National security law: Hong Kong legal groups deny city is losing its standing as global arbitration hub

Chris Lau
·4-min read

An influential lawyer association and a leading arbitration centre have defended Hong Kong’s reputation as a global hub for dispute resolution, dismissing reports that overseas companies are considering turning away from its legal services.

The Law Society and Hong Kong International Arbitration Centre spoke out following a Financial Times article published last week which reported that 10 large law firms across Asia were experiencing a rise in client queries on whether they should still look to the city for such services.

“Hong Kong has been and remains one of the most popular seats for international arbitration,” said the Law Society, the city’s professional body for solicitors.

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The statement added Hong Kong had always benefited from the presence of world-class legal professionals, quality services and well-established systems and legislation.

Separately, the arbitration centre said the number of cases it handled in 2020 had increased to 318, up 20 per cent on the previous year. Of those, 85 per cent involved international clients.

Neither statement directly referred to the Financial Times, an international daily newspaper headquartered in Britain.

The Law Society and Hong Kong International Arbitration Centre reject concerns that China’s perceived tightening grip on Hong Kong politics is spilling over into the city’s rule of law. Photo: Bloomberg
The Law Society and Hong Kong International Arbitration Centre reject concerns that China’s perceived tightening grip on Hong Kong politics is spilling over into the city’s rule of law. Photo: Bloomberg

Both groups rejected concerns that China’s perceived tightening grip on Hong Kong politics was spilling over into the city’s rule of law.

“The basic rights to legal advice and access to the courts and the independence of the judiciary are constitutionally guaranteed under the Hong Kong Basic Law,” the Law Society said, referring to the city’s mini-constitution guaranteeing legal rights, ranging from obtaining confidential advice to court access.

It added that arbitration awards in Hong Kong remained enforceable in 160 countries, with the city being the first and only jurisdiction where outcomes locally determined could be recognised in mainland Chinese courts.

The arbitration centre said it was aware of concerns relating to the national security law which Beijing imposed last June in Hong Kong.

But it said the Hong Kong legislation governing arbitration remained compliant and was updated to international standards, with court cases resulting from disputes put before specialist judges and even foreign ones sitting at the city’s highest court.

“The arbitration infrastructure in Hong Kong remains unchanged,” the centre said.

Australian judge James Spigelman resigned from Hong Kong’s Court of Final Appeal last year citing the national security law. Photo: Getty Images
Australian judge James Spigelman resigned from Hong Kong’s Court of Final Appeal last year citing the national security law. Photo: Getty Images

Hong Kong is home to seven arbitration bodies and has been one of the leading hubs in the area worldwide. In Asia, it has dominated the market with Singapore.

When companies sign contracts, they may designate an arbitration venue to help resolve issues that may arise, in an attempt to avoid resorting to the courts.

The private legal service is viewed as less damaging for parties’ relations than court proceedings and more suited to the highly specialised fields they may operate in, such as trading and marine services.

But recent developments in Hong Kong have made clients think twice before picking it as an arbitration destination, especially when drawing up long-term contracts, according to the Financial Times report.

Will Hong Kong’s rule of law survive the challenge of Beijing’s national security legislation?

The national security law sparked concern from many Western countries over the power it granted to send fugitives to the mainland for trial in serious cases, and for allowing the city’s chief executive to designate a team of judges to hear related cases.

Australian judge James Spigelman resigned from Hong Kong’s Court of Final Appeal last year citing the national security law, although the city later drafted in another British jurist Patrick Hodge.

A lawyer told the Post that worries over the city’s arbitration landscape had been present for some time, but said the national security legislation heightened those concerns.

He said state-owned enterprises and parties dealing with politically sensitive commercial matters would now look to Singapore and Britain.

Another lawyer said “the big guys” did not want to come to Hong Kong for various reasons, including the travel ban arising from the pandemic and the 2019 social unrest.

Justice Patrick Hodge. Photo: Handout
Justice Patrick Hodge. Photo: Handout

Secretary for Justice Teresa Cheng Yeuk-wah earlier wrote to the Financial Times, saying its article painted “an incomplete picture of Hong Kong”.

She said the 318 cases the International Arbitration Centre had cited were the highest since 2009.

The total sum awarded following Hong Kong arbitration last year was nearly US$9 billion, a record high since 2011.

She stressed that the arbitration agreement with the mainland was working well.

Arbitration agreement between Hong Kong and mainland China a ‘game-changer’

The arbitration centre said it had provided assistance to 37 such applications, which involved US$1.6 billion worth of assets being frozen.

Law Society president Melissa Kaye Pang said the body felt obliged to explain the situation “fairly and impartially”.

“We have the duty to promote a proper understanding of the rule of law and to stand up for it whenever it has been unfairly criticised to sought to be undermined,” she said, citing a call from former Chief Justice Geoffrey Ma Tao-li.

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