Driver Trett Digest Issue 21 03.2021 - Flipbook - Page 30
DIGEST | ISSUE 21
Many people in the construction
industry watching these events from
overseas might have questioned
whether Hong Kong is still an
appropriate jurisdiction for the
resolution of their disputes, particularly
with
State
Owned
Contractors
from Mainland China. State Owned
Contractors may themselves have
questioned whether Hong Kong is a
safe and secure place for the resolution
of disputes.
HONG KONG IS STILL
‘OPEN FOR BUSINESS’
FOR THE
RESOLUTION OF
CONSTRUCTION
DISPUTES
Ben Bury
Partner, HFW
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Hong Kong has been in the news a lot over the past 18
months. From mid-2019 to early 2020, Hong Kong was
rocked by protests against a proposed amendment to the law
relating to extradition of suspected criminals, including to
Mainland China. The proposed amendment was withdrawn,
but the protests continued until the outbreak of the COVID-19
pandemic was fully realised in early 2020. In June 2020, the
Central Government enacted legislation prohibiting acts of
secession, subversion, terrorism, and collusion with foreign
or external forces in Hong Kong. The Central Government
and the Hong Kong Government argued the legislation was
necessary, but it was criticised by some foreign governments
concerned about Hong Kong’s autonomy and has led to Hong
Kong losing some aspects of its special trading relationship
with the United States.
In this regard, it is important to
understand the recent events in
their context. Whilst significant and
newsworthy for a variety of reasons,
these events have had surprisingly
little, if any, impact on the way in which
construction disputes are resolved
in Hong Kong. That includes the
resolution of disputes against State
Owned Enterprises from Mainland
China and, indeed, the Hong Kong
Government itself. As Peter Burnett,
the Managing Director of Standard
Chartered Bank, and Chairman of
the British Chamber of Commerce,
recently remarked, “Hong Kong is
one of the few jurisdictions across
Asia-Pacific where you can sue the
Government and win, if the merits of
the case are in your favour.”1
As any Hong Kong student of
constitutional law will tell you, Hong
Kong is an inalienable part of Mainland
China, and in this regard the Central
Government is responsible for foreign
affairs relating to Hong Kong2 and the
defence of Hong Kong. However, Hong
Kong has been granted a high degree
of autonomy in all other respects3.
Whilst Mainland China is a civil law
jurisdiction, in Hong Kong the law is
based on the English common law.
The courts enjoy judicial independence
and the right of final adjudication4,
meaning that there is no recourse to
the courts in the Mainland for you or
your opponent if you have exhausted all
lines of appeal before the Hong Kong
courts. Judges from other common law
jurisdictions sit on the Court of Final
Appeal in Hong Kong, including the
current President of the UK Supreme
Court, Lord Reed, and three former
Presidents5.
In any event, most construction
disputes in Hong Kong are resolved
by confidential arbitration, whether
the disputes are between Hong Kong
parties, Mainland Chinese parties, or
foreign parties.
Contrary to popular opinion, the
number of arbitrations in Hong Kong
increased in 2020 and a significant
number of these arbitrations included
foreign parties in dispute with
Mainland Chinese entities6. In addition,
during the past 18 months, there
have been a number of steps taken
by the Governments in Hong Kong
and Mainland China towards mutual
recognition of arbitrations and arbitral
awards in the two jurisdictions. This
includes legislation to allow parties to
have recourse to the courts in Mainland
China for interim measures, including
preservation orders, in support of Hong
Kong arbitrations7.
You might also ask yourself questions
such as: 'Are the courts in this
jurisdiction pro-arbitration?'; 'Is there
an established legal structure?'; 'Can
I instruct well renowned lawyers?'; 'Do
arbitral awards rendered by tribunals
in this jurisdiction have a good track
record of enforcement in the country of
origin of my opponent?'
If you ask yourself these questions,
we suspect Hong Kong would present
itself as a real alternative to some
other seats which have not received
so much publicity in recent months.
These measures have made it
considerably harder for arbitral parties
with assets in the Mainland to avoid
complying with awards made against
them in Hong Kong. It is important
to note that Hong Kong is the only
jurisdiction outside the Mainland that
enjoys the benefit of these measures.
When selecting a
seat of arbitration for
dispute resolution
clauses in construction
contracts, it is
important that parties
make informed
decisions based on all
the relevant concerns.
If you haven’t ever previously asked
yourself: ‘What is the national security
legislation in this jurisdiction?’ or ‘Does
this jurisdiction enjoy a special trading
status with the US?’; you may want to
consider whether it is necessary to do
so now, when selecting a jurisdiction
as the seat of arbitration for your
construction disputes.
1. Andrew Kemp, “Hong Kong Arbitration
Remains Resilient Despite Detractors”,
20 October 2020, https://www.lexology.
com/library/detail.aspx?g=c676482b40dc-46e5-9e1e-74d7c617a079
2. Article 1, 13 and 14 of the Basic Law of
the Hong Kong Special Administrative
Region of the People’s Republic of
China (“Basic Law”).
3. Articles 2 and 12 of the Basic Law.
4. Article 19 of the Basic Law.
5. For further information and a list of
all Permanent and Non-Permanent
Judges of the Court of Final Appeal
visit: https://www.hkcfa.hk/en/about/
who/judges/introduction/index.html
6. Statistics on arbitrations submitted
to the Hong Kong International
Arbitration Centre can be found here:
https://www.hkiac.org/about-us/
statistics
7. The
Arrangement
Concerning
Mutual Assistance in Court-ordered
Interim Measures in Aid of Arbitral
Proceedings by the Courts of the
Mainland and the Hong Kong Special
Administrative Region, which came
into force on 1 October 2019.
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