Arbitration growth in Hong Kong: Going from strength to strength

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To the elation of legal professionals and cross-border businesses, international commercial and investment arbitration practices have enjoyed tremendous growth in the past decade in Hong Kong and further growth is expected. In the past few years, the government of Hong Kong has been championing the city as a regional dispute resolution hub, and the Chief Executive and Secretary for Justice has made recent proclamations to this effect respectively in the 2015 Policy Address and the Opening of the Legal Year Address. In particular, the 2015 Policy Address notes at paras. 51 and 52:

Hong Kong’s tradition of the rule of law and our legal system are conducive to the development of legal and dispute resolution services.  Last year, the China Maritime Arbitration Commission established an office in Hong Kong, its first branch office outside the Mainland.  The Central Government and the HKSAR Government have recently signed the Host Country Agreement and the related Memorandum of Administrative Arrangements respectively with the Permanent Court of Arbitration on the conduct of dispute settlement proceedings in Hong Kong by the court.

Renowned arbitration institutions such as the International Court of Arbitration of the International Chamber of Commerce, the China International Economic and Trade Arbitration Commission and the China Maritime Arbitration Commission have set up offices in Hong Kong in recent years.  With increasing maritime activities in Asia, maritime arbitration services have immense potential for growth.  Arbitration awards made in Hong Kong are enforceable in the jurisdictions of over 150 contracting states of the New York Convention, and also in the Mainland and Macao.

Hong Kong’s investment in dispute resolution infrastructure is certainly sensible, as it leverages the strength of its legal system and its status as an international business and financial centre.

However, Hong Kong has some way to go before it could secure its place as the top dispute resolution centre in Asia. Singapore seems to be a remarkable contender as it had begun heavily investing in its alternative dispute resolution institutions more than a decade ago. The Singaporean approach to institution-building resembles an effectively concerted enterprise. Its legislature has adopted fairly pro-arbitration laws, which are adjudicated and enforced by pro-arbitration courts and practised by highly skilled local professionals and foreign firms operating onshore. In addition, the Singaporean government has actively marketed arbitration in professional and business conferences among other forums, along with trade associations and private arbitral institutions.

Nonetheless, the high-profile establishment of the branch offices of the Permanent Court of Arbitration and the China Maritime Arbitration Commission in the city has definitely represented a vote of confidence for Hong Kong’s ability to thrive as a dispute resolution centre. It will be exciting to see how the Hong Kong arbitration scene will develop in the next two years. A key economic driving force for arbitration demand will come from the flourishing special economic and trade zones around China (e.g. the China (Shanghai) Pilot Free-Trade Zone  [中国(上海)自由贸易试验区]; Qianhai Shenzhen-Hong Kong Modern Service Industry Cooperation Zone [前海深港现代服务业合作区]). Hong Kong arbitration service providers will therefore need to position themselves strategically to compete against their counterparts around Greater China and the Asia-Pacific region. And, practitioners will be well served by a better understanding of arbitration trends in Asia. Keep your eyes opened!

In January 2015, I have contributed to an article in Arbitration Quarterly (Debevoise & Plimpton) titled “Agreement for Shanghai – Seated ICC Arbitration Recognized in China“, which examines current Chinese judicial views about supporting and enforcing foreign arbitrations in China. It also provides an overview of the relevant court processes. In the same periodical, I have also contributed to an article on arbitral enforcement trends at the Supreme Court of India in April 2014, which is titled “Recent Indian Supreme Court Decisions Continue Arbitration-Friendly Trend“.