Alternative Dispute Resolution Hong Kong International Arbitration Centre 29 December 2004

1. Alternative Dispute ResolutionHong Kong International Arbitration Centre29 December 2004

2. Overview • Origins and History of the Hong Kong International Arbitration Centre. • The growing need for arbitration flowing from increasing involvement by Hong Kong and Overseas Companies in the Mainland Market. • Arbitration in Hong Kong and Mainland China. • Enforcement of settlements in Hong Kong and China. • The role of the Hong Kong Institute of Arbitrators and the Chartered Institute of Arbitrators (East Asia Branch).

3. Business Disputes • Should commercial disputes be a hindrance to your company’s success. • How should you prepare for the worst. • What advice and guidance is available. • How can you proactively manage your disputes that could substantially save you in unnecessary costs and time. • Understanding the various dispute resolution mechanisms that are available in market place can assist you in managing your potential disputes in an effective and efficient manner while at the same time minimizing your exposure to potential risks.

4. Common Ways to Resolve Disputes in Society Violence Adjudication Negotiation Arbitration Avoidance Mediation Litigation

5. The Advantages of Arbitration • Flexibility in Proceedings • Confidentiality of Proceedings • The Speed of Resolution • Low Cost relative to Litigation • Legally Binding Nature • International Enforceability • Expertise of Arbitrator

6. Disadvantages of Arbitration • A major weakness of the arbitral process is the limited powers which the arbitral tribunal may exercise. • Another perceived drawback of the arbitral process lies in the fact that, in general, it is not possible to bring multi-party disputes together before the same arbitral tribunal. Unlike a Court of Law, an arbitral tribunal generally has no power to order consolidation of actions. • If the Arbitrator is an expert within a specified field, he/she may not have the requisite expertise when the dispute hinges on difficult points of law. • The doctrine of precedent does not apply. Each case is decided on its merits; and is therefore no guide to future similar cases.

7. Types of Arbitration Proceedings Institutionalized An institutional arbitration is one which is administered by one of the many specialist arbitral institutions under its own rules of Arbitration. Ad-hoc Ad-hoc arbitrations often take place under the provisions of a submission agreement which itself often establishes the arbitral tribunal and sets out the procedural rules upon which the parties have agreed. An ad-hoc arbitration arises under an arbitration clause.

8. Enforcement • The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards lays down a detailed framework for the recognition and enforcement of arbitration awards. • Over 140 countries are signatories to this convention • HK adopted the convention on 21 April 1977 by virtue of the United Kingdom’s accession on HK’s behalf. China is also a signatory to the convention and applied it to HK with effect from 1 July 1997 • HK Courts recognize and enforce arbitration awards made in countries which are signatories to the Convention in accordance with the terms of the Convention Arbitration awards are enforceable in the Mainland of China and vice versa.

9. Why Arbitrate in Hong Kong • The World’s Freest Economy • The Rule of Law • A Free and Open Society • Accountable Government • International Business Hub • International Financial Centre • International Arbitration and Dispute Resolution Centre • Update Arbitration Law • Available Expertise ( Including 3 Universities offering Postgraduate studies in Arbitration and Alternative Dispute Resolution courses)

10. Statistics

11. HKIAC 2003 Statistics ArbitrationMediation Construction 1375 Commercial 802 Shipping 280 Joint Venture 70 Others 30 Community 01 Total 2558 Domain Names 32N/A

12. HKIAC 2003 Statistics • Of 255 Arbitrations (excluding Domain Names) • 198 cases involve Hong Kong and other Countries. • 35 cases involve non-Hong Kong parties. • 22 cases involve Hong Kong parties.

13. HKIAC 2003 Statistics • Of the 198 cases involving Hong Kong Parties: - 18 cases from HK and Mainland of China. - 180 cases from HK and other countries. - 166 cases involve contracts performed in HK. - 32 cases involve contracts performed elsewhere. - Disputed amounts range from HK$ 61,000 to over HK$152 million.

14. HKIAC 2003 Statistics • Of the 35 cases involving non-Hong Kong Parties: - 14: Mainland of China/ Mainland of China - 1: United Kingdom/ Mainland of China - 1: Australia/United States of America - 1: Singapore/Mainland of China - 5: Korea/Japan - 9: United States of America/Mainland of China - 3 : Korea/Korea - 1: Netherlands/Mainland of China

15. Hong Kong International Arbitration Centre • The Hong Kong International Arbitration Centre an independent non-profit making limited by guarantee was established in 1985 to provide advisory and support services for the resolution of local and international disputes by mediation and arbitration. • Twenty-six Council Members– Board of Directors. • Seven Full-time staff. • 300 international and local arbitrators of experience and distinction. • An active mediation body –Hong Kong Mediation Council, a division of the HKIAC. • Superb facilities to conduct Arbitrations and other forms of dispute resolution procedures. • Publication of various rules and procedures for arbitrations in Hong Kong including the Securities Arbitration Rules and Small- Claims/Documents-Only Procedures.

