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Deepen Interregional Judicial Assistance, Uphold and Improve the “One Country, Two Systems” Principle - Comments on the Supplemental Arrangement on the Mutual Enforcement of Arbitral Awards between the Mainland and the HKSAR

Fri, 25 Dec 2020
Categories: Insights
Contributors: Jin Huang 黄进

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The Supplemental Arrangement on the Mutual Enforcement of Arbitral Awards between the Mainland and Hong Kong SAR (2020) provides detailed interpretation on reciprocal enforcement of arbitral awards, and further refines the interregional judicial assistance system.

Since the return of Hong Kong to China, especially since China promoted the construction of the Guangdong-Hong Kong-Macao Greater Bay Area (粤港澳大湾区), accompanied by the ongoing and ever-deepening communication and cooperation between Mainland China and Hong Kong, there have been an increasing number and diversified legal disputes and issues concerning both Mainland China and Hong Kong. In this context, effectively preventing and resolving disputes, responding to social needs, and bridging legal boundaries have become the core tasks of interregional judicial assistance in the new era. Deepening interregional judicial assistance is a pragmatic measure to implement the “One Country, Two Systems” principle, and the Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China (“the Basic Law of Hong Kong SAR”) in the judicial field, concerning the overall situation of the state’s work, and the core interest of the state. It is also related to the prosperity, development, and stability of Hong Kong SAR.

Article 31 of the Constitution of the People’s Republic of China lays the constitutional foundation for the implementation of the “One Country, Two Systems” principle, and provides constitutional conditions for the development of interregional judicial assistance. In the meanwhile, Article 95 of the Basic Law of Hong Kong SAR establishes that Hong Kong SAR can carry out judicial assistance with the Mainland judicial authorities by consultations in accordance with the law, providing an institutional basis for interregional judicial assistance. The Arrangement on the Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region (关于内地与香港特别行政区相互执行仲裁裁决的安排) (“the Original Arrangement”) signed in 1999 resolves the issue relating to mutual enforcement of arbitral awards between Mainland and Hong Kong SAR, establishing a practical and feasible mechanism for the development of interregional judicial assistance.

The Supplemental Arrangement on the Mutual Enforcement of Arbitral Awards between the Mainland and Hong Kong Special Administrative Region (关于内地与香港特别行政区相互执行仲裁裁决的补充安排) (“the Supplemental Arrangement”) was signed on 27 Nov. 2020 in Shenzhen. On the basis of the Original Arrangement, the Supplemental Arrangement provides detailed interpretation on mutual recognition and enforcement of arbitral awards, as well as revises and adds issues such as the procedures of applying for enforcing the arbitral awards and preservation. In general, the Supplemental Arrangement confirms the international trend of facilitating the recognition and enforcement of arbitral awards, focusing on deepening the interregional judicial assistance, promoting the coordinated development of the commercial arbitration systems of the Mainland and Hong Kong, and further implementing the “One Country, Two Systems” principle and the Basic Law of Hong Kong SAR. These features mainly demonstrate in the following aspects.

First, the Supplemental Arrangement enriches and develops the provision concerning the interregional judicial assistance by consultation according to the law as stipulated in Article 95 of the Basic Law of Hong Kong SAR. The Supplemental Arrangement clarifies the concept of procedures for enforcing arbitral awards of the Mainland or the Hong Kong SAR, emphasizing that the “procedures” include the procedures for the recognition and enforcement of arbitral awards of the Mainland or the Hong Kong SAR. This approach is consistent with the Arrangements on the Mutual Enforcement of Arbitral Awards between the Mainland and the Macao Special Administrative Region (关于内地与澳门特别行政区相互认可和执行仲裁裁决的安排) in terms of wording.

Second, the Supplemental Arrangement simplifies the requirement of a list of certain recognized arbitration institutions in the Mainland in the proceedings of mutual enforcement of arbitral awards. It directly provides that the people’s court in the Mainland shall enforce the arbitral awards rendered pursuant to the Hong Kong Arbitration Ordinance, and the courts in Hong Kong SAR shall enforce the arbitral awards rendered pursuant to the Arbitration Law of the People’s Republic of China (“the Arbitration Law”). The amendment is clear, enhancing mutual trust, and removes the subject requirement of the Mainland arbitration institutions, which renders the procedures simpler, swifter and more practical.

