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Wednesday, June 02, 2021, 00:16
International arbitration: Hong Kong shows the world its worth
By Grenville Cross
Wednesday, June 02, 2021, 00:16 By Grenville Cross

"When will mankind be convinced, and agree to settle their difficulties by arbitration?” said Benjamin Franklin, the American statesman.

With the enactment of the Arbitration Ordinance (“the Ordinance”) in 2011, Hong Kong’s arbitration law was reformed, through the unification of the dual regimes for domestic and international arbitration. Based on the Model Law on International Commercial Arbitration of the United Nations Commission on International Trade Law, the Ordinance made the city’s arbitration regime more user-friendly for arbitration users, both in Hong Kong and elsewhere. It opened the door for foreign law firms and practitioners to engage in and advise on arbitration questions, and enhanced confidentiality for international arbitration.

In consequence, Hong Kong’s competitiveness as a leading international arbitration center has been consolidated. International arbitration is now the preferred option for resolving cross-border disputes, and the city has established its credentials as a leading seat of arbitration for both local and overseas parties. Arbitral awards made in Hong Kong are now globally enforceable in over 160 States Parties to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This is complemented by separate arrangements for reciprocal enforcement with the Chinese mainland and Macao.

The most preferred seats for arbitration are now London, Singapore, Hong Kong, Paris and Geneva. As Cheng (Teresa Cheng Yeuk-wah) presses forward with her department’s LawTech initiative, which was unveiled in 2020 and envisages the development of an online dispute resolution platform, the city’s arbitration functions are set to increase yet further

Established in the 1980s, the Hong Kong International Arbitration Centre (HKIAC) is the city’s own independent arbitration body, and is authorized under the Ordinance to appoint arbitrators and decide on the number of arbitrators where the parties to a dispute cannot themselves agree. In 2019, the HKIAC handled 503 new dispute resolution cases, involving both arbitration and mediation, and the total disputed amount in all the administered cases was approximately US$3.4 billion. Since the Hong Kong Maritime Arbitration Group became independent of the HKIAC in 2019, it has promoted the development of maritime arbitration and mediation in Hong Kong.

In recent times, moreover, various high-level legal and dispute resolution organizations have set up shop in Hong Kong, and this has underscored its status as a leading arbitration center for the Asia-Pacific region.

In 2008, the International Court of Arbitration of the International Chamber of Commerce, which is Paris-based, opened its Secretariat’s first overseas branch in Hong Kong, to serve its arbitration functions in the Asia-Pacific region. In 2012, the China International Economic and Trade Arbitration Commission, which is China’s oldest arbitration body and handles the bulk of the country’s foreign-related arbitration, established its first branch outside the mainland, in Hong Kong. In 2014, the China Maritime Arbitration Commission, the country’s sole maritime arbitration institution, also set up a branch in the city.

As things stand, moreover, Hong Kong is the only jurisdiction outside the mainland where, as an arbitration center, parties to arbitral proceedings administered by designated arbitral institutions are able to apply to the mainland courts for interim measures under 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”, which came into effect in 2019.

In 2015, the Permanent Court of Arbitration (PCA), which is based in The Hague and handles international investment arbitration, signed a host country agreement with the Central People’s Government, together with a related memorandum of administrative arrangements with the Hong Kong government to facilitate the conduct of PCA-related administration in Hong Kong, including state-investor arbitration.

Much of the credit for the city’s prominence in global arbitration must go to the secretary for justice, Teresa Cheng Yeuk-wah. While in private practice, she made her mark as an arbitration specialist, and handled international arbitration cases in Asia, Europe, the Middle East and the United States. Indeed, in 2008 she was elected chairman of the Chartered Institute of Arbitrators, the first Asian woman to hold the post, and she also chaired the HKIAC Council. Since assuming office in 2018, she has prioritized Hong Kong’s arbitration role, and this has borne fruit.

In the 2021 Arbitration Survey on “Adapting arbitration to a changing world”, which is the fifth empirical study conducted by the School of International Arbitration at Queen Mary University, London, the HKIAC is ranked third in the world’s top five arbitral institutions, up from fourth in 2018. The most preferred seats for arbitration are now London, Singapore, Hong Kong, Paris and Geneva. As Cheng presses forward with her department’s LawTech initiative, which was unveiled in 2020 and envisages the development of an online dispute resolution platform, the city’s arbitration functions are set to increase yet further.

As Cheng realizes, Hong Kong, despite its arbitration success, cannot rest on its laurels, and the process is ongoing. She has now created, and chairs, the Advisory Committee on Promotion of Arbitration. Apart from departmental lawyers, it includes representatives of legal, arbitration and other sectors, and overseas experts can also be invited to advise generally or on specific issues. Its terms of reference include the consideration of new initiatives and fresh strategies for the promotion of the city’s arbitration services, both internally and externally. At a time, therefore, when China’s adversaries have sought to weaken Hong Kong’s legal arrangements in order to harm China, everybody who cares for the city will applaud Cheng’s efforts to promote its arbitration services and widen its global reach.

The author is a senior counsel, law professor and criminal justice analyst, and was previously the director of public prosecutions of the Hong Kong SAR. 

The views do not necessarily reflect those of China Daily. 

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