HONG KONG, July 14, 2014 /PRNewswire/ -- The Royal Institution of Chartered Surveyors (RICS) fully supports the Government's "Pilot Scheme for Arbitration on Land Premium" outlined in this year's Policy Address to accelerate the supply of land. In this regard, RICS established a task force to study possible options for land premium arbitration. After detailed discussion and research, RICS has submitted a proposal to the Government, with suggestions for the "Pilot Scheme for Arbitration on Land Premium", and additionally has proposed a dispute resolution process through expert determination, in order to streamline dispute resolution procedures, improve land supply, and enhance the transparency of the process.
The Lands Department's current land premium assessment system for lease modifications may require many years to complete due to negotiations on basic modification terms, legal issues and the premium amount. In this year's policy address, the Government has proposed a "Pilot Scheme for Arbitration on Land Premium" to use an arbitration process in order to assist in the swift resolution of land premium disputes.
RICS has made a number of suggestions to the pilot scheme of land premium arbitration. First, depending on which process is required, the arbitration process may have 2 options, namely either one which requires hearings, or on a "document only" processes. For cases that require hearings, the process should span 22 weeks. The system could be triggered off if the developers are not satisfied with the result of the 1st land premium appeal under the current system. Once the arbitrators have been appointed (composed of three arbitrators, who should have experience in local appraisals), parties can work to resolving preliminary points and setting a timetable. After which both sides can submit statements to set out each party's case. Next, following a discovery process, the submissions of the parties and expert reports will be reviewed. Finally, parties will need to attend a hearing, after which an award will be made. Land Premium Arbitration with only documents will differ slightly in procedures. After the appointment of arbitrators, parties will work towards resolving preliminary points and agreeing upon a "Documents Only" procedure. The Claimant will then circulate written submissions with supporting documents, after which the Respondent will have the opportunity to do the same. Finally, both parties will have a final submission process, after which an arbitration award will be made. The process should require about 16 weeks.
As an alternative to arbitration, RICS suggests using an "Expert Determination System" which allows expert valuers to assess premium amounts. The process first proposed included a team of valuation experts (with three professionals with local experience in valuation, one chosen by a developer and one by Government, and the third and final member to be selected by the 2 experts appointed and act as the chairman of the expert team). Subsequent expert meetings can be conducted with relevant parties to seek additional information, and if necessary, an independent investigation can follow. Parties can then make supplementary submissions and/or respond to the Expert's questions, after which a determination will be made. The process would only take 12 weeks to complete.
RICS suggests that Expert Determination can be used to assess premium amounts after the result of the first appeal under the current system is available and the developer is not happy with the result. It is also recommended that parties should accept the outcome of the expert determination, and that the ultimate premium amount does not stray from the limits provided by the Government and developer selected valuation experts. The results of the valuation should include an agreement signed by both sides with the date of assessment to be the date of agreement to ensure it will be adopted and to accommodate for fluctuations in the market. Ultimately, the Expert Determination scheme, the premium arbitration pilot programme and the Government's existing methods will work in parallel with each other to cater for the needs of different cases.
Gilbert Kwok, Chairman of the RICS Hong Kong Premium Arbitration Task Force said: "RICS has proposed several recommendations to the Government in order to expedite the land premium negotiation process. Resolving the issue through arbitration or Expert Determination will accelerate the resolution of the land supply issue, and help to solve Hong Kong's urgent housing shortage problem. RICS also expects the arbitration process to improve Government transparency in the land premium process. RICS recommends that the professional panel of experts be formed by members of professional bodies such as the RICS, who can closely monitor the professional standards of the panels and set up a reliable system of declaration of interests to provide fair and professional services, and ultimately protect the interests of the Government, developers and the public."
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