Interim measures in Mainland Chinese courts in aid of Hong Kong-seated arbitrations

International

On 1 October 2019, the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings (the “Arrangement”), concluded between China’s Supreme People’s Court and the Hong Kong Department of Justice back in April 2019, came into effect. The Arrangement marks an important milestone in the evolution of the China-Hong Kong SAR judicial assistance framework and is expected to further strengthen Hong Kong’s position as an arbitral seat.

Significance of the Arrangement

Before the Arrangement took effect, parties to arbitration proceedings seated outside Hong Kong (including Mainland China) were able to seek measures in aid of arbitration before the Hong Kong courts under the Hong Kong Arbitration Ordinance. However, a similar possibility to seek judicial assistance in Chinese courts was not available to participants in arbitrations with a seat outside Mainland China (including in Hong Kong). The Arrangement has now eliminated this disparity – from now on, applications can be made to Mainland Chinese courts in aid of arbitration proceedings seated in Hong Kong.

This development cannot be overestimated. In fact, it is the first time that parties to arbitrations seated outside Mainland China will be able to seek interim relief on the Mainland. The Arrangement thus removes a major concern with arbitrating with Mainland Chinese parties to the extent that arbitrations in need of interim measures from Mainland China no longer need to agree on a Mainland Chinese seat in order to be able to benefit from provisional measures ordered by a Mainland Chinese court. From 1 October 2019, arbitrations seated in Hong Kong and administered by an approved institution are now able to invoke the support of the Mainland Chinese courts’ in obtaining interim measures related to the arbitration in question.

Range of available interim measures

The Arrangement provides for three types of provisional measures in aid of arbitration that can be ordered by Mainland Chinese courts: property preservation, evidence preservation and conduct preservation.

The range of measures that parties to Mainland China-seated arbitral proceedings can request in Hong Kong courts is formulated somewhat differently: injunction and other interim measures for the purpose of maintaining or restoring the status quo pending determination of the dispute; taking action that would prevent, or refraining from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral proceedings; preserving assets; or preserving evidence that may be relevant and material to the resolution of the dispute.

Limitations

Of note, the Arrangement does not extend to ad hoc arbitrations, arbitrations administered by arbitral institutions which do not have an office in Hong Kong and by arbitral institutions that are not approved pursuant to the Arrangement, even if those arbitrations are seated in Hong Kong

To benefit from the Arrangement, parties must submit a dispute to a permanent arbitration institution which has been approved by both the Mainland and Hong Kong SAR. To date, six permanent institutions have received the requisite approval: the Hong Kong International Arbitration Centre (HKIAC), the China International Economic and Trade Arbitration Commission (CIETAC), the International Court of Arbitration of the ICC - Asia Office, the Hong Kong Maritime Arbitration Group, the South China International Arbitration Center (HK), and the eBRAM International Online Dispute Resolution Centre.

These institutions, and the HKIAC and the ICC – Asia office, in particular, will thus benefit from the Arrangement and have a distinct advantage in China-related disputes over other international arbitral institutions that do not feature on the approved list. It is now advisable for international parties to choose either of these institutions (again, in particular the HKIAC or ICC – Asia office given their extensive experience with international disputes and proven track record of administering them successfully in Hong Kong) in combination with a Hong Kong arbitral seat for China-related disputes in order to benefit from the unique advantages offered by the Arrangement. The Hong Kong Department of Justice has stated that the current list may be updated depending on “operational considerations”.[1]

Procedure

An application for interim measures can be filed with the people’s court in Mainland China by a party before an arbitral award is made. Where an application for interim measures is made after the arbitration case “has been accepted” by the relevant arbitration institution or permanent office, a party does not apply directly to the people’s court; rather, the party’s application must be “passed on” by the institution or permanent office.

In cases in which an application is granted before the arbitration case has been accepted by the institution, it is noteworthy that the people’s court in the Mainland shall lift any interim measures ordered pursuant to that application if the court does not receive a letter from the arbitration institution confirming the acceptance of arbitration case within 30 days of the date on which interim measures were ordered.

Conclusion

As access to interim relief in Mainland China under the Arrangement is only available in cases where arbitration agreements designate an approved institution and seat in Hong Kong, the Arrangement will undoubtedly further strengthen Hong Kong’s role as the preferred venue for arbitrating China-related disputes, by providing international parties – for the first time – with effective procedural tools in the courts of the Chinese Mainland.