Hong Kong launches Covid-19 disputes scheme

Out-Law News | 12 May 2020 | 12:30 pm | 1 min. read

Hong Kong’s Department of Justice (DoJ) is planning a dispute resolution scheme for coronavirus, or Covid-19, related disputes.

The Hong Kong scheme will cover disputes with a maximum claim amount of H$500,000 (£52,300). One of the parties involved in the dispute must be a Hong Kong resident or company, and they will only have to pay $200 in registration fees to access the scheme.

The scheme is aimed particularly at micro, small and medium-sized enterprises that may be adversely affected or hard hit by the coronavirus pandemic.

It will use a multi-tiered online dispute resolution mechanism where the parties will first attempt to negotiate their disputes, followed by mediation. Failed mediations will progress to arbitration for a final and binding award. Each tier of the process would be conducted within a limited time period.

Dispute resolution expert Vincent Connor of Pinsent Masons, the law firm behind Out-Law, said: “The scheme offers a fast and effective means to resolve disputes among commercial parties arising out of the current Covid-19 situation. Given that there are likely to be an extremely high number of such disputes, this is a major advantage given that many businesses will need fast and effective remedies that generate quick decisions and cashflow.

“The scheme takes advantage of the efficiency and speed offered by ADR compared to the courts. The use of multi-tiered dispute resolution maximises the opportunity for win-win solutions through mediation but provides the backstop of binding arbitration to ultimately resolve the dispute,” said Connor.

Connor said because the scheme was a voluntary opt-in arrangement, it would not displace the existing dispute settlement options in a contract – whether that is litigation or arbitration.

“The scheme will most likely be valuable to those who want to make claims that are low to medium value that ordinarily would not be litigated or taken to arbitration due to the time and cost of doing so,” Connor said.

In a blog announcing the scheme, the DoJ said it hoped to launch in June, and added that it expected the scheme to create jobs for mediators and arbitrators. Parties will be able to appoint a third-party neutral mediator and arbitrator of their choice, and if no agreement is reached, there will be a mechanism for appointment.

The DoJ added that the scheme was in line with its long-term policy objective of promoting Hong Kong as an international legal hub for deal-making and dispute resolution.