Guide 2 Dispute Resolution in Asia

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Guide to disputeresolution in Asia

2008/2009


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Introduction 1

Bangladesh Amir & Amir Law Associates 2

Cambodia Bou Nou Ouk & Partners 8

China Herbert Smith LLP 13

Hong Kong Herbert Smith 20

India Amarchand & Mangaldas & Suresh A. Shroff & Co. 27

Indonesia Hiswara Bunjamin & Tandjung (in association with Herbert Smith) 34

Japan Professor Hiroshi Oda & Herbert Smith (Tokyo) 39

Korea Kim & Chang 47

Macau Joo Nuno Riquito & Associados Advogados 54

Malaysia Skrine 62

Pakistan Orr Dignam & Co. 71

Philippines SyCip Salazar Hernandez & Gatmaitan 79

Singapore Rajah & Tann LLP 88

Taiwan Formosa Transnational Attorneys-At-Law 94

Thailand Herbert Smith (Thailand) Limited 101

Vietnam LWA Vietnam, Ho Chi Minh City Branch 107

Profiles 115

Published by Herbert Smith

23rd Floor, Gloucester Tower

15 Queens Road Central

Hong Kong

Tel: +852 2845 6639

Fax: +852 2845 9099www.herbertsmith.com

No photocopying

The information provided in this publication is general and may not apply to any specific situation. Legal advice should

always be sought (where appropriate, from local advisers) before taking any action based on the information provided.

The publishers and authors bear no responsibility for any acts or omissions contained herein. Information provided is

accurate as at May 2008.

Herbert Smith 2008

ContentsGuide to dispute resolution in Asia


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This is the sixth edition of the Herbert Smith Guide to Dispute Resolution in Asia. As those who have received

previous editions will know, the Guide is intended to provide a concise, accessible overview of the practical

issues surrounding dispute resolution across the region.

The Guide owes much to the co-operation of a number of leading law firms who have contributed chapters

devoted to their respective jurisdictions. I would like to express my gratitude to them for their input.

I am very pleased to welcome Amir & Amir Law Associates who have contributed a new chapter on

Bangladesh. The latest edition also includes a new question on the procedures for obtaining judgment without

proceeding to trial. Otherwise, the format follows the existing model, with the focus being on court litigation

and arbitration. Each chapter has been reviewed and updated to address legislative and procedural

developments.

Herbert Smith also publishes the Guide to financial services regulations in Asia and the Guide to anti-

corruption regulation in Asia. These publications form part of our comprehensive series of Asian guides.

Please contact Lydia Lam at [email protected] if you would like hard copies of the Guides.

We hope that the Guide will prove to be a useful resource. As always, we welcome any feedback from

readers. Please contact me if you have any suggestions or comments.

Mark Johnson

Head of dispute resolution, Asia

Herbert Smith

Introduction


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2Guide to dispute resolution in Asia 2008/2009

LitigationWhat is the structure of the legal profession?

The Bangladesh Bar Council is assigned with the task of administering the legal profession in Bangladesh. Any person

willing to practice as a lawyer before the courts and tribunals of Bangladesh must be enrolled with the Bangladesh Bar

Council. The enrolment procedure requires a candidate to go through professional exams. Officially, enrolled lawyers are

known as Advocates. In order to sit the professional exams, candidates must have a law degree (LL.B.) from any

recognised educational institution of Bangladesh or abroad.

What is the structure of the court system?Bangladesh has a two-tiered court system, traditionally known as the higher judiciary and the lower judiciary. The higher

judiciary comprises of the Supreme Court of Bangladesh. The Supreme Court has two divisions namely the High Court

Division and the Appellate Division. The lower judiciary comprises of trial courts, having both civil and criminal

jurisdiction.

What is the role of the judge (and, where applicable, the jury) in civil proceedings?

Bangladesh has a common law system which is adversarial in nature. Judges, at trial, are passive and their role is

governed by the Code of Civil Procedure, 1908. There is no jury system in Bangladesh.

What are the time limits for bringing civil claims?

The time limit for bringing a civil claim is laid down in the Limitation Act, 1908. Generally, the time limit for bringing a civil

suit varies from 6 months to 12 years, depending on the nature and subject matter of the suit. However, in the case of

suits brought by or on behalf of the government, the limitation period is 60 years.

How are civil proceedings commenced, and what is the typical procedurewhich is then followed?

A civil suit is generally commenced by presentation of a plaint or statement of claim. A plaint must be signed and

verified by the plaintiff. Once a plaint is accepted by a competent court, a summons is served on the defendants to

appear before the court. The court may refer any dispute to ADR (Alternative Dispute Resolution) before trial is

commenced. At trial, the plaintiff and the defendant present respective witnesses and documents to support their

respective claims or defence.

What is the extent of pre-trial exchange of evidence, and how is evidencepresented at trial?

A party is generally entitled to know beforehand the material facts constituting the case. Pre-trail disclosure of

documents is quite common and in some cases required by law. The court may issue summonses to persons whose

attendance is required either to give evidence or produce documents. A party may issue interrogatories to another

party with the leave of court. A party may apply to the court for an order directing the other party to make discovery of

documents in his possession. Parties to the dispute may present both oral and documentary evidence. During the trial

the parties are at liberty to present witnesses in support of their claim or defence. Common law principles of

examination-in-chief and cross-examination are applicable at the time of deposition of oral witness. Witness statements

are also permissible by way of affidavits. Generally, documentary evidence excludes oral evidence wherever applicable.

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To what extent are the parties able to control the procedure and thetimetable? How quick is the process?

The Code of Civil Procedure, 1908 has laid down the procedures to be followed in civil suits. Parties may resort to

dilatory tactics to slow down the litigation process. The Litigation process is slow and may take years to achieve a final

determination.

What interim remedies are available to preserve the parties interests pendingjudgment?

Courts may grant interim remedies in order to preserve property in dispute, from being wasted, damaged or alienated.

Interim remedies includead-interim injunctions, attachments before judgment, interim sale of moveable properties,

orders for detention or inspection of property, the stay of an application of any order, status quo etc.

Are there procedures available for judgment to be obtained withoutproceeding to trial, on the ground that it is believed there is no defence to theclaim? If so, at which stage of the proceedings should such procedures beinvoked?

There are a number of circumstances in which civil courts may pronounce judgment without proceeding to trial. If a

court is satisfied that a defendant had admitted the claim made against him, a judgment may be pronounced forthwith.

Further, if a defendant fails to present a statement of defence within the prescribed time, the court may pronounce

judgment. The court may also pronounce judgment without proceeding to trial if the parties are not at issue at all, ie,

there is no dispute between them. In addition, if after service of a summons a defendant does not appear before the

court, the court may proceed to issue an ex partejudgment.

What substantive remedies are available?

The Specific Relief Act, 1877 provides for substantive remedies in civil suits. The available substantive remedies include

recovery of possession of property, specific performance of contract, rectification of instruments, cancellation of

instruments, declaration of status or right, perpetual or mandatory injunction, damages, compensation and direction

etc.

What means of enforcement are available?

There are different modes of enforcement of decrees passed in a civil suit. The modes of enforcement include delivery

of property, attachment and sale, arrest and detention of the judgment debtor, appointment of receiver etc. Separate

proceedings must be filed for enforcement of a decree.

Does the court have power to order costs? Are foreign claimants required toprovide security for costs?

