5 Things You Should Know About Hong Kong Government’s “COVID-19 Online Dispute Resolution (ODR) Scheme”

On 8 April 2020, the Hong Kong Government announced their HK$137.5 billion package of relief measures that aimed to assist Hong Kong residents and businesses to withstand the increasing hardship caused by the COVID-19 outbreak. In particular, two of those relief measures were related to the Hong Kong legal sector, namely:

1. budgeting about HK$40 million to set up a “LAWTECH FUND” to facilitate SME law firms and chambers to upgrade their IT systems to better support the conducting of remote hearings; and
2. budgeting about HK$70 million for the introduction of “COVID-19 Online Dispute Resolution (ODR) Scheme” to provide online dispute resolution services for disputes related to or arising from COVID-19.

On 13 April 2020, Secretary of Justice, Ms. Theresa Cheng provided further information about the “COVID-19 Online Dispute Resolution (ODR) Scheme”:

1. What does the “COVID-19 Online Dispute Resolution (ODR) Scheme” (“Scheme”) aim to achieve?

   
   The Scheme aims to provide speedy and cost-effective means to resolve disputes relating to COVID-19, especially those involving micro, small and medium-sized enterprises (MSMEs). This is particularly important as almost 18% of the annual caseload of the Hong Kong Courts have been affected and delayed since the General Adjourned Period, and badly-hit MSMEs can hardly survive through the period with repeated postponement of legal proceedings and great uncertainties for a long period of time. The Court adjournment will also likely result in huge backlog of cases and additional pressure on court resources, hence brining further prejudice and delay to the litigants in seeking justice.

2. What are the main features of the Scheme?
   
   (i) Remote and Online Access – The Scheme will engage eBRAM (electronic Business Related Arbitration & Mediation system – http://ebram.org/) to provide online dispute resolution service to relevant parties. It should be noted that eBRAM is originally designed to be an online dispute resolution platform to support business-to-business transactions in the APEC Region.
   
   (ii) Multi-Tiered Dispute Resolution Mechanism – Under the Scheme, the parties must first look to resolve the dispute by attempting to negotiate a settlement, failing which the parties shall try to take part in online mediation. If mediation does not result in settlement, the dispute will be resolved by arbitration where the award will be final and binding.
   
   (iii) Time Limit – Each tier of the dispute resolution mechanism will be conducted within a limited time to ensure all disputes will be resolved in a timely and efficient manner. 
   
   (iv) Economic efficiency – Parties are required to pay only HK$200 registration fee each.
   
3. Which cases are eligible to be resolved through the Scheme?
   
   According to Secretary for Justice, the Scheme aims to resolve disputes of lower value and it should cover any COVID-19 related disputes that involves claims of no more than HK$500,000. Further, either one of the parties must be a Hong Kong resident or company. The parties will also be required to enter into a dispute resolution agreement to put on record their submission to the Scheme.
   
4. Who will be the Mediators and Arbitrators?
   
   The parties may agree to appoint any neutral third party as their choice of mediator / arbitrator. The Scheme will also put in place a mechanism for appointment in the event the parties cannot agree on their choice of mediator / arbitrator.
   
5. When will the Scheme be available?
   
   The Government is aiming to obtain funding approval in April in order to launch the Scheme in June.

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As the global COVID-19 outbreak is still greatly affecting local and global businesses, it is anticipated that more and more disputes will arise especially from contractual defaults as a result of virus interruption and city lockdowns. ELLALAN continues to follow the latest developments in order to provide the most commercial and practical solutions for clients.

Please contact our Senior Associate, Mr. James Choi (email: [email protected]), if you wish to know more about this topic. Please also follow ELLALAN’s LinkedIn page for further news and updates: https://www.linkedin.com/company/ella-cheong-&-alan-chiu-solicitors-&-notaries.

James Choi

Senior Associate

ELLALAN

14 April 2020