Hong Kong is considered to be one of the top favourite seats for international arbitration, since 2011. Hong Kong is the gate way for China. The Chinese as well as International Companies choose Hong Kong as the seat of arbitration while entering into a contract, since both are comfortable with Hong Kong. Normally while choosing a seat of international arbitration, parties look into the procedural law of the seat, the approach of the supervising courts in that country, recognition of the awards passed in that seat in the countries where the award may have to be enforced, availability of services of popular international arbitral institutions, political stability of the country, languages used etc., Hong scores high marks in all the above points which are considered by the parties while choosing their seat of arbitration.
Arbitration law of Hong Kong: The procedural law applicable in Hong Kong seated arbitrations is Hong Kong Arbitration Ordinance (Cap 609) which came into effect on 1st June 2011, which is very similar to the UNCITRAL Model law. Before this 2011 ordinance there were two different legislations for domestic and International arbitrations. Even though Hong Kong is controlled by the Chinese authorities, the legal system of Hong Kong is completely independent. The Hong Kong administration has incorporated all the changes, international arbitration community wanted and hence, the procedural law applicable in Hong Kong seated arbitrations is one of the best arbitration legislations of the world. The said law provides, wide powers to the arbitration tribunal and minimises the court interferences.
Interim orders: One of the important requirements for a party choosing a seat of arbitration is the interim order process, which is in practice in that country, either through the courts or arbitration tribunals. Because in most of the cases the party initiating arbitration requires some interim protection. In such a situation parties may have to approach either courts or arbitral institutions or the tribunals seeking interim orders. As per the above said law the arbitration tribunal has all the powers to issue enforceable interim orders including directions for deposit of security or costs, discovery of documents, directions with regard to witnesses etc., Even though the arbitration clause must be in writing, the above said ordinance permits email, telegrams as proof for the consent between parties to go for arbitration to resolve the disputes between them. The ordinance also permits Hong Kong courts to issue interim orders in support of foreign seated international arbitrations. It is important to note that the “Emergency arbitrator” provision is recognised and it is in practice in Hong Kong. Hence if parties have chosen Institutional arbitration, they can approach the respective institution and seek for appointment of emergency arbitrator in case of an emergency, before tribunal is formed.
The Approach of Hong Kong Courts in Arbitration related cases: The Courts in Hong Kong have proved them selves to be very supportive, pro arbitration and progressive Courts. The Courts in Hong Kong have ensured finality of arbitration awards and have consistently refused to interfere into the awards on merits. The judgments of Hong Kong courts are cited and respected by the courts all over the world because of their consistent and predictable judgments. In a 2015 case KB Vs S (2015) HKCFI 1787, Hong Kong Court of First instance strengthened its reputation as a pro arbitration judiciary by setting out 10 principles underpinning the enforcement of arbitral awards in Hong Kong.
In another recent case China Property Development Holdings Ltd (CPD) Vs Mandecly (Ltd) Hong Kong Court of Appeal confirmed the judgment of court of First instance, where an arbitral award is set aside due to a serious breach of due process. This setting aside judgment also is a pro-arbitration judgment since it increases the requirement of integrity in arbitration matters. In this matter the arbitrator allowed certain contentions of the respondents (sellers) against one of the CPD claimant, who was never heard on those points by the tribunal. Even the sellers who raised some claims against one of the claimants which was a PRC Company and not against CPD, but award came against CPD. Hence the Court partially set aside the award for want of natural justice and since there are “sufficiently serious breach of due process” as specified in Art. 34 (2)(a)(ii) of UNCITRAL model law. Hence Hong Kong Courts does not blindly approve any arbitral award but at the same time they do not go beyond the limitations prescribed in the Model law.
Presence of Major International Arbitral Institutions: The main and most popular arbitration Institution in Hong Kong is Hong Kong International Arbitration Centre (HKIAC), which is one of the most respected arbitral institution of the world. All the major arbitration institutions including ICC(International Chamber of Commerce), SIAC(Singapore International Arbitration Centre), CIETAC (China International Economic Trade Arbitration Commission) etc., not only administer arbitrations seated in Hong Kong but also have their own administrative offices in Hong Kong, which clearly exhibits the strategic importance of Hong Kong. As per the Chinese legal system, only China based arbitral institutions can administer the China seated arbitrations in PRC. But Hong Kong is an open market for all international arbitral institutions. Chinese arbitration institutions which do not provide for certain provisions like “Emergency Arbitrators” in China, provide for the same facility through CIETAC Hong Kong. The emergence of HKIAC as one of the top Arbitration Institutions of the world has also added to the reasons for Hong Kong being given a prominent place for Hong Kong in the field of international arbitration. Hence all the global institutions consider Hong Kong as one of the emerging international arbitration seats of the world.
India recognises Hong Kong seat of International Arbitration: India recognised Hong Kong as a recognised arbitration seat under New York convention on the basis of reciprocity from 2012. Hence the arbitral awards passed in Hong Kong seat after 2012 are enforceable in India and the international arbitral awards passed in India are enforceable in Hong Kong.
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