The court has discretion to award costs in favour of the wining party. However, in practice this is extremely rare. The

court may also award other costs namely, the cost of interrogatories. Compensatory costs may be awarded in respect

of a false or vexatious claim or defence. A claimant residing outside Bangladesh, who does not have sufficientimmovable properties in Bangladesh, may be required to furnish security for costs. Security for costs may be ordered

only in exceptional circumstances.

On what ground can the parties appeal, and what restrictions apply? Is therea right of further appeal? To what extent is enforcement suspended pendingan appeal?

The right of appeal is a statutory right. Appeals may be brought against original decrees in respect of both law and fact.

The plaintiff cannot be allowed to set up a new case at the appellate stage. The appeal must be filed within the time

limit prescribed by the Limitation Act, 1908. There is no provision for a second appeal under the Code of Civil

Procedure, 1908. However, a revision may lie against appeal. A further appeal may lie to the Appellate Division of the

Supreme Court (Apex Court), if leave is granted.

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To what extent can domestic and/or foreign state entities claim immunity fromcivil proceedings?

Generally, no domestic or foreign state entity enjoys any immunity from civil proceedings, unless exempted by any

special law or international treaty.

What procedures exist for recognition and enforcement of foreign judgments?A judgment of a foreign country cannot be enforced in Bangladesh in absence of any reciprocating agreement.

Bangladesh enjoys such reciprocity with most common law countries. The decree of any superior court of reciprocating

country can be executed under the supervision of District Judge. However, the District Court may refuse to execute a

foreign judgment if it -

(a) has not been passed by any court of competent jurisdiction;

(b) has not been passed on merits of the case;

(c) is founded on an incorrect view of international law;

(d) has been obtained by fraud; and

(e) upholds a claim in violation of any law in force in Bangladesh.

Experience shows that foreign judgments in default and summary judgments are very difficult to enforce.

Is it permissible for lawyers to charge contingency of conditional fees, or otherfee arrangements based on the result of the litigation/arbitration?

Lawyers are not allowed to charge contingency or conditional fees in litigation. However, for any other work outside the

court setting or litigation ie, recovery of debt out of court procedure, ADR, cross-border transactional work, setting up a

project etc, lawyers may charge conditional fees.

ArbitrationIs the arbitration law based on the UNCITRAL Model Law?

The Arbitration Act 2001 is based on the UNCITRAL Model Law. The Arbitration Act 2001 (the 2001 Act) is applicable

to all disputes where the parties have agreed to refer the matter to arbitration.

What are the main national arbitration institutions?

There is no national arbitration institution in Bangladesh. However, the Federation of Bangladesh Chambers of

Commerce and Industry has introduced the Bangladesh Council of Arbitration (BCA) as an arbitral body. The BCA is a

new body and its aim is to provide a simple, harmonious, cost-effective and speedy process of dispute resolution.Because it is still new, there is little experience of arbitrations being conducted under its rules. Therefore, in

Bangladesh, ad-hoc arbitrations are more in vogue than institutional arbitration.

Are there any restrictions on who may represent the parties to an arbitration?

A person of any nationality may be an arbitrator. If one party fails to nominate an arbitrator in respect of domestic

disputes held in Bangladesh, a District Judge has the power to appoint an arbitrator in an arbitration with a sole

arbitrator. Where an international commercial arbitration is concerned, and the arbitration is before a sole arbitrator in

which parties cannot agree on the appointment of arbitrator within 30 days of the receipt of request, the Chief Justice

may appoint an arbitrator of a nationality other than the nationalities of the parties to dispute.

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What are the formal requirements for an enforceable arbitration agreement?

An arbitration agreement may be in the form of an arbitration clause in a contract. An arbitration agreement shall be in

writing. An exchange of letters, telex, telegrams, fax, e-mail or other means of telecommunications may constitute an

arbitration agreement.

Can the court refuse to stay litigation if there is a valid arbitration clause?Under the 2001 Act, when any party to an arbitration agreement starts legal proceedings against the other party

concerning any matter agreed to be referred to arbitration, the court must refer the parties to arbitration and stay the

proceedings. However, the courts in Bangladesh have in the past interpreted this provision as applicable only when the

venue of arbitration is in Bangladesh.

If the arbitration agreement and any relevant rules are silent, how manyarbitrators will be appointed, and who is the appointing authority?

Parties are free to determine the number of arbitrators. If the parties fail to agree on the number of arbitrators, the

arbitral tribunal shall consist of three arbitrators. If the parties have agreed on an even number of arbitrators, the

appointed arbitrators shall jointly appoint an additional arbitrator who will act as the Chairman of the tribunal.

Are restrictions placed on the right to challenge the appointment of anarbitrator?

The appointment of arbitrators, under the 2001 Act, can be challenged on the following grounds:

a. if circumstances exist that give rise to justifiable doubts as to their independence and impartiality; and/or

b. if the arbitrator does not possess the qualifications agreed by the parties.

Where international commercial arbitration is concerned, a challenge against an arbitrator must first be made to the

arbitral tribunal. An appeal against the decision of the tribunal goes to the High Court Division of the Supreme Court.

The procedure for challenge may be modified by agreement.

Does the domestic law contain substantive requirements for the procedure tobe followed?

Parties are free to agree on the rules to govern the arbitration. In the absence of an agreement, and where the rules

selected by the parties do not cover a particular situation, the 2001 Act sets out the default rules. The arbitral tribunal

may determine its own procedure with the consent of the parties.

On what ground can the court intervene during an arbitration?

The court has limited power, however, to intervene in arbitration. The 2001 Act states that a court may only intervene in

limited circumstances as allowed under the Act.

Do arbitrators have powers to grant interim or conservatory relief?Arbitrators may grant the following interim measures:

injunctive relief;

security for costs;

pre-arbitration disclosure of documents; and

preservation of evidence.

The parties may restrict the powers of the arbitral tribunal by agreement. In the absence of a contractual restriction, the

2001 Act confers powers on the tribunal to give interim relief.

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When and in what form must the award be delivered?

An arbitral award must be in writing and signed by the arbitrator(s). The award must also state the date and place of

arbitration.

On what ground can an award be appealed to the court?

Parties dissatisfied with the final award may appeal to the High Court Division of the Supreme Court to set aside the

award. Such application must be made within 60 days from the receipt of the award. However, no appeal lies against

interim orders made by an arbitral tribunal.

What procedures exist for enforcement of foreign and domestic awards?

At present, no difference exists between domestic and foreign arbitration awards in respect of enforcement. Once a

60-day period has passed from the date the award was made and if no application has been made to set aside the

award the domestic award may be enforced in the same manner as a judgment of the court. As regards foreign

awards, the procedure is to apply to the district court in Dhaka to enforce the award. An application for the execution

of a foreign award should be accompanied by the arbitral award, agreement for arbitration and such evidence which

proves that the award is a foreign award.

Can a successful party recover its costs?

Yes.

Alternative dispute resolutionAre the parties to litigation or arbitration required to consider or submit to anyalternative dispute resolution before or during proceedings?

Section 89A of the Code of Civil Procedure, 1908 provides for mediation in order to settle disputes in civil suits at an

early stage of proceedings. The Arbitration Act, 2001 provides that it shall not be incompatible for an arbitral tribunal to

encourage settlement of disputes otherwise than by arbitration.

ReformsAre there likely to be any significant procedural reforms in the near future?

No significant procedural reforms are planned in the near future.

