Legal disputes can often arise between business partners operating in China, prompting the need for effective resolution mechanisms. When entering into a commercial contract with Chinese partners, two popular options for arbitration seats are Hong Kong and Singapore. The question then arises—which seat is more advantageous for international businesses seeking to resolve legal disputes while conducting business in China?
Though it is part of Chinese territory, Hong Kong maintains its judicial independence, with courts and tribunals separate from Mainland China. Arbitration seated in Hong Kong offers unique advantages, especially in terms of interim measures enforceable by Mainland courts, a privilege not available for arbitration seated in Singapore. For example, if your arbitration is handled by the Hong Kong International Arbitration Centre (HKIAC), your application for interim measures, such as an asset freeze, can more easily be accepted by a court in Mainland China. This privilege does not extend to arbitration in Singapore, as Mainland Chinese courts will not accept orders for interim measures from tribunals seated outside of Hong Kong (hkiac.org).
Recent Developments in Hong Kong and Singapore Arbitration
Hong Kong continues to strengthen its arbitration advantages:
• Revised 2024 HKIAC Rules: As of June 1, 2024, the HKIAC has implemented a new set of institutional arbitration rules aimed at boosting procedural efficiency and flexibility while also addressing information security and environmental impact considerations (hkiac.org). This update keeps Hong Kong arbitration at the forefront of global standards.
• Increased Case Volume and Value: In 2023, HKIAC received a record-breaking 500 cases, with 281 specifically as arbitration cases, and the total dispute amount reaching HK$92.8 billion (about US$12.5 billion) (hkiac.org).
• Mainland Court Enforcement of Interim Measures: Since the enactment of the “Arbitration Interim Measures Arrangement” between Mainland China and Hong Kong, the HKIAC has handled 105 interim measure applications by the end of 2023, with Mainland courts approving preservation orders totaling RMB15.8 billion (about US$2.2 billion) (hkiac.org).
What does this mean for foreign investors and businesspeople in China? Conducting arbitration in Hong Kong can better protect you against the bad faith transfer of assets in Mainland China. While you wait for the arbitration result, you can request a temporary order through the HKIAC, such as an asset freeze, to prevent cash from being transferred out, and bring it to the Chinese court where the defendant is located. The Chinese court has an obligation to enforce this order under the Mainland-Hong Kong Interim Measures Arrangement, helping you to prevent your counterparty from hiding or transferring its property before the arbitration award is granted.
In contrast, Singapore has yet to establish such an arrangement with Mainland China, limiting enforcement support from Mainland courts. However, Singapore’s international influence remains robust. The Singapore International Arbitration Centre (SIAC) handled 663 new cases in 2023, with 93% being international, underscoring its popularity for global disputes (siac.org.sg).
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