Hong Kong: Arbitration hub in the Greater Bay Area30Jul2020
Arbitration has become the leading process for resolving international business disputes in Hong Kong as the region sees an increasing number of matters involving the Guangdong-Hong Kong-Macau Greater Bay Area.
This article originally appeared in DutchCham Magazine’s July 2020 issue.
Hong Kong is widely recognised by the international business community as an efficient and reliable jurisdiction for arbitration. Parties who opt for arbitration in Hong Kong in respect of disputes arising in the Greater Bay Area benefit from two reciprocal arrangements between mainland China and Hong Kong: the 1999 arrangement on mutual enforcement of arbitral awards (“1999 Arrangement”) and the 2019 arrangement on court ordered interim measures in aid of arbitral proceedings (“2019 Arrangement”).
Hong Kong’s Arbitration Ordinance ensures the enforcement of mainland arbitral awards in Hong Kong; in turn, pursuant to the 1999 Arrangement and the Notice of Relevant Issues on the Enforcement of Hong Kong Arbitral Awards in the Mainland issued by the Supreme People’s Court in 2009, both institutional and ad hoc arbitral awards obtained in Hong Kong can be enforced in the mainland.
The 2019 Arrangement allows the mainland Chinese courts to issue orders to preserve assets, evidence and conduct in support of eligible arbitral proceedings seated in Hong Kong. Hong Kong is the only jurisdiction outside of mainland China that can benefit from interim measures of protection by the mainland Chinese courts. We have found that the Courts in Hong Kong will not simply rubber-stamp enforcement applications, but will scrutinise carefully any grounds for non-enforcement of arbitral awards, which adds to the reputation of Hong Kong as a reliable and predictable business hub.
The launch of the Pilot Scheme on Facilitation for Persons Participating in Arbitral Proceedings in Hong Kong (“Scheme”) by the Hong Kong government on 29 June 2020 is another welcome step to strengthen the city’s position as a dispute resolution hub. With the introduction of relaxed immigration rules, the Scheme is expected to enhance the competitiveness of Hong Kong as the seat of arbitration for international disputes but also for the Greater Bay Area as the area transforms into a prominent business and technology hub.
The Scheme is in line with the Belt and Road Initiative (“BRI”) and Hong Kong is well positioned to be the designated arbitration venue for BRI related disputes due to its geographical location, its sound and independent legal system and the highly developed arbitration infrastructure sustained by the Hong Kong International Arbitration Centre(“HKIAC”).
The HKIAC has proven to be a popular forum for parties from China and BRI countries for their finance, construction and maritime-related disputes. Hong Kong and the HKIAC appeal to mainland Chinese individuals and companies for the geographical proximity and cultural similarities, and they appeal to non-Chinese parties who seek independent, neutral and quality commercial arbitration.
According to the statistics provided by HKIAC, between January 2016 and June 2020, HKIAC registered a total of 980 arbitrations involving parties from a total of 42 BRI jurisdictions. HKIAC has handled several disputes with strong BRI connections, for example, disputes concerning the laying of subsea cables in the Middle East by a Chinese state-owned enterprise and the transfer of shares from a Chinese contractor in a joint venture for an infrastructure project in South East Asia.
Joe Liu, Deputy Secretary-General of HKIAC says: “Hong Kong is the most commonly chosen seat for HKIAC arbitrations involving parties from BRI jurisdictions and the Greater Bay Area. I anticipate that Hong Kong will continue to be a popular seat for such disputes given its modern arbitration legal framework, independent judiciary, deep pool of relevant expertise and strong support from the mainland Chinese courts which is reflected by the 2019 Arrangement.”
As Hong Kong positions itself as the most convenient, practical and reliable dispute resolution centre in the Greater Bay Area, opting for Hong Kong arbitration in your commercial contracts or ventures in the Greater Bay Area is certainly something to consider.
Pamela Mak and River Stone
If you would like to discuss any of the matters raised in this article, please contact:
Disclaimer: This publication is general in nature and is not intended to constitute legal advice. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.