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16 May 2019
On 2 April 2019 mainland China and Hong Kong 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 (HKSAR). This is the first time that mainland China has provided effective recourse to interim measures to parties to arbitral proceedings with a seat elsewhere.(1) As such, the arrangement is expected to significantly benefit parties to arbitral proceedings.
Historically, it has been impossible for parties to arbitral proceedings with a seat outside mainland China to obtain interim measures from mainland courts. In practice, such applications have usually been rejected for having no legal basis. This was the case in DONGWON F & B v Shanghai Lehan Commercial Co, Ltd,(2) in which the Shanghai Intermediate People's Court held that because the arbitral proceedings were seated outside China, the application for property preservation had to be rejected for having no legal basis. This situation will change completely after the arrangement comes into force.
Notably, the new arrangement applies only to institutional commercial arbitrations; ad hoc and investment arbitrations are not included within its scope.
The arrangement comprises 13 articles on:
The arrangement comprises three parts:
Provisions on applications submitted to a people's court of mainland China
Under the arrangement, parties to arbitral proceedings in Hong Kong may apply for interim measures from a mainland court. Under Article 2 of the arrangement, said arbitral proceedings must be:
Although the above list has yet to be published, it is widely expected to include the Hong Kong International Arbitration Centre, the International Chamber of Commerce Hong Kong and the China International Economic and Trade Arbitration Commission Hong Kong Arbitration Centre.(3)
With regard to the categories of interim measures, Article 1 affords the following kinds of pre-award remedy to parties:
Under Article 3 of the agreement, the court with competence to handle an application will be the intermediate people's court of:
Applications can be made to only one court, even if multiple competent courts exist.
Article 3 also provides the timeframe for submitting an application: parties may petition for interim measures before an arbitral award is made, including before arbitral proceedings are commenced.
With regard to the filing of an application, Article 4 requires parties to submit:
As regards the application procedure, Article 3 of the arrangement states that before an arbitration is accepted by an arbitral institution or permanent office in Hong Kong, the parties to the proceedings may apply directly to an intermediate people's court of mainland China. If the case has been accepted by an institution or permanent office, it will be passed on by said institution or permanent office to the relevant mainland court.
Provisions on applications submitted to an HKSAR court
Under Articles 1 and 6 of the arrangement, before an arbitral award is issued in proceedings administered by a mainland arbitral institution, a party to the proceedings may – pursuant to the Arbitration Ordinance and the High Court Ordinance – apply to the HKSAR High Court for injunctions and other interim measures to prevent another party to the proceedings from deliberately destroying the evidence or transferring the property.
Under Article 7 of the arrangement, an application for interim measures submitted to an HKSAR court must include:
Articles 9 to 13 of the arrangement are general provisions regarding:
Notably, the arrangement has yet to take effect. According to Article 13 of the arrangement, its date of effect will be decided after the promulgation of a judicial interpretation by the Supreme People's Court and the completion of the relevant procedures in Hong Kong.
This arrangement is expected to enhance the competitiveness of Hong Kong as an arbitral seat and accelerate the development of arbitration in both mainland China and Hong Kong. However, there are a number of omissions.
Ad hoc arbitration and investment arbitration
Ad hoc arbitration is not mentioned in the arrangement. In such cases, parties that wish to enjoy the benefit of the arrangement must choose the institutional arbitration method instead of the ad hoc arbitration method, which actually limits parties' autonomy. Investment arbitration also seems to be excluded from the arrangement. As such, the arrangement's scope may be extended to cover these two categories of arbitration.
Application before recognition of award
The arrangement applies to applications for interim measures which are made before an award is rendered. Applications which are made between the issuance and recognition of an award are not included within the agreement's scope. Notably, the Arbitration Law is also silent on this situation. Since the procedure for recognising a foreign arbitration award can take a long time, it is reasonable for parties to expect that interim measures could be obtained during this period.
As noted by HKSAR Secretary for Justice Teresa Cheng, following the agreement's coming into effect, Hong Kong will be the first jurisdiction outside mainland China where parties to arbitral proceedings administered by local arbitral institutions can apply to mainland courts for interim measures.(4) Following this development, it is likely that China will implement similar arrangements with other countries or regions.
For further information on this topic please contact Xing Xiusong, Wang Heng or Xue Chunyu at Global Law Office by telephone (+86 10 6584 6688) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org). The Global Law Office website can be accessed at www.glo.com.cn.
(4) Further information is available here.
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