An alternative for long and expensive court procedures: arbitration

Brasia, 19th July 2019

As an alternative to time and money consuming court procedures, arbitration has been used for many years as a cheaper, faster and confidential way to solve disputes arbitrationover the world. In an arbitration procedure, the parties agree to designate an independent third party (a tribunal, comprising of one or more arbitrators) to resolve the dispute between them and to be bound by their decision. Usually, contracts are drafted already with an arbitration clause, but that does not prevent the parties to agree to it later if the parties prefer not to go to court. If parties have agreed to go to arbitration, with limited exceptions, they cannot ignore the agreement by going to court, unless both parties agree. An arbitration award must be enforced in the same manner as a judgement form a Court and it is enforceable in a court of law.

Hong Kong is a world leader on Arbitration procedures, having arbitral awards being enforced in over 150 countries. The most important institution for arbitration in Hong Kong is the Hong Kong International Arbitration Centre (HKIAC). HKIAC maintains one of the largest caseloads in the Asia-Pacific region, having handled over 9,000 cases since 1985.

As an idea of cost, a USD1million amount in dispute would cost about USD20k to go through the HKIAC. On the other hand, in a court it could cost 2 or 3 times that. In terms of time, arbitration take on average 14 months to conclude (with an option of emergency arbitration, costing a bit more, that can be concluded in 8 months) whereas a court procedure could take years.

Intellectual property disputes, before a lengthy and expensive procedure are also able to be resolved by Arbitration awards since 2018 in Hong Kong, bringing much more secrecy to the procedures and comfort to the parties.

Having a robust contract and suitable Intellectual Property protection when you operate offshore is very important in order to avoid any surprises or unexpected losses. Count on our team to help you draft your contracts and guide you through an arbitration process in Hong Kong if you need.
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