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PRC Companies in International Arbitration (Series 2): Interim Measures Arrangement between Mainland and HKSAR and its Practical Notes

PRC Companies in International Arbitration (Series 2): Interim Measures Arrangement between Mainland and HKSAR and its Practical Notes

 

Introduction

 

On April 2, 2019, the Supreme People’s Court of the PRC and the Department of Justice of Hong Kong signed the “Arrangements concerning the Mutual Assistance in Court-Order Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong Special Administrative Region” (From now on the “Arrangements”), which came into effect on October 1, 2019. The Arrangements can be seen as a milestone in fusing the arbitration proceedings of Mainland China and Hong Kong. Its importance lies in Hong Kong becoming the first foreign legal jurisdiction through which parties can apply for interim measures in seeking arbitration assistance in the Mainland. In other words, apart from the Mainland, only in Hong Kong-based arbitration proceedings can an applicant apply for a preservation order against a Mainland-based respondent through compulsory measures such as the sealing-up, distrain, and freezing of Mainland-based assets.

 

Of course, the same holds vice versa. Still, since Hong Kong already has a mature system for preservation applications, the Arrangements, which target preservation orders against Mainland-based respondents, comes across as more meaningful.

 

The Types of Interim Relief Measures under the Mutual Assistance Arrangements

 

According to the Arrangements, applicants in a Hong Kong-based arbitration proceeding can apply for preservation order categories that include asset, evidence, and conduct preservation. Applicants in a Mainland-based arbitration proceeding can, in turn, use for preservation orders in Hong Kong that include compulsory measures and other interim relief to maintain and restore the conditions of assets currently, as well as prevent ongoing or future damage done to arbitration proceedings, support, and evidence.

 

Like Hong Kong, Mainland China may utilise the preservation measures under the Arrangement against ongoing arbitration proceedings in Hong Kong and arbitration proceedings to commence in Hong Kong. This holds excellent meaning in practice because this can effectively prevent respondents from transferring assets or otherwise attempt to jeopardise arbitration proceedings.

 

Hong Kong Arbitration Institutions subject to the Arrangements

 

The following six institutions in Hong Kong can benefit from the Arrangements, including:

The Hong Kong International Arbitration Centre (HKIAC)

China International Economic and Trade Arbitration Commission (CIETAC) – Hong Kong Arbitration Center

The International Court of Arbitration of the International Chamber of Commerce – Asia Office

Hong Kong Maritime Arbitration Group

South China International Economic and Trade Arbitration Commission (Also Known as the Shenzhen Court of International Arbitration, or the SCIA)

Bram International Online Dispute Resolution Centre

Ad hoc arbitration proceedings in Hong Kong, however, are not subject to the Arrangements.

 

Application Procedures

 

The Arrangements stipulate two means to apply for preservation orders in Mainland China. An applicant intending for Hong Kong to be the arbitration venue can apply for preservation directly to the Mainland courts with jurisdiction but must prove that the relevant Hong Kong arbitration institution has accepted the particular arbitration case within 30 days of the appropriate Mainland court preservation orders. For applicants whose proceedings have already commenced in Hong Kong, applicants must submit a request to the relevant institution in Hong Kong to apply for preservation orders in the Mainland. The institution will forward the application to a court with jurisdiction in the Mainland.

 

At the same time, the Arrangements contains requirements listed below as to what applications for preservation should include when being submitted to People’s Courts in the Mainland, which can also vary based on the type of preservation order that the applicant is seeking.

 

The basic situation of the applicant

 

Requested actions, including the value of assets to be preserved, contents and deadlines of the conduct preservation orders

The facts and reasoning relied on to apply for the preservation order, as well as relevant evidence.

A clear message that evidence an application of asset preservation and surrounding evidence may form specific clues in the chain of inquiry.

Financial information or credit certificates from the Mainland used to provide guarantees.

Whether any applications under the Arrangements have been made in other courts, relevant institutions, or offices, as well as the status of those applications.

According to our experience, it is crucial to maintain communication with the Mainland courts with jurisdiction well in advance to confirm that evidentiary materials submitted fulfilled the court’s review requirements. At the same time, for asset preservation applications of large sums, it is essential to provide issuance guarantee letters from the relevant insurance companies, which stipulate sufficient guaranteed amounts and guarantee periods that fulfil the court’s review requirements.

 

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts made to ensure the accuracy and correctness of the information published, White Code VIA Mediation and Arbitration Centre shall not be responsible for any errors caused due to human error or otherwise. 

  • Introduction
  • The Types of Interim Relief Measures under the Mutual Assistance Arrangements
  • Application Procedures

BY : Deewakar Yadav

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