Mr Thomas So [President, Law Society of Hong Kong], Mr
Grand Chan [Chairman, In-House Lawyers Committee, Law
Society], Distinguished Guests, Ladies and Gentlemen,
To begin with, may I express my gratitude for inviting me
to this year’s Annual Conference of In-House Lawyers, and also
for giving me this opportunity to address such a distinguished
In 2011, the Law Society decided to establish the
In-House Lawyers Committee to promote the interests of in-house
lawyers. Since its establishment, the Committee has done a lot of
good work for the in-house legal community and indeed the legal
professional as a whole. Among them is the organization of this
annual conference which provides a very effective platform for
in-house lawyers (and indeed other members of the legal
profession) to get together to connect, and to share ideas on
subjects of common interests.
Changing Role of In-house Counsel
In 1989, the American legal scholar Robert Eli Rosen
published an article on the dramatic growth in the size and
influence of internal legal counsel in large US corporations.
Rosen argued that in-house-lawyers had gone from a position of
marginality to being “general counsel”, a pivotal role in defining
and serving the legal needs of powerful corporations1
In the 28 years since Rosen's article, the status and
influence of in-house lawyers worldwide has only continued to
grow. Many large companies have general counsel offices.
In-house legal departments also rival large law firms as a
destination of choice for talented lawyers.
Today’s corporate lawyers have become essential partners
in business. In-house lawyers are of course expected to offer legal
advice to their respective corporations, but they also provide
sound business advice, risk management and suggestions about
many other complex issues. A greater number of in-house counsel
are now an integral and indispensable part of their company’s
strategic and operational teams, and they work closely together
with their board of directors to find solutions to business
problems, manage growth, and plan for the future. As a matter of
fact, many top in-house lawyers have ascended to the CEO seat.
In many cases, your role has become even more
challenging as a result of the modernisation and globalisation of
the world’s economies in recent decades. Substantive legal and
business issues that confront in-house counsel on a daily basis;
examples include compliance and regulatory issues, issues arising
from cybersecurity and FinTech.
Managing your organization’s legal issues in an
ever-increasing regulatory environment is one thing, but how do
you do so in an effective manner while keeping external legal
costs down? What should you be doing to prevent disputes
escalating, or to provide more effective support to the company?
These are some of the questions that most, if not all, in-house
counsel would have to consider at one stage or another. Allow me
to take this opportunity to briefly introduce the latest
developments which may be relevant to our in-house legal
The Belt and Road Initiative
First of all, I would like to start with the “Belt and Road
Initiative” which was first proposed in late 2013. It is a mega
initiative that encompasses more than 60 jurisdictions, with a
combined gross domestic product of over US$20 trillion, and a
combined population of more than 4 billion people spreading
across Asia, Europe and Africa.
As China’s most international city with well-developed
legal institutions which are familiar to investors of the
international commercial community and a deep understanding of
Chinese culture and business practices, Hong Kong is in an
enviable position to take advantage of the Initiative’s
opportunities. We also have many competitive strengths that are
unmatched by other cities in the region.
For example, we are part of China and yet we are the
only city in China that operates under a common law system; we
are the world’s leading offshore Renminbi market; and we are a
gateway for Mainland investors to invest overseas and for
overseas investors to invest in the Mainland. Our financial and
securities regulations are amongst the best in the world, and we
have a strong pool of educated, multilingual professional working
in key services areas, such as law, financial services, accounting
and information technology to provide support for investors
whenever they are needed.
We of course also understand that the world is fiercely
competitive. Hence, there is every reason that we should continue
to improve our competitiveness so as to maintain and consolidate
our status as an international financial centre, as well as the
leading centre for international legal and dispute resolution
services in the Asia Pacific region. As and when the Belt and
Road Initiative picks up momentum (as it now does), it will not
only present us with business opportunities, but also challenge our
ability and capacity to identify and handle them better than our
That is why the Government has taken a number of
measures to maximize our exposures to the opportunities of the
Initiative that lay ahead. They include, among others, our
participation in the Asian Infrastructure Investment Bank as a
member, the signing of Free Trade Agreement and Investment
Agreement between Hong Kong and ASEAN in November this
year, and the setting up of the Infrastructure Financing Facilitation
Office by the Hong Kong Monetary Authority to build capacity
and knowledge on infrastructure investments and financing.
