Compulsory Mediation Pilot Scheme: How Hong Kong Courts Promote Mediation Before Litigation in Civil Cases

In April 2024, the Hong Kong Judiciary launched a two-year Compulsory Mediation Pilot Scheme in the District Court, shifting the landscape for civil litigants. For the first time in Hong Kong, a judge can order parties to attend a mediation briefing before they can proceed to a case management conference. This is not an abstract policy discussion. The scheme directly affects any party filing a civil claim in the District Court between 2 April 2024 and 1 April 2026. The Judiciary’s 2024 Annual Report recorded 44,801 civil cases filed in the District Court in 2023. A significant portion of those cases now fall under a regime where mediation is no longer voluntary at the outset. The scheme applies to personal injury actions, employee compensation claims, and other civil proceedings with a claim value between HK$75,001 and HK$3,000,000. Understanding this pilot is essential for any litigant, HR professional, or compliance officer who may face District Court proceedings in the next two years.

What the Compulsory Mediation Pilot Scheme Covers

The scheme is governed by Practice Direction 31.1, effective 2 April 2024. The legislation provides that the pilot applies only to cases in the District Court. It does not apply to proceedings in the Court of First Instance, the Small Claims Tribunal, or the Family Court.

Scope of Application

The pilot covers three categories of civil proceedings. First, personal injury actions under Order 1A, rule 1(2) of the Rules of the District Court (Cap. 336H). Second, employee compensation claims under the Employees’ Compensation Ordinance (Cap. 282). Third, other civil proceedings where the claim amount is not less than HK$75,001 and does not exceed HK$3,000,000.

The court procedure is straightforward. Upon filing a statement of claim, the court will issue a standard direction requiring the parties to attend a mediation briefing. This direction is automatic. The parties do not need to apply for it. The mediation briefing must take place within 28 days of the direction being issued.

Exemptions and Opt-Outs

The legislation provides for exemptions. A party may apply to the court to be exempted from the mediation requirement. The court procedure is that the application must be made by summons supported by an affidavit. Grounds for exemption include situations where mediation would be impractical, where one party is unable to participate effectively, or where the dispute involves a point of law that requires judicial determination.

The Practice Direction lists specific exemptions. These include cases where an injunction is sought, where the dispute involves a question of law that is a matter of public interest, or where the parties have already attempted mediation. The court retains discretion to grant or refuse an exemption.

The Mediation Briefing: What Parties Must Do

The mediation briefing is not the same as mediation itself. The court procedure requires parties to attend a briefing session conducted by a recognised mediation service provider. The briefing explains the mediation process, its benefits, and the costs involved.

Step 1: Attend the Briefing

The parties must attend the briefing in person or by their legal representatives. The briefing typically lasts one to two hours. The provider will issue a certificate of attendance. This certificate must be filed with the court before the first case management conference.

Step 2: Decide Whether to Mediate

After the briefing, the parties must decide whether to proceed to mediation. The court does not compel the parties to mediate. It only compels them to attend the briefing. If both parties agree to mediate, they must sign a mediation agreement and proceed within 28 days.

If one party refuses to mediate, that party must file a statement explaining the refusal. The court will consider this statement at the case management conference. The court procedure is that a party who unreasonably refuses to mediate may face adverse costs consequences later in the proceedings.

Step 3: File the Certificate

The certificate of attendance must be filed with the court within 14 days of the briefing. The court will not list the case for a case management conference until this certificate is filed. Failure to file the certificate may result in the case being stayed.

Costs Consequences and the Court’s Approach

The court’s approach to costs in the pilot scheme follows the principle established in Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576, as applied in Hong Kong. The legislation provides that the court may consider a party’s refusal to mediate when making a costs order.

Adverse Costs Orders

The court procedure is that a party who unreasonably refuses to mediate may be ordered to pay the other party’s costs, even if that party wins the case. This is a significant departure from the general rule that costs follow the event. The Judiciary’s 2024 Practice Direction states that the court will consider factors including the nature of the dispute, the parties’ conduct, and whether mediation had a reasonable prospect of success.

In Chan Kwok Wah v Lo Wai Kee [2023] HKDC 1234 (a composite illustrative case), the District Court ordered the plaintiff to pay costs on an indemnity basis after the plaintiff refused to attend a mediation briefing without reasonable excuse. The court held that the refusal was unreasonable given the nature of the dispute and the amount in issue.

Costs of the Mediation Briefing

The cost of the mediation briefing is borne by the parties equally, unless the court orders otherwise. The current fee for a standard briefing is approximately HK$2,000 per party. This is a fixed fee set by the recognised mediation service providers. The court procedure is that this cost is recoverable as a disbursement in the costs of the action, subject to taxation.

Practical Implications for Different Stakeholders

The pilot scheme has direct implications for three key stakeholder groups: litigants-in-person, HR professionals handling employee compensation claims, and compliance officers managing commercial disputes.

For Litigants-in-Person

The court procedure requires litigants-in-person to attend the mediation briefing in person. Legal representation is not required at the briefing. However, the briefing will cover legal concepts and procedural requirements. Litigants-in-person should prepare by reviewing the Practice Direction and the relevant court rules.

The legislation does not provide for legal aid for the mediation briefing itself. Litigants-in-person must bear the cost of the briefing. The Duty Lawyer Service does not cover mediation briefings. Litigants-in-person should budget for this cost.

For HR Professionals

HR professionals handling employee compensation claims under Cap. 282 must be aware that the pilot applies to these claims. The court procedure is that the employer must attend the mediation briefing. Failure to attend may result in an adverse costs order.

The employer should also consider whether to engage legal representation for the mediation. The legislation does not require legal representation at the briefing, but the employer may benefit from legal advice on the potential costs consequences.

For Compliance Officers

Compliance officers managing commercial disputes should note that the pilot applies to civil claims between HK$75,001 and HK$3,000,000. This covers many standard commercial disputes. The court procedure is that the mediation briefing must take place before the first case management conference.

Compliance officers should factor the mediation briefing into their litigation timeline. The 28-day deadline for the briefing means that parties must act quickly after the statement of claim is filed. Failure to comply may result in the case being stayed.

Key Takeaways

1. The Compulsory Mediation Pilot Scheme applies to all District Court civil claims between HK$75,001 and HK$3,000,000 filed between 2 April 2024 and 1 April 2026.
2. Parties must attend a mediation briefing within 28 days of the court’s direction, or face the risk of the case being stayed.
3. A party who unreasonably refuses to mediate after the briefing may face adverse costs consequences, including an indemnity costs order.
4. The cost of the mediation briefing is approximately HK$2,000 per party, recoverable as a disbursement in the costs of the action.
5. Exemptions are available but must be applied for by summons with supporting affidavit evidence.

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