Why even the wealthy don't sue? : examining the suitability of arbitration for resolving private banking disputes in Hong Kong from the client's perspective

Abstract

The theoretical framework of “Naming, Blaming, Claiming” has guided the analysis of dispute transformation and has offered insights into finding a suitable dispute resolution mechanism. Drawing on an empirical and mixed-methods approach, this research aims to provide insights into private banking clients’ perceptions of the use of arbitration in resolving private banking disputes in Hong Kong. The thesis finds that private banking clients, in the face of one-sided contracts, often avoid the escalation of grievances through “lumping it”, accepting blame and opting for immediate resolution. Clients appear to engage in what is called a “self-corrective mechanism” by actively eliminating the formation of grievances instead of resolving them. This is due to clients’ perception of being in a weaker position in the contractual relationship arising from a one-sided contract, the influence from clients’ private bankers and the regulatory preference for banks to resolve disputes by themselves, even though banks’ complaint handling processes are not transparent. This renders any Alternative Dispute Resolution mechanism, including arbitration, less relevant. Regulators should support clients in this self-corrective process to establish a more equal footing between private banks and private banking clients and avoid the elimination of disputes without a proper resolution, in order for clients to assist in the proper supervision and improvement of bank operations.