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published on May 17, 2019 | reading time approx. 5 minutes
from Dr. Martin Seybold and Christina Gigler
On 2 April 2019, the Supreme People's Court of the People's Republic of China (hereinafter referred to as the “PRC”) and the Government of the Hong Kong Special Administrative Region (hereinafter referred to as “HKSAR”) 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” (hereinafter referred to as the “Arrangement”), by which the PRC courts are undertaken to recognize and enforce interim measures in support of institutional arbitration administered by designated Hong Kong arbitral institutions seated in Hong Kong and vice versa. However, this is not necessarily a new development, as under existing Hong Kong legislation and as well as applied in practice, parties to arbitral proceedings in any place may apply to the courts of Hong Kong for interim measures.
Although the PRC is a member state of the United Nations Commission on International Trade Law – UNCITRAL, which in its Art. 17 H et seq. of the “UNICTRAL Model Law on International Commercial Arbitration”, specifically mentions the recognition and enforcement of interim measures, such provisions have neither been enacted in the Arbitration Law of the PRC nor implemented by the judiciary. In practice, PRC courts have historically been unwilling to award interim measures in support of arbitrations seated outside of Mainland China (except in certain maritime matters).[1]
Whilst Hong Kong and the PRC have entered into reciprocal arrangements with respect to the enforcement of arbitral awards[2] and court judgments[3] in the past, neither instrument covers interim measures in support of arbitration.
As a consequence, parties to an international commercial dispute agreeing on arbitration have had no option but to arbitrate in Mainland China if they wish to ensure the availability of interim measures in the PRC.
Recent developments had however pointed to a potential change in approach and practice by the PRC courts. For instance, on 14 October 2016 the Wuhan Maritime Court of the PRC granted interim relief to a claimant in an arbitration seated in Hong Kong[4]. However, as there is no system of precedent in the legal system of the PRC, one cannot rely on a similar practice of other courts, as judgements do not formally bind other courts.
Although the Arrangement has already been signed, the effective date is yet to be announced, following the promulgation of a judicial interpretation by the Supreme People's Court of the PRC and the completion of the relevant procedures in the HKSAR.
The Arrangement will merely apply to institutional arbitration seated in Hong Kong and administered by an arbitral institution included in an exhaustive list, which will be published in due course by the HKSAR.
Accordingly, the Arrangement does not apply to ad hoc arbitrations, which in fact reflects the arbitration regime of the PRC, which specifies that arbitration agreements need to state an arbitral institution included in a list approved by the government in order to be valid. Although not yet published, the list is expected to include, among others, institutions such as ICC Hong Kong, HKIAC and CIETAC. Therefore, the Arrangement does not cover arbitrations seated outside of Hong Kong – even if administered by a listed institution – or Hong Kong seated arbitrations administered by institutions not mentioned in the list.
The wording of the Arrangement does not limit the parties to interim measures after having initiated arbitral proceedings, which potentially allows a party to secure the grant of interim measures at a very early stage of the case lifecycle.
Furthermore, the wording does also not restrict the parties to arbitral proceedings after the entry into force of the Arrangement. Thus, it can be understood that the Arrangement does have retroactive effect.
Before the arbitral award is made, a party to arbitral proceedings in Hong Kong may make an application for interim measure – before an arbitration is commenced – directly either to the Intermediate People's Court of the place of residence of the party against whom the application is made or to the place where the property or evidence is situated. In this case, the arbitral institution shall certify its acceptance of the case within 30 days after the interim measure is taken. Otherwise, the Intermediate People's Court shall discharge the interim measure. This 30-days-rule has to be particularly considered in cases of an application even before the official acceptance of the case, as the timing will be vital in order to retain the benefit of the interim measure.
Whereas, if interim measures are required after an arbitration is commenced, the respective party shall first lodge the application with the administrating arbitral institution, which will then pass on the case to the competent Intermediate People's Court.
It is worth mentioning that the responsible Intermediate People's Court has a wide discretion to order documents/information to be submitted that could be more stringent than the standard requirements stated in Art. 4 of the Arrangement. Accordingly, the application process might not be as smooth as expected.
In addition, with regards to the requirement for the applicant to submit “an accurate Chinese translation” for documents that are not in Chinese (Article 4), it is by now uncertain whether such translation demands notarization and/or legalization.
Other indistinct factors are firstly the time frame until the decision on applicability shall be made by the responsible court (“expeditiously” pursuant to Art. 8). Secondly, the decision shall only be made if the court is “satisfied that the party's application is in accordance with the law of the requested place”, which is another ambiguous and vague element not assessable by the parties.
As the PRC has no equivalent arrangement in place with any other jurisdiction, the Arrangement might enhance Hong Kong's attractiveness and competitiveness as a seat for China-related international arbitrations and even further strengthen Hong Kong's already existing status as one of the centers for international legal and dispute resolution services in the Asia-Pacific Region (among, for instance, Singapore). The Arrangement opens a new gateway for cross-border disputes and indicates a change in the attitude of the PRC to non-domestic arbitration. Nevertheless, it will be seen how this promising Arrangement will be applied by the PRC judiciary in practice and if it will in fact have the expected impact on parties of cross-border transactions.
[1] While parties to PRC domestic arbitral proceedings were (and still are) able to apply to the PRC courts for interim measures, under Articles 28, 46 and 68 of the Arbitration Law of the PRC and Articles 81, 101 and 272 of the Civil Procedure Law of the PRC, these provisions did not expressly provide that the same applied to non-domestic arbitrations.
[2] "Arrangement of the Supreme People's Court between the Courts of the Mainland and the Hong Kong Special Administrative Region on Mutual Recognition and Enforcement of Judgments of Civil and Commercial Cases under the Jurisdiction as Agreed to by the Parties Concerned" effective since 1 August 2008; "Arrangement of the Supreme People's Court on Mutual Enforcement of Arbitration Awards between the Mainland and the Hong Kong Special Administrative Region" effective since 1 February 2000.
[3] „Arrangement of the Supreme People's Court on Mutual Entrustment in Service of Judicial Documents in Civil and Commercial Matters between the Courts of the Mainland and the Hong Kong Special Administrative Region" effective since 30 March 1999.
[4] Case:（2016) between Ocean Eleven Shipping Corporation (Applicant) and Laos Kaiyuan Mining Co., Ltd. (Respondent). Another example would be the case （2014）of the Guangzhou Intermediate People`s Court between Guangdong Yuehua International Trade Group Co., Ltd. (Applicant) and Fanhua Group Co., Ltd. (Respondent), of 22 March 2016.
Sebastian Wiendieck
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