The View

Lawyers won’t like it, but the new arbitration centre is a boon for business and consumers

The Consumer Council’s dispute resolution centre will bring wide ranging benefits-- except for the legal monopoly

PUBLISHED : Wednesday, 07 September, 2016, 10:10am
UPDATED : Wednesday, 07 September, 2016, 11:17pm

Some of my best friends are lawyers (this sounds like a stretch but it happens to be true) nevertheless I am inclined to think that they have quite enough litigation business. That’s why I was pleasantly surprised to see the toothless Consumer Council finally coming up with a plan for an arbitration centre to resolve small-scale disputes between businesses and their customers.

It is well known that many customers, and smaller businesses for that matter, are unable to seek legal redress because the cost and time involved of so doing is prohibitive. This is why when you hear the words, “go sue me”, you can be pretty sure they come from someone with more money than you, confident that they have the deep pockets to see off any litigation attempt regardless of merit.

I heard them muttering about how it would be unfair to business and could produce a proliferation of complaints

The Council says that some 25 per cent of consumer complaints are unresolved each year, often because of fears over the high costs of litigation relative to the modest sums in dispute. An arbitration centre offers the prospect of speedier and far less costly settlements.

As it happens such a centre already exists but it deals with much bigger cases. The Hong Kong International Arbitration Centre was established in 1985 and is part of a global network of similar centres that focus on disputes between large companies operating on a cross-border scale. Although it initially gained government support it is now sufficiently successful to be self funding.

The Consumer Council’s proposal is far more modest but there is no reason why it could not be equally successful.

Given the many advantages of this proposed arbitration scheme I was, lamentably, not surprised to see the reflex negative response of some business organisations. As a business owner with a fair number of customers I guess that these fine upstanding folk were speaking on my behalf. However my opinion was not sought, nor, I guess, was it sought from others in my situation.

Why were they so quick to dismiss this proposal out of hand? I heard them muttering about how it would be unfair to business and could produce a proliferation of complaints. It was also, correctly, pointed out that part of the arbitration process involves mutual agreement not to litigate the outcome.

However this level of criticism is pretty thin stuff. For a start how can they be sure that this process will be biased in favour of customers? There is no foundation for this claim and it ignores the crucial fact that an arbitration process engages the services of specialists in the area that is subject to arbitration. Unlike lawyers who are mainly but not exclusively generalists; specialists should be able to provide specific expertise in these matters.

Secondly, there is always a danger that providing new paths for making complaints will lead to an increase in complaints, some of which will be on dubious grounds. The Council however proposes a vetting process prior to arbitration that should minimise this risk. However the best way of avoiding complaints is to provide the kind of service unlikely to give rise to complaints.

Most important is that participation in an arbitration scheme is voluntary. Companies can advertise their membership of the scheme both as a sign of confidence in their products and of their willingness to deal with complaints in a fair way.

And there is another plus here, namely that unlike litigation, which can end up in court cases subject to often unwelcome publicity, arbitration is not conducted in the public domain and thus the possibility of unjustified reputational damage can be avoided.

Given that the advantages far outweigh the disadvantages of this scheme the Consumer Council is to be congratulated for making these proposals, even though they took their time in so doing.

However a proposal from the Consumer Council, a body with no statutory powers, is one thing, implementation is quite another. A credible arbitration centre will require government funding and the approval of the lawyer’s friend, a.k.a. the Department of Justice. Don’t hold you breath for a speedy response from this quarter, nor underestimate the determination of the vested interests in the law business that are loath to see any erosion of their money making opportunities.

This might be somewhat unfair to the legal community as a whole as the initiative and indeed most of the hard work of establishing Hong Kong’s bigger international arbitration centre came from lawyers and not all lawyers are as money grabbing as others.

Yet at an institutional level lawyers’ organisations work assiduously to preserve their monopoly and, as we have seen in this instance, some business organisation’s instinctive conservatism does no favours to businesses on the ground that actually like their customers and want to provide the best service they can.