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Abstract: Resolving construction disputes using an adversarial approach is considered to be in opposition of the maintenance of a
harmonious relationship between two parties. The modern arbitration process may emulate the litigation proceeding leading to delay and
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cost escalation. During the past decade, the Hong Kong Government has implemented a mediation clause as an alternative mode for
settlement of construction disputes. In this paper, the experience and insight into resolving construction disputes by integrating mediation
and then arbitration in Hong Kong are highlighted. The state-of-the-art modern mediation process and its philosophical origins are
reviewed. The shortcomings of the present system are pinpointed. The success of the adjudication now practiced in the United Kingdom
may suggest that there is a place for another process of dispute resolution, which may help improve the situation. The prospect of the
proposed mediation/adjudication and then arbitration mechanism is discussed with particular reference to the construction industry in
Hong Kong.
DOI: 10.1061/共ASCE兲1052-3928共2007兲133:2共143兲
CE Database subject headings: Arbitration; Dispute resolution; Hong Kong; Construction industry.
JOURNAL OF PROFESSIONAL ISSUES IN ENGINEERING EDUCATION AND PRACTICE © ASCE / APRIL 2007 / 143
All these are also common features of the construction industry in life is of utmost significance. It is the obligation of every citizen,
Hong Kong 共Soo 2001; Molloy 2003兲. and in the common interest of the community, to avoid court
The perceived shortcomings of litigation and arbitration en- proceedings, which are considered to be detrimental to the natural
couraged the rapid growth of alternative dispute resolution pro- social order and ought to be the very last resort 共Creel 1960兲. This
cesses: conciliation, mediation, adjudication, etc. 共Battelle 1995; last step may be taken only after exhausting all other possibilities
Cronin-Harris 1996; Keil 1999兲. Alternative dispute resolution of dispute resolution. It would be unwise for a friend to resort to
methods have been used extensively around the world and are constant reproof, which inevitably render friendship remote. If
found to function well for many types of disputes. Particular suc- there exists a conflict of interest between two parties, it is essen-
cess has been recorded in such areas as purchasing, supply, bank- tial to acquire an accommodation or a compromise, with due con-
ing, insurance, personal injury disputes, partnership disputes, con- sideration to the interests of both parties without making one of
sumer disputes, maritime, divorce, and family matters 共Folberg them the winner and the other the loser. “Reciprocity” may serve
and Taylor 1984; Rouse 1988; Holland 1989兲. as a rule of life. The wise man recognizes that he should not do
unto others what he would not wish done unto himself.
All these are the prerequisites of Chinese philosophy, originat-
Mediation
ing from Confucius 共BC 551–479兲 and his successors 共Johnston
1934; Cheng 1947; Creel 1960; Lau 1983; Tu 1985; Li 1986兲.
Mediation is a voluntary, nonconfrontational, informal, private, This is, in essence, a philosophy of harmony, peace, and compro-
and nonbinding dispute resolution process in which an impartial
mise. Indeed, Confucian thought emphasized the supreme
and independent person, called a mediator, helps the parties to try
significance of the training and development of one’s character.
to reach a settlement by avoiding time-consuming and costly
Nowadays, many investigators, not just limited to Chinese, sub-
litigation/arbitration 共Chau 1992兲. Mediation can be considered as
scribe to the prevalent Confucian thought, which can be reflected
a half-way house between conciliation and arbitration in that a
in voluminous translations to other languages 共Louie 1980; Hall
mediator goes further than a conciliator in the degree of involve-
and Ames 1987; Strathern 2002兲. It comprises one of the most
ment in judgment decisions. Mediation attempts to resolve dis-
important components in current Chinese studies, not just a
agreement and focus on settlement by applying extra-legal
choice of convenience in itself.
principles rather than rigid legal rules, with due regard given to
the trade customs, previous business connections, and the prevail-
ing circumstances. Hong Kong Government Mediation Rules
Mediation avoids an adversarial arbitration or court proceed-
ing, which tend to polarize the parties and harden them in their Mediation is a contractual prerequisite to binding arbitration in
respective positions. Mediation seeks to ease hostilities by foster- government contract. The Hong Kong Government Mediation
ing cooperation in a structured way through dispute resolution. Rules 共Hong Kong Government 1991兲 are a set of 23 rules used
Besides, it provides significant potential savings in both time and extensively for mediations in the construction industry. The me-
cost in the settlement of disputes, provided that parties are deter- diation service is administered by the Hong Kong International
mined to resolve their disagreements by nonadversarial methods. Arbitration Center 共HKIAC兲, which is an independent and
Another advantage of mediation is the freedom to withdraw from nonprofit-making company limited by guarantee. The HKIAC
it when one party is dissatisfied with the attitudes adopted by or was established in 1985 by a group of leading business profes-
the style of the mediator. In such circumstances, the recommen- sionals in Hong Kong to provide advisory and support services
dations of the mediator can be disregarded. Its nonbinding nature for the resolution of local and international disputes by mediation,
can be an attraction since it allows the parties to objectively conciliation, and arbitration as well as to become the focus in
evaluate the personal qualities of the mediator and his recommen- Asia for dispute resolution. It has been generously funded by both
dations in determining whether or not to accept his opinion or the Hong Kong Government and the business community yet re-
proceed to arbitration. Thus, the appointment of a mediator in mains financially self-sufficient.