Third, the Supplemental Arrangement aims to exclude the impediments for applying the enforcement arbitral awards and improve the efficiency of enforcement. The Original Amendment stipulates that the parties shall not file applications with the courts in both Mainland and Hong Kong SAR at the same time. Only when the result of the enforcement of the award by the court of one place is insufficient to satisfy the liabilities may the applicant apply to the court of another place for enforcement of the outstanding liabilities. This provision is obviously not conducive to prompt enforcement and the rapid realization of the parties’ rights and interests. The Supplemental Arrangement modifies this approach, by stipulating that if the party against whom the application is filed is domiciled or has property in both the Mainland and the HKSAR which may be subject to enforcement, the applicant may file applications for enforcement with the courts of the two places respectively. The courts of the two places shall, at the request of the court of the other place, provide information on its status of the enforcement of the arbitral award. The total amount to be recovered from enforcing the arbitral award in the courts of the two places must not exceed the amount determined in the arbitral award. This amendment not only facilitates the parties’ application of enforcement to maintain their rights and interests based on the arbitral awards, but also fosters information communication and cooperation between courts of the Mainland and Hong Kong SAR.

Fourth, the Supplemental Arrangement clarifies that the court may, before or after accepting the application for enforcement of an arbitral award, impose preservation or mandatory measures pursuant to an application by the party concerned and in accordance with the law of the place of enforcement. The vitality of awards lies in their enforcement. Refusing the preservation and mandatory measures will impede the enforcement of arbitral awards from the root, which consequently will undermine the vitality of arbitration.

Finally, the Supplemental Arrangement further clarifies the scope of enforcement of arbitral awards, and revises the enforcement of arbitral awards from the perspective of the courts in Mainland and Hong Kong SAR. In terms of the scope of Hong Kong arbitral awards enforced by the Mainland people’s courts, the Supplemental Arrangement provides that awards made pursuant to the Hong Kong Arbitration Ordinance can be enforced in Mainland China. In terms of the scope of Mainland arbitral awards enforced by the courts of the Hong Kong SAR, it was limited to, as required by the Original Arrangement, the arbitral awards made pursuant to the Arbitration Law by certain recognized arbitral authorities in the Mainland (as in the list supplied by the Legislative Affairs Office of the State Council through the Hong Kong and Macao Affairs Office of the State Council). However, in accordance with the Supplemental Arrangement, now arbitral awards made by foreign arbitration institutions in the Mainland in accordance with the Arbitration Law can also be enforced in Hong Kong. In addition, the ad hoc arbitration in Mainland China is still in the exploration stage, and the Supplemental Arrangement leaves room for the development of ad hoc arbitration in Mainland. This is an exploration of the integration of commercial arbitration systems. Guided by the principle of harmonious coexistence and cooperation, it aims to promote the integrated development of institutional arbitration and ad hoc arbitration, and overseas arbitration and domestic arbitration.

Based on the “One Country, Two Systems” principle, the socialist system and the capitalist system co-exist in one country. The implementation of this principle is particularly prominent and remarkable in judicial fields relating to civil and commercial matters. The Supplemental Arrangement focuses on the issue of mutual enforcement of arbitral awards, and further refines the interregional judicial assistance system, which is conducive to improving the quality of arbitration in Mainland and Hong Kong SAR, enhancing the credibility of arbitration, and providing judicial services and safeguards for the integrated development of Mainland and Hong Kong SAR. The Supplemental Arrangement is a successful practice and example of upholding and improving the “One Country, Two Systems” principle and the Basic Law of Hong Kong SAR in the field of arbitration and judicial assistance.

 

 

Cover Photo by Man Chung (https://unsplash.com/@cmc_sky) on Unsplash

Contributors: Jin Huang 黄进

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