The Practice Direction 3.3 (P.D 3.3) issued by the Hong Kong Judiciary has taken effect on 2 Jan 2021 with the aim to encourage parties to shareholders’ disputes petitions to consider using mediation to resolve their disputes which do not involve the interest of the general body of creditors of the subject company or public interest.
P.D 3.3 sets out provisions for voluntary mediation in respect of :
(a) Petitions presented under Section 724 of the Companies Ordinance (Cap. 622); and
(b) Petitions for winding up on just and equitable ground under Section 177(1)(f) of the Companies (Winding Up and Miscellaneous Provisions) Ordinance, Cap. 32; and
(c) where there is no allegation of insolvency concerning the subject company; and
(d) where there is no allegation that the affairs of the subject company would require full investigation in the public interest.
Mediation is Voluntary
Parties are free to reach an agreement to mediate. Any such agreement is not actionable as a contract, and is without prejudice to the parties’ contentions in the Petition.
A party to an agreement to mediate is free to withdraw from mediation at any time and to proceed with the Petition.
Any settlement reached during mediation must be recorded in writing in order to be binding on the parties.
The conduct of the mediation shall remain confidential to the parties and will proceed wholly on a without prejudice basis.
At any stage of the Petition, if a party wishes to attempt mediation, this may be initiated by serving a Mediation Notice on the other party as invitation to mediation.
Where a Mediation Notice has been served, an unreasonable refusal or failure to attempt mediation may expose a party to an adverse costs order by the Court.
Whether a party has acted unreasonably would be determined having regard to all the circumstances of the case.
For legal advice or services on commercial or shareholders disputes (majority or minority shareholders disputes), please contact CHOW & CHEUNG, Hong Kong Solicitors & Notary Public. [Tel: +852 2856 3799 Email: firstname.lastname@example.org]
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