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Landmark arrangement on interim relief protection in China for Hong Kong arbitrations to take effect on 1 October 2019

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On 1 October 2019, the landmark arrangement between the Hong Kong Government and China’s Supreme People’s Court on interim measures in aid of arbitrations (“Arrangement“) will enter into operation.[1] The Arrangement allows parties to Hong Kong seated arbitrations administered by HKIAC, CIETAC (Hong Kong), ICC (Asia Office) or certain other eligible arbitral bodies to obtain an interim measure from the Chinese Courts that will be enforceable in Mainland China.

The Arrangement has significant implications for the local and international business communities. As of 1 October 2019, Hong Kong will be the first and only arbitral seat in the world that can provide this important benefit to international parties who wish to resolve China-related disputes in Hong Kong within a well-established legal framework and according to international best practices while preserving their ability to obtain interim relief in Mainland China. Conversely, Hong Kong law already allows parties to arbitrations seated in China and elsewhere abroad to seek from the Hong Kong courts interim relief in aid of their arbitration.

How it works

The Arrangement applies to arbitration proceedings provided that they are (i) seated in Hong Kong and (ii) administered by one of the following arbitral and dispute resolution institutions and permanent offices:

  • Hong Kong International Arbitration Centre
  • China International Economic and Trade Arbitration Commission Hong Kong Arbitration Center
  • International Court of Arbitration of the International Chamber of Commerce – Asia Office
  • Hong Kong Maritime Arbitration Group
  • South China International Arbitration Center (HK)
  • eBRAM International Online Dispute Resolution Centre

The Arrangement also applies to arbitrations that were commenced before 23 September 2019.

The Arrangement mentions three types of interim measures available in Mainland China, namely preservation of (i) property (e.g., freezing orders), (ii) evidence (e.g., not to destroy a document) and (iii) conduct (e.g., not to use a trademark). However, it remains to be seen whether in practice Chinese courts will grant measures preserving evidence and conduct as the PRC Arbitration Law appears to provide only for property preservation.

A party to a pending Hong Kong arbitration may file an application for an interim measure from a Chinese court with the arbitral institution administering the case. The institution will then forward the application to the court which will decide it pursuant to PRC law. A prospective claimant seeking an interim measure before commencement of an arbitration may file the application directly with the court. However, the court must discharge the measure if, within 30 days after it has been taken, the court has not received confirmation from the administering institution that it has accepted the case.

What this means for you

You are now able to choose Hong Kong-seated institutional arbitration without having to forego the ability to obtain interim relief protection from the Chinese courts.

To ensure that you are able to benefit from the Arrangement, please seek appropriate legal advice. Your arbitration clause should clearly and unequivocally:

  • Designate Hong Kong as the seat (legal place) of arbitration.
  • Specify that the arbitration shall be administered by one of the current five institutions or permanent offices that have been confirmed as qualified by the Hong Kong Government and the Supreme People’s Court.

Your options for arbitrations seated in China remain unchanged as Hong Kong courts could already grant interim measures in aid of China (and other foreign) seated arbitrations before the Arrangement became effective.

Conclusion

The Arrangement reinforces and enhances Hong Kong’s role and status as the preferred seat for China-related arbitrations. It is also an important contribution to the implementation of key policy initiatives such as the Greater Bay Area Initiative and the Belt and Road Initiative.

As a leading Global Firm, we have unparalleled presence and capabilities across all the major arbitral seats globally. If you need support in formulating your dispute management strategy or drafting and negotiating your dispute resolution clauses, please get in touch.

[1] The “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” was signed on 2 April 2019. See also our previous coverage of this major development on our moderated arbitration blog, Global Arbitration News.

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Author

Gary Seib is a partner in the Dispute Resolution team at Baker McKenzie Hong Kong. Gary previously served as the global chair of the Firm's Dispute Resolution practice (2009 - 2014) and before that as Asia Pacific chair of the practice (2006 - 2009). He is one of the first lawyers to be granted Solicitor Advocate status before the Hong Kong courts and is ranked as Eminent Practitioner and one of the leading lawyers in his field by top legal directories, including Chambers Asia, Chambers Global, Asia Pacific Legal 500 and IFLR 1000. Gary has written numerous articles for publications in Australia and Hong Kong on topics ranging from insolvency and corporate rescue, corporate compliance investigations and enforcement to fraud risk, insider trading and market misconduct. He has also written and spoken extensively on corporate compliance, risk management and cross-border dispute resolution. Gary can be reached at [email protected] and +85228462112.

Author

Philip Hanusch is a special counsel in Baker McKenzie’s Hong Kong office. He specializes in international commercial arbitration with a focus on shareholder, joint venture and M&A disputes. Philipp has represented parties in arbitrations under various arbitration rules, including the HKIAC Rules, ICC Rules, CIETAC Rules, ICDR Rules and UNCITRAL Arbitration Rules. Philipp Hanusch can be reached at [email protected] and +852 2846 1665.

Author

Haifeng Li is a partner in Baker McKenzie FenXun's Beijing office. Haifeng specializes in litigation and commercial arbitration. He also has extensive experience representing clients in both domestic and international arbitration institutions including CIETAC, BAC, ICC, HKIAC and SIAC.

Author

Paul Teo is a partner at Baker McKenzie in Hong Kong. Paul Teo leads Baker McKenzie's Arbitration Practice in Greater China. He handles disputes related to corporate and commercial transactions, energy, mining and resources, infrastructure and construction, offshore and marine, and telecommunications. Prior to joining Baker McKenzie, he jointly led a top-tier global law firm's international arbitration practice in Southeast Asia. Paul Teo is regularly appointed as arbitrator. He is a Chartered Arbitrator and is listed on the Presidential Panel of Arbitrators of the Chartered Institute of Arbitrators and he serves on the panels of many leading arbitral institutions. Paul Teo has 20 years of experience advising and representing parties in arbitration, adjudication, alternative dispute resolution including negotiation, mediation and med-arb, and litigation proceedings in Asia and Europe. He has advised and acted on many landmark projects in Hong Kong, China, Macau, Taiwan and the rest of the region, including Mongolia, Philippines, Vietnam, Thailand, Malaysia, Singapore, Indonesia, India and Bangladesh. Further afield, He has particular experience of acting for clients on disputes arising out of major projects in the Gulf Region, Central Asia, Africa and Latin America.

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