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Arbitration's Cost-advantage is fictitious, says a 2005 Survey

Many people are advocating the use of arbitration as a method of dispute resolution alternative ("ADR") to traditional litigation in court. One of the frequently used arguments is it takes up costs less than spent in court proceedings. This has become a fiction as in recent years, costs of international arbitration have increased dramatically. Practitioners are nowadays extremely zealous about arbitrations proceedings. When complex arbitration matters are coupled by volumnous paper works, arbitration proceedings have become costly much to the surprise of the parties to the proceedings.

A survey in 2005 carried out among in-house lawyers of international corporations having experience in international arbitrations has come up with the following significant findings in respect of arbitration's costs:

• 50% of the respondents who answered the releant question ranked expense as the most important disadvantage of arbitration.
• on the question of costs on international arbitrations comparing with litigation:
  • 26% of respondents considered it more expensive to a great extent.
  • 38% considered it more expensive to some extents.
  • 23% considered it about the same and
  • 13% considered it less expensive.

In short, majority of the respondents are of the opinion that arbitraion is more expensive than litigations. At the same time, only a minority are believing that arbitrations help to save costs.

Caution issued on recovery agents, says the Department of Justice

The Department of Justice warns the public to beware of touting activities by recovery agents advertising their services in helping clients handle claims for accident compensation on a "no win, no charge" basis.

It warned today such activities can constitute offences of champerty and maintenance, and there is concern the interest of the victims of personal injury cases may be jeopardised as their legal rights to compensation may not be fully protected.

The caution was issued today after Police arrested 21 people for champerty and maintenance offences across Hong Kong July 3, charging two with conspiracy to commit maintenance, champerty and conspiracy to commit champerty.

The department said people injured in accidents, including employees injured at work and traffic accident victims, should seek proper legal advice from solicitors or the Legal Aid, Labour or Social Welfare Departments.

In their advertisements the recovery agents claim they will help injured people pursue claims for a fee chargeable only when they are successful in recovering damages. However, pursuant to agreements, the victims would have to pay the agents a substantial portion of the compensation obtained from the defendants.

Unlawfully maintaining or sharing the profits of legal proceedings can be a crime subject to jail terms and fines.

A new announcement of public interest will be broadcast on all television and radio stations from tomorrow to remind people to be aware of these unlawful activities.

Hong Kong will Legislate against Anti-competition Trade Practices

In March 2007, the Commerce and Economic Development Bureau published the Report on Public Consultation on the Way Forward for Hong Kong's Competition Policy. The Report utters that the results of its public consultation in 2006 revealed that competition legislation iss broadly welcomed by the community. On 6th May 2008, the Bureau released a public consultation paper setting out detailed proposals for developing a anti-competition statute universally applicable to all trade and service sector. A summary of the major proposals for such an anti-competition law are set out below.

Summary of Recommendations

The main recommendations are summarised as follows:-

New Legislation - General

1. New legislation should be introduced to guard against anti-competitive conduct that would have an adverse effect on economic efficiency and free trade in Hong Kong.
2. Rather than target individual sectors of the economy, the legislation should apply to all.
3. Provision should be included in the legislation to allow the Government to grant exemptions to the application of the law in defined circumstances on public policy or economic grounds.
4. The regulatory authority should have the discretion to disregard inappropriate complaints, so as to guard against the new law being used to stifle legitimate competitive business activities.
5. The new law would not target market structures, nor seek to regulate “natural” monopolies or mergers and acquisitions.

New Legislation – Broad Provisions

1. The new legislation should cover the following types of anti-competitive conduct :
   • Price-fixing
   • Bid-rigging
   • Market allocation
   • Sales and production quotas
   • Joint boycotts
   • Unfair or discriminatory standards
   • Abuse of a dominant market position.
2. Such conduct should not be an offence per se, but rather, the particular conduct must be proven :
   a) to have been carried out with the intent to distort the market; or
   b) to have the effect of distorting normal market operation.
3. There should not be lengthy and detailed descriptions of these types of conduct in the law as such. Appropriate guidelines should be drawn up by the regulatory authority in consultation with relevant stakeholders that would include :
   • detailed descriptions and examples of the types of anti-competitive conduct listed in the law;
   • an indication as to how intent and effect in relation to market distortion might be assessed; and
   • reference to cases dealt with under existing local sector-specific laws and related overseas legislation.