We will of course continue to do more in the future,
including in the maritime sector and the Fintech sector. The
in-house legal community can help enhance our chances of
realizing those opportunities by providing us with ideas, by
sharing with us your experience and insights, and by preparing for
the legal challenges that will come with them in the months and
Hong Kong as a Leading Centre for International Legal and
Dispute Resolution Services
The Belt and Road Initiative, amongst others, aims to
promote infrastructure connectivity of the countries along the
route. According to a report issued by the Asian Development
Bank earlier this year, it is estimated that Asia infrastructure
investment, over a 15-year period from 2016 to 2030, would
amount to US$26 trillion (i.e. about US$1.7 trillion per year).
Indeed, as at mid-August 2017, China’s investment in the 68
countries along the Belt and Road route has reached the total
amount of around US$33 billion, surpassing the whole-year
investment amount of US$31 billion in 2016. Further, according
to a recent report of the Bank of China International, it forecasts
that Mainland enterprises could be awarded US$1360 billion
worth of construction contracts in 2030, representing a promising
compound annual growth rate of 19% during 2016 to 2030.
When infrastructure such as highways, railways and ports
are connected, the bilateral and multilateral trades are expected to
increase more and more in this circle.
The opportunities lay ahead for Mainland enterprises are
undoubtedly enormous. However, there are always two sides of a
coin. The rosy prospect is accompanied by a basket of risks that
investors need to take care of when venturing into the market.
As you may well appreciate, the legal systems along the route
range from common law and continental law, to Islamic law and
socialist law. In addition to the vast differences and divergence in
the legal systems and legal culture, the legal framework in some
developing countries may impose strict restrictions on foreign
investment entry threshold or may not be sophisticated enough to
provide protection for such kind of investment.
Further, local laws and regulations represent another key
factor in determining whether an enterprise would decide to “go
global”. For example, local laws and regulations on labour and
environmental protection, which some developing countries’
concern raises increasingly, are certainly other risks to be fully
taken into account.
As unpleasant as they are, business conflicts and disputes
are inevitable collateral consequences of business activities. They
occur all the time, and will surely continue to occur in the future.
Hence, as business activities associated with the Belt and Road
Initiative pick up momentum, more commercial and investment
disputes would arise.
In the face of these risks, in-house lawyers have a vital
role to play in scrutinizing the local laws, providing advice on
how to successfully implement projects in compliance with the
local legal framework, and managing the risks involved.
In this regard, it is always useful to remember that
arbitration and mediation (or the combination of the two, as well
as other forms of dispute resolution) offer a relatively simple and
cost-effective process to resolve disputes between parties than
traditional court litigation, and Hong Kong offers one of the best
dispute resolution services in the region.
Today, we are one of the prime venues and indeed one of
the best neutral venues for resolving commercial disputes. For
example, the total disputed amount of all arbitration cases handled
by the Hong Kong International Arbitration Centre (HKIAC) in
2016 has reached a staggering sum of US$2.5 billion 2 .
Moreover, according to the International Arbitration Survey
released by Queen Mary University of London in 2015, Hong
Kong is the third preferred place of arbitration, after London and
Paris, and the HKIAC is the most preferred arbitral institution
outside of Europe and the third best arbitral institution worldwide.
According to an article posted on the website of the
In-house Division of the Law Society of England and Wales3,
mediation is regarded as very effective. About 90% of the UK
commercial disputes settle. Mediation is quicker, less expensive
and less risky than many alternatives, and invaluable when a
relationship or reputation might be at stake. Like arbitration, it is
also strictly confidential.
