Hong Kong is an ideal hub to resolve international business disputes for foreign parties conducting business in, or with parties based, in Hong Kong and also acts as a bridge for overseas disputes involving Mainland Chinese parties given its geographic and economic proximity to Mainland China.
Pursuant to the constitutional safeguards laid down in the Basic Law, Hong Kong has a sound legal system and a rule of law tradition, as well as an independent judiciary. Hong Kong adopts the common law system, which is more familiar to the international commercial and trade community. This common law system is a continuation of the pre-existing 1997 legal system, before the resumption of the sovereignty of the HKSAR to the People’s Republic of China. Under the principle of “One Country, Two Systems”.
Hong Kong is mainly based on the English Court system. The final appellate court was replaced from the “Privy Council in London” with the “Court of Final Appeal in Hong Kong” after 1997.
A party wishing to start litigation in Hong Kong has to first identify the appropriate court. This would be based on the nature and amount of the claim. For business disputes, it would often be the District Court or the Court of First Instance of the High Court in which a party would commence an action. The benefit of a litigation in Hong Kong is that no upfront court fees are required unlike other jurisdictions.
Hong Kong has mutual agreements for the acknowledgement and enforcement of court judgments with 15 countries under the Foreign Judgments (Reciprocal Enforcement) Ordinance (Chapter 319 of the Laws of Hong Kong). This means that a Hong Kong monetary judgment can be recorded, recognized and directly enforceable in the selected jurisdictions according to their respective statutes. Enforcement instrument is also possible in non-common law authorities and the above options applies to enforcement of foreign verdicts in Hong Kong.
As a leading seat of arbitration, Hong Kong is home to a number of the world’s top arbitral organizations, top arbitrators, and foremost arbitration practitioners, making it an ideal place to commence arbitration proceedings. Furthermore, Hong Kong has experienced dispute resolution talents and rich dispute resolution culture.
With its long-standing history of arbitration and ample regulatory support, Hong Kong has featured an arbitration-friendly legal regime and achieved the status as a hub for alternative dispute resolution. There is national support for the development of Hong Kong as an international legal and dispute resolution services center in the region.
The signing of the Interim Measures Arrangement is a major breakthrough to the benefit of Hong Kong under “One Country, Two Systems”, signifying that Hong Kong has become the first and the only jurisdiction outside the Mainland of China where, as a seat of arbitration, parties to arbitral proceedings administered by the designated arbitral institutions would be able to apply to the Mainland courts for interim measures. This has been well-received by the local profession which generally considers that the interim measures arrangement will help enhance the attractiveness of Hong Kong as a center of arbitration for Mainland-related disputes.
With respect to arbitration awards, Hong Kong has an arbitration friendly regime and the courts have rarely refused to identify or enforce an arbitral award (whether it is made in or out of Hong Kong). The Agreement on the Recognition and Enforcement of Foreign Arbitral Awards is a key tool in international arbitration. As of Year, 2020, 164 countries have agreed to recognize and enforce arbitration awards made in other participant countries subject to limited conditions.
The unlikely event an arbitral award made in Hong Kong needs to be enforced in a non-New York Convention jurisdiction, enforcement may still be possible.
Hong Kong offers a clear and user-friendly platform to parties. Its recognized judicial system and mutuality with Mainland China further strengthen its position worldwide as the ideal place for parties to resolve business disputes mainly in cross-border relations.
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