16. HKIAC Structure

17. HKIAC Services • Provides a free information service on dispute resolution. • Provides information on arbitration law and procedure relating to international arbitrations in Hong Kong. • Promotes Hong Kong internationally, as the ideal venue for dispute resolution services. • Authority to appoint arbitrators under both the domestic and international regimes of the Arbitration Ordinance. • Authority to decide on the number of arbitrators under the international regime of the Arbitration Ordinance. • Accredits mediators for use on the Court Annexed Family Mediation Scheme. • Administers the mediation services for Hong Kong Government contracts. • Administer gTLDs and ccTLDs as approved by ICANN under the organisation of Asian Domain Name Dispute Resolution Centre –www.adndrc.org ( a joint venture between CIETAC and HKIAC), HKDNR (to handle .hk disputes) and CNNIC (to handle .cn disputes). • Administer rules for the Securities and Futures Commission and the Hong Kong Society of Accountants WebTrust Programme - a third party arbitration framework for the use and adoption by on-line merchants to handle consumer disputes on-line .

18. Hong Kong Mediation Council • The Hong Kong Mediation Council (HKMC) was set up within Hong Kong International Arbitration Centre (HKIAC) in January 1994 to promote the development and use of mediation as a method of resolving disputes. The HKMC is a division of the HKIAC and was previously known as the Mediation Group. • The Council is run by a committee who are responsible for activity co-ordination and who represent mediation interest in a wide variety of areas. In addition, there are specialist sub-committees who concentrate their mediation activities in specialist areas namely commercial, community, construction and family. • The Mediation Council aims to promote the use of mediation and other forms of ADR, encourage collaboration amongst its members and with similar professional bodies, facilitate exchange of information and provide education/training on ADR.

19. Hong Kong Institute of Arbitrators • Hong Kong Institute of Arbitrators (HKIArb) was set up in September1996 by a group of Hong Kong professionals interested in arbitration, mediation and other kinds of dispute resolution. The Institute enjoys charitable status and is non-profit making. It is funded by annual membership fees and is financially independent. • The administration of the Institute is conducted through a Council comprising of professionals of different nationalities and with a diversity of skills and experience. The Council, which is elected annually, has a number of committees covering such areas as membership, finance, institutional development, education and training programmes. • A main objective of the Institute is to promote arbitration and other alternative methods of dispute resolution (ADR) in Hong Kong. HKIArb is involved in the training of arbitrators and mediators, the setting of appropriate standards of conduct for arbitrators and mediators in Hong Kong and law reform relevant both to arbitration and mediation. It is working to forge ties with other organizations involved in arbitration and ADR, particularly those within China and in the Asia region.

20. Chartered Institute of Arbitrators (East Asia Branch) • The Chartered Institute of Arbitrators (CIArb) was founded in 1915 with the aim of promoting Arbitration as an alternative method of dispute resolution to litigation. It was incorporated in 1925, granted a Royal Charter in 1979 and charitable status in 1990.There are branches of the Institute throughout the United Kingdom and overseas. The East Asia Branch, previously known as The Hong Kong Branch, was formed in 1972 which covers geographical area of China, Thailand, Vietnam, Philippines, Korea, Singapore and Indonesia. Changes to the Royal Charter in 1999 means that the Institute now actively encourages the use of ADR to achieve the early and private settlement of disputes.

21. Chartered Institute of Arbitrators (East Asia Branch) • The objectives of the Branch are to provide a regional organization for Members of the Institute who are resident in East Asia generally. The purpose is to promote, encourage and facilitate the practice of settlement of disputes by arbitration and other means of dispute resolution, and to support and promote the status and interests of the Chartered Institute of Arbitrators. • The East Asia Branch is committed to providing education and training in areas of law and practice relating to arbitration, holding demonstration arbitrations, disseminating useful information connected with arbitration and protecting the public interest in relation to the conduct of arbitrations as a means of resolving disputes.

22. Quote “With a good man in the saddle, the unruly horse can be kept in control. It can jump over obstacles. It can leap the fences put up by frictions and come down on the side of justice.” Enderby Town Football Club Ltd. V. The Football Association Ltd. [1971] AC 591 By Lord Denning

23. Another Quote World Peace, like community peace, does not require that each man love his neighbor – it requires only that they live together with mutual tolerance, submitting their disputes to a just and peaceful settlement. By John F. Kennedy

24. Hong Kong the City of Life The City where East greets West that offers you a truly “Can-do” attitude which ultimately leads you towards success year after year Your Partner in Asia

25. Thank You Should you have any questions please feel free to discuss them now or refer to the HKIAC website at www. hkiac.org 38/F, Two Exchange Square Central, Hong Kong Tel 852 25252381 Fax 852 25242171 E-mail: adr@hkiac.org

26. Hong Kong International Arbitration Centre 38th Floor, Two Exchange Square Central Hong Kong www.hkiac.org adr@hkiac.org Tel 852 25252381 Fax 852 25242171