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How do I know if I am eligible for this Scheme?
You may apply for the Scheme if you have made a complaint to the HKMA against a bank that has sold you a Lehman-Brothers-related product, and the HKMA has completed its review of your complaint and
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either, the HKMA has referred your complaint to the Securities and Futures Commission (SFC) for it to decide whether to take any further action
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or a finding against a relevant individual or executive officer has been made by either the HKMA or the SFC.
If you are eligible, the HKMA will inform you about the mediation arrangements available. Should you and the bank decide to make use of mediation, the HKMA will pay your share of the mediation fee. The banks that have sold Lehman-Brothers-related products support the Scheme, but whether a bank agrees to mediation will depend on the circumstances of your case.
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What if the HKMA has yet to refer my case to the SFC, or a finding against a relevant individual or executive officer of the bank has yet to be made?
If you wish to pursue mediation you should contact the bank to see if it is willing to take part. You may then approach the Hong Kong International Arbitration Centre (HKIAC) (Website: http://www.hkiac.org), which will handle the case according to the same procedures and for the same fees as those applicable to the Scheme. You will, however, have to pay your share of the mediation fee. If the HKMA subsequently refers your complaint to the SFC or a finding against a relevant individual or executive officer is made, the HKMA will reimburse your share of the cost.
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Does this service cover investment products other than minibonds?
The service is available to investors in all unlisted Lehman-Brothers-related retail structured products distributed by banks in Hong Kong. These products include those listed on the SFC website (http://www.sfc.hk/sfc/html/EN/general/general/lehman/lehman_structure_products.html) and products sold through private placement.
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Do I need to pay for this service?
If you meet the criteria described in Q.1 above, the HKMA will pay your share of the cost. The fee for the mediation service is $11,200 and that for the arbitration service is $16,200. The fee for each case is divided equally between the two parties (i.e. the claimant and the bank) agreeing to mediation or arbitration.
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Do I need to open different files for my Lehman-Brothers-related investments with different banks?
Yes. If you wish to make use of the mediation or arbitration service in relation to more than one bank, you will need to seek a separate mediation or arbitration with each bank. The HKMA will meet your share of the cost for each case for which you meet the criteria set out in Q.1.
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Is Hong Kong International Arbitration Centre part of the Government?
No. The HKIAC is an independent, non-profit-making company. The HKMA has engaged the HKIAC to make available mediation and arbitration services in disputes between investors and distributing banks relating to Lehman-Brothers-Related Products. But the HKMA takes no part in the mediation or arbitration, which is conducted by neutral professionals who are trained in the field.
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Mediation, arbitration and litigation seem to be solutions offered for me as an affected investor of Lehman Brothers-related investment products. Which one is better and more suitable for me?
This is a matter for you to decide taking into account the specific circumstances of your case, your own preferences and the willingness of the other party to take part in mediation or arbitration. If in doubt, you should seek independent legal advice.
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What is mediation?
Mediation is a form of voluntary dispute resolution for parties who have been unable to reach a settlement on their own. Both sides of the dispute agree to appoint a neutral mediator, who will bring the two sides together to try to settle a claim in a speedy, confidential and amicable way. The mediator has no powers to decide the dispute, but has training and experience in helping people reach a negotiated settlement. If agreement cannot be reached, the mediator will try to help the two sides narrow the issues in dispute. Mediation can be quicker and less expensive than litigation through the courts, but it requires both parties to agree to take part before the process can begin.
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When and how should I apply for this service?
If you are eligible (see Q.1), the HKMA will inform you about the mediation arrangements available and, should you and the bank decide to make use of mediation, the HKMA will pay your share of the mediation fee.
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Activation of the mediation process requires agreement from both the complainant and the bank in question. If my bank does not agree to activate the process, what can I do?
Mediation is a voluntary process. The two sides of the dispute must each agree to seek mediation before it can begin. The banks that have sold Lehman-Brothers-related products support the Scheme, but whether a bank agrees to mediation will depend on the circumstances of your case.
