On 2 April 2019, the HKSAR Government and the Supreme People’s Court of the People’s Republic of China 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 HKSAR” (the “Arrangement”). This is significant as it provides a means for parties to a Hong Kong-seated arbitration to seek interim measures from the Mainland Chinese courts, an option which was previously only available for arbitrations seated in Mainland China. This has implications on the choice of dispute resolution forum in China-related transactions.
Under the existing regime, parties may sometimes find themselves in a difficult position when there is a need for interim measures in Mainland China. Given that Mainland Chinese courts had no power to grant interim measures in support of foreign-seated arbitrations, and interim measures obtained from an emergency arbitrator or the arbitral tribunal in the foreign-seated arbitration are not enforceable by the Mainland Chinese courts, parties may feel that they are left with no option but to adopt a clause providing for Mainland China-seated arbitration administered by an onshore arbitral institution. With the Arrangement, this is no longer the only option.
Overview of the Arrangement
The official text of the Arrangement can be found at http://gia.info.gov.hk/general/201904/02/P2019040200782_307637_1_1554209666288.pdf. We set out below some key features.
Scope of Application
Under the Arrangement, a party to “arbitral proceedings in Hong Kong” may apply for interim measures from the relevant Mainland Chinese courts in accordance with the relevant PRC laws and regulations.
“Arbitral proceedings in Hong Kong” includes, in summary, arbitral proceedings which (i) are seated in Hong Kong; and (ii) administered by a prescribed list of institutions or permanent offices which are established or set up in Hong Kong (see Art. 2 of the Arrangement). This list is yet to be published but is likely to include the Hong Kong International Arbitration Centre (HKIAC), the International Chamber of Commerce (ICC) - Hong Kong, and the China International Economic and Trade Arbitration Commission (CIETAC) - Hong Kong.
It follows from the above that the Arrangement does not extend to ad hoc arbitrations (eg an arbitration under the UNCITRAL rules that is not administered by any institution) or arbitrations administered by arbitral institutions which do not currently have an office in Hong Kong, even if those arbitrations are seated in Hong Kong.
Timing and Procedures
The Arrangement specifies the relevant procedures and documents to be submitted for making an application for seeking interim relief from a Mainland Chinese court.
An application may be made both before or after the relevant arbitral institution accepts a notice of arbitration. If it is after the institution’s acceptance of a notice of arbitration, a party should submit its application to the institution, which will then forward it to the relevant Mainland Chinese court (see Art. 3 of the Arrangement).
Types of Interim Measures Available from the Mainland Chinese Courts
The types of interim measures available from the Mainland Chinese courts include “property preservation, evidence preservation and conduct preservation” measures (See Art. 1 of the Arrangement).
Although there is no express reference to injunctive relief, in line with existing PRC law provisions, injunctive relief should, at least in theory, be encompassed. In particular, Art. 100 of the Civil Procedure Law of the PRC provides that in certain circumstances, a court may “order certain conduct of the party or prohibit the party from certain conduct”. It remains to be seen how readily in practice a Mainland Chinese court would issue an injunction, eg an anti-suit injunction, in support of a Hong Kong arbitration.
Commencement Date of the Arrangement
The commencement date of the Arrangement is to be announced following the promulgation of a judicial interpretation by the Supreme People’s Court of the PRC and the completion of the relevant procedures in Hong Kong.
It is understood that once the Arrangement comes into force, it will also be retrospectively applicable to arbitrations commenced before the commencement date of the Arrangement.
The Arrangement enhances the attractiveness of choosing Hong Kong as a seat of arbitration where there is a possibility that interim measures may be required in Mainland China.
In light of the Arrangement, if parties wish to preserve the ability to seek interim measures from Mainland Chinese courts, there are three points to bear in mind when considering the choice of dispute resolution clause:
- In terms of the seat of arbitration, a Mainland-China seated arbitration clause is no longer the only option. Parties can now also consider a Hong Kong-seated arbitration clause.
- As to the choice between ad hoc and administered arbitration, ad hoc arbitration should be avoided.
- When considering an appropriate arbitral institution for administering the Hong Kong-seated arbitration, parties should select from the prescribed list of institutions, eg HKIAC or the ICC.