Published: 09:59, June 14, 2024 | Updated: 11:42, June 15, 2024
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International arbitration: Hong Kong shows the way
By Grenville Cross

The 26th International Council for Commercial Arbitration Services Congress (“the Congress”) was held at the Hong Kong Convention and Exhibition Center in May. It was the most significant international arbitration conference to date, attended by over 1,400 legal and dispute resolution practitioners from over 70 jurisdictions.

The Secretary for Justice, Paul Lam Ting-kwok, called the Congress “the Olympics of international commercial arbitration”. His department supported the 3-day event hosted by the Hong Kong International Arbitration Centre (HKIAC). He said the city’s involvement would “significantly enhance Hong Kong’s status as a leading international center for legal services and dispute resolution”, and few would demur.

The HKIAC is the city’s independent arbitration body. If the parties to a dispute cannot agree, it can appoint arbitrators and decide on the numbers required in particular cases. It describes itself as “one of the world’s leading dispute resolution organizations”. It offers “state-of-the-art hearing facilities, which have been ranked worldwide for location, value for money, IT services, and helpfulness of staff”. In 2023, it was involved in 281 arbitrations, 184 of which it administered.

Various legal and dispute resolution organizations have recently established a presence in Hong Kong, and the Congress showcased Hong Kong’s role as a prime destination for international arbitration.

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In 2008, for example, the International Court of Arbitration of the International Chamber of Commerce, which is Paris-based, opened its Secretariat’s first overseas branch in Hong Kong to serve its regional arbitration functions. In 2012, the China International Economic and Trade Arbitration Commission, China’s oldest arbitration body that handles most of the country’s foreign-related arbitration, established its first branch outside the Chinese mainland in Hong Kong. In 2014, the China Maritime Arbitration Commission, the country’s sole maritime arbitration institution, established a branch in the city.

In 2015, the Permanent Court of Arbitration (PCA), which is based in The Hague and handles international investment arbitration, signed a host country agreement with the Central People’s Government, together with a related memorandum of administrative arrangements with the Hong Kong Special Administrative Region government to facilitate the conduct of PCA-related administration in Hong Kong, including state-investor arbitration.

In 2021, the AALCO Hong Kong Regional Arbitration Center (AALCO HK) was established in Hong Kong as the sixth regional arbitration center under the auspices of the Asia-Africa Legal Consultative Organization (AALCO). It is an international institution pursuing international commercial arbitrations in the Asia-Africa regions and provides arbitral services. It also has a specific focus on the use of online dispute resolution.

At the Congress, the HKIAC’s secretary general, Joanne Lau, said, “Hong Kong’s dynamic, multicultural, and multilingual attributes make it an ideal setting for such a global gathering.” The co-chair of the host committee, Neil Kaplan KC, agreed, calling the event “a prime opportunity for arbitration reform and innovation in Hong Kong”.

The Congress’ outcomes will have exceeded the organizers’ expectations, with the international arbitration community acquiring new perspectives that will hopefully spur greater innovation worldwide. The attendees must also have appreciated the opportunity to meet with Hong Kong’s business, legal, and dispute-resolution communities. As a bonus, they will have gained a greater appreciation of the “one country, two systems” governing policy.

Although hosting the Congress was a feather in Hong Kong’s cap, the decision to hold it in the city was not a surprise, given its credentials. Since 2015, Hong Kong has ranked among the top five preferred seats for arbitration globally and was ranked third in the latest International Arbitration Survey conducted by Queen Mary University, London. Although behind London and Singapore, it was ahead of Paris and Geneva.

The Congress’ theme was “International Arbitration: A Human Endeavour”, an intensive examination of the human elements that sustain the arbitration process was conducted. It included 50 meetings and side meetings, all with specific tasks. For example, one panel examined the potential use of artificial intelligence to influence arbitration practice and modernize methodology, while another considered how arbitrators approach decision-making compared to judges.

The Young ICCA-HK 45 Skills Training Workshop, chaired by Claudia Winkler from The Negotiation Academy, was notable. It explored the psychological aspects of negotiation, a developing area. The topics covered included interest-based negotiation, game theory, competitive bargaining, and unconscious basis, and the eyes of many will have been widened.