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I have already reached a settlement with my bank on Lehman-Brothers- related investment. Should I apply for mediation service?
If you have agreed with the bank on a final settlement of your case, then you should not apply for mediation.
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How long does the mediation process take?
The length of time depends on many factors, including the complexity of the dispute and the willingness of the two sides to come to a settlement. Normally, it should take a few hours - or longer if the case is more complicated.
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How long will I have to wait after applying before the mediation takes place?
This will depend on the number of people wishing to use the service. Once you and the bank have indicated that you agree to take part in mediation, an appointment will be arranged by the HKIAC.
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Can I be legally represented during the mediation?
No. Mediation is a means for the parties to reach resolution by agreement without resorting to arbitration or litigation. There is therefore no legal representation for either party.
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Can I have someone to accompany and advise me during the mediation?
If the other party agrees you may have someone to accompany you during the mediation.
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Can I authorise a representative in applying for this service on my behalf?
You should apply yourself. However, in exceptional circumstances (e.g. ill health or unavoidable absence from Hong Kong) you can authorise a representative to apply for the service on your behalf.
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Will I get back my money through the mediation service?
The aim of mediation is to reach a voluntary and negotiated settlement. Whether settlement can be reached, and if so whether and how much compensation will be involved, will depend on the circumstances of each case.
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What is the relationship between mediation and the buy-back proposal?
There is no formal relationship between the two. However, if you have already accepted a buy-back proposal, any payment the bank has made to your under the buy-back proposal will be taken into account in any eventual settlement of compensation under the Scheme. If you have already agreed to a final settlement through mediation, whether you are able to take part in any buy-back arrangement will depend on the terms of the settlement.
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Can I reserve my right to pursue litigation after mediation?
If you reach a settlement through mediation, the settlement is likely to be final and you will not be able to pursue litigation on matters covered by the terms of the settlement. If mediation does not result in a settlement, the options of arbitration and litigation will remain open. The mediator will explain these options and the procedures for pursuing them at the appropriate time.
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What is arbitration? How is it different from mediation?
Arbitration is a form of voluntary dispute resolution whereby both parties to a dispute agree to appoint a neutral arbitrator, who will decide the claim. The Arbitrator's decision will be final and binding on both sides. Like mediation, arbitration requires both parties to agree to take part before the process can begin. Under the Scheme, arbitration will be a documents-only process as far as possible. Arbitration is intended to be quicker and less expensive than litigation through the courts. It is suitable for less complex cases.
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When should I apply for this service?
You should only apply for this service if you and the bank have taken part in the mediation service but have been unable to reach a settlement. The mediator will explain the options and the arbitration process if your case is suitable for arbitration. It would be best to obtain your own legal advice on whether you should participate in the arbitration scheme as you will be bound by the findings of the arbitrator. As with mediation, the agreement of both parties is required before arbitration can begin.
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How should I apply for this service?
The mediator will explain the process at the appropriate time.
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How long does the arbitration process take?
The length of time depends on many factors, including the complexity of the dispute and the willingness of the two sides to come to a settlement. The HKIAC aims to complete arbitration cases under the Scheme within 21 calendar days of all of the necessary documents having been received.
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Can I be legally represented during arbitration under the Scheme?
The parties may not be legally represented during arbitration.
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Is the outcome of the arbitration processes legally-binding?
Yes. The Arbitrator's decision will be final and binding on both sides.
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What is the difference between arbitration and litigation?
Litigation takes place through the courts and does not require the agreement of the parties. Arbitration takes place before an arbitrator and requires the agreement of both sides. An arbitrator is not a judge but his or her determination of a dispute is final and binding on both sides. Arbitration is a confidential process. It is generally less formal and may be quicker and cheaper than litigation. It is suitable for less complex cases.
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Can I reserve my right to pursue litigation after a settlement is reached through arbitration?
A determination reached by an Arbitrator is final and binding on both sides. You cannot subsequently pursue litigation if you are unhappy with the Arbitrator's decision.
