Once the arbitration has concluded and an award has been issued by the tribunal, it must then be applied in order to be enforced in Hong Kong or internationally in a foreign jurisdiction.
How are arbitration awards enforced in Hong Kong?
Section 84 of the Hong Kong Arbitration Ordinance (Cap. 609) (“HKAO”) states that an arbitral award, whether made in or outside of Hong Kong, may be enforced in the same manner as a court judgment, once the court has given leave to enforce the award. While such leave by the court is not given as a matter of right, it will only be refused in unusual cases (for example, where there are legitimate grounds for doubting the validity of the award). If the court does not give leave, a party can still seek to enforce an award under the common law by bringing an action in the court on the award (usually based on the breach of an implied promise of the parties to comply with the award).
What is the New York Convention? Does it apply in Hong Kong?
The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “Convention”), signed in New York in 1958, provided the foundation for cross-border enforcement of arbitral awards. There are currently approximately 150 parties to the Convention, each of whom undertakes to recognise and enforce in their local courts the arbitral awards made in other member states. This reciprocal enforcement of arbitral awards provides reassurance and peace of mind to parties that their awards will be enforced in Convention states, assuming the debtor has assets in that jurisdiction.
The Convention was first applied to Hong Kong in 1977 by the government of the United Kingdom. Upon Hong Kong’s return to Chinese sovereignty, the central government affirmed that the Convention would continue to apply to Hong Kong. As such, arbitral awards made in Hong Kong can be enforced in other Convention states and vice versa. Similarly, awards made in Convention states are enforced in the same manner as awards made in Hong Kong.
The Hong Kong Courts may refuse to enforce a Convention award only on narrow grounds relating to issues of lack of jurisdiction, improper constitution of the tribunal, serious procedural irregularity, or if enforcement of the award would be contrary to public policy. However, enforcement may not be refused merely because of an error of fact or law on the part of the foreign tribunal.
Are awards made in Hong Kong enforceable in Mainland China (and vice versa)?
While China is a party to the Convention, the Convention only applies to the enforcement of awards made in a different state. Following Hong Kong’s return to Chinese sovereignty in 1997, this “different state” requirement was no longer satisfied. To remedy this problem, in 1999, the central and Hong Kong governments enacted laws (commonly referred to as the “Arrangement”) to permit the reciprocal enforcement of arbitral awards. In accordance with the Arrangement, awards made in Hong Kong are enforceable in mainland China and vice versa, on similar terms as under the Convention. However, only arbitral awards made by recognised PRC arbitral institutions may be enforced in Hong Kong under these provisions. Furthermore, the Supreme Court of the PRC has expressly recognised the enforceability of ad hoc (as opposed to institutional) arbitration awards rendered in Hong Kong.
How long do enforcement proceedings in Hong Kong take?
Hong Kong courts take a pro-enforcement approach and have a strong record for enforcing arbitral awards. The length of enforcement proceedings is generally reasonable, although time frames vary depending on whether or not the other party contests the enforcement. Uncontested proceedings can take as little as two to three months. However, once enforcement proceedings have concluded, the local court’s judgment must still be enforced and there is no expedited enforcement procedure available.
Our team at Hugill & Ip has extensive experience in dealing with Dispute Resolution issues – so if you need further advice on this subject, get in touch with us.
This article is for information purposes only. Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances.