Case Settlement Conferences: An Early Settlement Option for Parties to District Court Proceedings in Hong Kong

Feb 2021

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From January 2021, the District Court of Hong Kong will introduce Case Settlement Conferences (CSC) to assist parties to settle their disputes at an early stage. The CSC is a meeting between the parties, overseen by a District Court Master. The aim of a CSC is to encourage parties to narrow down the issues in dispute and, if possible, achieve amicable settlement.[1]

The CSC scheme will run for 24 months (from January 2021 to January 2023) and apply to certain District Court claims that are over $75,000 but under $3 million.

Details of the CSC practice and procedure are set out in the Guidance Note for Case Settlement Conference In Civil Cases in the District Court (Guidance Note).

Case Settlement Conferences only apply to certain civil disputes

Case Settlement Conference only applies to civil disputes before the District Court (with some exclusions).[2]

The Court must be satisfied that case is suitable for Case Settlement Conference

In deciding whether a matter is suitable for CSC, the Court will consider: (i) the facts and circumstances of each case; and (ii) information provided by the parties in the Timetabling Questionnaire.[3]

Examples of cases which are likely to be considered unsuitable for CSC include:[4]

  • where parties have provided “good” reasons demonstrating that their case is not suitable for CSC; or
  • where parties have produced a mediation report showing that: (i) they have already engaged in mediation over a period of time; (ii) there is no reasonable prospect of settling; and (iii) there is no material change of circumstances in the meantime.[5]

The Guidance Note is ambiguous on what constitutes a “suitable case for CSC”, or what the “good” reasons for not having a CSC are.

Procedure for Case Settlement Conferences

Conduct of Case Settlement Conferences

A CSC hearing is conducted on a without prejudice basis before a master (CSC Master) in chambers. Like any without prejudice negotiation, evidence of anything said or any admissions made during CSC will not be admissible in later proceedings.[6]

The parties themselves (whether natural person or company) and their legal representative (if any) must attend the CSC. If the party is a company, an authorised representative under O.5A of the Rules of the District Court must attend. The authorised representative must also be familiar with the litigation and have authority to settle the case during the CSC.[7]

Role of legal representatives

Legal representatives do not act as advocates during the CSC. Rather, they should only: (i) participate to the extent requested or invited by the Court; and (ii) provide assistance and advice to their client when necessary.[8]

Role of CSC Master

The CSC Master may address the parties directly (as opposed to addressing them through their legal representatives).[9]

The CSC Master may assist the parties to achieve settlement by reviewing and evaluating the process of any without prejudice negotiations (including any sanctioned offers and payments) between the parties and mediation (if conducted but unsuccessful).[10]

After conclusion of the CSC, the CSC Master has no further involvement with the case other than to conduct any adjourned CSC or to give orders limited to the following:[11]

  • An order adjourning the CSC;
  • A consent order disposing the case (fully or partially), including an order narrowing the issues to be tried; or
  • An order for directions to progress the case to the next stage (eg. in relation to a case management conference).

Comment

The introduction of the CSC is an effort by the Hong Kong Judiciary to assist parties to reach settlement at an early stage – before substantial costs are incurred and parties become entrenched in their positions.[12] It is part of a growing range of tools deployed by the Judiciary to speed up resolution of disputes, bring down costs, and free up court resources. CSC procedure is also standardised (as shown in the draft Court directions in Appendix 2 of the Guidance Note).

Often, companies will be faced with claims that fall within the District Court limits (claim value of between $75,000 and $3 million). The CSC process gives companies an opportunity to resolve those disputes quickly without incurring significant costs.

Parties who are participating in CSC should be aware of the following:

  • it is a requirement that, prior to CSC hearing, parties submit to Court a statement of costs prior to CSC hearing setting out the costs incurred to date and the estimated costs going forward (up to and including trial);
  • parties need to walk into the conference with a genuine intention to settle the matter in an amicable manner, or at a minimum, to narrow down the issues in dispute, particularly when they are required to disclose without prejudice documents during CSC; and
  • any information disclosed in the CSC cannot be used later in the proceedings, and the CSC Master involved takes no further part in the case (other than to issue procedural directions). Therefore, the parties are encouraged to communicate openly in the CSC without any concern that the CSC discussions will later be used against them.

 

 

[1] https://www.news.gov.hk/eng/2020/11/20201106/20201106_192514_317.html

[2] Guidance Note, para. [4].

[3] For more details on the Timetabling Questionnaire, see Section C of Practice Direction 5.2, available here.

[4] Guidance Note, para. [6].

[5] See Appendix 1 of the Guidance Note for a copy of the Mediation Report to be submitted.

[6] Guidance Note, para. [14].

[7] Guidance Note, para. [12].

[8] Guidance Note, para. [13].

[9] Guidance Note, para. [15].

[10] Ibid.

[11] Guidance Note, para. [15] and [16].

[12] Guidance Note, para. [7].

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