07 Dec 2020

Hong Kong seeks to bolster disputes reputation with updated China deal

New agreement will make it easier to enforce arbitral awards in both jurisdictions

Hong Kong strengthens its position as an arbitration seat for Chinese matters Shutterstock

Hong Kong’s government and the Chinese court system have agreed to update their arbitration agreement in a move that will enhance the former British colony’s appeal for hearing disputes that involve China-related matters.

The updated agreement, which was signed last month, will make it easier for arbitral awards to be enforced in both jurisdictions, allowing foreign businesses to confidently pursue such disputes in Hong Kong instead of having to use arbitrary panels or courts on the mainland.

Rimsky Yuen SC and David Rivkin, co-chairs of HKIAC, Hong Kong’s independent arbitration centre, endorsed the new arrangement. Yuen, a former justice secretary, said it was “a critical foundation for Hong Kong’s success as a leading seat of arbitration,” while Rivkin, a partner at Debevoise & Plimpton, said it would “provide another strong incentive for commercial parties to select Hong Kong as a seat for disputes with Chinese elements.”

The updated agreement includes protections for local, mainland and foreign businesses investing in China, particularly in the Greater Bay Area, which includes commercial hubs such as Shenzhen, as well as Hong Kong.

Hong Kong’s justice secretary Teresa Cheng said the deal improved the enforcement regime and deepened judicial assistance between both jurisdictions, while Wanming Yang, vice-president of the Supreme People’s Court, said the deal showed Chinese support for parties at all stages of arbitral proceedings, as well as the ‘one country, two systems’ principle.

The new deal is in keeping with the Hong Kong government’s policy of seeking greater social and business alignment and integration with mainland China, while also reassuring the business community, which was rattled by the passing of a controversial national security law in June.

Simon Chapman QC, head of Asia disputes at Herbert Smith Freehills, said the new deal enhanced the existing “highly effective” agreement, having “clarified areas where there had been uncertainties, and now included all institutions and ad hoc awards.”

Procedures for simultaneous enforcement applications, he said, “will materially help parties to get paid under their awards. All of this reflects the realities of the cases we see every day in this region, and addresses users' day-to-day needs.”

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