Regulatory Framework

1. A regulatory authority, to be known as the Competition Commission should be established under the new law. The Commission should have a “two-tier” structure, comprising a governing board underpinned by an executive arm that would include staff with relevant expertise.
2. The Competition Commission should have an advocacy role, and should be tasked with keeping the scope and application of the new law under review.
3. The Competition Commission should have sufficient powers to allow it to investigate thoroughly any suspected anti-competitive conduct prohibited by the new legislation.
4. The Government should seriously consider the merits of establishing a Competition Tribunal to hear cases brought by the Competition Commission and to hand down sanctions.
5. With regard to sanctions, civil penalties should apply in cases where anti-competitive conduct is found to have occurred.
6. The Competition Commission should be able to apply for an order from the Competition Tribunal (if established) to require an offender to cease and desist from anti-competitive conduct, pending a decision on the case.

Illegal Recovery Agents are Targeted by the Police with 3 Arrested

3rd July, 2008, HONG KONG

Efforts have ascalated on combating the illegal activities carried on by unscrupulous recovery agents.

Critics have on numerous occasions expressed serious concern on the activities of recovery agents in Hong Kong. These recovery agents operate under the "no win, no fee" purported pledge. Many are in the disguise of non-profit making bodies.

They appeal to injuried workers and traffic accident victims because they demand no legal fees from them. In some cases, the agent or a related party even provides high interest rate loans o victims to meet their daily expenses before a case is settled. By the time of settlement, the interests incurred will have taken away a substantial part of the compensation.

At the same time, the agent charges a substantial portion of damages recovered as high as 30%. Concern was expressed that recovery agents is easily driven to early settlement for lesser work to be done and because of such ill motive, resulting in a lower amount of compensation ignorant to the victims.

According to this issue of Legal Aid Council newsletter, the Government has produced a radio API which is ready to be launched. The TV API will be completed very soon. Besides and most importantly, police are investigating 9 cases on recovery agents and 3 arrests have been made.

Sex Traders Are INNOCENT:Website Operator Jailed for 18 months. Sex Traders Well-being Jeopardised

The operator of a popular online prostitutes directory was convicted of conspiring to live off the earnings of prostitution by a judge in the District Court. He was jailed for 18 months yesterday. He is a 48 year old gentleman called Chan Yuk-bun. The site's designer, programmer, photo processor and three photographers were each ordered to perform 180 hours of community service. They were also fined $20,000. They were lucky on not having been jailed like Chan.

The seven men made money by charging for adverts posted by sex workers on the website. The website has been run for three years. It was stopped after their arrest in May 2006. The case represented the first conviction of operatiors being involved in sex trade related advertising. Chan admitted his company made $90,000 to $100,000 a month by charging each prostitute $600. His personal bank account showed $6.5 million in deposits during the years the site operated.

The lucrative  income made as a result of such operation suggested that such online advertisements were effective in bringing customers to sex traders. Deputy Judge David Dufton stated that a deterrent sentence was needed because such websites might allow syndicates to hide other criminal activity.

The company sent photographers to brothels to take pictures of the women, which were uploaded to the website and included in the adverts, which included the prostitutes' names, age, service offered, fees and addresses.

Judge Dufton accepted the prostitutes in this case were not subjected to control, influence or direction, unlike if they were involved with a pimp. When deciding on these types of cases, a judge can easily be guided by morality as traditionally people "look down" sex workers on the mere reason that they have "betrayed" their souls by "selling" their intimacy which should belong to their loved ones. As found by the judge, the prostitutes suffered no loss. They were in fact agreeable on using those online adverts for their trades. While Chan's earnings might be envious to many, it does not mean that Chan should be made a criminal when no evidence of harm is found.

The judge said the case was serious because it was "a sophisticated operation" and "encouraged prostitution on a large scale" for three years. This statement helps to suggest that the judge has in mind that prostitution is a criminal phenomenon that must be curtailed. This is simply moralistic. The judge also commented that the website employed no measures to prevent access by the under-aged.  This statement means that underage's access to the site is a harm to them.

Hong Kong law does not prohibit prostitution. Many sex traders therefore run their trade alone in a flat. This does not breach the law. It is therefore not easily understandable while prostitution is in principle permitted, why promotion of this types of brothels has become illegal. The offence of living on the earnings of prostitute has the objective of sanctioning the abuse of sex traders. It does not aim at killing the business of single-woman brothel. The judge, while cherishing a moral cause, has in fact killed the livelihood and well-being of the sex traders who are legitimate under the law to trade their sexual intimacy legally.

Lastly, when operators using web to promote a sex trader's activities can be convicted of living off the earnings of prostitute, the list seems endless. In that event, the landlord who lets the flat to the prostitute, the woman collecting rubbish from her, the postman delivering letters to her and the Water Authority providing her with daily water for drinking and shower should also be brought before the judge for punishment.