GPC Hong Kong – A Mandate For Change

The Global Pound Conference event in Hong Kong saw over 200 delegates assemble to identify trends and cultural preferences in commercial dispute resolution. Hong Kong’s Secretary for Justice, Chief Justice and Solicitor General headlined the conference, underlining the government and judiciary’s high engagement with the initiative.

Hong Kong is a global financial centre and leading regional dispute resolution hub. It enjoys a strong, independent judiciary as well as world class international arbitration services. Mediation and other forms of ADR are heavily supported by a myriad of institutions. Although not a compulsory requirement, mediation in the context of civil litigation tends to be interpreted by commercial parties as a mandatory step. 

Against this backdrop, delegates voted at the GPC Hong Kong as follows:

  • When it comes to the choice of dispute resolution process, users and their advisors put far more store in their familiarity with the process and the outcome sought, rather than relationships, industry practice or saving costs.
  • Financial remedies are overwhelmingly the most important outcome for all involved in commercial dispute resolution. Preserving relationships or achieving action-based outcomes are far less significant.
  • The rule of law is seen as the most important factor in achieving dispute resolution outcomes, ahead of consensus.
GPC Hong Kong infographic

Click here to download the full infographic summarising the Hong Kong data 

Herbert Smith Freehills‘ (HSF) Greater China Managing Partner, Julian Copeman, who moderated the Hong Kong event, noted that some voting trends differed from other GPC events, particularly the one in Singapore. For example, when weighing up the benefits of financial outcomes and preserving relationships, all stakeholders viewed financial outcomes as far more important.

Does this translate to a vote for ‘business as usual’ processes like litigation and arbitration in the territory? Is Hong Kong an unsophisticated jurisdiction lacking confidence in less adversarial process options? It is not as simple as that:

  • While delegates voted for familiarity and financial outcomes governed by the rule of law, users said efficient processes driven by collaboration were also key.
  • Add to this a preference for combining adjudicative and non-adjudicative processes, and we are looking at a more sophisticated user profile.
  • Perhaps most interestingly, users saw mediation primarily as a way of gaining better information about the case, rather than a cost-saving device. This suggests a degree of high sophistication – seeing ADR as a means of gaining intelligence and honing the issues for future settlement.

Clients want their advisors to collaborate with them, they don’t necessarily want lawyers to be advocates in the traditional sense. Instead, lawyers need to think more about combining processes, rather than aiming for a binary decision between adversarial processes like litigation and arbitration. In light of users’ comments, it would also be advisable to redefine mediation ‘success’ to include fact-finding.

The technology debate

On the role of technology in resolving disputes, stakeholders were both wedded to the status quo, but open to change:

  • Delegates said they do not currently regard technology as a tool to enhance commercial dispute resolution.
  • However, they agree that the need for efficiency (including through technology) will have by far the most significant impact on future policy-making for commercial dispute resolution.

How technological innovation can be embedded in traditionally conservative professions like law is an important question. As our previous research on ADR has highlighted, the legal advisor sits at the centre of dispute resolution processes and therefore is often best positioned to influence change. At the GPC Hong Kong, like many other events, external lawyers were judged to be the most resistant to change. This paradox is an impediment to change, particularly when looking to improve processes (like technology), that can drive efficiency in dispute resolution.

May Tai, Partner at HSF in Hong Kong, stated in terms of technology, the option of staying with the status quo “does not exist”. She also pointed out that it is not appropriate to bring in internal or external technology specialists on a very simple or low value case – although there may not be another option available in complex and/or high value cases.

Tai’s collegue, Justin D’Agostino, HSF’s Global Head of Disputes, added: “With technology advances, the landscape for dispute resolution will be unrecognisable over the next 5-10 years. Hong Kong is well placed to benefit from the innovation technology affords but we must act now.”

Enforcement issues

Users, advisors and academics thought that the enforcement of settlements (including those reached through mediation was more important than making processes like mediation compulsory in Hong Kong. This is consistent with other GPC events. Of course, a process is only worthwhile if the outcome can be enforced.

But in practice, problems of enforcement of mediated settlement agreements are highly rare. In fact, at the Hong Kong event, panellists could not point to any practical experience of this. That enforcement of mediated settlement agreements could help optically to evidence the status and value of mediation, is perhaps the key point (see our commentary here).

Driving change

As with many GPC events, there were elements of high sophistication and a willingness to innovate among delegates in Hong Kong, but also conservatism and a reluctance to embrace change. It is clear that in Hong Kong, the tools and institutional support is in place to provide users of commercial dispute resolution with multiple high quality process options.

However, the GPC has highlighted that stakeholders are not always embracing those tools. In particular, despite its broad support, parties and lawyers alike remain reluctant to attempt ADR. The Hong Kong event has prompted well-needed reflection.

Commenting on the Hong Kong event, Alexander Oddy, global head of ADR and conference MC, concluded: “Hong Kong really captured my imagination. We had amazing audience engagement showing how receptive people were to new ideas. They have a set of dispute resolution tools that are known and work, but there is a clear willingness to look for new and constructive ways to resolve conflict.”

Written by Anita Phillips.

This is an adapted version of the original article published on HSF website, for the original please click here.

Anita Phillips.jpg

Anita Phillips, Professional Support Consultant at Herbert Smith Freehills, has over 13 years’ experience in all forms of contentious work. She specialises in thought leadership initiatives, and has been a core member of the firm’s disputes practice since 2003. She has been central to the firm’s major ADR research initiatives including The Inside Track 2007 and the Global Pound Conference 2017. In 2015, she led the Hong Kong office’s client research on mediation in Hong Kong, which was shortlisted for an FT Innovative Lawyer Award. Anita devised and edits the firm’s ADR in Asia Pacific guide series and has led on various other texts including the 4th edition of Kendall, Freedman and Farrell on Expert Determination by Sweet & Maxwell (shortlisted for CEDR’s best publication award 2008).

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