When Hong Kong’s Arbitration Ordinance (Cap.609) came into force in 2011, it unified the dual regimes for domestic and international arbitration. It was based on the Model Law on International Commercial Arbitration of the United Nations Commission on International Trade Law, and it made the city’s arbitration system more user-friendly for local and outside arbitration users. It enabled foreign law firms and practitioners to advise on arbitration issues and enhanced confidentiality for international arbitration.

As a result, Hong Kong’s competitiveness as a leading international arbitration center has been globally recognized. International arbitration is now the preferred option for resolving cross-border disputes, and the city has become a leading seat of arbitration for both local and overseas parties. Arbitral awards made in Hong Kong are now globally enforceable in over 170 states and parties to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which the Congress also considered.

By common consent, the Congress burnished Hong Kong’s credentials as a trusted and neutral international arbitration service with world-class facilities

The New York Convention, which applies to Hong Kong, is the primary instrument in international commercial arbitration. It was, therefore, fitting that one of Congress’ panels examined how the courts interpret it and the role of judges and practitioners in processing cases. The panel also homed in on the issues of consistency, public policy, local legal cultures, and arbitrability, as well as upon the visions that have shaped the Convention.

Arbitration, inevitably, has a national dimension. Under the “one country, two systems” framework, Hong Kong is the only jurisdiction outside the mainland where parties to arbitral proceedings administered by designated arbitral institutions can apply to the mainland courts for particular outcomes. It has signed three mutual legal assistance arrangements with the mainland, covering not only the mutual enforcement of arbitral awards but also interim measures under the “Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the HKSAR” (2019). In the first three months of 2024, the city’s arbitral institutions processed 118 applications for interim measures made to the mainland, and court orders involving 16.3 billion yuan ($2.2 billion) were issued.

The significance of the mainland dimension was not lost on the Congress. For example, Kaplan noted how “the strengthening business ties between Hong Kong and the Chinese mainland are fostering legal innovations that are enhancing Hong Kong’s ability to handle arbitrations involving the mainland.” He was correct, and the Department of Justice is currently collaborating with its counterparts in Guangdong and Macao with a view to establishing a panel of Guangdong-Hong Kong-Macao Greater Bay Area arbitrators. This will promote the harmonization of arbitration mechanisms in the three jurisdictions and also enhance the vibrancy of arbitration services.

This process will undoubtedly be facilitated through the system whereby, since 2022, Hong Kong lawyers can be licensed by the mainland authorities to provide legal services in the GBA, covering civil and commercial matters. By last March, over 420 Hong Kong and Macao lawyers had obtained the Lawyer’s License (GBA), which enables a “one-stop shop” insofar as cross-boundary and cross-jurisdictional legal services are concerned.

The licensed lawyers can advise the international business community on risk management and doing business in the GBA. If foreign enterprises are registered in the Qianhai Cooperation Zone, they can guide them over their choice of applicable law for contracts and advise them to choose Hong Kong as the seat of arbitration if contractual disputes arise. This can greatly benefit commercial enterprises with reservations over conducting operations in the mainland, and the Department of Justice is now seeking to expand these initiatives to the entire GBA.

On May 9, the Congress held its only event outside Hong Kong, and the latest cooperative developments were explained in Shenzhen. Apart from exchanging ideas on international arbitration, there was also a heavy focus on the dynamics of the Hong Kong-mainland relationship, which many found illuminating.

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In his holistic analysis, Lam explained, “The legal services provided by Hong Kong would enable overseas investors and businessmen to explore investment and business opportunities in the mainland while having the option of protecting their interests through Hong Kong’s common law system, which is trusted and familiar to the international community.”

In 2014, the Department of Justice created the Advisory Committee on Promotion of Arbitration, a prescient step. Apart from its own lawyers, it includes representatives of legal, arbitration, and other sectors, and overseas experts can be invited to advise generally or on specific issues. Its terms of reference include considering new initiatives and fresh strategies for the promotion of the city’s arbitration services, both internally and externally. Its work is now bearing fruit, and its efforts to promote the city’s arbitration services and widen its reach deserve applause.

By common consent, the Congress burnished Hong Kong’s credentials as a trusted and neutral international arbitration service with world-class facilities. The HKIAC and its partners can take great credit, and the city’s arbitration system will undoubtedly go from strength to strength. Hopefully, all those in the West who spend their days trying to diminish Hong Kong and downplay its prospects will have taken note.

The author is a senior counsel and law professor and was previously the director of public prosecutions of the Hong Kong SAR.

The views do not necessarily reflect those of China Daily.