Originially from: World Arbitration and Mediation Review (WAMR)

MEDIATION IS ENJOYING RAPID GROWTH
IN HONG KONG CONSTRUCTION INDUSTRY
By Colin J. Wall, Commercial Mediation & Arbitration Services Ltd., Hong Kong
Recent developments in Hong Kong demonstrate the growing strength of
mediation as an alternative dispute resolution technique. Although mediation has
penetrated only the construction industry so far, there is reason to believe that it
could enjoy equal success in commercial disputes.
Mid-1992 will see the publication of the Royal Institution of Chartered
Surveyors Minor Works Form of Contract, a contract designed for use in projects
under HK$5 million, which will use mediation in the dispute resolution process.
Also by mid-1992, the Government hopes to finalize a standard form of contract
for Design and Build, which contains mandatory mediation. Pursuant to the
standard contract, if the parties are unable to reach a mediated settlement, the
mediator becomes an adjudicator and renders a decision that binds the parties
until contract completion, at which time either party can elect to have the matter
arbitrated.
Also during this year, the Court Annexed Mediation Committee established by
the Chief Justice and chaired by Mr. Justice Neil Kaplan will present its
recommendations for the introduction of Court Annexed Mediation to the High
Court Construction List cases.
Last December, the Hong Kong Housing Authority adopted mediation in its
new construction contracts, along the lines of that used by the Hong Kong
Government. In August 1991, NAPCO, the arm of Government responsible for
the Airport Core Project (ACP) programmes associated with Hong Kong’s new
airport, introduced a panel of mediators and compulsory mediation in the ACP
projects, replacing the previous optional mediation procedures. In the ACP
projects, an attempt at a mediated settlement is a precondition to proceeding to
adjudication and/or arbitration.
And finally, last July the Government’s Architectural Services Department
(ASD) introduced a Dispute Resolution Adviser (DRA) system in the
refurbishment of a major operational hospital in Hong Kong (see 2 WAMR 227).
The DRA is a neutral individual jointly appointed and funded by the parties. The
DRA system consists of an initial pre-contract period of consensus building,
wherein the parties identify the major areas of anticipated dispute. The contract
documents are then amended to take account of the areas where disputes are
considered likely to arise.
In the DRA system, disputes that arise after contract award are dealt with by
mediation in the following manner. The parties are required to identify promptly,