Hong Kong hot on disputes

THE NEW legal rules were part of the drive to make Hong Kong a market leader for efficient and cost effective dispute resolution.
The new procedural code is case-management driven. It puts in place a framework that the legal profession can use to achieve resolution of disputes either by driving the case along the newly-prescribed litigation highway proactively and cost-effectively to early settlement or judgment, or by encouraging early recourse to mediation.
What changes has HK made to its procedural code?
Hong Kong has adopted a rather different approach from the Woolf Reforms in England and Wales.
It has retained the Rules of Court which England and Wales abolished in 1999 and instead has amended them. Whereas the England and Wales Civil Procedure Rules (CPR) govern both the High Court and the County Court, in Hong Kong the High Court and District Court remain governed by their own distinct yet similar respective codes; subject to amendment.
Whereas the cornerstone of the England and Wales procedural code is “the overriding objective” to secure a just result, in Hong Kong the cornerstone is “the underlying objectives” to secure the “just resolution of disputes in accordance with the substantive right of the parties” [the word “objectives” is deliberately cast in the plural, indicating more than one underlying objective].
The Civil Justice Reform Final Report explained the use of the phrase “underlying objectives” at Section 4, para 100, thus: “It would be wise to avoid suggesting that any such rule [as 0.1A, r.1] has an “overriding” character, to avoid encouraging over-elaborate and misguided reliance being placed on it.
“It should be made clear that such a rule merely makes explicit what are implicit objectives which “underlie” specific rules of the RHC, supporting the internal logic of such rules. Such specific rules should accordingly continue to demand intelligent application informed, but not overridden, by the underlying principles.”
By informing and not overriding interpretation, the underlying objectives may therefore be expected to avoid disproportionate satellite litigation.
What precisely is the new machinery?
Among other things, the following have entered the rule book: issue-driven litigation, openness in pleading and written evidence, proactive case management, a fundamental overhaul of expert evidence, offers to settle with a costs sanction, a curtailment of rights of appeal of interlocutory orders, together with
“proportionality”.
The Amended Rules of Court are accompanied by corresponding practice directions that provide the machinery to render the operation of the rules practical and effective.
That said, civil justice reform in Hong Kong is heavily indebted to the Woolf reforms and the English CPR. Indeed, many of the new rules track the wording of the CPR.
What is meant by issue-
driven litigation?
This was elegantly expressed by Lord Salmon in 1964 in his paper Some Thoughts on the Traditions of the English Bar: “But remember this, in few cases, however complex, is there usually more than one point that matters? Very seldom are there more than two and never, well hardly ever, more than three. Discover the points that really matter. Stick to them and discard the rest. Nothing is more irritating to a tribunal than the advocate who takes every point possible and impossible.”
To those brought up in the English nursery rhyme idiom, these words may be re-cast into the following: “Issue! Issue! Or we all fall down.”
Front-end loading,
openness and risk analysis
The new rules provide for pleadings [including the defence] proactively to make clear what the real case is and raise the genuine issue[s]: i.e. openness.
The front-end loading of costs in CJR results from the fact that issues in dispute and one’s position on those issues have to be identified and particularised at the early stages of any action.
The more accurate, issue-driven and transparent that analysis, the more cost-effective the front-end loading may be expected to be. The fact that pleadings are to be supported by a “statement of truth” [which means precisely what the words in terms convey] crystallises yet more clearly the demand for clarity, focus and genuine analysis.
The interaction of openness, risk analysis and settlement
Such analysis in turn ushers in the new rule providing for offers to settle – “sanctioned offers”.
The greater the opportunity to achieve an informed risk analysis, the more readily there can be secured early settlement. Under the old rules, the defendant could “pay in” to put the plaintiff at risk as to costs if he failed to beat what the defendant had paid into court.
There was no corresponding provision as to plaintiffs. Under the new CJR, it is open to both parties to make “sanctioned” offers or payments, with costs sanctions attaching to each.
For example, there will be costs advantages to a plaintiff if he recovers more at trial than he had offered to accept.
Pre-action protocols?
Save for personal injury litigation, there is no pre-action protocol prescribing what is to be served pre-action on the defence and when, as a condition precedent to the issue of proceedings.
The final consultation paper left it open to individual judges of specialist lists to decide whether to prescribe pre-action protocols. This is in contrast to the UK where pre-action protocols are ordained for most categories of court business.
The role of pleadings and “reverse engineering”
The barrister or solicitor pleading the case will be expected already to anticipate the shape of the final judgment he/she will be arguing for and thus he/she will already begin to inform the shape and content of such judgment; what the Honourable Mr Justice Reyes so accurately describes as “reverse engineering”.
One may anticipate the judiciary increasingly challenging litigators at the first hearing [the proactive case management hearing]: “What is [are] the issue[s] in this case? On what issue does the case turn?”
The role of experts
Experts now play a central role in so much litigation. Their reports must reflect the legal framework of a case; their opinions must also be reverse engineered, that is they must specifically and clearly address the technical issues which the court reasonably expects them to address.
The duty to cooperate
This duty is central to “the underlying objectives”. Prior to any hearing, the parties may be expected to seek to agree all matters that are capable of agreement be that law, fact or expert evidence.
What about mediation?
The Hong Kong judiciary is already actively promoting the use of mediation [as opposed to other forms of ADR].
On its implementation in January 2010, the Mediation Practice Direction will set out a protocol for parties to follow when they wish a dispute to go to mediation, buttressed with a costs sanction [for example, where a party is considered to unreasonably refuse to participate in mediation].
The prize for Hong Kong by achieving success in the operation of the new rules is of real significance, particularly in the present economic climate: a pre-eminent international centre for just and cost-effective dispute resolution and expanding free trade are two sides of the same coin.

Iain Goldrein is a QC practising from Chambers in Liverpool and London. He has a particular expertise in procedural law and expert evidence. The author would like to express his thanks to the many members of the legal profession in Hong Kong who contributed to this article.