China Supreme People's Court's Judicial Arrangement with Hong Kong Government Regarding Interim Measures for Arbitral Proceedings in Hong Kong and Mainland China Takes Effect

 
November 01, 2019

The Supreme People’s Court (the “SPC”) of China and the Government of Hong Kong Special Administrative Region on April 2, 2019 signed 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 “Arrangement”), which entered into force on October 1, 2019 and also applies to the pending arbitration commenced before October 1, 2019.

By allowing parties to certain Hong Kong-seated arbitrations to apply, for the first time in history, interim measures before Chinese courts, the Arrangement marks a breakthrough in terms of Chinese courts lending help to arbitrations seated overseas, and certainly reflects a pro-arbitration approach in a broader sense. The Arrangement effectively sets Hong Kong apart from other foreign jurisdictions where parties to arbitrations still have no access to interim measures from Chinese courts. In return, the Arrangement also allows parties of arbitral proceedings administered by a Mainland arbitral institution to obtain interim measures from Hong Kong courts, which is however an existing right provided under Section 45 of the Hong Kong Arbitration Ordinance.

Background

Given Hong Kong's status as one of the most popular seats of international arbitration as well as its unparalleled ties with the Mainland in many aspects, including economy, society and politics, it is of great importance for Chinese central government to nurture and create a special arbitration-friendly judicial mechanism to support arbitrations seated in Hong Kong.

In this respect, following the SPC's Arrangement on the Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region, effective as of February 1, 2000, which formed legal basis for the enforcement of arbitral awards between Hong Kong and Mainland China, the issuance of this Arrangement (again, the first and only legal instrument allowing parties of overseas arbitrations to apply interim measures from Chinese courts) furthered the judicial assistance from Chinese courts and provided arbitrations in Hong Kong with even more privileges than other foreign jurisdictions.

Types of interim measure (Article 1)

“Interim measure” referred to in the Arrangement includes, in the case of applying before Mainland courts: i) property preservation; ii) evidence preservation; and iii) conduct preservation. In cases of applying before Hong Kong courts, the interim measure refers to injunctions and other interim measures that:

  • maintain or restore the status quo pending determination of the dispute
  • require the respondent to take actions that would prevent current or imminent harm or prejudice to the arbitral proceedings; or refrain the respondent from taking action that is likely to cause current or imminent harm or prejudice to the arbitral proceedings
  • preserve assets
  • preserve evidence that may be relevant and material to the resolution of the dispute

Definitions of arbitral proceedings in Hong Kong (Article 2)

Arbitral proceedings in Hong Kong refer to arbitral proceedings seated in Hong Kong and administered by certain institutions or permanent offices in Hong Kong. The Department of Justice (“DOJ”) of Hong Kong has issued the first batch of institutions and permanent offices qualifying for applying for the interim measure pursuant to Article 2 of the Arrangement. These institutions and offices include:

  • Hong Kong International Arbitration Centre (“HKIAC”)
  • China International Economic and Trade Arbitration Commission – Hong Kong Arbitration Center (“CIETAC-Hong Kong”)
  • International Court of Arbitration of the International Chamber of Commerce – Asia Office (“ICC- Asia”)
  • Hong Kong Maritime Arbitration Group (“HKMAG”)
  • South China International Arbitration Center (Hong Kong)
  • EBRAM International Online Dispute Resolution Centre

At present, an arbitration that is seated in Hong Kong but not administered by the above institutions has no access to interim measures from Chinese courts under the Arrangement. Also, neither ad hoc arbitration nor investment arbitration is covered by the Arrangement. 

Procedures and requirements of application for the interim measure (Articles 3-8)

Prior to initiating an arbitration in Hong Kong, a party could directly apply for interim measure with the Mainland Intermediate People’s Court of: i) the place of residence of the respondent; ii) the place where the property is situated; or iii) the place where the evidence is situated. Application shall include the following materials:

  • application for interim measure
  • the arbitration agreement
  • documents of identity of the applicant (legal person or individual)
  • any other materials required by the Chinese courts

Within 30 days following implementation of the interim measure, the Mainland Court will discharge the interim measure if it does not receive from the relevant institution or permanent office in Hong Kong documentation proving that it has accepted the concerned arbitration case.

Where the application for interim measures is made after initiation of the arbitration case and before issuance of the arbitral award, the party’s application shall be passed to Chinese courts through the said institution or permanent office. In addition to the documents already noted above, the applicant shall further submit documents, including:

  • request for arbitration
  • relevant evidential materials
  • documentation certifying the institution's acceptance of the arbitration case

In return, a party to an arbitral proceeding in Mainland China, before the arbitral award has been issued, when applying to the High Court of Hong Kong for interim measure, shall submit materials including the application, an affidavit supporting the application, exhibit(s) thereto, a skeleton argument and a draft court order.

Following the submission of the application, the competent court shall review it expeditiously1 and may require the party to provide relevant security. Specifically, in accordance with the Civil Procedure Law of the People's Republic of China (2017 Amendment), the Mainland Court may require the applicant to provide security where he/she makes the application of interim measures after applying for arbitration; by contrast, the applicant shall provide security if he/she does so before applying for arbitration. The Hong Kong Court may require the applicant to give an undertaking of being liable for any future damages caused by the measure, and provide security for litigation costs or other reasonable costs occurred by the counterparty, etc.

Footnotes

1) On October 8, 2019, Shanghai Maritime Court accepted an application for property preservation of a party to an arbitral proceeding in Hong Kong and made the order granting the interim measure on the same day, which became the first case after the Arrangement enters into force as of October 1, 2019.

 

 

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