The city's mediators help avoid lengthy and costly court battles

Despite a growing pool of mediators, Hong Kong is yet to fully embrace the idea of dispute resolution

PUBLISHED : Tuesday, 08 October, 2013, 12:00am
UPDATED : Tuesday, 08 October, 2013, 10:40am

A bank, under siege from elderly customers over losses on risky investment schemes that it sold, offers mortgages at special rates to their families to resolve the claims. In another dispute, a businessman agrees to accept unsold goods from an erstwhile partner as reparation for a reneged deal.

Both settlements came about through mediation, which the government has been promoting in recent years to help ease pressure on the courts. But while the government initiative has spawned a cottage industry to provide mediation training as well as several mediators' groups, the process has yet to gain currency among many residents and organisations. This has left the mediators with little to do.

Hong Kong is well-placed to become a mediation and arbitration hub
Teresa Cheng, Financial dispute resolution centre chairwoman

There's a lot to be said for bringing parties together to talk things out, not least of which is avoiding the cost and stress of legal battles. "While a court case is a zero-sum game with a winner and loser, parties in mediation can think outside the box, discuss and agree on a settlement that is acceptable to both sides," says Denys Look Ting-wah, president of the Hong Kong Mediation Alliance, a company grouping 340 mediators.

Government organisations have yet to really embrace the concept. A prime example is the Hospital Authority, which declined to meet patients and mediators in several disputes over medical procedures that had gone wrong.

In one instance, a man wanted to sue because he felt negligence on the part of medical staff had led his father to fall after surgery. Another case involved a mother who believed a hospital had botched her daughter's dental operation, causing difficulty swallowing.

"The [authority] said it would only take action when patients filed a writ," says alliance vice-president Annita Mau Siu-kwan.

Chan Bing-woon, a solicitor and experienced mediator who sits on the board of the Hospital Authority, acknowledges "there are more and more disputes" between patients and the authority, but says "we need to study how it can embrace mediation".

Still, the authority has been sending its frontline staff, including doctors and nurses, for training, and 240 people have completed the programme since last year.

Hospital Authority culture has been such that medical staff are often inflexible and reluctant to explain more to patients and their families, says Chan. So a major part of training is about learning to listen, communicate and direct their dialogue.

"The mindset of staff is: 'If you are dissatisfied, so be it; we will wait for the court to make a judgment.' We want to change this [passive] culture. Staff should know how to communicate with patients and their relatives and try to defuse problems before it gets to formal mediation, arbitration or lawsuits."

Whether it's conflict over improperly sold insurance or mobile phone packages, opposing parties do not want for mediators if they are willing to come together to work out a solution.

There are now about 500 specialists in mediating family conflict and more than 2,000 accredited mediators, who can be contacted through the Joint Mediation Helpline Office. Based out of the High Court complex in Admiralty, the helpline was set up in 2010 by the Hong Kong Mediation Council, the Hong Kong Bar Association, the Law Society and five other organisations.

But the number of mediators means there aren't enough cases to go round, says Chan, a former mediation council president.

"It is estimated that Hong Kong now covers around 3,000 mediation cases annually. But there are 2,000 mediators. How many cases can each one get each year?" This surfeit is perhaps most acute at the Financial Dispute Resolution Centre, which has 55 mediators.

Opened last year, the centre was set up partly in response to the Lehman Brothers debacle of 2008. Tens of thousands of residents who bought minibonds linked to the US investment bank saw their savings vanish with its collapse. The centre is charged with providing arbitration in financial disputes between customers and banks, brokers and fund managers under the oversight of the Securities and Futures Commission and the Hong Kong Monetary Authority.

But by the end of June, just 36 cases had gone to mediation, well below the 2,000 cases the centre was projected to handle.

The centre's chairwoman, Teresa Cheng Yeuk-wah, attributes the low rate to people's lack of awareness of its services. More than half of the cases handled by the centre involve alleged misrepresentation of investment schemes sold by financial services companies.

"[Consumers] might go to the monetary authority to lodge complaints, but many don't know they can come to us for help and seek a solution through mediation," Cheng says.

In 2012, a new clause was added to the licensing conditions for companies selling financial products, requiring them to inform consumers of the centre's services whenever disputes arise. The financial services companies are also obliged to participate in mediation if a client seeks the centre's help.

