Contractual disputes in Hong Kong can be solved through court litigation or through arbitration or mediation. Contractual disputes can arise for a number of reasons, including but not limited to damages caused by one of the parties, delays, different goals or simply the misinterpretation of the contractual terms.
Hong Kong courts may have strict jurisdiction over certain matters, however, the courts will allow the parties to expressly use their own choice of a jurisdiction in a contract.
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Laws governing contract disputes in Hong Kong
Commercial disputes in Hong Kong are brought before the Court of First Instance. Civil proceedings that include contractual breaches are not uncommon but court litigation is not the only option to solve agreement disputes. Mediation and arbitration are alternative disputes resolution methods.
Because Hong Kong is a world business centre where many international companies have opened offices, the governing law of a contract can sometimes be different from the Hong Kong contract law. When the parties agree upon this, they can expressly state the chosen governing law in a contract. However, certain limitations apply to this, including:
– when the parties agree against a mandatory Hong Kong rule of law (for gambling activities or other sectors that are regulated more thoroughly),
– when the choice of law is not legal under any other jurisdiction.
Matters like insolvency and bankruptcy in Hong Kong as well as employment are regulated through specific laws belonging to the Special Administrative Region. Hong Kong imposes its own common law system and it is not dependent on Mainland China.
A Hong Kong court may have jurisdiction over contractual disputes is the defendant is a Hong Kong resident, if the contractual breach took place in Hong Kong or if the matter of the breach includes land or movable properties located in Hong Kong.
In the case of court litigation, the statute of limitations for contractual breaches in Hong Kong (the amount of time during which the case can be brought to court) is six years from the date of the contract breach.
Alternative contractual dispute resolution in Hong Kong
The parties who sign a contract in Hong Kong can include a clause that allows for the use of alternative dispute resolution methods. Arbitration and mediation are often preferred to court litigation because they can provide faster judgment and lower costs.
Arbitration is based on the judgment of a qualified arbitrator instead of a judge and it is a binding type of dispute resolution. In mediation, the parties will agree to rely on the expertise of a third party, the mediator, to help them agree upon a convenient settlement.
Our lawyers in Hong Kong provide a wide range of legal services, including contractual dispute management and dispute proceedings.
For legal aid and support please contact our Hong Kong law firm.