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Recently-released statistics from the Hong Kong International Arbitration Centre (HKIAC) show:
a) The highest number of new cases since 2010, and a 24.2% increase on 2021
b) Greater diversity of party nationality – up 53% from 2021
c) Banking and financial services overtaking international trade as the most popular sector
d) The majority of new cases involving multiple parties and contracts
e) Continued use of the Hong Kong-Mainland China interim relief arrangement
This article summarises some of the key takeaways from the HKIAC’s report.
A record-breaking year
HKIAC accepted 344 new arbitration cases – a 24.2% increase on the 277 new cases in 2021 and the highest number since 2010.
The vast majority (83.1%) of disputes submitted to the HKIAC were international in nature, meaning that at least one party was not from Hong Kong. Most administered arbitrations (87.1%) were conducted in the English language.
There was a notable increase in the diversity of party nationality, with parties coming from 63 jurisdictions – a 53.7% increase on the 41 nationalities recorded in 2021. The top five geographical party nationalities or origins were Hong Kong, Mainland China, the British Virgin Islands, the Cayman Islands and Singapore.
Disputes submitted to the HKIAC involved 16 different governing laws, with Hong Kong law as the most commonly selected governing law, followed by English law then Jersey law.
Despite the growth in overall new cases, the total amount in dispute fell to HK$43.1 billion (approximately US$5.5 billion), from HK$54.6 billion (approximately US$7 billion) the previous year.
Type of dispute and conduct of proceedings
Over a third (36.9%) of new cases were in the banking and financial services sector. This was the first year this sector was the largest recorded. The corporate, international trade/sale of goods and maritime sectors, came in second, third and fourth places, with 17.7%, 14% and 12.5%, respectively.
Perhaps unsurprisingly, given the proportion of cases in the banking and financial services sector, 2022 saw a considerable number of cases involving multiple parties and contracts. Of the 344 arbitrations commenced that year, 53.2%, or 183, involved multiple parties or contracts. The HKIAC Administered Arbitration Rules have special provisions providing for arbitration under multiple contracts, as well as joinder and consolidation. These provisions were invoked in more than a quarter of the 183 cases.
Given the extended effect of the global pandemic in 2022, 75 of the total 93 hearings were fully or partially virtual.
Hong Kong-Mainland China interim measures arrangement
Since October 2019, parties to qualifying Hong Kong-seated arbitration have had the benefit of an Arrangement1 allowing for the possibility of obtaining interim relief in Mainland China, a factor which sets Hong Kong apart from other jurisdictions outside of the Chinese Mainland.
In 2022, the Arrangement remained popular, with the HKIAC processing 26 applications. These applications were made to 14 different Mainland courts, meaning that the Mainland judiciary is becoming increasingly familiar with the procedures involved. The vast majority of these were for the preservation of assets, as opposed to preservation of evidence or injunctive relief (known in the PRC as preservation of conduct). These applications related to disputes with an aggregate value of RMB 7.6 billion (approximately US$1.1 billion).
The majority of these applications (82.8%) were brought by parties from outside Mainland China, including parties from Hong Kong, Singapore, the Cayman Islands, Germany, Australia and the British Virgin Islands.
Conclusion
HKIAC’s 2022 statistics reflect the continued popularity of the jurisdiction and institution for resolving cross-border commercial disputes. On the one hand, the continued use of the Arrangement demonstrates the attractiveness of the jurisdiction for resolving China-related disputes. On the other hand, the record number of new cases, and growing diversity of party nationality, illustrate Hong Kong’s sustained attraction to international parties.
- 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.
Client Alert 2023-030