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Wednesday, August 31, 2016, 17:10

Consumer dispute resolution center proposed

By Honey Tsang

Consumer dispute resolution center proposed
Two shoppers walk past a Hong Kong sign in a street in Hong Kong on Dec 13, 2010. (AFP PHOTO / ED JONES)

HONG KONG – The city’s consumer rights watchdog is looking to introduce a mechanism to solve consumer disputes by mediation and arbitration to better cater to the needs of consumers and merchants in disputes over small amounts, the Consumer Council announced on Wednesday.

According to the council, a total of 24,548 consumer complaints – about 5,000 each year – were left unresolved from 2011 to 2015.

It proposed to set up a Consumer Dispute Resolution Centre – designated to deploy a ‘Mediation First, Arbitration Next’ mechanism as a better dispute resolution approach for consumers and traders.

Chairman of the council’s Legal Protection Committee Samuel Chan Ka-yan said the considerable amount of cases still left up in the air through conciliation or mediation suggests a strong demand for arbitration to settle such consumer disputes.

Chan added that aggrieved consumers might see the current litigation channels as costly and cumbersome, particularly for those claims involving an insubstantial amount.

The ‘Mediation First, Arbitration Next’ (med-arb) model proposed by the council will be put in place to offer shoppers an affordable and time-effective adjudicative option in consumer disputes, in which an arbitrator with relevant expertise appointed by the parties will determine the liability and merits of the cases.

In its preliminary proposal, the center will not charge complainants a fee for its services. These include preliminary legal advice at the pre-mediation stage, mediation, arbitration and legal representation during arbitration.

“The hearing of consumer disputes in courts is made public. This inevitably incurs a negative impact on traders’ business reputation, despite the fact that they (may) have solid reasons to defend against the allegations,” Chan said.

“But arbitration proceeds in a closed-door manner. This favors the interests of the parties involved,” he added.

The council proposes the initial set-up and recurrent operational costs of the center should be funded by the government rather than by an industry funding. This is to better achieve fairness, neutrality and impartiality in handling consumer disputes.

Beauty services, electronic devices, renovation and retail are the four industries the council considers will be the major beneficiaries of the proposed arbitration procedure.

“If arbitration, normally used in commercial disputes, is extended further to consumer disagreement, it will bring a significant positive effect on solving consumer disputes in Hong Kong,” Simon Chui Chun-king, deputy chief executive of the council, told China Daily.

Head of the council’s legal affairs division Eddie Ng Yick-hung said the council has also researched other jurisdictions which adopt the practice of arbitration in handing consumer rights disputes, including Macao. The research shows that the mechanism can yield to better, faster and more efficient results, Ng said.

When asked about the time frame to set up the center, Chan said consultation with the relevant industries and the government will be needed before the center can be officially established.

“In the long run, the med-arb model can bring benefits to consumers, traders, and also society as a whole,” Chan said. “This can relieve court caseload and also foster a virtuous cycle in the business and consumption environment.”

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