Due to the uncertainties arising from the recent economic downturn and geopolitics, enterprises on the Chinese mainland may become more cautious in expanding their business overseas or transacting with foreign entities. Having said that, the Hong Kong Special Administrative Region, being the only jurisdiction within China practicing common law, serves as the bridgehead in boosting the confidence of the relevant stakeholders in the mainland in cross-boundary transactions and dispute resolution.
Such a feature was highlighted and emphasized at the Hong Kong Legal Services Forum, held in Xi’an on May 27. The forum was divided into two main sections — panel discussions by eminent speakers from the Hong Kong legal field and representatives from the HKSAR government and Shaanxi provincial government; and alternative dispute resolution (ADR) simulations carried out by legal practitioners in Hong Kong. The forum shed light on various transactional aspects of cross-boundary deals and on how disputes can be effectively resolved with the assistance of legal service providers in Hong Kong.
As a matter of principle, preemption of risks and provision of mechanisms to guard against or mitigate such risks is key to every successful business operation. The starting point is a contract that properly caters for parties’ needs and concerns. Seasoned transaction lawyers are able to draft clauses that give balanced weight to parties’ concerns amid competing interests. More importantly, a dispute resolution mechanism shall be provided for, under the relevant contract specifying the scope of disputes to be referred to alternative dispute resolution(s), the governing law, the institution that handles the dispute resolution, and its relevant rules. Hong Kong lawyers are competent in designing a suitable package for Chinese mainland enterprises after taking into account the subject matter involved under the contract, the relationship between the place of dispute resolution (or the applicable law) and the place of enforcement, and the costs incurred, etc.
In this aspect, Hong Kong has a well-developed ADR infrastructure, such as the eBRAM International Online Dispute Resolution Centre in the context of mediation and the Hong Kong International Arbitration Centre in the context of arbitration. These institutions are able to provide world-class ADR services, in terms of their hardware (e.g., physical facilities and technology) and software (e.g., the governing rules). However, concerns have been raised that mainland enterprises may have difficulty in proposing to their foreign contracting party to adopt Hong Kong as the place of ADR. It is suggested that foreign contracting parties may wish to resort to a place which has “neutrality”.
Empirical data has unequivocally shown that ADR institutions in Hong Kong have handled, processed and dealt with cross-boundary transaction disputes involving enterprises on the mainland with professionalism, impartiality and fairness. Having said that, even if the foreign contracting parties insist on selecting a “third party” place as the place of arbitration, Hong Kong lawyers are still able to provide legal services to mainland enterprises as long as there is a common law element in the ADR process.
The aforesaid developments prompted by the legislature and professional bodies enhance the competitiveness of the Hong Kong legal service providers and their compatibility with the business culture of the mainland enterprises in the context of dispute resolution
On this note, litigation lawyers in Hong Kong are substantively equipped with the relevant knowledge to assist when the place of the ADR and the governing law are related to a common law jurisdiction. Procedurally, Hong Kong litigators are familiar with the procedures involved in the ADR. For example, Hong Kong litigators are specifically trained to conduct cross-examinations, a salient feature of litigation in common law jurisdictions, which are commonly adopted in international arbitrations. During the forum, two mock mediation and arbitration cases were conducted to give the audience a taste of how mediation and arbitration are conducted in practice. As regards the mock arbitration, a demonstration of cross-examination of an expert witness was carried out concerning the expert’s conclusion on the unworkability of a defective product. Issues such as whether forensic tests were carried out before arriving at the conclusion and submissions of new evidence were canvassed. Accordingly, the services provided by lawyers in Hong Kong can add value to the business expansion of the mainland enterprises, as well as ADR.
Last but not least, costing frequently poses a genuine concern for the parties. It is understood that a contingency-fee arrangement is commonplace in the mainland legal service sector, and stakeholders on the mainland are accustomed to such a fee structure in dealing with cross-boundary transaction disputes. With a view to aligning with such expectations, the Arbitration Ordinance has been amended to allow outcome-related fee structures for arbitration, which are, namely, a conditional-fee agreement, damages-based agreement, and a hybrid damages-based agreement. Further, the Code of Conduct of the Hong Kong Bar Association has been revised to allow mainland clients, under specific conditions, to directly engage barristers in arbitration. The aforesaid developments prompted by the legislature and professional bodies enhance the competitiveness of the Hong Kong legal service providers and their compatibility with the business culture of the mainland enterprises in the context of dispute resolution.
The author is a member of the Hong Kong Bar Association’s standing committee on mainland affairs. He practices as a barrister and is qualified as a Guangdong-Hong Kong-Macao Greater Bay Area lawyer.
The views do not necessarily reflect those of China Daily.