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Amir & Amir Law Associates

Contact M. Amir-Ul Islam

203 Concord Tower (2nd Floor), 113 Kazi Nazrul Islam Avenue, Dhaka 1000, Bangladesh

Phone +880 2 933 0877

+880 2 933 3253

Fax +880 2 933 7746

+880 2 831 7178

Email [email protected]

Website www.tlabd.org

Amir & Amir Law Associates has provides comprehensive legal services in the areas of formation of Joint-Ventures;

International trade; Foreign Direct Investment; Corporate & Commercial Law; Project Finance; Finance, Banking &

Insurance; Documentary Credit; Mergers & Acquisition; Admiralty & Maritime Law; Securities Laws & Regulations;Energy Projects; Tele-communication; Environmental Law; Constitutional Law & Public Interest Litigation; Arbitration

International & National; Immigration & Naturalization; Employment Law; Claim Recovery and General Practice;

Administrative & Judicial Review; Property, Intellectual Property Law Registration & Litigation.


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This year, the Cambodian legal profession celebrates its 10th anniversary as an officially recognised profession. The

governing body for the profession is the Bar Association of the Kingdom of Cambodia, which is subject to the Law on

Statute for Lawyers 1995. One of its roles is to admit new lawyers and grant practising licences to existing lawyers.

Individuals can be admitted as lawyers if they hold Cambodian citizenship; have a degree in law from a recognised

institution; have passed a lawyers training school and have completed a one-year probation period after training

school. Alternatively, persons with a Doctorate degree in law or who have been a court clerk or a judge can beadmitted as a lawyer once certain criteria are met.

Upon admission to the Bar, lawyers have rights of audience in all of Cambodias courts.

What is the structure of the court system?

The three main courts in Cambodia are the Municipal/Provincial Court, the Appeal Court and the Supreme Court. In

addition, there is a Constitutional Court which hears complaints on the constitutionality of laws and electoral laws and a

military court which hears disciplinary matters for the armed forces. The government is currently preparing draft laws to

establish a Commercial Court and Administrative Courts.

What is the role of the judge (and, where applicable, the jury) in civilproceedings?Courts of First Instance handle cases by a single judge, except for the following types of cases which are heard by a

panel of three judges:

Cases in which the value of the subject matter of the action equals or exceeds 5 millions Riels, and it is determined

that adjudication of the case using a panel of three judges is appropriate, taking into consideration the number of

parties and any other relevant circumstances; and

cases in which it is established by law that the case should be heard and adjudicated by a panel of three judges.

Judges render judgment based on parties claims, factual relevance, and issues.

What are the time limits for bringing civil claims?A person may bring a civil claim for a breach of contract or a debt obligation within five years from the date of the

breach of contract, or from the date on which the debt arose. If the contract specifies the date for payment, five years

is calculated from the date of the execution of the agreement. The limitation period for tort claims and personal injury

claims is three years from the date the person suffered injury or damage.


Once the plaintiff submits a complaint with a court. The court clerk in charge of the receipt of complaints shall affix a

receipt seal with the date of receipt in order to make clear when a complaint was submitted, and make a case dossier

by putting a cover thereon with a case number. The court clerk distributes the case dossier to the judge to be in

charge of the case in accordance with the case distribution order established in advance every year by the chief ofjudge (director of court). In cases where there is a problem in using a particular judge, the case shall be distributed to a

substitute judge in accordance with the order of appointment of substitute judges established in advance by the chief

of judges. The orders for case distribution and for appointment of substitute judges may be changed during the year

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only by the chief of judges. The judge to whom a case has been distributed shall examine whether or not the complaint

contains sufficient information. If the complaint does not fulfil the formal requirements, the judge shall order the

complaint to be corrected within a reasonable time. Once the court accepts a complaint as being legitimate as a result

of its examination, the court clerk shall serve the complaint on the defendant. The judge shall determine within at least

30 days the date of initial preparatory proceeding for oral argument and summons of parties. The judge shall conduct

the clarification of factual relevance by parties and then set the date for oral argument. The judge may be asked by

parties to investigate, examine or question any proof or witness at the initial preparatory proceeding and then set thedate for oral argument in an open-court for rendering the judgment.


The court shall, in all cases, preserve the principle of La Contradiction. Hence the parties shall submit all evidences

relating to the case either when lodging the complaint or submit at the initial preparatory proceedings. The parties shall

not insert any evidence after the preparatory proceedings for oral argument. However, parties may request the judge to

investigate, examine or question any proof or witness, if those are in question. The judge shall take in consideration its

power to carry out the investigation.


Where a party thinks that his or her rightful interests are being harmed by the courts control of litigation in the

preparatory proceedings for oral argument or the actual proceedings for the oral argument or by the courts exercise of

its authority to request an explanation, the party may raise an objection to the court. Where an objection is raised, the

court shall render a decision on the objection via a ruling. Since small claims litigation aims to resolve a dispute quickly

through simplified proceedings, the court, in such proceedings, should designate the date for the oral argument

immediately after the filing of an action without conducting preparatory proceedings for oral argument. For complicated

cases, the court shall designate the date of the initial preparatory proceedings for oral argument within 30 days of the

date of the filing of an action. This is so a defendant has time to spend on the preparation of the defense and the

commencement of the proceedings is not delayed. The court shall make efforts to ensure that civil actions are

conducted fairly and speedily, and parties to disputes shall pursue civil actions honestly and in good faith. The parties

can appeal against any judgment within 30 days from the date of judgment.


In civil matters, the Municipal/Provincial Court can issue interim measures to preserve assets of the parties pending

trial. There are no written rules to determine the grounds upon which an order should be granted it is at the sole

discretion of the judge.

Are there procedures available for judgment to be obtained withoutproceeding to trial, on the ground that it is believed there is no defence to theclaim? If so, at which stage of the proceedings should such procedures be

invoked?No.


The court has the power to order any appropriate relief necessary to give effect to its judgment. This may include an

order for payment of money, transfer of property, injunctive relief or a declaration that a contract is void, absolving the

parties from all legal obligations.


A party that breaches an interim order may face criminal charges or a civil claim for allowing that assets covered by the

orders to be transferred or removed.

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The court will usually order each party to meet their own costs regardless of whether a party succeeds at trial. Foreign

claimants are not required to provide security for costs.


A party may appeal against an interim order or a judgment of the lower courts within 30 days from the date of the

issuance of the judgment or within 45 days if the party appealing was not present in court when the judgment was

granted. If there is an appeal to the Supreme Court, in the first instance, it will only hear an appeal on a point of law

and not on an issue of fact. If, on hearing the appeal, the Supreme Court is not satisfied with the decision of the Appeal

Court, then it has the power to send the case back to the Appeal Court for retrial. If, following that retrial, the case is

appealed to the Supreme Court for a second time, then the Supreme Court will hear the appeal on points of law, of

fact, or both.


Cambodia is a party to the Geneva Convention on Protection of Civil and Political Rights and the implementing

Protocols. As a result it is obligated under international law to recognise the rights and protection of foreign diplomats.

No domestic entity can claim immunity from civil proceedings.

What procedures exist for recognition and enforcement of foreign judgments?

No laws or procedures exist for the recognition and enforcement of foreign judgments in Cambodia. However, a foreign

arbitral award can be enforced in the Appeal Courts.

Is it permissible for lawyers to charge contingency or conditional fees, or other

fee arrangements based on the result of the litigation/arbitration?Lawyers may charge contingency fees, or other fee arrangements based on the litigation/arbitration provided the

agreement is in writing and executed by the client. There is no legal limit on such fee arrangements.


Cambodia has promulgated the Law on Recognition and Enforcement of Foreign Arbitral Awards and the Law on

Commercial Arbitration. The Law on Commercial Arbitration, which was passed last year, is based on the UNCITRAL

Model Law.


