In view of the severe economic repercussions caused by the COVID-19 pandemic globally and locally, the Government announced another package of measures to support the affected individuals and businesses last Wednesday. Two of which are particularly relevant to the legal and dispute resolution sector – LawTech Fund and COVID-19 Online Dispute Resolution (ODR) Scheme. The LawTech Fund was briefly introduced in this blog a few days ago (https://www.doj.gov.hk/eng/public/blog/20200411_blog1.html). Today, I would like to give an outline of the COVID-19 ODR.
In anticipation of an upsurge of disputes arising from or relating to COVID-19, the Scheme aims to provide speedy and cost-effective means to resolve such disputes, especially for those involving micro, small and medium-sized enterprises (MSMEs) that may be adversely affected or hard hit by the pandemic. The Scheme will engage eBRAM to provide ODR services to the general public and businesses, in particular MSMEs, involved in low value disputes.
The Scheme plans to cover COVID-19 related disputes with the claim amount for each case to be capped at $500,000. Either one of the parties (claimant or respondent) must be a Hong Kong resident or company and they will only be required to each pay $200 as registration fees. Under the Scheme, the parties are required to enter into a dispute resolution agreement to record their consent.
The process to be adopted is a multi-tiered dispute resolution mechanism where the parties will first attempt to negotiate their disputes, followed by mediation and if that does not result in settlement, then subsequently to arbitration for a final and binding award. This is in line with the “Mediate First” policy that we have been advocating under our “Mediate First” Pledge Programmes.
The Scheme aims to offer a fast and effective means to resolve disputes among parties. Each tier of dispute resolution will be conducted within a limited time. The tiers are devised with a view to avoiding disputes and differences from being entrenched. If the disputes can be resolved successfully and amicably through negotiation or mediation, we hope it will help build and reinforce a harmonious society and enable the parties to preserve their long term business relationship.
We also hope the Scheme will have the benefit of job creation and job advancement for mediators and arbitrators (including their pupils). Parties are at liberty to appoint the third party neutral of their choice and if no agreement is reached, there will be a mechanism for appointment. The third party neutrals and the parties or their representatives can still handle cases under the social distancing measures online and indeed to practice on the handling of cases online. We would like the Scheme to be launched in June if funding is provided in April.
It is a global trend to develop and use ODR to provide reliable and efficient platform to facilitate alternative dispute resolution. The Scheme is in line with the development under Asia-Pacific Economic Cooperation’s Collaborative Framework on ODR (APEC Framework), with MSMEs as the major beneficiary. The mechanism of adopting negotiation and mediation in the first stage under the APEC Framework is also to prevent entrenched views on the conflicts, thereby helping to create harmony in society.
Some forms of alternative dispute resolution, such as mediation, are a more cost-effective way to resolve disputes. The costs of mediation are almost always lower than the disputed amounts, making it an economical way to resolve disputes. Mediation can save time too. Some cases may be resolved following just one day of mediation.
LawTech has greatly helped the development of dispute resolution services. The establishment of a safe, reliable and credible platform to provide enterprises with convenient and cost-effective online dispute resolution will become a new trend.
It is one of the major long-term policy objectives of the Department of Justice (DoJ) in recent years to enhance and promote Hong Kong’s status as an international legal hub for deal-making and dispute resolution. A further promotion of the use of ODR will help consolidate Hong Kong's position as an international business and financial centre.
The social media accounts of DoJ’s IDAR Office has been introducing the procedure, characteristics and benefits of mediation and arbitration. You may wish to visit the dedicated pages of IDAR Office to keep abreast of the dispute resolution services.
In addition to the relief measures announced by the Government, the DoJ has also taken the initiative to speed up payment of fees to counsel. Counsel engaged by the DoJ could submit their interim fee notes together with the interim case reports after certain work has been completed. Each case will be considered individually on a case-by-case basis and interim payments could be made. I have enquired and am also glad to learn from the Legal Aid Department and the Duty Lawyer Service that they made similar arrangements.
We are confident that Hong Kong can weather the storm with our fundamental strengths and resilience. We also trust that we would overcome this unprecedented challenge by standing in solidarity.
April 13, 2020