Hong Kong’s Law Reform Commission has appointed Herbert Smith Freehills partners Kathryn Sanger and Briana Young to co-chair a study on the introduction of success fees in arbitration.

At present, Hong Kong lawyers are prohibited from charging outcome-related fees in arbitration. The sub-committee will consider whether reform is needed to the relevant legal and regulatory framework and make recommendations for reform.

“Success fees are now standard in many of Hong Kong’s competitor markets, such as the US and the UK, so this is an important element in the industry’s future competitiveness,” said Sanger.

In view of Hong Kong’s status as a leading centre for arbitration services, the commission says that it sees value in studying this topic. By permitting success fees, lawyers can share with clients in the risk and reward of complex arbitration cases.

“As practitioners, we are seeing increased demand for these types of pricing structures from clients,” said co-chair Briana Young. “The study will allow us to carefully assess the risks and benefits for Hong Kong and outline any legislative and regulatory changes required.”

The study follows recent changes that allow parties to Hong Kong-seated arbitrations to apply to the Chinese courts for injunctive relief in support of the arbitration. No other arbitral seat benefits from such support from the Chinese courts.

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