China - PRC Courts Offer Interim Measures For Hong Kong Arbitration.
Legal News & Analysis - Asia Pacific - China - Hong Kong - Dispute Resolution
5 April, 2019
Hong Kong and Mainland Chinese Courts to Provide Mutual Assistance in Interim Measures in Support of Arbitral Proceedings
The Government of the Hong Kong Special Administrative Region ("Hong Kong Government") and the Supreme People's Court of the People's Republic of China ("Supreme People's Court") have signed an Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong Special Administrative Region ("Arrangement"). The signing ceremony took place at the Justice Place in Hong Kong on 2 April 2019. The Arrangement will come into force on a date to be announced by the Hong Kong Government and the Supreme People's Court.
Pursuant to the Arrangement, any party to "arbitral proceedings in Hong Kong" may, before the arbitral award is issued, apply to the relevant Mainland Chinese courts for interim measures in relation to the arbitral proceedings in accordance with the relevant laws and regulations of Mainland China. Such interim measures include preservation of assets, evidence and conduct.
Equally, any party to arbitral proceedings in Mainland China may apply to the Hong Kong courts for interim measures pursuant to Hong Kong law – a remedy that is already available to parties to foreign-seated arbitral proceedings under Section 45 of the Hong Kong Arbitration Ordinance. Interim measures available under Hong Kong law include injunctions and other interim measures to (i) maintain or restore the status quo pending determination of the dispute; (ii) take actions that would prevent, or refrain from taking actions that are likely to cause, current or imminent harm or prejudice to the arbitral process; (iii) preserve assets; or (iv) preserve evidence that may be relevant and material to the resolution of the dispute.
For the purposes of the Arrangement, "arbitral proceedings in Hong Kong" means arbitral proceedings which are seated in Hong Kong and administered by any of the following institutions or permanent offices:
- arbitral institutions established or headquartered in Hong Kong, with their principal place of management located in Hong Kong; or
- dispute resolution institutions or permanent offices set up in Hong Kong by international intergovernmental organisations of which the People's Republic of China is a member; or
- dispute resolution institutions or permanent offices set up in Hong Kong by other arbitral institutions which satisfy the relevant criteria set by the Hong Kong Government.
A list of institutions or permanent offices referred to above will be provided by the Hong Kong Government for confirmation by both sides to the Arrangement.
As the Hong Kong International Arbitration Centre ("HKIAC") is an arbitral institution established or headquartered in Hong Kong with its principal place of management located in Hong Kong, the Arrangement applies to any arbitral proceedings which are administered by HKIAC and seated in Hong Kong. Any party to such proceedings may request interim measures from the Mainland Chinese Intermediate People's Court in the location of the respondent or relevant assets or evidence.
According to the Arrangement, a party to arbitral proceedings in Hong Kong may apply for interim measures from the Mainland Chinese courts before or after the relevant arbitral institution accepts a Notice of Arbitration.
If a party applies before the institution accepts a Notice of Arbitration and the relevant Mainland Chinese court decides to grant an interim measure, that party must submit to the court documentary proof to confirm that the institution has subsequently accepted the arbitration within 30 days from the date of the court's decision. In the event of a failure to provide such proof, the court shall terminate the interim measure previously granted.
If a party applies after the relevant arbitral institution accepts a Notice of Arbitration, the party must submit its application to the institution which will forward the application to the relevant Mainland Chinese court for determination – a practice that is required by the Arbitration Law and Civil Procedure Law of the People's Republic of China.
Teresa Cheng GBS, SC, JP, Secretary for Justice of Hong Kong, says "the Arrangement creates a new area for judicial cooperation between Hong Kong and Mainland China which benefits parties to arbitral proceedings in both jurisdictions. The Department of Justice of Hong Kong thanks the Supreme People's Court for its long-standing support for Hong Kong arbitration. With this Arrangement, we are confident that Hong Kong will continue to thrive as a leading international arbitration centre under the 'One Country, Two Systems' framework."
Wanming Yang, Vice-President of the Supreme People's Court, says "the Arrangement is the first document which the Mainland has signed with another jurisdiction in respect of interim measures in arbitration. This is a practical measure taken by the Central Government to support the development of Hong Kong's legal services and its position as an international legal and dispute resolution services hub in Asia Pacific. This is also a reflection of closer regional judicial assistance under the 'One Country, Two Systems' principle, and another judicial wisdom in the implementation of the principle."
The signing of the Arrangement has been welcomed by arbitrators, practitioners and in-house counsel in and outside of China.
Neil Kapan CBE, QC, SBS, Honorary Chairperson of HKIAC and international arbitrator, says "the Arrangement is a milestone development in China-related arbitration and international arbitration generally, because it marks the first time a legal framework has been introduced to allow the Chinese courts to issue interim relief in support of arbitrations seated in a jurisdiction outside of Mainland China. This is a game changer for Hong Kong arbitration and will provide an even stronger incentive to choose Hong Kong as the seat and a Hong Kong arbitral institution such as HKIAC in arbitrations involving Mainland Chinese parties. This is another example of Hong Kong being at the cutting edge of arbitral innovation."
Helen Shi, Member of HKIAC's Proceedings Committee and Partner at Fangda Partners, says "I am pleased to see that Mainland China and Hong Kong have achieved another milestone in judicial support of arbitration. Prior to the Arrangement, the Mainland Chinese courts were only able to issue interim measures in aid of arbitral proceedings seated in Mainland China and administered by Mainland arbitral institutions. Under the Arrangement, the Mainland Chinese courts can also issue interim measures in aid of arbitral proceedings in Hong Kong. This will enhance the enforceability of Hong Kong awards on the Mainland and attract more parties to choose Hong Kong as the seat of arbitration for disputes involving Chinese parties."
Michael Mcilwrath, Global Litigation Counsel at Baker Hughes, a GE company, says "the potential consequences of arbitrations seated outside of Mainland China has long been a cause of concern for international companies doing business with Mainland Chinese parties. The Arrangement addresses this issue on a key point, the enforcement of interim measures, and makes Hong Kong an even more attractive seat for arbitrations involving contracts for business in the PRC or with Mainland Chinese parties."
HKIAC will publish further information on how it will assist parties to eligible proceedings in seeking interim measures from the Mainland Chinese courts in accordance with the Arrangement.