Breaking: Mainland Chinese courts can order interim relief for HK arbitrations

The Hong Kong SAR Government and China's Supreme People's Court today signed a mutual assistance pact on interim relief in support of arbitration. For the first time, Mainland Chinese courts will be able to order interim measures in support of Hong Kong-seated arbitrations. This historic agreement makes Hong Kong SAR the only seat outside the Mainland to benefit from such support, boosting its reputation as the leading seat for China-related international arbitrations.

Content of the Arrangement

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 (Arrangement) was signed in the Hong Kong SAR on 2 April 2019. Under its terms, parties to certain institutional arbitrations seated in Hong Kong can apply through those institutions for interim relief from the people's courts in Mainland China.

Under the Arrangement, which will come into force on a date to be announced, this right will be limited to Hong Kong seated institutional arbitration, administered by a defined list of arbitration institutions established or headquartered in the SAR. Although that list is yet to be released, it is our understanding is that it will include HKIAC, CIETAC Hong Kong Center and ICC Hong Kong. The Arrangement will not apply to arbitrations administered by institutions without a base in the SAR, even if the arbitration is seated in Hong Kong, or to ad hoc arbitrations.

Although the Hong Kong SAR and the Mainland have had a mutual arrangement on enforcing arbitral awards since 1999, it does not apply to interim measures (known as "preservation measures" in the Mainland). Until now, only parties to arbitrations administered by Mainland commissions could ask a Mainland court to order interim relief. Moreover, Chinese arbitral tribunals have no power to order interim measures. Such measures preserve evidence or assets, or maintain the status quo pending a final decision, and are an important tool in the conduct of international proceedings, including arbitrations.

Hong Kong's Arbitration Ordinance (Cap. 609) empowers Hong Kong courts to order interim relief in support of arbitrations seated outside Hong Kong, including in Mainland China. Until now, however, Mainland courts lacked power to reciprocate (except in certain maritime arbitrations). Prior to the Arrangement, interim relief under the PRC Arbitration Law and the PRC Civil Procedure Law was available only in aid of arbitrations seated in Mainland China and administered by Mainland arbitration commissions. Such relief was not available in support of a foreign arbitration administered by a foreign arbitral institution (including Hong Kong).

Application process

A party to a Hong Kong arbitration may request interim relief from a Mainland court by following the same "two step" approach as applies to arbitrations seated in Mainland China. This requires applying first to the relevant arbitration institution, which forwards the application to the competent people's court for consideration.

Applications may be made any time before the tribunal makes its award, including before the relevant institution accepts a Notice of Arbitration.

Retrospective effect

We understand that the Arrangement will apply retrospectively, to include arbitrations commenced before it comes into force, as well as those commenced on or after the effective date.

Comments

The Arrangement is a game-changer for Hong Kong, which has long been recognised as parties' favoured seat for arbitrations involving a Mainland party or with any other connection to Mainland China. Previously, parties who were likely to need interim relief in the Mainland had to arbitrate in the Mainland to ensure access to that relief. Under the Arrangement, these parties can now choose to arbitrate in Hong Kong without losing access to the support of Mainland courts to preserve critical evidence, prevent dissipation of assets, or otherwise ensure the arbitration can proceed efficiently, and to ensure that there will be assets against which to enforce if the tribunal makes an award in their favour.

With Hong Kong poised to become a leading seat for arbitration of Belt and Road disputes, the Arrangement is particularly welcome.

For further information on the Mainland China interim relief regime, please refer to our Legal Guide Interim Relief in Mainland China or contact May Tai, Kathryn Sanger, Helen Tang or Stella Hu.