There are none in existence at present. However, the recent Law on Commercial Arbitration requires that a National

Arbitration Center be set up under the supervision of the Ministry of Commerce.


Under the Law on Commercial Arbitration, there is no restriction on who may represent a party in an arbitration hearing.

What are the formal requirements for an enforceable arbitration agreement?

The basic requirement is that an enforceable arbitration agreement must be made in writing and executed by all parties

to the agreement. There are other subsidiary requirements that mirror the requirements set out in the UNCITRAL Model

Law.

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Can the court refuse to stay litigation if there is a valid arbitration clause?

It is possible for the Cambodian court to stay litigation in the presence of a valid arbitration clause. However, in

practice, those Cambodian courts that have limited experience of international commercial arbitrations will refuse to

grant a stay in favour of arbitration and will allow a party to pursue the substantive claim through the court.


Under the Law on Commercial Arbitration, if the arbitration agreement or the relevant rules are silent, the court may

appoint an arbitrator if the parties fail to agree one between them.

Are restrictions placed on the right to challenge the appointment of anarbitrator?

Under the Law on Commercial Arbitration, there is no restriction placed on the right to challenge the appointment of an

arbitrator.

Does the domestic law contain substantive requirements for the procedure to

be followed?The Law on Commercial Arbitration contains detailed substantive requirements for the correct procedure that mirror the

UNCITRAL Model Law.


Under the Law on Commercial Arbitration, the court can provide interim measures for arbitration or compel a

party/witness to appear if this person fails to comply with a summons for the arbitration panel.

Do arbitrators have powers to grant interim or conservatory relief?

Yes, these are the same as those powers set out in the UNCITRAL Model Law.


Under the Law on Commercial Arbitration, the award must be made in writing, dated and signed by the arbitrator and it

must, unless agreed by the parties, state the reasons for the award. Copies of the award must be served on all parties.


The Commercial Arbitration Law provides that an application to the court to set aside an award may be made where

the:

(i) arbitral award is not valid due to limited capacity of a party;

(ii) party making the request was not given the required notice under the laws of Cambodia;

(iii) party making the request was unable to present their defence;

(iv) arbitral award deals with matters that do not fall within the terms of the arbitration agreement;

(v) composition of the arbitral tribunal or the arbitral procedure was not in accordance with the laws of Cambodia;

(vi) claims made under the arbitral proceedings relate to a dispute which is not capable of being the subject of an

arbitration under the laws of Cambodia; or

(vii) arbitral award is in conflict with public policy or the custom of Cambodia.

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The Law on Recognition and Enforcement of Foreign Arbitral Awards provides procedures for the recognition and

enforcement of foreign arbitral awards through the Appeal Court. For enforcement, a certified copy of the award is

required together with a translation of the award into Khmer language. Once the award is recognised by the Appeal

Court it is equivalent to a judgment of the Appeal Court. The task of enforcing that judgment is then given to the

Municipal/Provisional Courts.


Yes.


There are certain types of agreements in Cambodia which may be entered into by the parties requiring them to attempt

to negotiate a settlement in the presence of the Cambodia Development Council. If negotiations fail, then the partiescan submit to arbitration or litigation depending on the agreement in the contract. In industrial relations, collective

disputes must be referred to conciliation by the officials of the Department of Labour Dispute Resolution of the Ministry

of Labour and Vocational Training prior to litigation or arbitration.


A new Code of Civil Procedure has been passed and promulgated by the King; however, it will not come into force in

July 2007. The Civil Code has also been passed by Parliament but has yet to be promulgated into law. The Code of

Criminal Procedure has also been enacted.

Bou Nou Ouk & Partners

Contact Mr Ry Ouk

# 74, Street 136, Phsar Kandal I, Doun Penh, Phnom Penh, Cambodia

Phone +855 23 220 823

Fax +855 23 220 823

Mobile +855 12 858 695


Website www.bnokh.com

Bou Nou Ouk Partners is one of the biggest law firms in Cambodia. The firm provides a full range of legal services to a

large international, as well as domestic client base in most industry groups.

The firm is divided into three principal departments: Litigation, Corporate Affairs, Projects and Project Finance

Investment. A senior partner with the support of several associates heads each department. Our litigation practice

includes arbitration and mediation.

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The Chinese legal profession is open only to Chinese citizens who have passed the PRC judicial examination and

satisfied certain other admission criteria. Since 2001, there has been a unified examination for judges, prosecutors and

other lawyers. Under current rules, the right of individuals to practice as a lawyer is suspended if they work for a non-

Chinese organisation (eg, a non-Chinese owned law firm).

The representative offices of non-Chinese law firms in China are allowed currently by Ministry of Justice regulations to

advise on non-Chinese law and, also, to provide information on the impact of the Chinese legal environment, but not togive opinions on Chinese law. Such firms are allowed to be counsel of record and to make submissions in Chinese

arbitration proceedings but not in Chinese court proceedings.

What is the structure of the court system?

There are four levels of court of general jurisdiction: Basic (at local level), Intermediate (at city level or equivalent),

Higher (at provincial level) and the Supreme Peoples Court in Beijing. There are also a number of courts of specialist

(eg, maritime) jurisdiction.

Cases involving non-Chinese parties must usually be started at the Intermediate level, though the Higher Level Courts

may exercise first instance jurisdiction in some very large cases and conversely, some Basic Level Courts are

authorised to handle small cases involving non-Chinese parties. The relevant thresholds and related practices for

allocation of jurisdiction between the different levels vary regionally.

What is the role of the judge (and, where applicable, the jury) in civilproceedings?

There are no juries in Chinese courts. Judges hear cases either alone or as a panel of three.

Compared with common law judges, Chinese judges tend to be relatively inquisitorial, though practices vary.

An unusual feature of the Chinese judicial process, from an international perspective, is that, in addition to the judges

hearing a case, Chinese courts have adjudication committees to supervise major cases.

What are the time limits for bringing civil claims?The ordinary limitation period under Chinese law is two years from when the claimant knew or ought to have known of

the alleged infringement of rights. This is subject to a long-stop limitation period of 20 years from when the wrongful act

was done.

In certain contexts, periods different from the two-year rule apply. For example:

(i) Six months for employment law claims;

(ii) One year for certain personal injury, sale of goods, landlord and tenant and bailment cases;

(iii) Three years for certain environmental damage cases;

(iv) Four years for certain international sale of goods and technology transfer cases.

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It is important to seek specific advice as to the precise distinction between these categories, and as to the date on

which the limitation period starts to run.

Chinese law is unusual (from the international perspective) in that limitation periods may be tolled not only by the

commencement of proceeding or by a written acknowledgement of debt, but also by giving notice of an assertion of

claim to the intended defendant. Specific advice must, however, be sought in order to take advantage of this rule

safely.

Certain types offorce majeure preventing a claim from being brought may also toll the limitation period.

In cases of continuing infringement, the limitation period usually runs from when the claimant first knew or ought to

have known of the infringing conduct, but those are certain exceptions in the context of intellectual property.


The claimant starts proceedings by filing a very simple document known as a (which may be translated as bill

of complaint). The court should then decide whether to accept it or not within seven days. There are rules, but also a

degree of discretion, governing the question of acceptance. Non-acceptance is appealable. If accepted, the court

should send a copy of the bill of complaint to the defendant within five days and the defendant must file a bill of

defence within 15 days of receipt of a copy of the bill of complaint. A judicial panel will then be established.


