Asian rivals are eyeing Hong Kong’s crown as the leading centre for dispute resolution, but Hong Kong remains well placed to handle the competition
By Andrew Kemp for Conventus Law
Hong Kong has been long established as one of the world’s leading centres for dispute resolution. Strategically positioned at the heart of the Asia-Pacific region, Hong Kong boasts a thriving economy, a highly developed legal infrastructure and benefits from a wealth of both local and international expertise across all sectors.
Despite its prominent position, Hong Kong is facing growing regional competition from other jurisdictions including Singapore, Malaysia and South Korea who have stepped up their efforts to attract a greater share of the work to resolve the world’s disputes in an ever-expanding global economy.With Asia’s GDP forecast to grow by around 6% every year until 2023, a surge in cross-border transactions will inevitably spark more trade and investment disputes.
So, what advantages does Hong Kong have over these rival countries and how can it maintain its position as the leading centre for dispute resolution?
“Hong Kong has a mature and highly regarded legal system for domestic and international disputes”, says Nick Gall, founding partner of Gall, Hong Kong’s leading dispute resolution law firm. “According to a recent Global Competitiveness Report from the World Economic Forum it currently ranks top in Asia and thirteenth globally for judicial independence. This indicates that the Hong Kong Judiciary has a high level of freedom from political or corporate influence.”
The independence of Hong Kong’s legal system is enshrined in the Basic Law of Hong Kong, the constitutional document of the Hong Kong Special Administrative Region. The Basic Law came into effect on 1 July 1997 following Hong Kong’s return to China and sets out the basic policies for Hong Kong under the “One Country, Two Systems” principle. As stated in the Basic Law, Hong Kong will continue to use the common law system and maintain an independent judiciary until 50 years after the handover.
Hong Kong’s Judiciary is globally renowned for its quality, independence and respect for the rule of law. The Judiciary is responsible for the administration of justice in Hong Kong and comprises of all levels of the courts of justice in Hong Kong. The courts in Hong Kong hear and adjudicate all prosecutions and civil disputes, including all public and private law matters. The Judiciary is completely independent of the executive and legislative branches of the Government. As also confirmed in the Basic Law, the Court of Final Appeal (CFA), the highest appellate court in Hong Kong, is vested with the power of final adjudication. As a further indication of independence, jurists from other common law jurisdictions may be appointed to the CFA as non-permanent judges. This maintains a high degree of confidence in Hong Kong’s legal system and allows Hong Kong to maintain strong links with other common law jurisdictions.
Legal aid is also available for all individuals in Hong Kong, regardless of whether they are a Hong Kong resident. Legal aid helps to ensure anyone who has reasonable grounds for taking or defending a legal action is not deprived from doing so because of lack of means.
Senior Partner and Head of Litigation, Gall
““Hong Kong currently ranks top in Asia and thirteenth globally for judicial independence. This indicates a high level of freedom from political or corporate influence”
As a global commercial and financial centre, Hong Kong has a deep and varied pool of legal expertise. Of the 9,500 practising solicitors about 1,500 are registered foreign lawyers from over 30 jurisdictions.
Many global law firms have offices in Hong Kong and their international perspective and experience in handling cross-border transactions means that commercial disputes can be dealt with efficiently.
In keeping with Hong Kong’s Basic Law, the official languages for use in legal proceedings in Hong Kong are both English and Chinese, making it an accessible jurisdiction to litigants from all over the world
Established Arbitration Centre
The Hong Kong International Arbitration Centre (HKIAC) was established in 1985 and is one of the world’s leading dispute resolution centres. It was ranked first by the Global Arbitration Review Hearing Centres Survey in 2016, 2017 and 2018 for location, perceived value for money, helpfulness of staff and IT services. Since 2015 Hong Kong has also been among the top five preferred seats for arbitration globally according to the International Arbitration Surveys conducted by Queen Mary University of London.
Hong Kong arbitral awards are enforceable in over 150 countries, by virtue of their adoption of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This is complemented by reciprocal enforcement arrangements with Mainland China and Macau.
