Document background
The High-Low Settlement Agreement serves as a risk management tool in Hong Kong's legal landscape, particularly useful in civil litigation where parties seek to limit their financial exposure while preserving the opportunity for a favorable outcome. This document type emerged from the need to provide certainty in uncertain litigation situations, combining elements of traditional settlement agreements with boundaries on potential outcomes. It is commonly used in insurance-related disputes, personal injury cases, and commercial litigation where damages are disputed but liability may be clear. The agreement specifies a minimum amount that the plaintiff will receive even if they lose at trial, and a maximum amount they can receive even if they win a larger verdict. This structured approach aligns with Hong Kong's common law system and provides a sophisticated mechanism for risk allocation between parties.