Documentary evidence is supposed to be exchanged by the parties in a defined sequence supervised by the court,

with the party making an allegation bearing the burden of proving it. This marks a change from the procedure followed

up to 2001, whereby primary responsibility for gathering evidence lay with the court, not the parties.

In commercial cases, the primary focus at the main hearing (or hearings) is usually on the documentary evidence, with

much attention typically being given to questions of authentication. In practice, the court often will not compel

attendance of witnesses. Scope for cross-examination of witnesses is, in any event, restricted. In practice, theconsequences of false testimony tend to be limited.


Control of the proceedings is very much in the hands of the court, though parties of course seek to influence the

progress of a matter by communication with the court.

Studies indicate that delay is not yet as large a problem as in common law jurisdictions, but this is to a large extent a

consequence of the simplicity and (in some cases, regrettably) superficiality of the process. However, sensitive or

complex cases often take a long time to resolve.


There are interim remedies available to freeze assets or preserve evidence, but their efficacy varies from place to place,

and with the particular legal context. Problems with enforcement and significant requirements for the provision of

security by applicants often operate as a practical barrier to the freezing of assets. That said, it is sometimes possible

to obtain a successful remedy, particularly in respect of intangible assets, such as shares or bank accounts, the transfer

or realisation of which is dependent on a reputable third party which is unlikely to flout a court order.

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Are there procedures available for judgment to be obtained withoutproceeding to trial, on the ground that it is believed there is no defence to theclaim? If so, at which stage of the proceedings should such procedures beinvoked?

No. Judgment at first instance can only be made after trial. The procedure for getting to trial is however much less

involved than in common law systems, so there is not the same pressure to find a short cut as is felt in common lawsystems.

At second instance, the court is empowered to make a ruling without a trial if it considers this appropriate after

examining the files and carrying out such other investigations as it considers appropriate.


Financial remedies (including damages) and injunctions may be sought, as well as miscellaneous remedies of lesser

commercial significance (such as orders to apologise). However:

(i) Whilst, in principle, the basic rules governing damage for loss of profit and consequential damage are similar to the

rules applied in common law jurisdictions, a very rigorous approach is often taken to exclude speculative

elements with the result that awards are often much lower than would be seen abroad in comparable cases. It is

however difficult to generalise about this;

(ii) Problems are often encountered in securing the effective enforcement of injunctions, particularly against locally well-

connected parties.


There are wide powers to seize assets, though successful execution is variable, depending on location and other

circumstances.

Significant imprisonment for what would in many other countries be regarded as a serious flouting of the courts

authority (eg, perjury or refusing to obey an injunction) is still rare in commercial cases in China.

Amendments to the Civil Procedure Law which came into force on 1 April 2008 seek to improve enforcement by:

Increasing fines ten-fold for failure to comply with a court order (the old maximum fines were RMB1,000 for

individuals and RMB30,000 for legal persons; the new maximum fines are RMB10,000 and RMB300,000

respectively).

Providing for non-compliance with a judgment to be publicised in the media and/or reported to credit reference

agencies.

Empowering courts to prohibit judgment debtors from leaving the country.


The unsuccessful party is usually ordered to pay the successful partys court fees, but it is very rare for Chinese courts

to order an unsuccessful party to pay a successful partys lawyers fees unless the parties contracted expressly for this.

There is no security for costs regime analogous to that of England / Hong Kong.


There is a right of appeal to the court one level above in the hierarchy (ie, Basic to Intermediate, Intermediate to Higher,

Higher to Supreme). There is an automatic stay of execution upon the filing of an appeal. The appeal is a re-hearing:there are no precise limitations on grounds of appeal. There is no right of further appeal after the second instance

decision.

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It is important to appreciate, however, that in addition to the appeal process, there is a parallel procedure available for

challenging judgments by way of trial supervision on widely-drawn ground (including insufficiency of evidence, error of

law or deficiency of process). There are various channels by which this process may be invoked: by approaching the

adjudication committee of the court which rendered the judgment, by approaching the court at the next level up in the

hierarchy or by approaching the relevant regional Peoples Procuratorate (which is empowered to invoke the trial

supervision process by filing a protest against a judgment.) Unlike an appeal, an invoking of the trial supervision

process does not operate as an automatic stay of execution. Also unlike an appeal, there is significant discretion as towhether a court will agree to undertake trial supervision.

The trial supervision process is seen by some in China as improving justice by giving an additional remedy against

incompetent, corruptly obtained or otherwise improper judgments. Critics of the system regard it as dangerously

undermining the finality of judgments. For the time being, proponents of the system appear to have the upper hand:

amendments to the Civil Procedure Law which came into effect on 1 April 2008 expand yet further the grounds on

which trial supervision may be invoked and increase the time limits for doing so (the old time limit was two years from

judgment date: the amendments maintain this but also provide for it to be extended indefinitely until three months from

when the problem with the judgment was or ought to have been apparent).

To what extent can domestic and/or foreign state entities claim immunity from

civil proceedings?Domestic state entities do not enjoy immunity in theory, but in practice Chinese courts will usually not accept claims

against state entities in respect of governmental functions other than in accordance with certain defined circumstances

under the Administrative Procedure Law.

With respect to diplomatic immunity, China is party to the Vienna Convention on Diplomatic Relations. So far as

immunity more generally is concerned China signed the United Nations Convention on Jurisdictional Immunities of

States and Their Property in 2005 but it is not yet in force. In the same year, China enacted the Law on the Immunity of

Judicial Compulsory Measures against the Properties of Foreign Central Banks.


In practice, China only recognises foreign judgments pursuant to specific treaties with the foreign jurisdiction in

question. At the time of writing (May 2008), such treaties are in force with approximately 33 countries, but not with

some of Chinas largest trading partners, such as the US, UK and Japan.

If a relevant treaty exists, it is important to review its terms to check its scope and exceptions.

There are also reciprocal enforcement arrangements with Taiwan and Macau.

A further arrangement was signed with Hong Kong in July 2006 and was enacted into law in Hong Kong in April 2008,

but is not yet in force and will only apply in commercial cases where the parties have included an exclusive Hong Kong

or mainland jurisdiction clause; even, then, enforcement will be subject to major exceptions. Furthermore, the

arrangement will only be effective in relation to agreements executed after it comes into force, so parties executing

agreements prior to that date (which is as yet not fixed) should proceed on the basis that the arrangement does not

exist.

China participated in the negotiation of the 2005 multilateral Hague Convention on jurisdiction and judgments but the

Conventions scope is narrow (similar to the Hong Kong arrangement mentioned above) and it remains to be seen, in

any event, whether China will sign and ratify it.

Is it permissible for lawyers to charge contingency or conditional fees, or otherfee arrangements based on the result of litigation/arbitration?

Yes in commercial litigation and arbitration cases. No in many other cases.

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No.

There are substantial differences, most of which can be traced back to the fact that the Chinese notion of arbitration

has, at its heart, the notion of submission to a method of state-sponsored dispute resolution, somewhat different from

the ordinary courts, but still ultimately deriving its authority from the state, not the parties.

Chinese law continues to insist on a significant degree of official involvement in the process, in the shape of a

requirement to arbitrate through quasi-governmental bodies known as arbitration commissions, which control the

appointment of the presiding arbitrator and must review and approve tribunals awards.

That said, increasing scope for party choice has been introduced in recent years, and there appears to be a basis for

thinking that this liberalisation process will continue.


The principal institution of relevance to non-Chinese parties is the China International Economic Trade Arbitration

Commission (CIETAC), headquartered in Beijing with branches in Shanghai and Shenzhen. The local arbitration

institutions in Beijing and Shanghai also increasingly hear foreign-related cases. There is also a maritime arbitration

commission (CMAC) and numerous local commissions.


