A newly announced agreement between Hong Kong and mainland China is set to formalise the reciprocal enforcement of interim measures supporting arbitration carried out in the two markets.
The “Arrangement Concerning Mutual Assistance in Court-Ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the HKSAR” was signed in April this year and is viewed as a game-changer given the absence of other such agreements between PRC and jurisdictions outside the mainland.
According to PRC state news agency Xinhua, this is a move to strengthen the “credibility” of mainland China’s arbitration system, while also encouraging “the introduction of the Internet in arbitration.” The bid to utilise online measures appears to reference the HK$150 million ($19 million) government-backed online dispute resolution platform known as eBRAM that is currently in development in Hong Kong.
James Kwan, a partner at Hogan Lovells, says the arbitration support measures make up one of the six recently concluded arrangements Hong Kong had entered with mainland China regarding legal assistance for civil and commercial matters.
The agreement “highlights that the two Governments are willing to cooperate on mutually beneficial legal arrangements so as to avoid any injustices and inefficiencies, so as to benefit all stakeholders,” Kwan says, adding that he expected more beneficial legal agreements in the future.
Wilfred Ho, litigation and arbitration associate at Skadden, Arps, Slate, Meagher & Flom, called the arrangement a “milestone development for arbitration in Hong Kong.” “Not only does it advance the cause of international arbitration in Hong Kong, but it also signals a new level of judicial assistance and support between the mainland and Hong Kong. This is undoubtedly a significant and very welcome innovation,” Ho says.
While existing demand for such measures existed prior to this, the process of formalising the agreement has been somewhat lengthy. Despite this, Kwan says there have already been cases of mainland China courts granting relief “without specifying a legal basis.”
“Despite these ‘one-off’ successes, the formal footing of the arrangement will give comfort to foreign investors that if they seat an administered arbitration in Hong Kong, they can get interim measures in aid of a Hong Kong arbitration for the mainland courts,” Kwan says.
While he notes that applying interim measures is still untested in aid of Hong Kong-seated arbitrations, Kwan predicts the city will become the default dispute resolution mechanism for resolution of Greater Bay Area related disputes with foreign parties. And while it may be early days for such an agreement, Hong Kong does have a solid history which encourages confidence.
“Hong Kong has already been one of the leading seats in arbitrations involving PRC entities given its arbitration friendly regime, independent judiciary, wealth of arbitrators with experience in dealing with PRC entities and transactions on the mainland as well as arbitrators and counsel with Chinese language capabilities,” says Kwan.
“In addition, PRC courts have historically enforced Hong Kong seated awards including those administered by the HKIAC. There have been very few Hong Kong awards that have been refused enforcement on the mainland,” says Kwan.
In addition to its attractiveness as a hub for Greater Bay Area disputes, Ho says the arrangement further drives home Hong Kong’s appeal as a seat of arbitration “from the perspective of both Chinese and foreign parties, for China-related arbitration.”
To contact the editorial team, please email ALBEditor@thomsonreuters.com.