Ms Sylvia Siu [President, Hong Kong Institute of Arbitrators], Madam
Justice Shen Hongyu [Judge, Court No. 4, Supreme People’s Court], Ms
Elise Leung [Deputy Director, HKSAR Basic Law Committee,
Standing Committee of National People’s Congress], Fellow
Members of the Legal and Dispute Resolution Sectors, Distinguished
Guests, Ladies and Gentlemen,
It gives me great honour to attend this year’s Regional Arbitral
Institutes Forum (“RAIF”) conference here in Hong Kong and to have
the privilege to address such a distinguished audience. On behalf of the
Government of the Hong Kong Special Administrative Region
(“HKSAR”), may I extend to all of you, especially those who have come
from other jurisdictions, our warmest welcome.
The Macro Picture
This is the second time the Hong Kong Institute of Arbitrators
hosts the RAIF Conference in the HKSAR. The world, including the
Asia-Pacific region, as well as the international arbitration landscape,
have undergone very significant changes since this Forum was last held
in Hong Kong in 2009.
Among others, Asia’s economy has experienced unprecedented
transformation. Asia’s GDP, for instance, grew faster than the rest of the
world. Trade and investment flows have also expanded substantially in
this region. The pace of economic changes in China has been very
impressive. According to the IMF, China continues to enjoy strong
growth — projected at 6.7% for 2017, and has potential to sustain strong
growth over the medium term. Growth in the Mainland economy
between 2017 and 2021 is now expected to average 6.4%.
1
International commercial arbitration plays an increasingly
important role in the Asia-Pacific region. As countries expand their
economies, a rising number of companies worldwide are engaging in
contracts with counterparts in the region. These contracts will inevitably
result in some disputes, creating a need for adequate dispute resolution
mechanisms.
As we talk about global economic development, we certainly
cannot afford to omit the Belt and Road Initiative, which was first put
forward by President Xi in 2013. The Belt and Road Initiative is a
collaborative and inclusive strategy aimed at promoting integration,
connectivity, trade and investment, as well as people-to-people bonding
among countries along the Belt and Road corridors. Spanning across
9,000 kilometres, the Initiative covers more than 60 countries in Asia,
Africa and Europe (and essentially all the home countries of the RAIF
members). Altogether, these countries represent over 60 per cent of the
world’s population, around 31 per cent of the world's GDP and over
one-third of global merchandise trade.
The growth in China’s outward investment grows with the closer
cooperation with Belt and Road countries. China’s outward foreign direct
investments (FDI) flows (US$145.7 billion) ranked as the world’s
second-largest source of FDI for the first time in 2015.
2
Further, Mainland enterprises’ direct investment in places along the Belt and
Road route continued to grow sharply in 2016.
3
As at early 2017, China
has established 56 economic and trade cooperation zones in over 20
countries along the Belt and Road with a total investment of US$18.55
billion, creating about 180,000 jobs for local people in the relevant
places.
4
Mainland enterprises require extensive and high quality
professional legal support, especially in the context of legal risk
management, in their “going global” in pursuit of opportunities arising
from the Belt and Road Initiative. In this context, the Central People’s
Government fully supports the HKSAR’s participation in the Belt and
Road Initiative. In March 2016, the Central People’s Government
released the “Outline of the 13th Five-Year Plan for the National
Economic and Social Development”. In the dedicated chapter on the
HKSAR and the Macao SAR, the HKSAR received express support in
establishing itself as a centre for international legal and dispute
resolution services in the Asia-Pacific region.
The Belt and Road Initiative thus presents abundant
opportunities for the HKSAR legal and dispute resolution professionals,
working in conjunction with their counterparts in other jurisdictions, to
provide services to enterprises engaging in investment and other business
activities in economies along the Belt and Road route.
One aspect which stands out in this big picture is the importance
as well as the need to have a neutral forum which is geographically
convenient and which has the talents to deal with trade and investment
disputes. In this regard, it is pertinent to note the result of a recent study
supported by the Canada-ASEAN Business Council and Norton Rose
Fulbright. According to this study, about 57% of the respondents did not
always include an arbitration clause in their contracts.
