Mainland China agrees to offer interim measures in aid of arbitration in Hong Kong upon signing bilateral arrangement

On 2 April 2019, Hong Kong and Mainland China signed an “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). The Arrangement will come into force on a date to be announced by the Hong Kong Government and the Mainland’s Supreme People's Court. This significant development will enhance Hong Kong’s position as a venue for international arbitration services in the Asia Pacific region.

Hong Kong is the first and only jurisdiction which has such an arrangement with Mainland China for interim measures in aid of arbitration. Parties to arbitration in Hong Kong will be able to apply to the Mainland courts for interim relief for the purpose of property preservation, evidence preservation and conduct preservation (an order requiring a certain action to be taken or restrained). 

Background 

Although Hong Kong and Mainland China entered into a reciprocal arrangement with respect to the enforcement of arbitration awards in 1999, such arrangement does not cover interim measures in support of arbitration. Interim measures under Mainland law are only available in aid of arbitrations seated in the Mainland and administered by Mainland arbitral commissions. As a result, parties who need to apply for any interim measures in the Mainland in aid of arbitral proceedings have no option but to conduct the arbitration in Mainland China. 

The Arrangement

Under the Arrangement, parties to arbitral proceedings in Hong Kong may, before the arbitral award is issued, apply to the relevant People’s Court in Mainland China for interim measures in relation to the arbitral proceedings, in accordance with the relevant laws and regulations of Mainland China. 

The Arrangement applies to arbitral proceedings seated in Hong Kong and administered by (i) arbitral institutions established or headquartered in Hong, with their principal place of management located in Hong Kong; (ii) dispute resolution institutions or permanent offices set up in Hong Kong by international intergovernmental organisations of which the PRC is a member; and (iii) dispute resolution institutions or permanent offices set up in Hong Kong by other arbitral institutions and which  satisfy criteria prescribed by the Hong Kong Government, such as the number of arbitration cases and amount in dispute. Hong Kong’s Department of Justice has recently invited applications from arbitral and dispute resolution institutions wishing to quality under the Arrangement and a list of the institutions successfully qualifying will be published in due course. We understand that this will include HKIAC, CIETAC Hong Kong and ICC Hong Kong. The Arrangement does not extend to ad hoc arbitration or arbitration administered by institutions without a principal place of management in Hong Kong, even if the arbitration is seated in Hong Kong. 

The Arrangement also confirms the right of a party to arbitral proceedings in Mainland China to apply to the Hong Kong courts for interim measures -measures that are already available under Hong Kong’s Arbitration Ordinance (Cap. 609).

The application process 

The application for interim measures in Mainland China is made to the Intermediate People’s Court of the place of residence of the party against whom the application is made (respondent) or the place where the property or evidence is situated. If the respondent’s place of residence or the location of property or evidence falls within the jurisdiction of different People’s Courts, the applicant must select one of those Courts to apply to. 

If a party makes the application for interim relief after the relevant arbitral institution has accepted the Notice of Arbitration, the application must be submitted to the arbitral institution, which then passes it on to the relevant Mainland Court. If a party applies for interim relief before an arbitral institution has accepted the Notice of Arbitration, then the application is made directly to the relevant Mainland Court and if the interim measure is granted, the party must submit documentary proof to the Mainland Court within 30 days from the Court’s decision that the institution has accepted the arbitration or else the interim measures will be terminated.        

The application for interim measures must be accompanied by a number of specified documents including the arbitration agreement, documents of identity, the request for arbitration together with a letter from the relevant institution or permanent office in Hong Kong certifying its acceptance of the relevant arbitration and any other materials required by the People’s Court. 

Significance of the Arrangement 

The Arrangement is a significant development for Hong Kong arbitration, as the availability of interim measures in the Mainland will make Hong Kong an even more attractive venue for the resolution of Mainland China-related disputes. Parties wishing to avail themselves of the interim measures in the event of a dispute, should ensure that they include a suitably-worded arbitration clause in their contract, providing for Hong Kong as the seat of arbitration and an arbitral or dispute resolution institution qualifying under the Arrangement.