In June 2017, the Arbitration and Mediation Legislation (third party funding amendment) Ordinance 2017 was published. It introduces the framework for third party funding (TPF) for arbitration and mediation in Hong Kong by introducing a new part 10A to the existing Arbitration Ordinance (Cap 609). This legislation allows for TPF of arbitrations in Hong Kong in return for a financial benefit if the arbitration is successful.
Some have suggested that the benefits of TPF include expanding financing options for those unable to fund an arbitration proceeding, while the potential risks include the possibility for improper influence over proceedings, lack of transparency, conflicts of interest and a possibly grey zone within which the aims of TPF may align with those of controversial vulture funds. To address some of these concerns, the third party funding amendment requires disclosure of funding agreements and lawyers are prohibited from funding a party for whom they act. Close oversight will be necessary to determine whether such provisions provide sufficient safeguards to overcome the potential risks of TPF.
Both Hong Kong and Singapore have developed provisions for the use of mediation in the context of arbitration proceedings where parties agree to this process with some slight variation. In Singapore, the Arb-Med-Arb Protocol (“AMA Protocol”) is a joint initiative of the Singapore International Arbitration Centre (SIAC) and the Singapore International Mediation Centre (SIMC). According to the Protocol, parties who commence arbitration can choose to stay the arbitration proceedings and attempt mediation under the SIMC. If the mediation is successful, the agreement can then be referred back to the SIAC and recorded as a consent award.
In Hong Kong, the Arbitration Ordinance (“AO”) provides that Arb-Med-Arb may be conducted by the same arbitration tribunal at the request of the parties. If the mediation is successful, the agreement is written up as a consent award. If the mediation is not successful, the tribunal must disclose any confidential information revealed in private sessions to all parties. More information about the process as practice in Hong Kong can be found here.
At present, over 68 countries and regions have endorsed China’s Belt and Road initiative which aims to strengthen trading ties among regions along the original silk road route. As part of the initiative, various dispute resolution proposals are being put forward. Within Mainland China, the Beijing Arbitration Commission (BAC) has entering into ‘institutional coalitions‘ with the Kuala Lumpur Regional Centre for Arbitration (KLRCA) and the Cairo Regional Centre for International Commercial Arbitration (CRCICA). In addition, the BAC in collaboration with the Nairobi International Arbitration Centre has established a China-Africa Joint Arbitration Centre (CAJAC) in March of 2017.
Within Hong Kong, the International Academy of the Belt and Road released a Blue Book on the Dispute Resolution Mechanism for the Belt and Road which advocates mediation followed by arbitration. Hong Kong arbitration institutions have addressed commercial disputes between trading partners along the Belt and Road and as addressed in a recent talk by the HK Secretary for Justice, stand to contribute to future cooperation in this area.
As reported in the SCMP, on November 15, Hong Kong Shue Yan University (HKSYU) will host an Interdisciplinary Research Day highlighting insights from law, psychology, restorative justice and nuroscience on the practice of mediation. Speakers include: Prof. Michelle LeBaron, Dr. Peter Reiner, Dr. Shahla Ali, Prof. Leung Hing Fung, and Prof. Dennis Wong. Details of the event can be found here. The event is free and open to all.