailie Associated Ltd v Natcon Group Ltd (1992) 28 NSWLR 194; Elizabeth Bay Developments Pty Ltd v Boral Buildings Services Pty Ltd (1995) 36 NSWLR 709; Aiton Australia Pty Ltd v Transfield Pty Ltd (1999) NSWSC 55020 of 1999, 1October 1999; Hyundai Engineering & Construction Co Ltd v Vigour Ltd (2005) HKCA 64; Kenon Engineering Ltd v Nippon Kokan Koji Kabushiki Kaisha (2003) HKCFI 568 as per Muttrie J at para 7.

  90. See also Hyundai Engineering & Construction Co Ltd v Vigour Ltd (2005) HKCA 64 at para 33 per Rogers VP; Scott v Avery (1856) 10 ER 1121.

  91. See also the principle of separability Article 16(1) UNCITRAL Model Law.

  92. Compared to the law on the enforceability of arbitration clauses, which is based on legislation and interpreted by courts.

  93. [2003] HKCFI 568.

  94. Id. at para 7 as per Muttrie J.

  95. Id. at para 34 as per Muttrie J.

  96. [2004] 2 HKC 505, [2004] HKCFI 205.

  97. Id. at para 11 as per Reyes J.

  98. [2005] 1 HKC 579 at paras 27–28 per Roger VP. This view is strengthened in the Australian case Con Kallergis Pty Ltd v Calshonie Pty Ltd (1998) 14 BCL 201 where Hayne J held that negotiations in good faith do not bring adequate certainty because negotiators could break off and walk away at any time for any reason.

  99. [2005] 1 HKC 579 at 30 as per Roger VP.

  100. [2004] 2 HKC 505, [2004] HKCFI 205 at para 100 per Reyes J.

  101. Compare the law on the enforceability of arbitration clauses, which is based on legislation and interpreted by courts.

  102. [2002] EWCA Civ 302.

  103. See also Cable & Wireless v IBM United Kingdom Ltd (2002) 2 All ER 1041.

  104. [2009] HKCU 1529, (unreported, 8 October 2009; HCPI 805/2007).

  105. Id at para 20.

  106. Id. at para 21; see also PD18.1 para 29.

  107. Id. at para 19.

  108. [2002] 1 WLR 2434 (CA).

  109. [2009] HKCU 123.

  110. Id. at para 25.

  111. Unreported, 18 March 2010; HCPI 672/2008.

  112. Id. at paras 9–11.

  113. Ingleby (1993, p. 445).

  114. Olsson (1996, p. 237).

  115. Order 1A, r. 3 CPR: The parties to any proceedings and their legal representatives shall assist the Court to further the underlying objectives of these rules; PD 31 App B, Part II: ‘I have explained to our client the availability of mediation with a view to settling the dispute or part(s) of the dispute, and the respective costs positions of mediation as compared with the costs of the litigation. I have explained to our client the Mediation Practice Direction.’; The Hong Kong Bar Association, Code of Conduct, para 116A (A barrister in appropriate cases should consider with client the possibility to resolve disputes by mediation); Professional Guide, Volume 1, Chapter 10, The Litigation Solicitors; Chapter 10.17 (Encouraging Settlements) with new commentary 3.

  116. Generally, mediation does not appear to be appropriate when a party:

    • Is likely to attend in bad faith

    • Has unreasonable expectations

    • Is seeking revenge

    • Is using mediation for tactical purposes, delay or information gathering

    • Is not open-minded towards the process

    • Wants the mediator to make an authoritative decision

    • Threatens the safety of a person or persons

    • Abuses physically or emotionally the other person or persons

    • Threatens to destroy or actual destruction of property

    • Constitutional or other legal issues are in question

    • Involves the rights of the public at large.

  117. Olsson (1996, p. 237).

  118. Olsson (1996, 802).

  119. Ingleby (1993, p. 446).

  120. [2001] NSWSC 427 at 40 as per Einstein J.

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  1. GIGA, Institute for Asian Studies, Hamburg, Germany

    Sarah E. Hilmer

  2. Sarah E. Hilmer Consultancy, Hamburg, Germany

    Sarah E. Hilmer

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Hilmer, S.E. Mandatory mediation in Hong Kong: a workable solution based on Australian experiences. China-EU Law J 1, 61–96 (2013). https://doi.org/10.1007/s12689-012-0016-y

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