15 Years of the Handover: The Rise, Discontent, and Positive Interaction of Cross-border Arbitration in Hong Kong with Mainland China

Abstract

Since the sovereignty handover and establishment of the Hong Kong SAR in 1997, Hong Kong has faced the dual challenges of balancing her need to facilitate a cross-border arbitration regime which is compatible with Mainland China under the principle of 'one country, two systems', and promoting herself as an international arbitration center. The two goals are at times incompatible, as accommodating the localized needs and standards of Mainland China often requires Hong Kong courts to be more 'flexible' than established international arbitration standards would allow. This Article attempts to give a comprehensive analysis of the above problems. First, this Article surveys all the cases of the enforcement of Mainland China arbitration awards in Hong Kong courts since the handover to present the actual interpretation of the standard of cross-border arbitration in Hong Kong with Mainland China. Second, from this comprehensive evaluation of the enforcement landscape, this Article makes a macro-proposition over the interaction between the Mainland China arbitral regime and the Hong Kong courts, with the judgments of the Hong Kong courts serving as a catalyst for improvements in the rules and practices of the Mainland China arbitral authorities. This Article gives credit to the proper type of interaction between the two sides, i.e. the positive interaction trend where Mainland China arbitral authorities reflecting on Hong Kong’s arbitral enforcement judgments, become persuaded and incentivized to change their rules to cohere with the high and internationally accepted arbitration standards that Hong Kong maintains. This Article argues that 'positive interaction' is important to the cross-border arbitration development. Despite the recent halt, or even reversal, of the positive interaction trend in light of the Keeneye case, this Article argues that positive interaction should be and is likely to be resumed, as Hong Kong seeks to maintain its image as an international arbitration powerhouse and Mainland China continues to modernize and internationalize its arbitration system. In the long run, this improved cross-border arbitration consensus will bring about the healthy development of the legal cooperation between the two sides and act as an engine for economic growth in the Greater China region.