13 December 2011
On 30 November 2011, the Government introduced the Mediation Bill into the Legislative Council. Unlike draft versions of the Mediation Bill, no provision is made for creating a single accreditation body for mediators. However, the Mediation Bill does seek to define "mediation" and implement a regulatory framework with respect to the protection of anything said, done, or prepared for the purpose of, or in the course of mediation ("mediation communications").
But what does the Mediation Bill really achieve? This update provides a brief overview of the current status of mediation in Hong Kong and reviews the key confidentiality provisions of the Mediation Bill.
Mediation as a dispute resolution procedure has been well established in the Hong Kong construction industry. Government Works Contracts from as early as 1990 featured mediation as a condition precedent before any other procedure, including arbitration and litigation, could be undertaken.
The implementation of mediation as a feature in all civil disputes, however, is a reasonably recent evolution. The Civil Justice Reform in 2009, familiar to all local practitioners, was the catalyst. In an effort to maximize cost effectiveness and expedite the dispute resolution process, the Judiciary promulgated a Practice Direction on Mediation ("PD31"), which became effective from 1 January 2010.
While PD31 does not make it compulsory for all parties to Hong Kong civil litigation to attempt mediation, Hong Kong Courts may and will in appropriate cases, order costs to be taxed on a more generous basis due to the party's unreasonable refusal to attempt mediation.1
The Mediation Bill contemplates that the proposed Mediation Ordinance will apply retrospectively to mediations conducted (in whole or in part) in Hong Kong or to mediation agreements which provide that the Mediation Bill or Hong Kong law applies.
Definition of Mediation
The meaning of mediation is defined in clause 4 of the Mediation Bill:
"A structured process comprising one or more sessions in which one or more impartial individuals, without adjudicating a dispute or any aspect of it, assist the parties to the dispute to do any or all of the following-
- identify the issues in dispute;
- explore and generate options;
- communicate with one another;
- reach an agreement regarding the resolution of the whole, or part, of the dispute."
The definition is consistent with the facilitative model of mediation provided for in PD31, namely, the mediator is there to assist the parties to reach their own resolution of the dispute rather than imposing their own views or decisions on them.
Confidentiality of mediation communications is already recognised by the Courts.2 Further, before commencing the mediation process, almost all parties who participate in mediation in Hong Kong execute a mediation agreement which usually includes standard confidentiality provisions.
The Mediation Bill confirms that subject to certain exceptions discussed below, all mediation communications are confidential. Accordingly, in the event the parties are unable to reach agreement and litigation or arbitration commences or continues, the parties cannot disclose the mediation communications in the proceedings.
There are some important exceptions. First, the Mediation Bill defines mediation communications so as to exclude an agreement to mediate and a settlement agreement. It follows that where parties wish to maintain confidentiality in respect of a settlement agreement made at the conclusion of a mediation, the settlement agreement must include a confidentiality clause.
Secondly, clauses 8(2) and 8(3) of the Mediation Bill identifies circumstances in which mediation communications may be disclosed. This includes where the parties and the mediator agree, the information has been lawfully released into the public domain, they comprise documents which are otherwise discoverable in civil proceedings or where the communications are otherwise required by law to be disclosed. The Mediation Bill also provides that mediation communications may be disclosed with prior leave of the Court or tribunal for the purpose of enforcing or challenging a mediated settlement agreement, establishing or disputing an allegation or complaint of professional misconduct made against any professional participating in the process (including the mediator) or for any other purpose that a Court or tribunal considers justifiable.
Whilst the confidentiality provisions in the Mediation Bill are largely consistent with the common law position, they generally provide greater certainty to the confidential and without prejudice nature of mediation communications and clarify the circumstances in which disclosure may be made. In our view, clauses 8(2) and 8(3) of the Mediation Bill will override a confidentiality provision in a mediation agreement (made before or after the commencement of the Ordinance) to the extent the latter is inconsistent with those provisions of the Mediation Bill.
The timing of the Mediation Bill’s progress through LegCo will depend on whether a Bills Committee should be formed to scrutinise the Bill in detail. This is currently being considered by the Legal Service Division of the Legislative Council, together with the legal and drafting aspects of the Mediation Bill.
As we follow the progress of the Mediation Bill through Legco, it is clear this recent step is a further indication of the Government’s desire to promote and encourage parties to adopt mediation as a favoured alternative dispute resolution process in Hong Kong.
1. Golden Eagle International (Group) Limited v GR Investment Holdings Limited (HCA 2032/2007).
2. See comments of Ribeiro J in Champion Concord Ltd and Anor v Lau Koon Foo and Anor (FACV 16 and 17/2010, 27 May 2011)