In 2011 Hong Kong adopted the United Nations Commission on International Trade Law (UNCITRAL) Model Law on International Commercial Arbitration. This user-friendly framework unified the legislative regimes for domestic and international arbitrations into a self-contained set of provisions. It guarantees a clear, certain and accessible framework that attracts more international arbitration to Hong Kong.
The future for Hong Kong’s disputes lawyers continues to look bright with nearly US$1 trillion in investment being pledged by the People’s Republic of China, for the Belt and Road Initiative (BRI). The BRI involves building a series of infrastructure projects along overland and maritime routes between China and Europe, stretching more than 60,000 km and will inevitably create demand for arbitration as the number of cross border transactions grows.
The State Council of the People’s Republic of China is promoting Hong Kong as an international legal and dispute resolution centre for the BRI with the National Development and Reform Commission (NDRC) and the Hong Kong Government executing an arrangement in December 2018 setting out Hong Kong’s full participation in and contribution to the BRI.
Hong Kong also has an edge over its rivals through its participation in the Greater Bay Area (GBA), a regional economic development framework covering Guangdong Province, Hong Kong and Macau. The aim of the initiative is to develop the Pearl Delta Region of China into a leading technology and innovation hub to rival the likes of Silicon Valley in the US. Looking ahead, Hong Kong has ensured its ability to make arbitration awards, involving intellectual property rights, following an amendment to the Hong Kong Arbitration Ordinance. The amendment came into force in January 2018 and it places Hong Kong at the forefront of intellectual property dispute resolution.
Hong Kong’s unparalleled access, along with its ability to arbitrate intellectual property matters, knowledge and experience will continue to make it the natural choice for arbitration.
“Looking ahead, Hong Kong has ensured its ability to make arbitration awards, involving intellectual property rights, following an amendment to the Hong Kong Arbitration Ordinance. The amendment came into force in January 2018 and it places Hong Kong at the forefront of intellectual property dispute resolution.”
Stiffer competition for Hong Kong in the future
Though countries such as Malaysia and South Korea continue to build their presence in the arbitration world, Chinese companies continue to favour arbitrations hearings held in the HKIAC or at the Singapore International Arbitration Centre (SIAC).
In January 2017 SIAC released updated arbitration rules designed to attract investment disputes related to the BRI. In April last year,the HKIAC followed suit by establishing a Belt and Road Advisory Committee, with an online resource centre to support opportunities related to the BRI’s establishment.
Despite Singapore and other countries making advances, the HKIAC’s reputation means Hong Kong remains an obvious choice for many seeking effective arbitration. This rings especially true for Chinese investors, given Hong Kong’s geographical, linguistic and economic proximity.
Such benefits have been lauded by leading arbitration experts from around the world, including Sir Nicholas Hamblen, Judge of the Court of Appeal of England and Wales who said “Whilst Hong Kong is no doubt geographically convenient, it is also a well-known and respected arbitration forum with a reputation for neutrality, not least because of its supervising courts”.
Some view the competition from other jurisdictions as being beneficial for Hong Kong, as it will ensure continued growth and development. In April 2019 Hong Kong’s Chief Executive Carrie Lam made this point at the International Dispute Resolution Conference when she told delegates “Hong Kong is determined, and my Government is committed, to Hong Kong’s continuing rise as the centre for international legal and dispute-resolution services”. Such support has been evidenced by the rolling out of an electronic Business Related Arbitration and Mediation (eBRAM) initiative which has been developed as a secure and cost-effective deal-making and dispute-resolution service, with the BRI initiative a key focus. The Hong Kong government’s provision of almost US$20 million to support eBRAM’s development and initial operation underscores how seriously Hong Kong is taking the competition from hubs such as Singapore.
The Hong Kong legal system finds itself in a unique position to excel into the future given its proximity to both the BRI and GBA initiatives. Hong Kong’s geographical location combined with its Western and Chinese cultures is the ideal location for resolving disputes. Whilst competition is fierce, Hong Kong’s independent judiciary, as well as its strong and diverse lawyers continue to give it the edge in dispute resolution.