In this regard, I would venture to suggest that Hong
Kong’s strengths in the context of dispute resolution have not
only increased our capability for supporting the Belt and Road
Initiative, they have also enhanced our international image and
overall competitiveness in the Asia Pacific region. Many of you
would know that the Department of Justice has put in a lot of
efforts in recent years in bolstering our competitive strengths in
dispute resolution services. We will continue to do more in the
future. The following is a brief summary of the key recent
developments in this regard.
First on arbitration. Following the signing of the
“Arrangement Concerning Mutual Enforcement of Arbitral
Awards between the Mainland and the Hong Kong Special
Administrative Region” in 1999, we can see exchanges between
the arbitration sectors of the Mainland and Hong Kong proliferate.
The setting up of the China International Economic and Trade
Arbitration Commission Hong Kong Arbitration Center in 2012,
and the China Maritime Arbitration Commission Hong Kong
Arbitration Center in 2014 indicate these arbitral organizations’
recognition of Hong Kong as a regional centre for international
arbitration and their support in this regard. Reciprocally, in 2015,
HKIAC became the first international arbitration institution
setting up a representative office in the Mainland. The presence of
these institutions in Hong Kong is greatly conducive in promoting
the use of arbitration.
Since our Arbitration Ordinance, which is modelled after
the latest version of the UNCITRAL Model Law on International
Commercial Arbitration, coming into effect in 2011, we have
introduced successive legislative amendments to refine and keep
it up to date. For example, two bills were passed by the
Legislative Council this June, one amending the Arbitration
Ordinance to clarify that disputes over intellectual property rights
are capable of resolution by arbitration; the other amending the
Arbitration Ordinance and the Mediation Ordinance to clarify that
third party funding of arbitration and mediation is not prohibited
by the common law doctrines of maintenance and champerty.
Next on mediation. Hong Kong enacted the Mediation
Ordinance in 2013 to provide an effective regulatory framework
for conducting mediation. The Ordinance is also instrumental in
promoting the resolution of disputes by mediation, and it protects
the confidential nature of mediation communications.
Since then, there have been important developments on
mediation in Hong Kong. One example is that, in December 2015,
the China Council for the Promotion of International Trade and
the Hong Kong Mediation Centre set up the CCPIT-HKMC Joint
Mediation Centre in Hong Kong to provide a platform for
resolving cross-boundary commercial disputes between the
Mainland and Hong Kong. As a matter of fact, more and more
cross-boundary disputes are now resolved through mediation.
The other example is our efforts in promoting evaluative
mediation in addition to facilitative mediation. Thus far,
mediation in Hong Kong has been largely facilitative in nature.
However, both from experience and from exchanges with
end-users, there is a growing demand for evaluative mediation. As
a result, a special committee under the Steering Committee on
Mediation has been set up to look into issues concerning
evaluative mediation. Our aim is to provide yet another option for
end-users so that they can choose a form of dispute resolution that
best suits their needs.
To further create an environment conducive to amicable
resolution of disputes, the Apology Ordinance was enacted this
July. Hong Kong is the first Asian jurisdiction to have enacted
such legislation. By stating the legal consequences of an apology,
the object of the Apology Ordinance is to promote and encourage
the making of apologies, with a view to preventing the escalation
of disputes and facilitating their amicable resolution. My
colleague, Ms. Ada Chen, will speak on this new legislation at
one of the sessions this morning.
Ladies and gentlemen, the significance and influence of
in-house lawyers in the organizations they serve are growing
under the increasingly complex business environment. While we
will strive to ensure that our legal infrastructure will stay at the
forefront of international development, I trust we can count on
you in shaping a better legal landscape for Hong Kong as well as
in enhancing Hong Kong’s competitiveness.4
I look forward to having more opportunities to exchange views with you on how
we can together achieve more for the in-house legal community
and Hong Kong as a whole.
On this note, it remains for me to wish you all a fruitful
conference today and wish this conference every success.