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Supplemental arrangement concerning mutual enforcement of arbitral awards between the mainland of China and the Hong Kong Special Administrative Region

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On 27 November 2020, the Mainland and the Hong Kong Special Administrative Region signed the ‘Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region’ (the Supplemental Arrangement), which supplements and amends the existing ‘Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region’ (the Existing Arrangement, as supplemented by the Supplemental Arrangement, the Arrangement).

The Existing Arrangement

The Existing Arrangement, which was signed in June 1999 and came into force in February 2000, records the agreement between the Mainland and the Hong Kong Special Administrative Region (HKSAR) in relation to the mutual enforcement of arbitral awards made in the Mainland and the HKSAR respectively. The contents of the Existing Arrangement are given effect in the HKSAR through sections 92-98 of the Arbitration Ordinance (Cap. 609), which largely resemble the mechanism for the enforcement of arbitral awards, and the grounds for refusing enforcement, provided under the New York Convention.

The Supplemental Arrangement

The Supplemental Arrangement introduces four key changes to the Existing Arrangement:

  1. It provides that the Arrangement covers the “recognition” stage in addition to the “enforcement” stage of an arbitral award, thereby expressly recognising the two-stage procedure for the enforcement of an arbitral award (i.e. recognition and enforcement).
  2. It expands the scope of the arbitral awards which may be mutually recognised and enforced in the Mainland and the HKSAR. It provides that any arbitral award issued pursuant to the Arbitration Ordinance (Cap. 609) in Hong Kong (including institutional and ad hoc awards) may be enforced in the Mainland. As for arbitral awards issued in the Mainland, the Supplemental Arrangement removes the condition that the arbitral awards must be issued by certain recognised arbitral institutions in the Mainland and provides that the Arrangement applies to any arbitral award issued pursuant to the Arbitration Law of the People’s Republic of China, thereby expanding the categories of arbitral awards which may fall under the Arrangement.
  3. It provides that an applicant may apply for the enforcement of an arbitral award before the courts in both the Mainland and Hong Kong at the same time. Under the Existing Arrangement, an applicant may not apply for enforcement before the courts in both the Mainland and Hong Kong at the same time, thereby giving rise to a number of issues in practice, such as limitation of time issues. These issues are to be resolved through these latest changes introduced by the Supplemental Arrangement.
  4. It expressly provides that preservation measures may be applied for before and after the court’s acceptance of an application for the enforcement of an arbitral award. Such provision aims at addressing the uncertainty arising from 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’ (Interim Measure Arrangement), which came into force on 1 October 2019.  The Interim Measure Arrangement provides that interim measures may be ordered before the issuance of an arbitral award, but it does not provide for the availability of preservation measures after the issuance of an arbitral award. The revision contained in the Supplemental Arrangement therefore ensures that preservation measures may be applied for in all phases of an arbitration, thereby facilitating the enforcement of arbitral awards.

The changes contained in (1) and (4) took effect as of the date of the announcement, while those in (2) and (3) will only take effect on a date to be announced by the Supreme People’s Court after the necessary legislative procedures have been completed in the HKSAR.