No.

It should be noted, however, that, under current Ministry of Justice regulations, only locally qualified and licensed

lawyers may express opinions on Chinese law during an arbitration in mainland China (see question 1 above).

What are the formal requirements for an enforceable arbitration agreement?The basic requirements are that the agreement must be in writing (a concept which the Supreme Peoples Court has

ruled, in 2006, should be interpreted broadly, so as to encompass, for example, exchanges of email) and must

adequately identity the subject matter.

A more important restriction is that domestic arbitrations (which comprise most disputes between two Chinese

companies, even if one or both are foreign-owned) must be arbitrated in mainland China by a Chinese arbitration

commission; only foreign-related arbitrations may, in the eyes of Chinese courts, be arbitrated elsewhere. See the

November 2006 special edition of the Herbert Smith mainland China disputes newsletter 1 for details of this distinction,

which sometimes causes trouble for foreign investors in practice.


No, unless the defendant has waived the right to insist on arbitration.2


The default rule under the current rules of CIETAC, the Beijing Arbitration Commission and the Shanghai Arbitration

Commission is for there to be three arbitrators unless the parties agree otherwise, subject to some minor exceptions.

In a three-arbitrator arbitration, each party appoints one arbitrator and the relevant arbitration commission chairman

appoints the presiding arbitrator. The commission chairman also appoints sole arbitrators.

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1 Available under Publications at www.herbertsmith.com

2 For what counts as a waiver, see the September 2006 Herbert Smith Mainland China disputes newsletter (available under

Publicationsat www.herbertsmith.com) containing a translation and commentary upon the August 2006 Supreme Peoples Court

Interpretation on this and other arbitration law issues.

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This appointment power is a matter of some controversy internationally, but for the time being is clearly provided for in

the Arbitration Law and is usually regarded as a mandatory rule of law from which the parties may not validly depart. It

remains to be seen whether it will be revised as part of the legislation review of the Arbitration Law in 2008 (see

question 32 below).

Are restrictions placed on the right to challenge the appointment of an

arbitrator?Yes, challenges must be based on the types of ground familiar in international arbitration practice (such as personal

relationship, conflict of interest or improper conduct.) In practice, such challenges are usually handled by the arbitration

commissions rather than the courts.


Not of any real significance, other than the point mentioned in question 22 above and a requirement for the arbitration

commission to review and approve a tribunals draft award before it is finalised.

Other than on these points, the parties have largely free scope to agree variations. For example, CIETAC has been

prepared to conduct arbitrations under ICC rules where the parties have agreed this.

In practice, however, the more significant factor affecting procedure tends to be not anything that the parties agree, but

rather the identity of the arbitrators, who have great discretion on matters such as witness examination. Typically,

arbitrators from a domestic background will emphasise documentary rather than witness evidence, in line with the

traditional approach of the Chinese courts.


In practice, intervention is usually limited to the matters mentioned in question 26 below.


No. Applications for freezing assets or preserving evidence must be referred to a court. There is legal controversy overwhether the power to decide what to do with evidence which a court has ordered to be preserved lies with the court or

the arbitral tribunal.


The CIETAC rules as to timing are, in theory, four months in domestic cases and six months in foreign-related cases,

both measured from when the tribunal is constituted. The arbitration rules for Beijing Arbitration Commission and

Shanghai Arbitration Commission have the same provisions. However, in practice the commissions readily grant

extensions to tribunals. There are no published statistics as to case duration.

Awards must be made in writing, specifying the claim, the facts of the decision, the reasons for the decision, the

tribunals ruling as to costs, and the date of the award. If the parties agree that they do not wish the facts of the

dispute and the reasons for the decision to be specified in the arbitration award, this is respected. Awards should be

signed by the arbitrators and sealed by the arbitration commission.


In purely domestic arbitrations, there are relatively broad grounds of appeal, including potential for review of the merits,

whereas appeals against awards of domestic commissions in foreign-related cases (see question 20 above) must be

based on certain jurisdictional or (serious) procedural defects. The Supreme Peoples Court has, in its August 2006

Interpretation on Arbitration Law, sought to limit the scope for parties to rely on trifling procedural defects as a basis for

challenging awards.


Chinese arbitration awards are enforceable like domestic judgments subject to certain exceptions broadly equivalent tothe grounds of appeal mentioned in question 28 above.

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Foreign arbitration awards in commercial cases which China law regards as foreign-related (see question 20 above)

are enforceable in China under the New York Convention. A special procedure applies, designed to reduce the scope

for local judicial protectionism, whereby local courts must obtain Supreme Peoples Court approval before refusing to

enforce a foreign or foreign-related Chinese arbitration award. In practice, however, problems may still be encountered

in seizing assets depending on the local situation.

The remarks above in relation to foreign awards apply equally to Hong Kong awards following an arrangement mirroringthe New York Convention which has been in effect between mainland China and Hong Kong since 2000.


Yes, Chinese arbitration tribunals have power to order an unsuccessful party to pay some or all of the process costs

incurred by the successful party, including administrative fees, arbitrators fees and lawyers fees (including, sometimes,

a success-based element). In practice, the awards made for lawyers fees depend heavily on individual tribunal

composition. The reasonableness of such costs is assessed on a broad brush, global basis.


No in theory, but in practice courts or arbitration tribunals will often push parties to settle, and even seek to mediate a

settlement.


Possibly.

As noted above, certain reforms relating to enforcement and trial supervision have recently come into force, on 1

April 2008. Further incremental reform is likely on an ongoing basis but the details and timing remain unclear.

For arbitration, the relevant legislation is scheduled for review in 2008, but expectations are modest.

Herbert Smith LLP

Mainland China dispute resolution practice

Contact Graeme Johnston

38th Floor, Bund Center, 222 Yan An Road East, Shanghai 200002, China

Phone +86 21 2322 2000

Fax +86 21 2322 2322


Website www.herbertsmith.com

Our mainland China dispute practice is staffed by lawyers with long experience of handling contentious process both

inside and outside mainland China. We believe that we provide a service of unique quality and perspective in dealing

effectively with complex large-scale cross-border disputes involving China. We assist both non-Chinese and Chinese

businesses with such matters. Headquartered in Shanghai, the practice also draws on dedicated dispute resolution

lawyers based in our Hong Kong and Beijing offices.

For a more detailed description of the practice, please refer to

www.herbertsmith.com/Publications/Mainland+ChinaDisputeResolutionService2006.htm.

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Hong Kongs legal profession is divided into solicitors and barristers. Solicitors advise clients on all aspects of law but

there are restrictions on their rights of audience in the courts. Barristers can appear as advocates in all courts, but have

only limited rights to advise clients other than through a solicitor. Both professions have formal training and qualification

requirements. The judiciary is appointed from solicitors and barristers of at least 10 years standing (or five years in

some lower courts). Judges can only be removed in cases of gross misconduct or incompetence.

What is the structure of the court system?Civil claims for less than HK$50,000 are brought in the Small Claims Tribunal. Claims for up to HK$1 million are brought

in the District Court, and claims above that amount or claims that concern an important legal principle are brought in

the Court of First Instance. Appeals from both courts lie as of right with the Court of Appeal from which further appeals

may be made, in limited circumstances, to the Court of Final Appeal. Specialist tribunals, such as the Lands Tribunal

and the Labour Tribunal, deal with disputes about the matters denoted by their titles; some (such as the Labour

Tribunal) do not permit legal representation. The Standing Committee of the National Peoples Congress of the Peoples

Republic of China retains the ultimate power to rule on interpretation of Hong Kongs Basic Law.

