The Background
I have been a dispute-resolution lawyer for many years. It gives me great satisfaction to win cases and see outcomes in line with my expectations. One frustrating outcome, however, which occurs from time to time, is that even though clients win their cases, some of them are still unhappy for various reasons. These can include not winning all the arguments, winning “empty judgments” – where the losing party has no assets so the client cannot recover any awarded sums – and not being able to recover all of the fees spent on lawyers.

One great development in Hong Kong in recent years is that there is a growing awareness of alternative forms of dispute resolution, such as mediation. Mediation is an informal and private process in which a neutral third party is appointed as a mediator to help parties settle disputes through discussion sessions. Unlike a judge, a mediator has no power to impose, advise or propose a binding solution for the dispute. Instead, a mediator is trained to encourage parties to discuss their matters and to filter out their emotional elements, so that they can reach their own solution and take control of the process.

The Cases
One recent case of mediation I worked on involved a typical dispute under a sales and purchase agreement. A ship owner owed part of an outstanding payment of about HK$200,000 to an engineer who had sold him a tailor-made power unit. The engineer threatened to commence formal proceedings against the ship owner, who subsequently responded with counterclaims including delivery delays, defects in the power unit, supervision costs, and costs relating to design problems. The sum of the counterclaims came to over HK$1 million.

This type of dispute can involve many years of litigation. All the engineer wanted at that time, however, was recognition of his work – not money. Mediation was later proposed as a means to settle the dispute and both parties sensibly agreed. A very practical construction lawyer was subsequently appointed as mediator. After the mediation process, a watered-down letter of apology was written by the ship owner expressing his recognition of the engineer’s work and kindness.

This sort of result is very difficult to achieve through litigation. The court is usually cautious in ordering an apology in the case of an unwilling defendant – one that does not feel sorry – because this will potentially infringe the defendant’s rights and freedom.

For example, in Ma Bik-yung v Ko Cheun, the court held the defendant, Ma, a taxi driver, liable to the plaintiff, Ko, a paraplegic, for harassment under the Disability Discrimination Ordinance. The plaintiff asked for an apology from the taxi driver, but the court did not order one. It said that the circumstances did not come within the “rare cases with exceptional circumstances” – such as the degree of gravity of the defendant’s unlawful conduct, and the extent of the plaintiff’s loss and damages – that might prompt the ordering of such an apology.

Even in cases where there is a huge public interest regarding discrimination, such exceptional circumstances are hard to meet. In private contractual disputes, like the case of the ship owner and the engineer, it would be even less likely that a court would find it appropriate to impose an apology order. Hence, mediation is arguably the only mechanism which provides the parties with the opportunity to achieve an outcome which cannot be obtained from the court. This highlights the beauty of mediation. It can produce a win-win situation which the court – and even money – cannot offer.

The Additional Benefits
Confidentiality is an essential element in mediation. Parties are required to sign an agreement to mediate, which sets out their confidential obligations. Section 8 of the Mediation Ordinance, save for some exceptions, also provides that all communications are confidential and contents of discussion shall not be disclosed to people outside the mediation. Hence, mediation offers disputants privacy and encourages them to engage in frank discussion, to understand each other’s needs and interests (as opposed to their positions), to develop options, and to reach agreement. As mediation is private, the embarrassment of losing face can be avoided and the process can better preserve relationships.

In addition, compared with slow court procedures, the mediation process usually proceeds very quickly and avoids delays. Each party has much more control and can set out the period of time to which they want to commit to stay in discussion. When the amount in dispute between the parties is not substantial, early-stage mediation is particularly efficient and cost-effective.

I have certainly seen more happy clients after successful mediations than after successful court cases. For more happy clients, let’s see more mediation.

Steven Yip, member of the Construction Mediation Interest Group of the Hong Kong International Arbitration Centre’s Hong Kong Mediation Council

The information contained in this article should not be relied on as legal advice and should not be regarded as a substitute for detailed advice in individual cases. If advice concerning individual problems or other expert assistance is required, the service of a competent professional adviser should be sought.