A study on the implications of the outcome related fee structures for construction-related arbitration in Hong Kong

Abstract

This dissertation focused on the implications of Outcome-Related Fee Structures for construction-related arbitration in Hong Kong. With the enactment of the Arbitration and Legal Practitioners Legislation (ORFS for Arbitration) (Amendment) Ordinance 2022, lawyers can now arrange fee agreements based on the case outcome, rather than traditional hourly wages, in arbitration. The research provided a comprehensive examination of the implications of ORFS on arbitration practice, specifically within the context of construction arbitration. The significance of this study lied in addressing the existing research gap regarding the implications of ORFS in construction-related arbitration in Hong Kong, considering the unique dynamics of the construction sector in this jurisdiction. The study has five major objectives: 1. To review the development of ORFS in Hong Kong. 2. To investigate the implications of implementing ORFS in arbitration practice in Hong Kong. 3. To explore the implications of ORFS in construction-related arbitrations in Hong Kong. 4. To determine whether ORFS for construction-related arbitration can enhance the popularity of arbitration in construction disputes in Hong Kong from the views of construction and legal professionals. 5. To identify the limitations of ORFS in construction-related arbitrations and provide recommendations for enhancing their implementation in Hong Kong. The study formulates and tests six hypotheses: 1. ORFS for arbitration would enhance access to justice in construction-related arbitrations in Hong Kong. 2. ORFS is suitable for construction-related arbitration in Hong Kong. 3. The use of ORFS for arbitration would lead to increased cost-effectiveness on construction-related arbitration in Hong Kong. 4. The availability of ORFS in construction-related arbitration in Hong Kong would vary based on the complexity of the dispute. 5. The availability of ORFS in construction-related arbitration in Hong Kong would vary based on the value of the dispute. 6. The perception of ORFS in construction-related arbitration in Hong Kong by key stakeholders, including parties, legal professionals, and industry experts, would play a significant role in determining the success widespread adoption of such fee structures. To achieve the objectives and test the hypotheses, a combination of online questionnaires and semi-structured interviews were utilized to gather insights from legal and construction professionals. The collected data was analyzed using a mix of qualitative and quantitative research methods. Quantitative analysis involved reliability tests, descriptive statistics, and an effectiveness index, while qualitative data was analyzed through categorization. Upon analysis, hypothesis 1, hypothesis 4, hypothesis 5, and hypothesis 6 were supported, while hypothesis 2 and hypothesis 3 were rejected. The findings indicated that ORFS can enhance access to justice in construction-related arbitrations in Hong Kong by providing a funding option to alleviate financial burdens. However, it was discussed that ORFS may not be suitable for construction arbitration due to the specific nature of construction disputes. Additionally, the use of ORFS may not necessarily lead to increased cost-effectiveness in construction-related arbitration in Hong Kong, as it could potentially create conflicts of interest between lawyers and their clients. The study also highlighted that lawyers are more inclined to use ORFS in construction arbitration when the claim value is higher and the case is less complex. The role of key stakeholders in determining the widespread adoption of such fee structures was emphasized. The study also discussed the beneficiaries of ORFS in constructionrelated arbitration, other factors affecting the willingness to use ORFS in construction-related arbitration, its limitations, and provided recommendations for the Amendment Ordinance. It is believed that this study provides insightful findings regarding the implications of ORFS on construction-related arbitration. The perspectives offered to policymakers and professionals help evaluate the ORFS regime specifically in the context of construction-related arbitration and lay the groundwork for future research on this topic.