whom both parties have faith and respect is a prerequisite. The mediation process begins when a claimant serves a written
request, copied to the HKIAC, to the other party for mediation. A
Historical Origin of Philosophy of Mediation concise statement of the nature of the disagreement, the quantum
in dispute, any associated remedies, names and addresses of all
In ancient China, mediation was the primary method of settling parties, and nomination of a mediator are included. Within 28
disagreements. The Confucian view was that a disagreement days, the respondent should inform the serving party and the
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146 / JOURNAL OF PROFESSIONAL ISSUES IN ENGINEERING EDUCATION AND PRACTICE © ASCE / APRIL 2007
mediation/adjudication procedures, it is anticipated that there will Hong Kong Government. 共1985兲. General conditions of contract for civil
be a demand for its usage in the Hong Kong construction indus- engineering works, Hong Kong Government, Hong Kong.
try, as was seen following its introduction in the United Kingdom. Hong Kong Government. 共1989兲. “Administrative guidelines for media-
tion in construction disputes.” Lands and Works Branch Technical
Circular No. 8/89, Hong Kong Government, Hong Kong.
Conclusions Hong Kong Government. 共1991兲. Hong Kong Government mediation
rules, Hong Kong Government, Hong Kong.
This paper presents the current setting in resolving construction Hong Kong Institution of Engineers. 共1985兲. Hong Kong Institution of
disputes by integrating mediation and then arbitration during the Engineers mediation services rules, Hong Kong Institution of Engi-
neers, Hong Kong.
past decade in Hong Kong. The state-of-the-art modern mediation
Johnson, H. M., and Singh, A. 共1998兲. “Conflict management diagnosis at
process and its philosophical origins were reviewed. It might be
project management organizations.” J. Manage. Eng., 14共5兲, 48–63.
argued that a reason for avoiding court judgments in ancient times
Johnston, R. F. 共1934兲. Confucianism and modern China—The Lewis Fry
was that the law was not developed. However, today the well-
Memorial Lectures 1933–34 at Bristol University, Gollancz, London.
developed rules and regulations 共right of discovery and examina- Keil, J. H. 共1999兲. “Hybrid ADR in the construction industry.” Dispute
tion of documents before hearings, extended hearings, etc.兲, but Resolut. J., 54共3兲, 14–22.
with concomitant escalation of cost, delays, and adversarial rela- Kennedy, P., and Milligan, J. L. 共2005兲. “Research analysis of the
tionships, detract from both arbitration and litigation. The short- progress of adjudication based on returned questionnaires from adju-
comings of the present two-tier system are pinpointed. The dicator nominating bodies 共ANDs兲 and on questionnaires returned by
reported success of adjudication now practiced in the United adjudicators.” Adjudication Rep. No. 7, School of the Built and Natu-
Kingdom may suggest that there is a place for another process of ral Environment, Caledonian Univ., Glasgow, U.K.
dispute resolution, which may help improve the situation. The Latham, M. 共1994兲. “Constructing the team.” Final Rep., Joint Review of
implementation of the enhanced two-tier structure, namely, me- Procurement and Contractual Arrangements in the United Kingdom
diation or adjudication followed by arbitration, in resolving con- Construction Industry, Her Majesty’s Stationary Office, London.
struction disputes in Hong Kong allows more flexibility for the Lau, D. C. 共1983兲. Confucius: The analects (Lun Yu)—The sayings of
parties as well as renders incentives for improvement in the con- Confucius, Chinese University Press, Hong Kong.
Lewis, S. 共1999兲. “The Housing Grants, Construction, and Regeneration
duct and the procedures of the conventional arbitration process.
Act 1996.” Proc. Inst. of Civ. Eng. (UK), 132共2/3兲, 125–131.
Based on the successful results and experience, it is believed that Lewis, S. J. 共1997兲. “Adjudication.” Proc. Inst. Civ. Eng., Munic. Eng.,
there will be a large increase in mediation or adjudication usage 121共3兲, 156–160.
in Hong Kong for construction disputes. Li, F. C. 共1986兲. The Confucian way: A new and systematic study of “The
Four Books,” KPI, New York.
Louie, K. 共1980兲. Critiques of Confucius in contemporary China, St.
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