On a recent trip to Hong Kong, I noted several newly built skyscrapers filling up the remaining voids of the city’s skyline. From my perspective sitting in the Felix restaurant, perched atop a high rise on the other side of Victoria Harbor, it was easy to see how global economic and financial activity had shifted from west to east, especially to markets connected to the Chinese economy.
To illustrate this point, the Financial Times reported yesterday in its article China Eclipses U.S. in IPOs, that “Chinese stock exchanges raised double the amount of money secured by initial public offerings across the US in 2009, highlighting the region’s rising weight in international finance.Ken Poon of Citigroup said:
It is likely to be another busy 12 months [in 2010]. Expect more records to fall."
In light of the surge of economic activity, Hong Kong will likely remain the international arbitration hub in Asia for resolving commercial disputes. Due to its relationship with and proximity to the Mainland, Hong Kong has become the arbitral seat of choice for China-related arbitration.
Between 2007 and 2008, the Hong Kong International Arbitration Center (HKIAC) saw a 34% increase in the number of arbitrations handled by it, which was a significantly bigger increase than those enjoyed by fellow heavy weights American Arbitration Association (AAA), Center for Investment, China International Economic and Trade Arbitration Commission (CIETAC) and International Chamber of Commerce (ICC). This trends is indicative of the world’s growing trust in the Hong Kong government’s abnility to resolve disputes.
Two recent developments in Hong Kong arbitration are likely to cement Hong Kong’s position as the hub for internatioal arbitration in Asia: The new rules of HKIAC and the implementation of the Civil Justice Reforms (CJR).
The overall approach of the new Rules, which went into effect early this year, is to provide “light touch” administration. They are generally based on the UNCITRAL arbitration rules and are said to be inspired by the Swiss Arbitration Rules. The main purpose of the new HKIAC rules is to make arbitration more user friendly to arbitration users both in and outside Hong Kong. It will enable the Hong Kong business community and arbitration practitioners to operate an arbitration regime which accords with widely accepted international arbitration practices and development. The main features of the Administered Rules include:
- The use of more user-friendly language;
- The Administered Rules are designed especially with Chinese-foreign disputes in mind and are issued in Chinese and English versions;
- If the parties to an arbitration are of different nationalities, neither the sole arbitrator nor the chairman of a three-member arbitral tribunal shall have the same nationality as any party unless specifically agreed otherwise by all parties in writing;
Hong Kong Civil Justice Reforms
The CJR is effectively a revamp of the existing civil procedure system. The new procedures are designed to change the litigation culture in Hong Kong, with the courts taking on a much more pro-active role in case management. Hong Kong courts, like those in a number of other jurisdictions, have struggled to address the increasing delays, complexity and expense associated with modern litigation.
Also, prior to the implementation of the CJR the HongKong courts had been held to lack power to entertain an application for a Mareva injunction (or other interim relief) in aid of foreign litigation proceedings. As part of the CJR, both the High Court Ordinance and the Arbitration Ordinance have been amended to make it clear that interim relief can be sought in aid of foreign proceedings and foreign arbitrations as an independent, free-standing form of relief, without being ancillary or incidental to substantive proceedings in Hong Kong.
The recent developments that have taken place in Hong Kong and that are referred to above will all contribute to making Hong Kong an increasingly attractive, and friendly, place for arbitration, as well as to reinforce Hong Kong as a hub for international arbitration in the Asia Pacific region.
Trend to Watch: Look for Hong Kong to Challenge Shanghai and Singapore as the Region’s Premiere Arbitration Center.