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Author: Deacons
Service Area: Litigation & Dispute Resolution
Date: March 2011
Country: Hong Kong

 

Guide to Hong Kong Civil Litigation And Dispute Resolution

SUMMARY OF CONTENTS

About Deacons

Deacons is the largest independent law firm in Hong Kong with offices in Beijing, Shanghai and Guangzhou.

In Hong Kong, Deacons has one of the largest litigation and dispute resolution practices. Our lawyers have extensive experience in a wide range of litigious matters and often deal with large-scale, complex, multi-jurisdictional and multi-party disputes.

Deacons also has expertise in alternative dispute resolution procedures, such as arbitration and mediation. We also assist our clients with compliance issues and help them develop strategies to protect their interests and reduce the risk of litigation.

In 2011, Deacons celebrates its 160 years in Hong Kong. As a firm that always has litigation and dispute resolution as our core practice, we would be pleased to assist and advise you in relation to any contentious or potentially contentious matter.

This guide provides an overview of the rules and procedures of civil litigation, which were amended substantially in April 2009 pursuant to the Civil Justice Reform in Hong Kong. The Reform not only changed the court rules and procedures, but also brought about a change in litigation culture.

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Court System in Hong Kong

The courts in Hong Kong consist of the Court of Final Appeal (being the highest appellate court), High Court (Court of First Instance and Court of Appeal), District Court, Magistrates' Court, Coroner's Court and Juvenile Court. There are also various tribunals, determining specific types of dispute, including the Lands Tribunal, Labour Tribunal, Small Claims Tribunal and Obscene Articles Tribunal. The choice of court or tribunal depends on the nature of the case and the size of the claim.

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Language

English and Chinese are the official languages for court proceedings in Hong Kong. Whilst most court proceedings are conducted in English, if a party wishes the trial to be conducted in Chinese, an application can be made to have the trial heard by a bilingual judge.

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Court Rules and Practice Directions

The rules and procedures governing civil litigation are contained in the Rules of the High Court and, for District Court proceedings, in the Rules of the District Court. In addition, there are Practice Directions issued by the court for the guidance of practitioners. Some specialist areas, for example personal injuries and construction, have their own Practice Directions, containing the practice and procedures to be followed in those types of cases.

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The Underlying Objectives of Civil Litigation

The court rules contain a list of "underlying objectives", which the court must consider and give effect to whenever exercising its powers or interpreting the court rules or practice directions. Parties must therefore bear them in mind when taking any step in proceedings or deciding whether to make any interlocutory application. The underlying objectives are to:

  1. increase the cost-effectiveness of any practice and procedure;

  2. ensure that a case is dealt with as expeditiously as is reasonably practicable;

  3. promote a sense of reasonable proportion and procedural economy in the conduct of proceedings;

  4. ensure fairness between the parties; 

  5. facilitate settlement of disputes; and

  6. ensure the resources of the court are distributed fairly.

In giving effect to the underlying objectives, the court shall always recognise that the primary aim in exercising its powers is to secure the just resolution of disputes in accordance with the substantive rights of the parties. The rules also impose a duty on the parties and their lawyers to assist the court to further the underlying objectives.

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Active Case Management by the Court

The court rules place a positive duty on the court to further the underlying objectives by actively managing cases. These case management powers enable the court to intervene in a case and make orders of its own motion, rather than sitting back and letting the parties run the case as they think fit. The aim is to ensure that a case is managed efficiently and proportionately to the amount involved or importance of the case. The court expects the parties to act reasonably and co-operate with each other. Failure to do so may result in adverse costs orders against the party acting unreasonably.

Active case management includes :-

  1. encouraging parties to co-operate with each other;

  2. identifying issues at an early stage;

  3. where appropriate, encouraging and facilitating the parties' use of alternative dispute resolution procedures to resolve the dispute;

  4. helping the parties to settle;

  5. fixing timetables and controlling the progress of the case; and

  6. dealing with the case without the parties having to attend court.

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Mediation

As mentioned above, one of the underlying objectives of the court rules is to facilitate the settlement of disputes. Further, as part of active case management, the court has a duty to further that objective by encouraging the parties to use an alternative dispute resolution ("ADR") procedure. Mediation is a form of ADR, a voluntary procedure in which a trained and impartial third party (called a mediator) helps the parties settle their dispute. The mediator assists the parties discuss the issues in dispute, identify their real needs and interests, explore possible settlement options and reach a settlement agreement.

A Practice Direction requires the parties to indicate at an early stage of court proceedings whether they are willing to attempt mediation and, if not, why not. If the court considers that a party has unreasonably refused to engage in mediation, it may make adverse costs order against that party. If, for example, a party refuses to engage in mediation and insists on litigating a matter to trial, even if that party wins at trial, the court may decline to award them their legal costs if it considers their refusal to mediate unreasonable.

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Before Proceedings are Commenced

At a fairly early stage of proceedings, the parties are required to complete questionnaires, giving detailed information about their cases. After considering the questionnaires and the needs of the particular case, the court will fix a strict time-table for steps to be taken in the action and "milestone dates" which, once fixed, are extremely difficult to change. Accordingly, before commencing proceedings, a claimant needs to identify issues and carry out as much preparatory work as possible, to be able to complete the questionnaires and comply with the court's strict time-table.

For personal injury cases, a Practice Direction lays down a pre-action protocol, which requires parties to proposed proceedings to exchange certain information and documentation within a certain time frame, before proceedings are commenced. 

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Pre-emptive Remedies

Where there is a real risk that a defendant may deal with or dispose of his assets with the intention of defeating the plaintiff's claim, the plaintiff may obtain a mareva injunction, freezing the defendant's assets.

