Post-handover recognition and enforcement of arbitral awards between mainland China and Hong Kong SAR: 1999 agreement vs. new your convention

摘要

Foreign investors engaged in commerce between Hong Kong and Mainland China have two important choices to make in drafting their dispute resolution clauses or agreements. The first choice involves which method of dispute resolution to apply: to arbitrate or to litigate. The second choice involves the venue for the trial or arbitration. For contracts in which one of the parties is from or a substantial amount of the assets involved are located in Mainland China and, therefore, enforcement of some type can be anticipated in Mainland China, the dispute resolution clause should call for arbitration in a foreign venue, not in Hong Kong or Mainland China. First, arbitration is the superior choice because of the difficulty of litigation in Mainland Chinese courts. If litigation is chosen, parties can either submit their dispute to a competent Mainland Chinese court, Hong Kong court, or a third-country's court. Most practitioners do not trust Mainland China's domestic courts with handling international commercial disputes because the judiciary lacks commercial expertise, the procedures are slow and complex, and there is a danger of local protectionism. Unlike Mainland China, Hong Kong courts are more sophisticated and capable of handling international commercial disputes. However, since no agreement exists for the mutual recognition of court judgments between Hong Kong and Mainland China, enforcement of Hong Kong judgments in Mainland China would be equivalent to obtaining an original Mainland Chinese court decision. The final option would be to pursue litigation in a third-country, but this involves complex jurisdictional problems and, once again, the party seeking enforcement would need a subsequent judgment in Mainland China. Because of the difficulties associated with litigation, arbitration is likely to remain the more popular choice for resolving Mainland China-related international commercial disputes. Second, it is best to arbitrate Mainland China-related disputes in a foreign venue. With Hong Kong's reversion to Mainland Chinese sovereignty in 1997, the question of venue has taken on a new dimension. Basically, disputing parties have three options concerning venue: they can arbitrate their disputes domestically in Hong Kong, domestically in Mainland China, or in a foreign venue, such as the International Chamber of Commerce or the Singapore International Arbitration Centre.