Hong Kong arbitration service breaks new ground

Hong Kong's status as an international arbitration center is set to reach a new milestone with arbitral and dispute resolution institutions soon able to apply for interim measures from Chinese mainland courts.

Due to come into effect on Tuesday, the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by courts on the mainland and in the Hong Kong Special Administrative Region was signed by the SAR's Department of Justice and the Supreme People's Court in April this year.

The new arrangement is pivotal as Hong Kong is the first and, so far, the only jurisdiction outside the mainland, as a seat of arbitration, to become a party to arbitral proceedings administered by its arbitral institutions and be able to apply for interim measures.

Secretary for Justice Teresa Cheng Yeuk-wah said on Friday either party to an arbitration sometimes needs to apply for interim measures or cancel the final award if it's deemed dubious. From October 1, a party may apply for interim measures from mainland courts through one of the six qualified institutions.

Before the new rule takes effect, mainland courts could only order interim measures for arbitration services that took place on the mainland.

"This is really a game changer because a party to arbitration can apply, through Hong Kong-based institutions, to mainland courts for interim measures to order the other party to freeze the asset in question and preserve relevant evidence," Cheng said.

"The arbitration results will become fairer and more enforceable. This will enhance Hong Kong's competitiveness as an arbitration service center under 'one country, two systems'."

Cheng noted that Hong Kong has three advantages as a global arbitration hub.

Firstly, the arbitration law used in Hong Kong is based on the United Nations' standard law, which is very neutral, fair and universally applied.

Secondly, Hong Kong has adequate arbitration specialists, including lawyers, arbitrators and expert witnesses, on top of foreign experts coming for arbitration services.

Thirdly, Hong Kong boasts a robust, independent judiciary. According to the World Economic Forum, Hong Kong has ranked first globally in judicial independence since 2012.

Anthony Neoh, director of the South China International Arbitration Center (HK), said either party to an arbitration can choose Hong Kong as the place of arbitration where local courts can enforce the results.

"Hong Kong is a welcomed place for arbitration because Hong Kong uses an arbitration law that is widely used internationally and is easy to understand," he said. In the past before the new rule is made, a party to arbitration can only apply for final award but this process is very long and may take several years.

In between time, urgent things may happen as a party may fear that the other party will destroy evidence and remove assets, Neoh explained. To seek remedy, a party could apply for an injunction from a Hong Kong court but the injunction would not be enforceable on the mainland.

As the new rule comes into effect, a party can apply for interim measures from mainland courts.

Clement Tang, legal counsel of eBram International Online Dispute Resolution Centre, said the new measures could help businessmen from Hong Kong, the mainland and the rest of the world because they would inevitably encounter disputes in the course of business.

Staffed with arbitration specialists, their company will help businesses to solve their problems with legal knowledge and technology in a speedy and efficient manner, Tang said.