More Chinese firms turning to Hong Kong for arbitration

PUBLISHED : Tuesday, 01 October, 2013, 12:00am
UPDATED : Tuesday, 01 October, 2013, 3:02am

An increasing number of mainland firms have been coming to Hong Kong to seek arbitration for their commercial disputes.

Lawyers expect the trend to continue, with companies likely to come here the most with marine, construction and commercial disputes.

"An increasing number of Chinese companies are coming to Hong Kong for arbitration," said James Rogers, a litigation and dispute resolution lawyer with international law firm Norton Rose Fulbright.

The city is an attractive place for mainland companies for arbitration. It is geographically close and culturally accessible. There was also a large number of international and local law firms with Chinese-speaking practitioners experienced in international arbitration and well placed to assist Chinese parties, Rogers said.

"It is much easier for witnesses and company executives who are based in [mainland] China, or elsewhere in Asia, to travel to Hong Kong for arbitration hearings rather than to London or other traditional arbitration centres in Europe," he said.

Under the New York Convention, to which Hong Kong is a party, an arbitration awarded here is valid in more than 140 countries, including mainland China.

This is why companies with no connection with Hong Kong are increasingly resolving their disputes here. "They know that they will be able to turn their award into money at the end of the day," Rogers said.

He also believes that the Hong Kong legal system, which is based on English common law, is an advantage and attracts parties to the region. "This gives parties certainty of process."

"Indeed, companies from all over the region will increasingly look to Hong Kong as a venue to resolve their disputes. Singapore offers similar advantages but, for Chinese companies in particular, Hong Kong is the place to be," Rogers said.

Steve Vickers, the chief executive of political and corporate risk consultancy Steve Vickers and Associates, agreed that more companies are seeking arbitration in Hong Kong.

"I think this is a growing trend," Vickers said. "My company has been increasingly involved in fact-finding exercises in support of arbitration hearings.

"Hong Kong still maintains a reputation for a fair system, albeit one that is under pressure, so it is attractive to parties to get an impartial hearing."

The Hong Kong government strongly supported the arbitration process but high costs in the city were a concern, he said.

"Arbitration is supposed to be the low-cost answer to expensive and time-consuming court trials but something went wrong along the way, and in Hong Kong, it can still be prohibitively expensive," he said.