What is the role of the judge (and, where applicable, the jury) in civilproceedings?

Judges take a passive role, ruling on matters of fact and law after hearing evidence and submissions from thecompeting parties. A strict doctrine of precedent applies. There are no juries in civil actions, except in defamation cases

and other very limited circumstances.

What are the time limits for bringing civil claims?

Civil claims must generally be brought within six years of the date when the legal cause of action accrued, except in

personal injury claims, which must generally be brought within three years. The time limit for contract claims is

extended to 12 years if the contract is made under seal. There are special rules extending the time limit in the case of

latent defects and for claims based on allegations of fraud or breach of trust.

How are civil proceedings commenced, and what is the typical procedure

which is then followed?A civil action is started by the plaintiff filing a formal document (usually a writ of summons) at court setting out the

grounds of the claim. The plaintiff must serve a court-sealed copy of the document on the defendant, together with an

acknowledgement form which the defendant must return to the court if they wish to defend the action. The defendant

must file and serve a formal defence (unless they wish to challenge the jurisdiction of the court), and the plaintiff has an

opportunity to reply. After this exchange of pleadings, the parties exchange lists of relevant documents and statements

of factual and expert witnesses (see question 6, below). A trial date will not generally be fixed until this exchange of

evidence is complete.


Parties are required to give discovery on the traditional common law basis. They must exchange lists of all documents

in their possession, custody or power which are relevant to any issue in dispute, or which may identify a line of enquiry

for their opponents. Parties must make copies of all documents available to their opponents unless any particular

document is protected by legal or other privilege, or the document was created as part of a genuine attempt to settle

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the dispute. The parties must also exchange written statements of the evidence of any factual or expert witnesses

whom they wish to call at trial. The witnesses will then be prohibited from giving any evidence at trial which was not

covered in substance in their statements, unless the other party agrees or the court gives permission.

The primary source of evidence at trial is oral testimony from the individuals with direct knowledge of relevant facts.

Parties may call expert witnesses to address matters of technical knowledge and opinion. The written statements of

factual and expert witnesses will generally stand as their evidence in chief at trial. Witnesses may be cross-examined bythe opposing party, with the party who called the witness being allowed to re-examine on issues raised in cross-

examination. Relevant documents can be admitted into evidence when referred to by a witness or by counsel in the

course of cross-examination.


The procedures for the conduct of litigation are laid down by the relevant rules of court. The rules for the District and

High Courts are similar but not identical. These procedural rules have sufficient inherent flexibility to meet most

reasonable requirements. The procedural directions that are made are relatively standard in most civil cases. These can

be agreed between the parties, but must usually be approved by the court, which is increasingly willing to impose its

own time limits and directions on the parties. Parties requiring more time to comply with directions can apply to the

court for an extension.

Cases typically take at least two years to come to trial, although smaller matters may be tried more quickly and

acceleration is possible where urgency is clearly demonstrated. Summary judgment may be obtained more quickly

where the court considers that there is no real defence to the claim.

What interim remedies are available to preserve the parties interestspending judgment?

The District and High Courts have power to freeze a partys assets pending judgment where there is prima facie

evidence of a good arguable case against the owner of the assets and a credible risk that they may be dissipated to

defeat a judgment. Where appropriate, the court may also grant injunctions or make other prohibitory or mandatory

orders in order to preserve the status quo until the trial. Interim orders may also be made (if appropriate, without noticeto a defendant) permitting a party to trace the flow of funds through financial institutions, or to enter a defendants

premises to search for and seize evidence. The courts also have jurisdiction to order that a defendant or a debtor

under a judgment, be prohibited from leaving Hong Kong. It is necessary to persuade the court that the defendant or

debtor is about to leave Hong Kong, and that enforcement of any judgment is likely to be obstructed or delayed. It is

possible to obtain a prohibition order against a potential defendant prior to the commencement of an action. The

prohibition order is obtained ex parteand is valid for a month, but can be extended virtually indefinitely upon

subsequent applications until the judgment is satisfied. There are various grounds upon which the prohibition order can

be set aside.

Are there procedures available for judgment to be obtained withoutproceeding to trial, on the ground that it is believed there is no defence to the

claim? If so, at which stage of the proceedings should such procedures beinvoked?

The summary judgment procedure enables a plaintiff to obtain judgment quickly in cases where there is plainly no

arguable defence. This avoids the need for interlocutory procedures, such as discovery, and the expenses and delay in

having a full trial. The summary judgment application may cover the whole of the plaintiffs claim, or a particular part of

the claim. As a result, if the plaintiff accepts that the defendant has an arguable defence to part of his claim, he may

seek summary judgment on the other part to which he believes there is no case. The summary judgment procedure is

not available to all types of claim. Libel, slander and claims involving fraud are, amongst others, exempt. A summary

judgment application can only be made after the defendant has given notice of intention to defend and has been

served with the claim. The application can be made either before or after the defence has been filed. The application

should be made promptly but there is no rule of law that it must be made within a reasonable time. However, any delay

will be considered by the court when looking at the substance and merits of the application, and when deciding costs.

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Both the District and High Courts have very wide powers to award remedies, including injunctive relief, declarations,

orders for an account of profits and the transfer of property and, most commonly, a monetary award of damages to

compensate for the loss suffered. Non-compensatory (punitive or exemplary) damages are awarded only rarely, in

cases of particularly outrageous or oppressive conduct by the defendant. Multiple damages are not available. Where

damages are not an appropriate or sufficient remedy, the court may instead make whatever prohibitory or mandatory

order seems most appropriate in order to give effect to its judgment on the underlying dispute.


Judgments and orders are enforced by means of further court procedures and, where necessary, by court officials.

There is no procedure for direct enforcement (ie, not involving the court) by the judgment creditor against the debtor.

The creditor must initiate the enforcement action, since the court will not enforce a judgment automatically. Standard

means of enforcement include:

(i) an examination of the debtor (or a corporate debtors directors) under oath to require the debtor to identify all

available assets;

(ii) an order empowering a court official to seize the debtors goods and possessions or to take possession of land;

(iii) an order requiring a third party who owes a debt to the judgment debtor (eg, a bank holding a debtors funds) to

pay that debt instead to the judgment creditor;

(iv) an order imposing a charge on land or certain other property in favour of the judgment creditor;

(v) an order appointing a receiver to manage the judgment debtors property and/or business with a view to paying off

the judgment debt;

(vi) an order committing a person (including the director of a company) to prison for wilful disobedience to an order of

the court affecting that person or company; and;

(vii) an order empowering the judgment creditor or a third party to do some act which the judgment debtor should have

done but has not.

This list is not exhaustive. The court has wide powers to make such orders as appropriate under the circumstances to

give effect to its orders.


The court usually orders the losing party to pay the winning partys legal costs. However, the amount payable is

assessed by the court, and as a rule of thumb the winning party should not expect to recover more than half to

two-thirds of its actual legal expenses. Prior to trial, the court has the power to order that an overseas plaintiff should

provide security for the defendants costs, usually by depositing cash in court, but this power is discretionary and willdepend in part upon a preliminary assessment of the merits of the case. Domestic plaintiffs are not obliged to provide

security, unless they are limited companies and there is credible evidence that they may be unable to pay whatever

costs may be awarded against them. Security can only be ordered against a defendant in respect of a counterclaim.


