Hong Kong Mediation Service Helps Mainland Enterprises Resolve Cross-border Commercial Disputes

10 Apr 17

Hong Kong Mediation Service Helps Mainland Enterprises Resolve Cross-border Commercial Disputes

Under the terms of the Belt and Road Initiative (BRI), the 60 or so countries that fall within its geographical remit are expected to benefit from both an enhanced investment environment and streamlined trade arrangements. In practical terms, this will manifest itself in a number of jointly-developed Free Trade Zones, an expansion of existing trade activities and moves to nurture both the trade in services and cross-border e-commerce. Overall, the BRI programme is expected to set a new high water mark in terms of cross-border business activities, with an accompanying rise in the number of international commercial disputes.

Typically, these cross-border trade disputes revolve around such issues as breach of contract, quality control problems, deferrals and difficulties related to customs procedures. Under established practices, such disputes are settled via expensive and time-consuming litigation, often across a number of different jurisdictions.

Photo: Offering on-site mediation service at the Canton Fair: Daniel Ying, a Hong Kong-based General Mediator

Offering on-site mediation service at the Canton Fair: Daniel Ying, a Hong Kong-based General Mediator.

Ying Chi Lit Daniel [1] is a General Mediator who has spent the last two years offering on site arbitration services at the Canton Fair, China’s largest trade event. Two years ago, the fair – more formerly known as the China Import and Export Fair – was chosen as the pilot zone for the trial of a new initiative, one designed to settle cross-border trade conflicts between Chinese companies and their overseas counterparts through an internationally-accepted mediation framework.

Under the terms of this initiative, mediation is the first step for all of the parties concerned. Should this prove successful, the two sides then sign a settlement agreement before applying to a mainland arbitration court to endorse the arrangement. Once this step has been completed, the agreement is considered binding on all the relevant parties under the terms of the New York Convention, an agreement covering the recognition and enforcement of foreign arbitral awards recognised by some 65 countries. Combining aspects of both mediation and arbitration, this legally-binding model has proved highly effective in terms of resolving trade disputes. As such, it is seen as a fast, effective and low-cost platform for resolving cross-border disputes between the mainland and its overseas trading partners.

According to Ying, this globally-accepted model of facilitative mediation is very different to the form of advisory mediation favoured on the mainland. The international model focuses more on enabling all parties concerned to make their own decisions and evaluate their own situations, constantly facilitating communication between the various sides, while promoting an understanding of each other’s needs and perspectives. The mediator then guides the parties with regard to discussing, creating and expanding upon feasible solutions, while gradually addressing any difficulties.

Once a settlement has been reached, the mediator then assists in drafting and formalising the final agreement. Overall, the mediation process is based on the principles of voluntariness, neutrality and confidentiality and looks to both resolve the immediate conflict while fostering a long-term relationship between the parties.

According to Ying, many of the overseas businessmen who engaged the services of the Canton Fair arbitration centre were delighted to learn they were dealing with a Hong Kong-based mediator, believing this offered a very trustworthy route for the resolution of any trade-related issues. Overall, Hong Kong service providers are seen as having had greater exposure to the international business environment, a clear asset when dealing with such situations.

As the BRI programme and the mainland’s going-out initiatives continue to roll out, the demand for cross-border dispute resolutions will inevitably rise. Addressing this issue, Rimsky Yuen, Hong Kong’s Secretary for Justice, reassured the Legislative Council’s Panel on the Administration of Justice and Legal Services back in 2016 that every effort will be made to actively promote Hong Kong’s legal and dispute resolution services. It is hoped that this will encourage mainland businesses and those based in countries within the scope of the BRI to use the services of the relevant Hong Kong professionals whenever the need arises.

Yuen also committed Hong Kong’s mediation bodies to establishing a wide-ranging dialogue with their mainland counterparts in order to enhance the effectiveness of all concerned.

Overall, Ying believes the extensive experience of Hong Kong’s international facilitative mediation service providers is the perfect complement to China's arbitration-based cross-border commercial dispute resolution services and mechanisms. He also hoped that an increasing number of companies operating in markets along the proposed BRI routes would opt to use the mediation plus arbitration model when it came to resolving commercial disputes, believing this will help China and Chinese companies as they participate more fully in the global business arena.

 

[1] Daniel Ying is a Director of the Hong Kong Mediation Centre, Chairman of its Disciplinary Committee, a mediation expert in Hong Kong and Chinese commercial matters, a cross-border mediation instructor and an examiner. He has dealt with a variety of conflicts, including: a number of business disputes in both China and Hong Kong, corporate mergers, acquisitions, reform programmes, investment and financial disputes, partner conflict, debt collection and account handling problems.

Content provided by Picture: Pansy Yau

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