Where parties are involved in proceedings outside Hong Kong, but have assets in Hong Kong, those assets may be frozen by a mareva injunction in order to assist those foreign proceedings. Such injunctions will only be made where the judgments or arbitral awards in those overseas countries are capable of being enforced in Hong Kong.

Where there is evidence that a defendant is about to leave Hong Kong, thereby obstructing or delaying satisfaction of any judgment which may be obtained against him, the plaintiff may apply for a Prohibition Order to prevent the defendant leaving Hong Kong. 

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Commencing Proceedings

Proceedings are commenced by the claimant issuing a writ (or in some circumstances, an originating summons), in the court appropriate to the type of the case in question. The parties then file with the court and serve on each other written statements of their case, known as "pleadings" in writ actions. Since the introduction of Civil Justice Reforms in April 2009, all pleadings must be verified by a "statement of truth". In signing the statement, the party confirms that it believes that the facts stated in the pleadings are true. The potential consequences of signing a statement of truth, without an honest belief in the truth of the pleading's contents, are serious, namely contempt proceedings, which may result in a fine or imprisonment. It is important to identify the appropriate person to sign the statement of truth at an early stage if a party to the proceedings is a corporation. 

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Discovery

Discovery is a stage in the litigation process which requires each party to disclose to the other the existence (and allow inspection) of all documents which relate to the matters in question in the action and which are or have been in their possession, custody or power, regardless of whether the documents are in favour of the party's case. "Documents" include not only paper documents, but also emails, computer databases, photos, video and sound recordings and microfilm. Litigants are under a duty to search for and preserve all documents which may be discloseable in the proceedings.

A party may withhold inspection of certain documents if they are "privileged". The two main types of "privilege" are "legal advice privilege" and "litigation privilege". Legal advice privilege protects confidential communications between solicitors and their clients conducted for the dominant purpose of giving or receiving legal advice. "Litigation privilege" protects confidential communications between solicitors and their clients or between solicitors or their clients and a third party (such as a witness or expert), which come into existence for the dominant purpose of litigation or contemplated litigation.

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Witness Statements

Parties are required to exchange written statements (witness statements) of the factual and expert witnesses who they intend to call to give evidence at trial. As with pleadings, witness statements must be verified by a statement of truth. At trial, a witness statement will generally stand as the witness's evidence in chief. A witness will usually be cross-examined at trial by the opposite party.

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Expert Evidence

Parties may call experts to give evidence on technical matters. Where expert evidence is required, the parties are expected to identify the issues requiring expert opinion at an early stage of proceedings and to exchange expert reports. Again, expert reports must be verified by a statement of truth, whereby the expert verifies the contents to be true and opinions expressed in it honestly held. The court has the power to order parties to appoint a single joint expert, rather than one expert each.

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Trial

Assuming that the case is not settled, it will proceed to trial, where the judge will consider the evidence presented by each party and give judgment. Except for limited exceptions (for example defamation cases) there is no jury for civil trials.

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Appeals

The Court of Final Appeal, the highest appellate court in Hong Kong, hears appeals from the High Court (Court of Appeal). The Court of Appeal hears appeals from the Court of First Instance and District Court whereas the High Court (Court of First Instance) hears appeals from various Tribunals and Statutory Bodies.

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Legal costs

Generally, the losing party will be ordered to pay the winning party's legal costs. However, the court may disallow costs or order a party to pay costs incurred as a result of improper or unnecessary acts or omissions or delay or misconduct in the proceedings. The court rules are aimed at discouraging unmeritorious or unnecessary applications and encouraging the parties to act reasonably and co-operatively throughout the proceedings. Once a costs order has been made, if the parties cannot agree on the amount of costs, this will be determined by the court by a process called taxation.

During the course of proceedings, where the court has determined an interlocutory application, it may make a summary assessment of costs (rather than ordering costs be taxed) and require costs to be paid within a short period, usually 14 days, of the assessment.

Parties who reach a settlement before court proceedings are commenced and agree who is to pay costs, but cannot agree on the amount of costs, can bring "costs only proceedings", in which the only issue for the court's determination is the amount of costs to be paid.

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Enforcement of Judgments

Once a party has obtained judgment, there are various ways to enforce the judgment and the method used depends on the nature of the judgment debtor's assets. Broadly speaking, a judgment can be enforced against the judgment debtor's interests in all forms of tangible assets, including land, stocks and shares, goods and money in bank accounts. Where the judgment creditor does not have sufficient information about the judgment debtor's assets, he can apply to the Court for an order to examine the judgment debtor under oath in order to identify such assets.

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Enforcement of Foreign Judgments and Arbitration Awards

There is a mechanism for the recognition and enforcement of foreign judgments from a number of jurisdictions, by way of a simple and quick registration procedure in the Hong Kong courts. A prerequisite for registration is that enforcement of Hong Kong judgments is reciprocated by the foreign country concerned.

Similarly, there are provisions for arbitration awards made in foreign jurisdictions to be registered and enforced in Hong Kong.

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Reciprocal Enforcement between Hong Kong and Mainland China

Subject to specific requirements, judgments made by courts in Mainland China based on certain types of contracts can be registered in Hong Kong. The effect of registration is that for the purposes of enforcement, the registered judgment has the same force and effect as if it had been made in the Hong Kong court. Similarly, again, subject to specified requirements, Hong Kong judgments can be enforced in Mainland China.

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This Guide is intended to give a general overview of Hong Kong civil litigation and dispute resolution and does not constitute legal advice. If you would like legal advice in relation to Hong Kong civil litigation or dispute resolution, please feel free to contact us.