Before moving to Hong Kong 24 years ago, I lived in The Hague, Netherlands, often referred to as the capital of international law. The rather magnificent Peace Palace houses the two oldest international bodies established to settle international disputes — the Permanent Court of Arbitration (PCA, founded in 1899) and the International Court of Justice (ICJ, colloquially often called the World Court, founded in 1945).
The Peace Palace reminds us of a very different era, when the American steel magnate Andrew Carnegie donated the funding to build it, to help the functioning and promotion of international law. The Hague also hosts the International Criminal Court and such bodies as the Hague Conference on Private International Law, first held in 1893, which works to try to prevent conflicts of laws by harmonizing them.
The world has changed dramatically since the late 19th century, and it has become clear that more up-to-date versions of The Hague to take into account the current realities of the world are truly needed because of the great increase in complexity and volume of international legal disputes. While there can only be one ICJ and one PCA, the other strands of international dispute settlement can be headquartered elsewhere. In this regard, Hong Kong is making serious inroads to become another global center of cross-border dispute resolution. The various methods of international dispute resolution if direct negotiation does not work are mediation, arbitration, and judicial settlement. While The Hague is the longstanding center for international judicial settlement, Hong Kong is quickly becoming the global center of international arbitration and mediation.
Mediation is a structured process of finding a solution with the help of neutral third-party mediators. What’s important to understand is that a mediator does not make the final decision, but rather helps the parties come to a solution on their own. It’s a bit like counseling. Arbitration is quite different in that parties agree beforehand to accept the decision made by the third-party arbiters as binding. Both mediation and arbitration are generally quicker and considerably cheaper than going through the international courts.
Indeed, Hong Kong has all the credentials and many unique advantages to successfully play the global mediation and arbitration role: a long tradition of a robust and uncorrupted legal system; a common law legal system to differentiate it from The Hague, which is in a civil law jurisdiction; first-class universities forming top legal talent; the good luck of being geographically situated in the heart of Asia; and being the superconnector between the Chinese mainland and the rest of the world. The other advantage of being a common law jurisdiction is that the laws of Hong Kong are readily accepted by the engaged parties in most international contracts. Last but not least, it must also be noted that Hong Kong is the only Chinese-English bilingual common law jurisdiction in the world.
Hong Kong already hosts the Hong Kong International Arbitration Centre (HKIAC), which was established in 1985 to promote the use of arbitration and other forms of alternative dispute-resolution services in Asia. Following the success of the HKIAC, two other international arbitration bodies — the International Court of Arbitration of the International Chamber of Commerce, and the China International Economic and Trade Arbitration Commission — established their regional offices in Hong Kong. Having three important international arbitration centers in one city is unique, although unfortunately, Hong Kong does a poor job of advertising this fact.
And now Hong Kong will become the global center for mediation. The International Organization for Mediation (IOMed) has been established and has its global headquarters in Hong Kong. IOMed is the world’s first intergovernmental international legal organization dedicated to resolving international disputes through mediation. It will serve as an important mechanism for upholding the principles of the Charter of the United Nations and will mediate disputes between states, between states and private parties, and between two private parties. That this new dispute settlement organization has struck a chord was evidenced by the large number of international representatives who flew to Hong Kong for the official signing ceremony: Over 80 countries across Asia, Africa, Latin America and Europe, and about 20 international organizations, including the UN, were represented.
As Chinese global trade continues to grow (notwithstanding the various ever-changing US trade tariffs and sanctions), the role of Hong Kong in solving trade misunderstandings and disputes through mediation and arbitration will grow proportionally. This growth will likely come in large part from Chinese trade with the Global South and the ever-expanding BRICS group of nations. Many of these areas do not have the robust legal traditions that Hong Kong has, and will therefore be more than enthusiastic about promoting Hong Kong as the place to solve any future trade disputes. Now that mediation has been added to the arsenal, the acceptance of Hong Kong as the dispute settlement venue will only grow.
We can be proud of Hong Kong becoming a global hub of international dispute resolution. This is not only good for the city’s reputation and local employment, but it really underlines the beauty of “one country, two systems”, in which Hong Kong has a unique role to play, which no other Chinese city or province can replicate.
The author is an adviser to international corporations and investors, acting as a liaison between East and West. He is a former lawyer, having specialized in international law with experience in cross-border legal disputes and mediation.
The views do not necessarily reflect those of China Daily.
