Hong Kong and Mainland China Strengthen Arrangement on Enforcement of Awards
The Government of the Hong Kong Special Administrative Region (the “Hong Kong Government”) and the Supreme People’s Court of the People’s Republic of China (the “Supreme People’s Court”) signed the Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region (the “Supplemental Arrangement”) on 27 November 2020. The Supplemental Arrangement introduces several amendments designed to enhance enforcement under the Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region which entered into force on 1 February 2000 (the “2000 Arrangement”).
27 November 2020 in Shenzhen, Supplemental Arrangement signed by Teresa Cheng, GBS, SC, JP, Secretary for Justice of Hong Kong and Wanming Yang, Vice-President of the Supreme People’s Court
Over the past 20 years, the 2000 Arrangement has provided the legal framework for mutual enforcement of arbitral awards between Hong Kong and Mainland China, and has been relied upon by the Hong Kong and Mainland courts to enforce numerous awards between the two jurisdictions. Under the 2000 Arrangement, HKIAC awards maintain a strong track record of enforcement in Mainland China.
To further enhance the ease of enforcement of arbitral awards between Hong Kong and Mainland China, the Supplemental Arrangement introduces the following amendments to the 2000 Arrangement:
1. The references to “enforcement” of arbitral awards in the 2000 Arrangement shall be interpreted as “recognition and enforcement” of arbitral awards.
2. The scope of application is amended to clarify that Mainland awards are those issued under the Arbitration Law of the People’s Republic of China, removing a requirement in the 2000 Arrangement that such awards be issued by the Mainland arbitral institutions listed by the State Council of the People’s Republic of China. Hong Kong awards continue to be those issued under the Hong Kong Arbitration Ordinance.
3. Parties are permitted to make simultaneous applications to both the Hong Kong and Mainland courts for the enforcement of arbitral awards, provided that the total value of assets to be enforced by the courts of the two jurisdictions must not exceed the amount determined in the award.
4. An enforcing court may issue preservation or mandatory measures before or after its acceptance of an application for the enforcement of an arbitral award pursuant to the applicant’s request and the law of the place of enforcement.
Amendments 1 and 4 above came into force on 27 November 2020. Amendments 2 and 3 above will come into force on a date to be announced after the completion of the relevant procedures in Hong Kong.
Teresa Cheng, GBS, SC, JP, Secretary for Justice of Hong Kong, says “the Supplemental Arrangement improves the legal regime for enforcement of arbitral awards between Hong Kong and Mainland China in a manner that deepens the judicial assistance between the two jurisdictions and provides greater protection of parties’ rights in enforcement proceedings. This Supplemental Arrangement is yet another important measure to support Hong Kong’s position as a leading dispute resolution venue in the Asia-Pacific region, particularly for the Belt & Road Initiative and the Greater Bay Area.”
Wanming Yang, Vice-President of the Supreme People’s Court, says “the Supplemental Arrangement connects the legal systems and rules of Mainland China and Hong Kong. The combination of this arrangement and the 2019 arrangement on court-ordered interim measures provides interim relief in respect of all stages of arbitral proceedings and enforcement proceedings. This is the first of its kind between Mainland China and another jurisdiction. It reflects the Supreme People’s Court’s support for the development of Hong Kong as an international legal and dispute resolution centre in the Asia-Pacific region under the ‘One Country, Two Systems’ policy.”
The Supplemental Arrangement was signed following the entry into force of 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 (the “Interim Measures Arrangement”) in 2019, making Hong Kong the only jurisdiction outside of Mainland China to benefit from interim measures by the Mainland courts. HKIAC has reported on the signing of the Interim Measures Arrangement here and published regular updates on its experience and statistics under that arrangement (the last update is available here). To date, HKIAC has processed 34 applications seeking to preserve assets, evidence or conduct under the Interim Measures Arrangement and is aware of 20 orders issued by the Mainland courts preserving USD 1.5 billion worth of assets.
Parties to arbitrations administered by HKIAC and seated in Hong Kong can benefit from both the Interim Measures Arrangement and the Supplemental Arrangement.
Rimsky Yuen, GBM, SC, JP, Co-chairperson of HKIAC, welcomes the signing of the Supplemental Arrangement and says “the 2000 Arrangement and the Supplemental Arrangement provide the critical foundation for Hong Kong’s success as a leading seat of arbitration. With these arrangements, parties will be able to seek enforcement of Hong Kong awards under a legal regime with greater flexibility and support from the Mainland courts. This is another milestone after the Interim Measures Arrangement to facilitate closer judicial assistance between Hong Kong and Mainland China.”
David W. Rivkin, Co-chairperson of HKIAC, says “the enhanced enforcement regime between Mainland China and Hong Kong provides another strong incentive for commercial parties to select Hong Kong as the seat for disputes with Chinese elements. The Supplemental Arrangement improves an enforcement system that is already functioning very well and is a welcome addition to Hong Kong’s long list of attributes as a premier arbitration centre.”