Its mediation services cost between HK$300 and HK$550 per hour and there is a ceiling of HK$500,000 on claims handled; but small investors with valid grievances could find that taking their case to the centre may be the most efficient route to realising their claims.

"Our success rate for mediation is 80 per cent and it takes an average of four hours for a case to reach settlement," Cheng says.

Although the mediation ordinance, which sets out the obligations of mediators, only came into force at the start of this year, the practice in Hong Kong dates back to the 1990s, when the airport was being built. It was one of the first Asian cities to adopt mediation.

"Given this long history, Hong Kong is well-placed to become a mediation and arbitration hub in the Asia-Pacific region as [championed by the Department of Justice]," says Cheng, a lawyer who has also served as a mediator for two decades.

"Construction contracts for the airport stipulated that all disputes, such as those about cost overruns and project delays, must first go through mediation. So the earliest mediation cases here were all in the field of construction. I was among the local mediators who went to Singapore and Malaysia to teach them about mediation in the late 1990s," says Cheng.

In 2000, the Family Court of Hong Kong started to encourage embattled spouses to seek mediation before arguing their cases in front of a judge.

And three years ago, the High Court and Court of First Instance began advising litigants to first try mediation.

The Department of Justice's push for mediation is aimed at lessening judges' caseloads. Civil cases coming before the Court of First Instance have risen in the past two years, from 15,966 in 2011 to an estimated 17,210 this year. At the same time, the wait between application for a hearing and the start of the trial has grown steadily longer, from 215 days in 2010 to 231 days in 2011 and 244 days last year.

While the mainland and Taiwan embrace evaluative mediation that allows the mediator to recommend solutions after hearing from both parties, Hong Kong has adopted the facilitated approach in which the mediator acts in a neutral capacity.

"Parties in facilitated mediation are more involved in the settlement. The mediator helps find common ground. Parties are more likely to stick to the settlement because it's due to their own efforts," says Look.

Mau, a media consultant and mediation trainer, believes in negotiated settlements, having seen the toll lawsuits can take on litigants.

"One of my clients felt she received poor chiropractic treatment from a private doctor. She sued him for compensation and found a specialist to testify that her condition was worse than before she sought treatment. But the doctor also got a medical expert to say he was not in the wrong. From her doctor's visit until the scheduled court date, it lasted six years. She was distressed and angry throughout," Mau says.

"In the end, she opted for mediation. It was resolved after two three-hour sessions."

As Cheng explains, mediation allows cooler heads to prevail. "Opposing parties in a lawsuit usually get more entrenched in their views as the hearing progresses, losing their usual rational thinking. A mediator can help them handle their emotions better and prompt them to consider other options."

However, mediation veterans such as Chan worry that the drive towards mediation without ensuring oversight of the training and accreditation of mediators has created a confusing scene with uneven quality of service.

"A decade ago, there was only one training provider. Now there are over 30 institutions providing mediation training and several organisations doing accreditation," he says. "There are a number of substandard mediators."

Time, perhaps, for a cooler look at the mediation explosion.

Keeping a lid on court action:

A host of mediation centres have sprung up in Hong Kong to help resolve disputes at the community level.

  • Taxi drivers Cabbies involved in fender benders and rows with passengers can now file a case with the police and seek help from the Taxi Drivers Mediation Scheme. Launched recently by the Hong Kong Mediation Alliance in collaboration with the United Friendship Taxi Owners & Drivers Association, it provides the first four hours of mediation free of charge. The centre does not handle cases involving liability for personal injury and death.


  • Telecommunications Customers can now take their cases to the Customer Complaint Settlement Scheme mediation service centre sponsored by the Office of the Communications Authority. A centre spokeswoman says: "We used to see clients take billing complaints to court. We want to avoid that and support the mediation move by the government by setting up the centre." All cases are referred by the authority, and parties must be in deadlock for at least six weeks and involve sums of HK$300 or above. The centre, which opened in January, had settled 20 cases by August. Four cases are ongoing.


  • Flat purchases Since 2011, the Joint Mediation Helpline Office has run a mediation centre for owners in dispute with estate developers. The Development Bureau introduced the scheme after a regulation was revised, lowering the proportion of owner agreements needed to trigger compulsory sale of flats in residential blocks from 90 per cent to 80 per cent. "The aim is to lessen the cases going to the Lands Tribunal," says Cindy Fong Yan-yan, a helpline office mediation consultant. It has trained 139 mediators in compulsory sales.