hat are the typical challenges facing the construction industry in Hong Kong? Let me first set the scene by saying a few words about the history of Hong Kong. Most recently, on 1 July 2022, Hong Kong has marked the 25th anniversary of the city’s handover from British to Chinese rule. For over 150 years, Hong Kong had been a British colony. In 1997, Hong Kong’s sovereignty was transferred back to China under the “One Country, Two Systems” agreement in the 1984 Sino-British Joint Declaration. As such, Hong Kong has retained its preexisting legal system, making the city the only common law jurisdiction within China. The five bodies of law, namely contract law, tort law, criminal law, the law of restitution and legislations therefore still remain as the basis of construction law in Hong Kong. The Hong Kong construction industry has long been a fertile breeding ground for disputes due to the nature of its multi-layer chain subcontracting, particularly with an extensive pipeline of ADR and Statutory Adjudication in the Hong Kong Construction Industry As a fast-developing city, Hong Kong is fertile ground for both a flourishing construction sector and all the disputes that can arise from it. What legislative steps is Hong Kong taking to curb a rise in construction-related litigation? John Lau offers his expert insight on the construction climate in the nation and how ADR is being used to combat these new challenges. EXPERT INSIGHT W new and existing major construction projects – to name a few, the city’s HK$250 billion Ten Major Infrastructure Projects; the HK$140 billion Hong Kong International Airport Third Runway; the HK$200 billion 10year Hospital Development Plan and the proposed HK$500 billion Lantau Tomorrow Vision. Most standard forms of private or government contracts, however, only provide for post-project completion arbitration provisions, which tend to prohibit parties from resolving their disputes as and when they arise. This often results in entrenched views, with a damaged relationship leaving both parties, particularly the contractor, without remedy for many years. This is of particular concern as activity likely to cause construction-related disputes is on the rise. Typical challenges are the lengthy duration needed for resolving disputes over unfair payment terms, payment delays and others, which generally cause widespread issues on cashflow – described by Denning LJ in Modern Engineering (Bristol) Ltd v Gilbert-Ash (Northern) Ltd (1973) as being the “very lifeblood” of the construction industry. Recognising the fundamental legal principle of “justice delayed is justice denied”, with the delay constituting the entire construction duration and the period of the dispute resolution process, it is advocated that parties to a construction
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