Guidance Notes

GUIDANCE NOTE ON JUDICIARY'S PRACTICE DIRECTION 31 ON MEDIATION

This Guidance Note provides assistance on the application of the new Practice Direction 31 on Mediation ("PD"). The PD can be downloaded at https://legalref.judiciary.hk/lrs/common/pd/pdcontent.jsp?pdn=PD31.htm&lang=EN. Solicitors are expected to play a prominent role in advising clients on mediation, preparing them for mediation, and possibly representing them in the mediation process as well as drafting the agreed terms and consequential court orders.

Mediation Providers

The Law Society has a Panel of qualified mediators. These mediators are solicitors who have specialised in most areas of litigation before the courts. Solicitors will be expected to provide guidance to their clients on the selection of potential mediators therefore it would be appropriate for solicitors to consider engaging a mediator from the Law Society's Panel as they will be more familiar with the requirements of the Judiciary's PD.

There is no requirement that any mediator be professionally qualified as such, but the bodies mentioned in Annexure 1 list mediators who have received training as mediators.

Law Society's Material on Mediation

Solicitors are encouraged to refer to the Law Society's material on mediation which contains inter alia:

1. details of the Law Society's own Panel of mediators who can be appointed;
2. a Mediation Agreement which can be adapted; and
3. Law Society's mediation rules which can be adopted to apply to mediations (conducted under the new PD) by Law Society mediators.

For easy reference, the same material can be found at the Law Society website www.hklawsoc.org.hk at "The Law Society's Mediation Services".

Law Society Explanatory Pamphlet on Mediation

The Law Society publishes a pamphlet in relation to mediation which can be downloaded and given to your client. It is available from the Law Society's website www.hklawsoc.org.hk at "The Law Society's Mediation Services".

Judiciary's Practice Direction on Mediation ("PD")

Solicitors should take the following steps:-

1. Step 1 - Advise Clients of the PD

Under paragraph 4, solicitors must advise their clients of the possibility of the Court making an adverse costs order (after 1 January 2010) where a party unreasonably fails to engage in mediation. The circumstances in which such advice is given will naturally vary from case to case, depending on the background to the litigation and efforts at resolution prior to giving such advice. However, it is recommended that solicitors include a suitable reference to the existence of the PD and the costs consequences either in their retainer letters or in a separate letter to their clients. It is implicit in the PD that solicitors assist the Court in its underlying objective to facilitate the settlement of disputes, and encourage such efforts by explaining the advantages of mediation.

Annexure 2: Sample letter to be adapted as appropriate.

2. Step 2 - Mediation Certificate

Under paragraph 9 of the PD, a Mediation Certificate must be filed at the same time as the Questionnaire under Order 25 Rule 1. It is to be in the form of Annex B of the PD. If a party is not willing to attempt mediation, then they need to set out the reasons in the Mediation Certificate, or in an attached sealed statement. If a sealed statement is filed, it needs to be sent to the other party as well as attached to the Mediation Certificate. There is no reason why a solicitor should not advise a client to attempt mediation prior to the stages in Paragraphs 9 and 10 of the PD.

3. Step 3 – Mediation Notice

If the party is willing to attempt mediation, then a Mediation Notice should be served.

1. A Mediation Notice in the form of Annex C needs to be completed and sent to the other party as soon as practical after filing the Mediation Certificate.
2. Preparing for the Mediation
   In order to complete the Mediation Notice the solicitor and client would have to discuss whether any mediator is to be nominated. If so, then an indication of that mediator's fees and the venue can be inserted in the Mediation Notice together with proposals on the payment of the costs of the mediation, such as a suggestion for "costs in the cause" or "an equal contribution."
3. Minimum level of Participation
   The Mediation Notice will also provide (paragraph 6) for the inclusion of a specified minimum level of participation and the PD footnote suggests a suitable clause providing for "one substantive mediation section". The PD provides that there will be no costs consequences if a party has engaged in mediation to the "minimum level".

OR Step 3 - Mediation Response

4. In the event the other party has already served a Mediation Notice, the solicitor will then need to consider the specimen Mediation Response.

