Hong Kong: Embracing technology in arbitration and mediation

Artificial intelligence is profoundly transforming the global legal profession, ushering in a new era of increased efficiency and cost saving. As an internationally recognised global and regional dispute resolution centre, Hong Kong is at the forefront of the tech-led revolution in dispute resolution.

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The legal profession is on a cusp of tech-led change worldwide. Automated processes using Artificial Intelligence (AI) and machine learning are increasingly taking on routine tasks, freeing lawyers and paralegals for higher-value responsibilities. In the United States, for example, processes involving document review, non-disclosure agreements and vendor contracts can all be handled by AI. One company has even automated the contesting of parking tickets in small claims lawsuits. In a Beijing court, a robot assistant called Xiao Fa (Little Law) uses AI to take questions verbally or via a touch screen and then responds, printing out the relevant documents.

Hong Kong’s legal sector is also undergoing technological change. “AI will revolutionise legal practice here,” said Shahla Ali, a professor of law at the University of Hong Kong and an arbitrator in Hong Kong. Ali cites the city’s new Electronic Business Related Arbitration and Mediation (eBRAM) Centre which provides an innovative, cost-cutting approach to both deal-making and dispute resolution (including arbitration, mediation and negotiation) by cutting travel expenses associated with in-person hearings.

Hong Kong’s common law heritage and world-class legal system underpin the city’s role as one of the world’s top investment destinations.

As legal transactions multiply across geographically widespread Belt and Road Initiative (BRI) jurisdictions, cost-conscious businesses will look for efficient ways to conclude business deals and resolve disputes. “eBRAM's use of AI translation systems and blockchain storage of legal documents represents a next step in the advance of cross-border dispute resolution systems.” said Professor Ali, whose research focuses on governance, development and international dispute resolution in Asia.

eBRAM's use of AI translation systems and blockchain storage of legal documents represents a next step in the advance of cross-border dispute resolution systems.

Shahla Ali
Professor of Law,
The University of Hong Kong

Hong Kong’s professional arbitrators, mediators and legal practitioners, including members of the Bar Association and Law Society, are co-operating in the city’s eBRAM Centre that employs AI for efficient and cost-effective online dispute resolution. “The exponential growth of business through electronic means and smart contracts logically call for a system that is credible, user-friendly and professionally reliable,” said Daniel Lam, chief executive of the eBRAM Centre.

Mr Lam said eBRAM was still in the “incubation” stage, but added that “we have attracted a lot of interest from the legal and arbitral community locally”. The project will initially be aimed at small and medium-sized enterprises. “These parties are at present unable to have immediate international access to justice due to the high costs of formal arbitral process and travelling constraints,” said Mr Lam.

It is predicted that eBRAM would then move to larger cases of formal arbitration, mediation and adjudication. “eBRAM will convince business operators and state-owned enterprises to recognise the benefits of online dispute resolution, and to incorporate clauses into their respective contracts to refer disputes to eBRAM for settlement,” Mr Lam said.

“The fact that this will judicially and economically resolve business disputes will bring about a more modern way of doing business comfortably, electronically and efficiently – across geographical borders, across languages, across cultures.”

Daniel Lam, chief executive of Hong Kong’s Electronic Business Related Arbitration and Mediation (eBRAM) Centre.

Hong Kong’s arbitration system is in the spotlight in October courtesy of the eighth annual Hong Kong Arbitration Week, which brings together experts from across the globe. “Hong Kong Arbitration Week provides an opportunity for arbitration practitioners to share experiences, reflect, connect, learn and take innovative steps to further refine arbitration practice in the region,” says Professor Ali. It is expected that this year’s discussion will be especially compelling.

The arrangement signed in April 2019 between Hong Kong and mainland China is reciprocal and allows parties to arbitral proceeding seated in Hong Kong and administered by designated Hong Kong arbitral institutions to apply to mainland China courts for interim measures in aid of such Hong Kong arbitration.

The arrangement complements that for reciprocal recognition and enforcement of arbitral awards signed in 1999, cementing Hong Kong’s attractiveness as an arbitration hub. “This will also bring the mainland closer to Hong Kong’s legal orbit,” said Peter Yuen, a partner with Shanghai-based Fangda Partners, one of China’s largest law firms.

When the arrangement comes into operation, Hong Kong will be the first jurisdiction outside mainland China where parties, regardless of their nationality or place of business, in relevant arbitral proceedings seated here will be able to seek assistance from mainland China’s courts in granting interim measures.

The impact on Hong Kong will be significant. “[The April signing] enhances Hong Kong’s role as a key legal services and dispute resolution hub for the region,” said Paul Teo, a partner heading up Baker McKenzie's arbitration practice for greater China.

As an international finance centre, Hong Kong’s legal system is globally recognised for being sophisticated, transparent and accountable. These attributes are also vital to its role as a global and regional dispute resolution centre.

“Hong Kong has a fundamental role to play as an arbitration and mediation hub for disputes arising out of the strategic BRI and the Greater Bay Area [GBA],” said Mr Teo. (The GBA initiative in southern China aims to more closely integrate cities in the Pearl River Delta region.)

The 2018 International Arbitration Survey, conducted by Queen Mary University of London, found Hong Kong to be in the top five most preferred seats of arbitration globally. The Hong Kong International Arbitration Centre (HKIAC) was rated in the top five most preferred arbitral institutions.

“HKIAC is top-ranked rightly for its governance, quality of arbitrator panel, efficiency of delivery and its thought leadership in the development of arbitral law and regulations worldwide,” said Vincent Connor, partner and head of the Hong Kong office of global law firm Pinsent Masons, and a member of the HKIAC’s Belt and Road Advisory Committee.