Lawyer Monthly - October 2022

and related court proceedings. Secondly, there is also the proposed safety and health reform, namely the Occupational Safety and Occupational Health Legislation (Miscellaneous Amendments) Bill 2022, which seeks to enhance their deterrent effect through increasing the penalties for inadequate protection of workers. What is new from the perspective of construction arbitration and fees? In 2019, Hong Kong passed legislation on third-party funding for Hong Kongseated arbitration and local services provided for arbitration seated outside Hong Kong. The effect of this legislation was that that the common law doctrines of maintenance, champerty and barratry no longer apply to arbitration. However, ‘no win no fee’ arrangements remain of infrastructure works as part of the Northern Metropolis Development Strategy, which involves a major development project along the boundary area of Hong Kong and Shenzhen of Mainland China, which aims to facilitate integration into the overall development of the country in coordination with Shenzhen and the Greater Bay Area. A portion of the budget has also been set aside for advancing the development table of the HKD500 billion Lantau Tomorrow Vision, a massive land reclamation plan of artificial islands, and its related key projects. In previous policy addresses and budgets, other ongoing and committed public construction investments have included the first and second 10-Year Hospital Development Plans (totalling HK$500 billion) and planning of transport infrastructure including a series of major urban and cross-boundary railway projects. The new public budget provides a positive outlook for the Hong Kong construction industry with trillion-dollar public construction investment in the pipeline, and the next decade is poised to be an exciting time in the construction sector. It transpires that activities likely to cause construction-related disputes are also rising steeply. Beyond the proposed statutory adjudication, what other new developments have there been in the Hong Kong construction industry? There are currently two proposed legislative reforms that affect the Hong Kong construction industry. Firstly, there is the Arbitration and Legal Practitioners Legislation (Outcome Related Fee Structures for Arbitration) (Amendment) Bill 2022, which seeks to amend the Arbitration Ordinance (Cap. 609) (‘AO’) and the Legal Practitioners Ordinance (Cap. 159) (‘LPO’), with the view to removing the prohibitions on the use of certain outcome-related fee structures (ORFS) applicable to construction arbitrations prohibited in Hong Kong. With increased arbitration funding options, construction claims may have since been on the rise as accessibility to third-party funding now allows meritorious claim to be brought by, for examples, claimant sub-contractors, who have not been able to without such financial support. When a claimant is funded, it may help discourage oppressive interlocutory applications by defendants due to the claim’s perceived strength, hence promoting settlement. The proposed legal reform on ORFS now seeks to lift the prohibitions by enabling flexible fee arrangement, i.e. outcomerelated contingency, damages-based or hybrid fee agreements to be in place for arbitration in Hong Kong. By the same token, how will the government’s proposed legislative reform of health and safety impact the construction sector? The proposed legislative reform seeks to amend the Factories and Industrial Provided the regime is operated as it is intended at every level, the Hong Kong construction industry is already a step closer to its eventual transition to a legislative regime. 68 LAWYERMONTHLYOCTOBER 2022

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