Having the Permanent Court of Arbitration conducting arbitrations in Hong Kong is a vote of confidence in the SAR, writes Secretary for Justice Rimsky Yuen, SC
Hong Kong began the year of 2015 with wonderful news: the Host Country Agreement between the Government of the People’s Republic of China and the Permanent Court of Arbitration on the Conduct of Dispute Settlement Proceedings in the Hong Kong Special Administrative Region of the People’s Republic of China (HCA) and the related Memorandum of Administrative Arrangements (MAA) were officially signed in Beijing on 4 January. These two documents will greatly facilitate the conduct of dispute resolution proceedings, such as arbitration, by the Permanent Court of Arbitration (PCA) in Hong Kong.
Permanent Court of Arbitration
The PCA was established by the Conventions for the Pacific Settlement of International Disputes of 1899 and 1907. Headquartered in The Hague of the Netherlands, it has 116 member states at present. For more than a century, the PCA has been facilitating arbitration and other forms of dispute resolution, and it plays an important role as a pioneer steering the development of peaceful settlement of international disputes, with a profound impact on the development of the rules of international law.
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The PCA has evolved continuously. From confining itself to disputes between states in its early years, it has gradually expanded to services for the resolution of disputes involving states, intergovernmental organisations, and private parties. The scope of arbitration has also extended to cover areas such as international trade and finance. The PCA has developed into a modern and multi-faceted arbitral institution that is able to meet the needs of the international community in dispute resolution, whether in respect of cases involving public international law or private law.
The PCA and Hong Kong
China is one of the original parties to the 1899 and 1907 Conventions. The government of the People’s Republic of China decided to recognise the conventions and resumed China’s involvement in the PCA in 1993. Upon China’s resumption of its exercise of sovereignty over Hong Kong from 1 July 1997, the conventions, falling under the category of “political, diplomatic and defence”, have been applied to the Hong Kong Special Administrative Region (HKSAR). For details on this, please refer to the note dated 20 June 1997 concerning multilateral international treaties applicable to the HKSAR from Qin Huasun, the former permanent representative of China to the UN, to the secretary-general of the UN.
With the rapid development of international arbitration, especially investment arbitration between investors and states in Asia, the PCA not only administers and conducts proceedings such as arbitrations at its headquarters in The Hague, but also provides dispute resolution services in various Asian member states through the conclusion of host country agreements with them. Indeed, at the signing ceremony of the HCA on 4 January 2015, Hugo Hans Siblesz, the secretary-general of the PCA, stated that PCA-administered cases involving Asian parties constituted 30% of its caseload, as compared to none 10 years ago.
Hong Kong occupies a central location in Asia and has a robust common law legal system, a wealth of experience in arbitration and a distinguished legal profession. Coupled with its special legal status under “one country, two systems”, and with the strong support and assistance provided by the central government, the HKSAR is well placed to be the new base for the PCA to enhance access to its services in Asia. Indeed, the PCA conducted its first arbitration hearing on an investment dispute between an Asian state and a foreign investor in the HKSAR in 2013. The arbitration process was completed smoothly and successfully.
The signing of the HCA and the MAA will facilitate the PCA’s administration of arbitration in the HKSAR. As a regional, as well as international, centre for dispute resolution, Hong Kong will provide quality services in support of PCA-administered arbitrations.
International and regional arbitration centre
Consolidating and enhancing Hong Kong’s position as a centre for international legal and dispute resolution services in the Asia-Pacific region has always been an important policy of the HKSAR government.
Hong Kong is endowed with unique strengths in international arbitration. With the continued application of the common law system under “one country, two systems”, an independent and excellent judicial system, and an emphasis on the rule of law, Hong Kong is undoubtedly an ideal venue for conducting international arbitration. We have pooled a wealth of legal talent with over 9,000 locally qualified lawyers (including solicitors and barristers) and over 1,300 registered foreign lawyers from 28 jurisdictions, many of whom have extensive experience in international arbitration. Moreover, there is no restriction on foreign law firms engaging in international arbitration in Hong Kong. Arbitral awards made in Hong Kong can be enforced not only in 150 jurisdictions pursuant to the New York Convention, but also in the mainland of China and Macau under similar arrangements.
In addition, the HKSAR government has been updating its arbitration legislation to keep pace with international arbitration trends. The current Arbitration Ordinance (Chapter 609 of the Laws of Hong Kong) enacted in 2010 was modelled upon the latest version of the Model Law on International Commercial Arbitration of the United Nations Commission on International Trade Law, making our arbitration law most user-friendly to the international business community.
While we have had the Hong Kong International Arbitration Centre (HKIAC) since 1985, there has been a burgeoning number of renowned international legal bodies establishing their presence in Hong Kong with branches or administrative bodies. In 2008, the International Court of Arbitration of the International Chamber of Commerce (ICC) set up a branch office in Hong Kong, the very first one outside its Paris headquarters. In addition, the Hague Conference on Private International Law (HCCH) opened its Asia-Pacific regional office in Hong Kong in 2012.
We have gained a very competitive edge by leveraging on the mainland while engaging the world under the “one country, two systems” principle. Hong Kong is culturally linked and geographically in proximity to the mainland, and yet the only region within the entirety of China where the common law system familiar to the international community is practised. Taking these together, and given its standing in the field of international arbitration, Hong Kong is an ideal neutral venue to provide arbitration services to mainland and foreign enterprises.
There is in place an Arrangement Concerning Mutual Enforcement of Arbitral Awards between the mainland and Hong Kong. The two leading arbitral institutions in the mainland, namely the China International Economic and Trade Arbitration Commission (CIETAC) and the China Maritime Arbitration Commission (CMAC), also established arbitration centres in Hong Kong in 2012 and 2014, respectively, and are the first such centres outside the mainland.
Promoting international rule of law
The start of the year saw the coming into force of the HCA and the related MAA upon signature. This amounts to a vote of confidence in the HKSAR and its legal system. This is also an important measure for Hong Kong to carry out legal co-operation with foreign countries. It will enable Hong Kong to play a bigger role as an international as well as a regional centre for law and arbitration, and as an international commercial hub.
To foster the development of international arbitration and promote the rule of law in the region, the HKSAR will continue to strive for perfection in providing efficient and quality services for the PCA as well as other institutions and individuals conducting international arbitration in Hong Kong.
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Rimsky Yuen, SC, is the Secretary for Justice with the Government of the Hong Kong Special Administrative Region, People’s Republic of China
