Render unto the mediator…

Mediation-arbitration is available under Hong Kong’s new Arbitration Ordinance. But in most cases, opting for arb-med may not be wise. By David Fong, arbitrator and mediator

A high proportion of foreign-related contracts in the PRC specify Hong Kong as the seat of arbitration.

Section 33(1) of Hong Kong’s Arbitration Ordinance, which took effect in June 2011, provides that an arbitrator may act as a mediator for the parties to arbitration proceedings with their written consent. This arrangement, known as “med-arb”, is not new to Hong Kong. Section 2B of the previous Arbitration Ordinance contains an almost identical provision. Anecdotal evidence suggests that med-arb has rarely been used in Hong Kong. However, since the civil justice reforms of 2009 and a new practice direction on mediation, which was issued in 2010, mediation has become a more commonly used alternative dispute resolution mechanism.

The most often-cited advantage of med-arb is cost-effectiveness. An arbitrator chosen by the parties commonly has relevant expertise and experience in the subject matter. He or she is likely to be familiar with the factual background of the case and the issues in dispute. This may be conducive to successful mediation. It may also save the costs associated with retaining a third party to mediate the dispute who would have to spend time to understand the background of the case.