Five Years Of Interim Chinese Court Measures Benefit Hong Kong-Seated Arbitrations

• Published date: 30 July 2021
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: Jones Day
• Author: Ms Annie Leeks, Samuel Ngo, Zachary Sharpe, Matthew J. Skinner and Wilson L.K. Sung

In Short

The Background: 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 ("Interim Measures Arrangement") came into force on 1 October 2019, allowing parties to Hong Kong-seated arbitrations to seek interim measures directly from People's Republic of China ("PRC") courts.

The Situation: Since the implementation of the Interim Measures Arrangement, the Hong Kong International Arbitration Centre ("HKIAC") has processed a significant number of applications for interim measures in Mainland China.

Looking Ahead: The track record of the Interim Measures Arrangement over the past 18 months provides a compelling reason for parties to consider choosing Hong Kong as the seat of arbitration, due to the proven ability of parties to seek and obtain interim measures in PRC courts.

On 9 February 2021, the HKIAC reported in the HKIAC Releases Statistics for 2020 that since the Interim Measures Arrangement entered into force on 1 October 2019, the HKIAC has processed 37 applications for interim measures before courts in Mainland China brought by parties to ongoing arbitrations in Hong Kong. These applications include 34 applications for preservation of property, two for preservation of evidence and one for preservation of conduct (effectively an injunction). The total value of assets sought to be preserved across all 37 applications is approximately RMB 12.5 billion or US$1.9 billion.

The HKIAC also reported that it is aware of 24 decisions that have been handed down by PRC courts in relation to applications for interim measures. In particular, the Intermediate People's Court ("IPC") has granted 22 applications for property preservation upon the applicant's provision of security and rejected two such applications. The total value of assets reported to have been preserved as a result of these decisions amounts to approximately RMB 10 billion or US$1.6 billion.

Through the Interim Measures Arrangements, parties to Hong Kong-seated arbitrations have the ability to seek interim measures directly from PRC courts. This opportunity is not available to parties to arbitration seated anywhere else outside of Mainland China.

The Interim Measures Arrangement and its Implications

In order to apply for interim measures in PRC courts, parties to arbitration must fulfill two criteria: (i) the arbitration must be seated in Hong Kong; and (ii) the...