Appeals to the Court of Appeal generally lie as of right from all orders and judgments of the Court of First Instance

except in various specified circumstances, but leave is usually required in the case of orders and judgments of the

District Court. A party can appeal:

(i) against findings of fact if there is insufficient evidence to support the finding, or if the decision is clearly wrong; and

(ii) against decisions of law, on the basis that the decision is wrong.

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The Court of Appeal has power to receive new evidence if such evidence could not have been obtained with

reasonable diligence prior to trial, may have had an important influence on the outcome of the case, and is

inherently credible.

Leave of the Court of Appeal or Court of Final Appeal is required if a party wishes to appeal a decision of the Court of

Appeal. If the dispute on the appeal amounts to HK$1 million or more and the judgment is final, leave is still required,

but such leave must not be refused. Leave will be at the discretion of the court for any other judgment, final orinterlocutory, and will be granted where the appeal involves a question of general or public importance.

An appeal does not operate as an automatic stay of execution, but the court may grant a stay if persuaded that the

appeal has a real prospect of success and that it would be rendered pointless if the stay was refused.


Before the change of sovereignty in 1997, Hong Kong recognised a doctrine of restrictive state immunity, whereby the

immunity of a foreign state (or state entity) from action is restricted to acts of a governmental nature. Immunity does not

extend to acts of a commercial nature that could be performed equally well by a private individual or trading

corporation. It is unclear whether the same approach still applies. As the basic law excludes foreign affairs from the

jurisdiction of the Hong Kong courts, the courts may require a certificate from the Chief Executive when adjudicating

relevant cases. In 2005, China signed the United Nations Convention on Jurisdiction Immunities of States and Their

Property treaty which applies to the immunity of a state and its property from the jurisdiction of the courts of another

state. Once it comes into force, it will also be applicable to Hong Kong.


The enforcement in Hong Kong of civil and commercial judgments from foreign jurisdictions with which Hong Kong has

reciprocal agreements is dealt with by registration under the Foreign Judgments (Reciprocal Enforcement) Ordinance

(Cap 319). These may be judgments from Commonwealth or non-Commonwealth jurisdictions. In cases where there is

no reciprocal agreement, the enforcing party must begin new proceedings in Hong Kong in which the foreign judgment

is pleaded as a debt. In such cases, summary judgment may be granted. In either event, enforcement can be

challenged on specified grounds, such as where the foreign court did not have jurisdiction, or where the foreign

judgment is not final or conclusive.

Is it permissible for lawyers to charge contingency or conditional fees, or otherfee arrangements based on the result of the litigation/arbitration?

Solicitors in Hong Kong are expressly prohibited for entering into contingency fee arrangements in litigious proceedings.


The Arbitration Ordinance applies the Model Law to international arbitrations. The Ordinance itself prescribes the lawapplicable to domestic arbitrations. The Ordinance is available online at http://www.justice.gov.hk/home.htm (go to

Chapter 341).


The main arbitration institution is the Hong Kong International Arbitration Centre (http://www.hkiac.org).


No. Parties may represent themselves or be represented by any advocate of their choice, whether or not

legally qualified.

What are the formal requirements for an enforceable arbitration agreement?A purely oral arbitration agreement is rare but would be valid as a matter of common law. However, such an agreement

would not fall within the ambit of the Arbitration Ordinance, depriving the parties of the support and supervision

provided by the Ordinance. To fall within the ambit of the Ordinance, an arbitration agreement must be in writing, a

term which is given a wider definition under the Ordinance than would be the case under Article 7(2) of the Model Law.

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For example, under the Ordinance, an agreement is in writing if evidence of the agreement is in writing, even if the

agreement itself is not written.


Article 8 of the Model Law applies. The court must stay proceedings in favour of arbitration unless satisfied that the

arbitration agreement is null, void, inoperative or incapable of being performed. There is a possible exception in relation

to claims for fraud in domestic arbitrations, which may be determined by the court.


In domestic arbitrations, the Arbitration Ordinance provides that references are deemed to be to a single arbitrator

unless the arbitration agreement provides otherwise. In international arbitrations, the appointing authority will decide

whether to appoint one or three arbitrators in default of an agreement between the parties. In both cases, the

appointing authority is the HKIAC in default of agreement between the parties.

Are restrictions placed on the right to challenge the appointment ofan arbitrator?

Articles 12(2) and 14 of the Model Law apply to international arbitrations. A challenge is permissible:

(i) in circumstances that give rise to justifiable doubts as to the arbitrators impartiality or independence;

(ii) if the arbitrator does not possess the qualifications agreed to by the parties;

(iii) if they are unable to perform their functions; or

(iv) if they fail to act without undue delay.

In domestic arbitrations, the Ordinance provides that the court may remove an arbitrator:

(i) if they fail to use all reasonable dispatch in proceeding with the reference;

(ii) in cases of actual or perceived bias; or

(iii) for serious misconduct.


No, save that an arbitrator:

(i) must act fairly and impartially as between the parties;

(ii) must give the parties a reasonable opportunity to present their cases and deal with the cases of their opponents;

(iii) must use procedures appropriate to the particular case; and

(iv) must avoid unnecessary cost and delay.

An arbitral tribunal is not bound by the rules of evidence. It can receive such evidence as it considers relevant and must

give it such weight as it considers appropriate.


The court has supportive powers and may assist by making orders for interim protection (see below) and for production

of evidence. However, the arbitral tribunal has similar powers and therefore the court will generally only intervene on exparteapplications or where a third party is involved over whom the tribunal has no jurisdiction. The court may also rule

on questions arising under Article 16(3) of the Model Law concerning the tribunals jurisdiction.

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The Arbitration Ordinance and Article 17 of the Model Law give arbitrators powers to make such interim protective

orders as they consider necessary, specifically including the power to grant injunctions (see below for enforcement).

Arbitrators also have the power (unless the agreement provides otherwise) to make an interim award that is final and

binding for the issues it addresses and which cannot therefore be re-opened. By contrast, they may not make

provisional awards, these being awards which may be varied on the final determination of the dispute, unless the

agreement specifically provides.


Awards must be delivered within the time specified in the agreement (if any), failing which there is merely the general

prohibition against unnecessary delay. Article 31 of the Model Law provides that an award must:

(i) be in writing and signed by the arbitrator;

(ii) state the reasons on which it is based; and

(iii) state the date and place of the arbitration.

That aside, the law merely provides that an award must be cogent, complete, certain and final.


In international arbitrations, the parties rights to appeal an award are essentially limited to those set out in Article 34

of the Model Law. In domestic arbitrations, the grounds for appeal are more extensive. An award may be remitted

for reconsideration by the arbitrator if, for example, the award is incomplete, made in excess of the tribunals

jurisdiction, or fails to comply with the general formalities mentioned above. Further, and more generally, a domestic

award may be appealed on a question of law with the consent of both parties or with the leave of the court.

The court is generally reluctant to grant leave and will judge cases by their place on a notional scale where the

presumption of finality is greatest in relation to one-off cases (where the appellant must show that the arbitrator

was obviously wrong), and weakest in relation to standard forms of contract in regular use in Hong Kong with

facts or events that are likely to recur (where the appellant must show that the arbitrators decision is open toserious doubt).


An award made in Hong Kong may be enforced in the same way as a judgment of the court, subject to the leave of

the court. Where leave is granted, judgment will be entered in the terms of the award in favour of the successful party.

In the case of foreign awards, China has acceded to the New York Convention on behalf of Hong Kong, allowing

awards made in other

Documents

Guide 2 Dispute Resolution in Asia