6 January 2021
On 27 November 2020, the Secretary for Justice and the Vice President of the Supreme People’s Court signed the “Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Arrangement between the Mainland and the Hong Kong Special Administrative Region” (the Supplemental Arrangement).
The Supplemental Arrangement supplements and amends the existing ‘Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region’ (the Existing Arrangement), which was signed in June 1999 and came into force in February 2000.
Key points of the Supplemental Arrangement
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Recognition of arbitral awards
Article 1 of the Supplemental Arrangement expressly provides that references to “enforcement” of arbitral awards shall be interpreted to include “recognition” of arbitral awards. This puts an end to the debates in the Mainland courts as to whether recognition is required before enforcing arbitral awards made in Hong Kong.
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Removal of the requirement that a Mainland award has to be issued by one of the recognized arbitral authorities
Article 2 of the Supplemental Arrangement expands the scope of Mainland awards to be all arbitral awards issued under the Arbitration Law of the People’s Republic of China, removing the requirement in the Existing Arrangement that such awards be issued by the Mainland arbitral institution listed by the State Council. Meanwhile, Hong Kong awards continue to be those issued pursuant to the Arbitration Ordinance (Cap. 609).
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Simultaneous enforcement applications in Hong Kong and the Mainland
Under the Existing Arrangement, parties may not apply for enforcement before courts in both Hong Kong and the Mainland at the same time. Article 3 of the Supplemental Arrangement now provides that an applicant may apply for the enforcement of arbitral awards before the courts in Hong Kong and the Mainland simultaneously, provided that the total amount recovered in the courts of the two places do not exceed the amount determined in the arbitral award.
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Availability of post-award preservation and mandatory measures
Article 4 of the Supplemental Arrangement clarifies that an enforcing court may issue preservation or mandatory measures before or after its acceptance of an application for the enforcement of an arbitral award to the applicant’s request and the law of enforcement. Before the Supplemental Arrangement, there is no provision that interim measures may be ordered before issuance of an arbitral award. This clarification ensures preservation measures could be applied for in all phases of an arbitration.
In the Mainland, the Supplemental Arrangement is implemented by Judicial Interpretation as promulgated by the Supreme People’s Court on 27 November 2020. In Hong Kong, Articles 1 and 4 above have came into force on 27 November 2020, while Articles 2 and 3 will take effect after the necessary amendments to the Arbitration Ordinance (Cap. 609) are enacted locally.
In addition, the Department of Justice and the Supreme People’s Court released 10 notable cases relating to the mutual enforcement of arbitral awards (http://www.court.gov.cn/zixun-xiangqing-275321.html). These cases illustrate the approach of the Mainland and Hong Kong courts in considering grounds for refusal of enforcement of awards.
For further information, please contact:
Kevin Yam, Partner, Kennedys
Kevin.Yam@kennedyslaw.com
