HK PLAYS BIGGER ROLE IN DISPUTE RESOLUTION
China’s opening up and development of bay area, along with city’s sound legal system, give rise to arbitration and mediation trend, expert says
The ongoing opening up of China and the development of the Greater Bay Area have seen an increasing number of companies conduct arbitration or mediation in Hong Kong, burnishing the city’s status as a leading international dispute resolution centre, according to a legal expert.
The number of arbitration cases in the city reached 344 last year, an increase of 24 per cent from 2021 and 8 per cent higher than in 2020, according to data from the Hong Kong International Arbitration Centre.
“In terms of arbitration or mediation, [the trend] to settle disputes in Hong Kong is on the rise,” said Christopher To Wing, a barrister who has handled mediation and arbitration in the city since the 1990s.
Hong Kong ranked third globally as the most preferred location for arbitration after London and Singapore, according to a survey of 1,200 participants conducted by the School of International Arbitration at Queen Mary University of London in partnership with law firm White & Case in 2021.
“Over the past decade, Hong Kong has shown the world its legal system and talent in arbitration and mediation can help the international business community solve its disputes here,” said Robert Lee Wai-wang, the lawmaker for the financial services sector and CEO of local brokerage Grand Capital Holdings.
“This is why many international firms like to set up in Hong Kong as a gateway to enter the mainland. As China continues to open up its market for international companies, Hong Kong’s role as a dispute resolution centre will continue to grow.”
To said Hong Kong had become a top choice now because it was a part of China and at the same time the only city to adopt common law jurisdiction in the country.
“Over the years, Hong Kong has developed into a hub whereby people trust its legal system, which is very sound and credible,” he said in an interview.
“We have highly respected judges in Hong Kong and very competent legal practitioners who give solid advice to clients with an international element.”
Hong Kong’s rise as a dispute resolution centre is due to the opening up of China that has resulted in growing international trade and business deals between mainland companies and global firms over the past decade.
“When an American company does business with a mainland firm and there is a dispute, the natural choice is to do arbitration or mediation in a neutral venue like Hong Kong because people trust the system here,” To said.
“One of the advantages of arbitration is the award, when rendered in Hong Kong, can be enforced in mainland China and the United States, as well as over 170 countries around the world,” he said, referring to the universally recognised New York Convention on the Reciprocal Enforcement of Arbitral Awards.
The development of the Greater Bay Area since Beijing announced the blueprint in 2019 had led to more trading and business opportunities in the bloc, which comprises nine mainland cities, Hong Kong and Macau, giving rise to the need for dispute resolution services, To said.
“When the Greater Bay Area companies are looking to the world in terms of doing business, they need provision for some form of dispute resolution mechanism within their contractual agreements,” he said.
“Most of the mainland firms doing business tend to deal with companies in common law countries such as the US, Britain, Canada or Australia.”
There is a wide range of international disputes that are handled in Hong Kong, from construction and finance to investment and shareholders’ disputes.
To further strengthen Hong Kong’s standing, the central government supported the legal sector’s move to introduce a Greater Bay Area qualification exam for lawyers based in the city in 2021, with the first licences granted in July last year.