Cross-Border Dispute Resolution with the Greater Bay Area

Hong Kong’s Role

Hong Kong plays a key role in the development of the Greater Bay Area (“GBA”) and was identified in the GBA’s Outline Development Plan (“Outline Plan”) released in 2019 as establishing itself as a centre for international dispute resolution centre for the Asia-Pacific region as well as commercial disputes relating to Belt and Road projects.

The GBA, a leading economic powerhouse with a combined GDP of US$1.6 trillion, seeks to create a globally competitive business environment by, amongst other things, promoting the development of a multi-faceted cross-border dispute resolution mechanism creating a commercial environment protected by the rule of law. Leveraging Hong Kong’s unique advantages makes Hong Kong a bridge for Chinese businesses going global as well as foreign companies looking to enter the PRC market.

Hong Kong’s Strengths in the Greater Bay Area

  • Unique status as a Special Administrative Region acting as an entry point for businesses entering the PRC.
  • Robust legal services platform for dispute resolution.
  • Linguistic edge by having both Chinese and English as official languages of the Special Administrative Region.
  • Convenient geographical location as Hong Kong remains one of the most important international shipping finance centres in Asia. The Hong Kong International Airport is consistently ranked among the best and busiest in the world for both passengers and air cargo.
  • With support from the Central Government’s 14th Five-Year Plan, Hong Kong will leverage the GBA development as the best entry point to integrate into the overall development of PRC.
  • Opportunity for Hong Kong lawyers to obtain Mainland Practice Certificates allowing them to practice cross-border civil and commercial cases in nine mainland GBA cities.
  • Wealth of experienced professionals with both PRC and international exposure.
  • Global-leading international finance centre with the highest RMB liquidity outside PRC (world’s offshore RMB business hub) and ranked no. 2 globally for IPO funds raised in 2020.
  • Global-leading international finance centre with the highest RMB liquidity outside PRC (world’s offshore RMB business hub) and ranked no. 2 globally for IPO funds raised in 2020.
  • Free economic system and foreign investment friendly regulatory environment.

Unique Dispute Resolution Strengths

  • A common law legal system which is well-established, has robust rule of law and an independent and impartial judiciary.
  • Rated among the top 5 seats of arbitration globally, the New York Convention applies to Hong Kong, and Hong Kong arbitral awards are enforceable in over 150 Contracting States.
  • Several independent commissions have set up offices or arbitration centres in Hong Kong, providing platforms for resolving cross-border commercial disputes for Hong Kong and the PRC.
  • HKIAC maintains an extensive List of Arbitrators including different types of arbitrators.
  • Reciprocal recognition and enforcement of foreign judgments (Chambers Global Practice Guide on Enforcement of Judgments contributed by Gall).
  • Established and recognised intellectual property protection legal system and alternative dispute resolution mechanisms (including arbitration, mediation and consultation) to which the GBA could leverage and promote. The PRC supports Hong Kong in becoming a trading hub for intellectual property rights in the nation’s 14th Five-Year Plan (for 2021 to 2025).

Updates on Dispute Resolution in Hong Kong

In 2017, the Legislative Council in Hong Kong passed two amendment bills relating to arbitration and mediation, encouraging parties to use arbitration and mediation as alternatives to resolve cross-border disputes.

1 October 2019 was an important milestone for the Hong Kong dispute resolution community because on that day, the “Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the HKSAR” (the “Arrangement”) officially came into force. Under the Arrangement, parties to arbitrations seated in Hong Kong may now seek interim measures from the PRC courts.

The Arrangement no doubt strengthens the position of Hong Kong as a premier destination for cross-border dispute resolution. With the city being the first and only jurisdiction which enjoys such an arrangement with the PRC, it is foreseeable that Hong Kong will continue to be an increasingly popular choice as the arbitration seat for resolving disputes in China.

On 19 May 2021, Part 2 of the Arbitration (Amendment) Ordinance 2021 came into force allowing for simultaneous applications to be made to both PRC and Hong Kong courts to enforce arbitral awards, further synchronising the law of arbitration in Hong Kong with international arbitration practice.

At the 2nd Guangdong-Hong Kong-Macao Bay Area Legal Departments Joint Conference in 2020, the working proposal of the Greater Bay Area Mediation Platform was endorsed to facilitate and promote cross-border mediation as a form of alternative dispute resolution in the GBA. Moreover, the Greater Bay Area Mediator Accreditation Standards and the Greater Bay Area Mediator Code of Conduct Best Practice were endorsed by the 3rd Guangdong-Hong Kong-Macao Bay Area Legal Departments Joint Conference on 10 December 2021 and came into effect on 30 December 2021.

The Matrimonial and Family Cases (Reciprocal Recognition and Enforcement) Ordinance (Cap. 639) (Ordinance) and the Rules will come into operation on 15 February 2022, negating the need for re-litigation for specified orders for matrimonial cases.

The Record of Meeting of the Supreme People’s Court and the Government of the Hong Kong Special Administrative Region on Mutual Recognition of and Assistance to Bankruptcy (Insolvency) Proceedings between the Courts of the Mainland and of the Hong Kong Special Administrative Region was signed between the Supreme People’s Court and the HKSAR Government on 14 May 2021 regarding reciprocal recognition and enforcement of foreign judgments in PRC, establishing a framework for cooperation between the Hong Kong High Court and PRC People’s Courts in company insolvency and restructuring matters.

Conclusion

Hong Kong’s unique status under the “One Country, Two Systems” regime, well-established common law legal system, and substantive alternative dispute resolution systems are cutting-edge and exciting, offering a sea of opportunity for both individuals and businesses. It is vital for those seeking to do business in the PRC to understand the benefits of opting for Hong Kong law to resolve cross-border disputes.

For further information on the cross-border dispute resolution, please do not hesitate to contact our team of commercial litigation and dispute resolution lawyers.