Consumer Council

Details revealed for independent arbitration centre to handle Hong Kong shoppers’ complaints

Proposed Consumer Dispute Resolution Centre will be designed to settle consumer complaints without the need to go to court, and would provide free legal advice to customers

PUBLISHED : Wednesday, 31 August, 2016, 9:59am
UPDATED : Wednesday, 31 August, 2016, 11:25pm

Hong Kong’s Consumer Council has revealed long-awaited details of a plan for an arbitration centre for disgruntled shoppers and customers to seek legal advice or settle claims without the need for long and expensive court procedures.

In a report released on Wednesday, the consumer watchdog ­recommended the government set up an independent centre to resolve disputes between ­customers and businesses through mediation and ­arbitration. The amount of ­compensation would be capped at HK$200,000.

Modelled on a similar system of “mediation first, arbitration next” in Macau and Portugal, the proposed Consumer Dispute Resolution Centre should be funded and operated by the ­government to maintain its ­neutrality, the council said.

“Hong Kong is more than ready to put in place such a ­consumer dispute resolution ­centre,” said Samuel Chan Ka-yan, who chairs the council’s legal protection committee. He cited the city’s “adequate and ­competent professionals, and sound legal framework”.

“The resources of the courts could be better used to deal with needier cases,” he said.

Customers would not have to give up their rights because of high legal fees and lengthy ­processes, he added.

Hong Kong’s beauty parlours and electronic gadget retailers could be prime targets

In response, the Department of Justice said it had all along ­“encouraged and supported use of arbitration or mediation to resolve disputes in suitable situations”.

The department said it would exchange views with the ­Consumer Council on its recommendations and provide advice to other relevant policy bureaus.

According to the watchdog, while free services, including ­mediation and legal advice, would be provided for consumers, the specialist centre’s operational costs should be capped at a certain amount, but the council did not ­specify how much. Arbitrators would be paid an honorarium.

Mediators and arbitrators would be chosen from a government-approved pool by the ­consumers and businesses involved in a dispute.

“There is ­remarkable demand for arbitration by consumers,” Chan said.

About 5,000 cases, or 25 per cent of consumer complaints to the watchdog, remained ­unresolved each year from 2011 to 2015, partly because shoppers were wary of high legal costs.

As some 97 per cent of cases ­involved amounts less than HK$50,000, Chan said, complainants might not consider it worthwhile going through the courts under the current system.

Unlike traditional litigation, where judges make rulings without necessarily being experts in the fields concerned, mediators and arbitrators are expected to draw on specialist skills.

“If the mediator or arbitrator possesses relevant experience ... the case can be resolved very quickly and cost-effectively without engaging in any expert ­evidence,” Chan said.

He added that arbitration cases could be solved within months, while court battles can take years.

Chan also noted that case ­details would not be made public in closed-door mediation or ­arbitration, an arrangement preferred by merchants, so they could protect their reputation and business secrets. “The legal costs of society as a whole will be ­reduced,” he said.

To initiate the mediation or ­arbitration process, mutual ­consent by both parties in a ­dispute will be needed. Traders who agree to become permanent members of the centre will be ­allowed to ­display a specific logo to gain ­consumer confidence.

Council chief executive Gilly Wong Fung-han said the watchdog would start consulting major commerce chambers on Thursday, but did not specify when the centre would be launched.