5 This is
apparently due to the fact that they were not familiar with international
treaties on the enforcement of arbitral awards and the norms of
international arbitration. It is regrettably that such a knowledge gap may
prevent the ASEAN businesses from fully utilising the opportunities
offered by the legal and dispute resolution services sectors that will
enable them to solve their cross-border commercial disputes in a
cost-effective manner.
Against this background, there is ample scope for the legal and
dispute resolution community in the region to promote international
commercial arbitration in the region.
The Development in the HKSAR
In this regard, the HKSAR is more than ready and willing to
work with other jurisdictions, including of course jurisdictions in the
region, to promote the use of international arbitration as a means to
resolve commercial and investment disputes. As a matter of fact, the
promotion of dispute resolution (including international arbitration and
cross-border commercial mediation) has been one of the top policy
objectives of not just the Department of Justice, but the entire
Government of the HKSAR. Such a stance is firmly reiterated in the
2017 Policy Address promulgated by the incumbent Chief Executive Mrs.
Carrie Lam on this Wednesday (11 October 2017)
6. Among others,
Hong Kong stands ready to act as an ideal neutral venue for resolving
international commercial and investment disputes involving Mainland
parties, and is actively positioning itself as a dispute resolution services
centre for the Belt and Road Initiative.
The implementation of the “one country, two systems” policy by
way of constitutionally entrenched safeguards under the Basic Law, the
HKSAR enjoys the benefits of being a special administrative region of
China, capitalizing, at the same time, on the city’s economic and legal
systems separate and distinct from the rest of China. Indeed, the HKSAR
is the only jurisdiction in China practising the common law system
which remains principally the legal backbone upon which international
business is transacted.
For the purpose of implementing this policy objective, the
Department of Justice has been constantly modernising and updating our
statutory framework for conducting arbitration and other forms of
dispute resolution, so as to ensure that it is in alignment with
international best practices and that it will meet the changing needs and
expectations of the end-users.
Most recently, we have introduced two amendment bills to the
Arbitration Ordinance and the Mediation Ordinance which were both
passed by the Legislative Council this June.
The first one is the Arbitration (Amendment) Ordinance 2017,
which clarifies that disputes over intellectual property rights (“IPRs”)
can be resolved by arbitration, and that it would not be contrary to public
policy to enforce an arbitral award solely on the ground that the award
involves IPRs dispute. This amendment will come into operation on 1
January 2018.
The second one is the Arbitration and Mediation Legislation
(Third Party Funding) (Amendment) Ordinance 2017, which puts it
beyond doubt that third-party funding for arbitration and mediation is not
prohibited by the common law doctrines of maintenance and champerty.
Further, to ensure that safeguards are in place for funded parties in
arbitration and mediation, an authorized body soon to be established will
issues a code of practice with which third party funders are expected to
comply.
Arbitration, be it domestic or international, is not conducted in a
legal vacuum. Apart from the legal regime that provides a favourable
environment for the conduct of arbitration, the judiciary has an important
role to play. In this regard, not only are arbitral awards made in the
HKSAR enforceable in over 150 jurisdictions pursuant to the New York
Convention or under reciprocal arrangements made with the Mainland
and the Macao SAR, our Judiciary has a fine reputation for its quality,
independence and arbitration-friendly stance.
Judgements handed down by the HKSAR courts in recent years
not only continue to reflect the region’s robust judiciary and its form
pro-arbitration stance, but also highlight Hong Kong as one of the key
arbitration-friendly jurisdictions in the Asia-Pacific region. In this regard,
you may already be aware of Reyes J’ observation in
A v R (Arbitration:
Enforcement)7, which the learned judge explained as follows:
“Abortive and unmeritorious attempts to challenge or to
frustrate enforcement of or compliance with a valid award
should not be encouraged. Where a party unsuccessfully
resists enforcement, or seeks to set aside an award, or as in
this case, seeks unsuccessfully to reopen through court
proceedings an issue dealt with in arbitration, instead of
reverting to the arbitral tribunal or making a new submission
to arbitration in accordance with an acknowledged and
agreed arbitration clause, it should pay the incidental costs on
an indemnity basis, unless special circumstances exist. The
fact that it may have an arguable case would not constitute
special circumstances.”
