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Hong Kong cements commitment to regional cooperation in arbitration

31.01.2019 Commercial Disputes

Joanne Waters

Joanne Waters Senior Registered Foreign Lawyer (England & Wales)

The Hong Kong government has begun the year by affirming its commitment to regional collaboration in international arbitration and mediation through signing a Memorandum of Cooperation (“MoC”) with the Ministry of Justice of Japan. A copy of the MoC signed on 9 January 2019 can be accessed here.

The MoC is not binding but provides for a framework for cooperation between Hong Kong and Japan in three distinct areas:

  1. Exchange of information on their legal framework and case law as well as views and experience relating to international arbitration and mediation;
  2. Provision of training on international arbitration and mediation; and
  3. Promotion of international arbitration and mediation through jointly organised forums and seminars.

The MoC is part of the Hong Kong government’s continued push to take advantage of the opportunities offered by the Belt and Road Initiative and the development of the Greater Bay Area, opportunities which Hong Kong is uniquely positioned to benefit from given its location and connections to the PRC.

In further support of this aim, on 14 January Hong Kong’s Secretary for Justice, Ms Teresa Cheng, announced the establishment of the Inclusive Dispute Avoidance and Resolution Office which is charged with pursuing cooperation agreements with other jurisdictions and international organisations, and with further promoting Hong Kong as a leading dispute settlement forum.

These recent developments serve to underline Hong Kong’s commitment to becoming the leading regional centre for international arbitration and mediation and the natural forum for international disputes with a Chinese counterparty.

With an independent judiciary, a common law system derived from English law and with an extensive presence of international law firms practising both English and Hong Kong law, Hong Kong is a viable and increasingly attractive choice of seat for international arbitration involving Asian parties. The flexibility of arbitration means that parties are free to agree, for example, that a dispute will be subject to arbitration and English law, but will have its seat in Hong Kong. Furthermore, the Arbitration Ordinance in Hong Kong is derived from the UNCITRAL Model Law, as is the Japanese Arbitration Laws, so the main principles applicable to arbitrations seated in Hong Kong should not be too unfamiliar to Japanese parties.

In addition, where you are dealing with a PRC counterparty, awards obtained from arbitrations seated in Hong Kong have the added advantage that they are, in principle at least, easier to enforce than awards obtained from arbitrations seated elsewhere. This is due to the bilateral arrangement between the PRC and Hong Kong which deals with mutual enforcement of awards. That provides another incentive to consider a Hong Kong arbitration clause when negotiating contracts with PRC counterparts.

Should you have any questions on the new cooperation agreement between Hong Kong and Japan or how you might incorporate a Hong Kong arbitration clause into your contracts, please do not hesitate to get in touch.

Article authors:

Joanne Waters