1. The Mediation Response needs to be filed within 14 days (presumably of service) unless otherwise agreed or directed.
2. Under paragraph 15 the Mediation Notice and Mediation Response can be taken into account by the Court on the question of costs, they should not erroneously indicate an unreasonable refusal to engage in mediation.

5. Step 4 - Resolving Administrative Issues - Mediation Minute

1. In the event of any inconsistency between proposals in the Notice and Response, the parties are directed to try to reach agreement. If they do so, the variation on the proposals in the Notice and Response is to be recorded in a "Mediation Minute" although no precedent is suggested for that. It may follow the format of the Notice and Response in an abbreviated form, dealing with those limited items in question.

OR Step 4 - Court Direction

6. If parties are unable to reach agreement on proposals then the Court can, on application jointly or by one party give directions but only on limited issues of: venue, costs of the mediation, minimum level of participation and commencement date of the mediation.

7. Mediation

In the event that agreement is reached by the respective Mediation Notice and Response, the parties will proceed as agreed, or alternatively as directed, to appoint a Mediator.

8. Delay in Proceedings/No Automatic Stay

The commencement of the mediation does not automatically stay proceedings. In the event there is to be a mediation, the parties may discuss whether it is necessary to adjust any timetables and seek any stay of proceedings. In the event that the parties disagree, then the Court can decide on the matter under paragraph 16 of the PD.

9. Notify Court

In the event that a settlement is reached, the parties are directed to notify the Court promptly. In some cases it will be suitable for matters to be disposed of by way of a Consent Order in appropriate form. If it is clear that there will be no difficulty over the preparation and filing of a draft Order the Court might be notified by letter in advance of preparation of the Order.

Annexure 1

Annexure 2

Order 1A of the Rules of the High Court provides that the Court has an underlying objective of facilitating the settlement of disputes. The Court has therefore issued the Practice Direction on Mediation designed to encourage parties to use alternative dispute resolution in an effort to settle the case so as to avoid the expense, time and uncertainty involved in litigation.

The Law Society has provided a pamphlet explaining some of the advantages of mediation which is attached herewith. The Law Society and other bodies provide mediation services whereby a mediator can be chosen. The pamphlet also explains the method by which a mediator is appointed and a mediation proceeds.

One of the advantages of mediation as explained in the pamphlet is the considerable saving in costs which is possible in comparison with the costs that may well be incurred in litigation.

Should parties fail to make any effort to mediate, to at least a minimum level, the Court can take this failure into account if it is unreasonable. It would do so at the time when it is considering what are the appropriate costs orders to make in the case. Even if a party succeeds, if the Court is of the view that a party unreasonably failed to engaged in mediation, it could order that the successful party should not have its usual order for costs in relation to the litigation, or parts of it.

Mediation Certificate

It is necessary for your solicitor to file a certificate stating that the PD on Mediation has been explained to you and that you are aware of the possible costs consequences of unreasonable failure to engage in mediation.

Your solicitor's Mediation Certificate will state whether or not you are prepared to engaged in mediation, and if not, give the reasons.

Mediation Notice(/Response)

If you are prepared to engage in mediation a Mediation Notice must be served on the other party (parties). A Mediation Notice can specify a mediator and the rules of a particular mediation body to be used during the course of the mediation. A copy of the Court's specimen Mediation Notice is enclosed herewith and you will note that draft paragraphs [       ] need to be completed. We will need your instructions in relation to the insertions to be made.

OR

{A copy of the Mediation Notice which has been served on [       ] is enclosed herewith, together with a specimen Mediation Response. Proposals have been made by the applicant for mediation. The Mediation Response contains draft paragraphs which need to be completed with your instructions (this must be filed within 14 days of service of the notice)}.

Legal Costs

The Mediation Certificate, Mediation Notice and the Mediation Response can be taken into account by the Court in deciding on the question of legal costs. They should demonstrate a reasonable approach in furthering the underlying objective of settlement where it is suitable to attempt mediation.