In the case of Hong Kong Golden Source Ltd. v New Elegant
Investment Ltd
8, Chow J reiterated that it is the legislature’s intent for
arbitral awards to be
“readily enforceable in Hong Kong and refusal to
enforce should be an exception rather than the rule”. He noted that the
discretion the court has to refuse enforcement is a residuary one, and the
required threshold to resist enforcement is a very high one. Where
enforcement is resisted on the ground that it would be contrary to public
policy, it should be borne in mind that the HKSAR public policy itself
leans towards the enforcement of foreign arbitral awards, and that the
concept of “contrary to public policy” should be given a narrow
construction, and it must be shown that there is a “substantial injustice
arising out of an award which is so shocking to the court’s conscience as
to render enforcement repugnant” before the HKSAR courts would
consider refusing enforcement of a foreign arbitral award.
In the more recent decision of
TNB Fuel Services Sdn Bhd v
China National Coal Group Corporation9
, the HKSAR courts rejected a
claim of crown immunity by a PRC State Owned Enterprise ("SOE") and
upheld the enforcement of an arbitral award by a foreign company10
against the assets of the PRC SOE located in Hong Kong. In the decision,
Mimmie Chan J decided that the PRC SOE could not assert crown
immunity to escape enforcement of the award because it is neither part of
nor controlled by the Chinese government to the extent required to assert
such a defense. This decision makes clear that it will only be in very
exceptional circumstances that PRC SOE will be able to assert immunity
in the HKSAR in relation to their commercial dealing.
At this juncture, allow me to say a few words on the rule of law
situation in the HKSAR. The rule of law has long been a cornerstone of
our legal system. Nevertheless, following some recent events concerning
certain political movements in the HKSAR in the past few years, certain
people in the local or international community (including certain media
reports) have sought to raise queries over the independence of our
judiciary. I would like to take this opportunity to make it crystal clear
that there is absolutely (and I stress “absolutely”) no sign of deterioration
of the rule of law or judicial independence in the HKSAR.
Article 2 of the Basic Law provides that the HKSAR enjoys
independent judicial power, including that of final adjudication. The
same guarantee for independent judicial power (including that of final
adjudication) is repeated in Article 19 as well as Article 85 of the Basic
Law. The repetitions reflect the importance attached to the concept of
judicial independence by the drafters of the Basic Law.
In a speech delivered by Lord Neuberger, the former President of
the UK Supreme Court and one of the Non-Permanent Judge of our
Court of Final Appeal on 13 September 2017 (that is last month) put it
beyond doubt that the HKSAR Judiciary is truly and completely
independent. The following part of his speech is definitely worth noting:
... ... I have read suggestions that at least when it comes to
some decisions, the Hong Kong judges are not independent in
that they are somehow leant on by the authorities in Beijing, or
they are not impartial, in that they are somehow anxious to
please the authorities in Beijing. I can say from my own direct
experience as a judge who has sat in the Court of Final Appeal
on a part time basis since 2010 that there is absolutely nothing
in such suggestions.” (para.21)
Concluding Remarks
Ladies and gentlemen, the HKSAR continues to be an active
player in international arbitration arena. The firm commitment of the
government, the courts, the international arbitral institutions in the
HKSAR, and the arbitration community at large all support the HKSAR
in its continuous and sustainable development as an important
international dispute resolution centre in the region.
The HKSAR is very keen to work with other jurisdictions to
explore how arbitration and other dispute resolution mechanisms can be
further enhanced so as to better cater for the different needs of the
end-users of dispute resolution mechanism, achieve the ultimate goal of
resolving disputes in a fair, just and effective manner, enhance investors’
confidence and facilitating the implementation of the Belt and Road
Initiative. I invite the legal and arbitration communities of the RAIF
members’ home countries and the HKSAR to explore issues of common
interests and join hands in seizing the immense opportunities that are
ahead of us.
On this note, it remains for me to wish this conference every
success. And, for those of you who come from other jurisdictions, I
hope you can find time to enjoy your stay in this dynamic city.
Thank you.
5ocknie Hsu, Pearlie Koh and Yip Man (3 August 2017) Improving Connectivity between ASEAN’s Legal
Systems to Address Commercial Issues (Interm Report), pp 65 – 66,
http://www.canasean.com/uploads/Interim%20Report%20Final%20Sep%202017.pdf.
6See para. 114-116.
7[2009] 3 HKLRD 389.