CHINA (HONG KONG BAR): An Introduction to Commercial Dispute Resolution: The Bar

Chambers Greater China Region Guide 2023: Overview for Commercial Dispute Resolution: The Bar

Introduction 

Despite the challenges brought by the COVID-19 pandemic, the outlook for commercial dispute resolution in the Greater China Region is positive and hopeful. Recent changes to loosen pandemic control measures and open up the economy, coupled with specific legal developments in the Hong Kong and Greater China Region, give reason to believe that 2023 will be a better year for the broader economy and legal sector in particular.

Changes to Pandemic and Economic Policy 

It is not too distant a memory that Hong Kong and the Greater China Region welcomed 2022 with a sharp spike in COVID-19 infections that marked the fifth wave of the pandemic. This necessitated heightened pandemic restrictions, which led to a general economic downturn, and ensuing bankruptcies, business closures and job losses. As a result, in November 2022 Hong Kong downgraded its full-year economic forecast amid an ongoing recession. Gross domestic product (GDP) and property values also experienced noticeable declines when compared to figures from previous years.

However, the poor economy has not exerted an entirely negative impact on Hong Kong’s legal sector. Rather, the number of commercial disputes has not dwindled, as corporations and individuals had to decide how to best act and what losses to cut in the face of the economic downturn and reduced capital. In tandem, the number of corporate and personal insolvencies has been on the rise. Lenders have also been more robust in reorganising or restructuring bad and doubtful debts in moving forward to a revitalised economy. Consequently, although transactional work may have been affected by the poor economy, commercial dispute resolution was still active despite the above-mentioned challenges, as economic actors had to decide how to best adapt to unfavourable market conditions.

In 2023, Hong Kong and the Greater China Region are gradually moving away from restrictive pandemic control measures and policies. Starting from around December 2022, the Hong Kong government announced that almost all COVID-19 measures, including mandatory polymerase chain reaction (PCR) tests for arrivals, vaccine pass scheme and quarantine requirements for close contacts, will be dropped. This follows similar policies implemented in mainland China. The change in government policy is predicted to usher in an improved economic outlook and growth, with economists being optimistic that the new measures will lead to growth in GDP for 2023. The improved economic outlook, in turn, will further improve the dispute litigation landscape, and more investments and economic activities take place in Hong Kong and the Greater China Region.

The outlook for commercial dispute resolution in Hong Kong and the Greater China Region is likely even more positive in 2023 in light of the following three key developments.

Three Key Developments 

First, the Hong Kong government is predicting an accession to the Regional Comprehensive Economic Partnership (the “RCEP”) in 2023. The RCEP is the world’s largest free trade agreement – it covers 30% of the world’s population (2.2 billion people), with a combined GDP of USD38 trillion (approximately a third of global GDP). From an economic perspective, accession to the RCEP will offer Hong Kong preferential tariffs for its member countries, improved mechanisms for addressing non-tariff barriers including customs procedures, quarantine and technical standards, and a common set of rules on intellectual property, trade and e-commerce. This gives room for significant economic cooperation and growth with businesses and companies in other parties to the RCEP, which in turn creates fertile ground for commercial dispute resolution. From a legal perspective, the ascension to the RCEP does pose a set of new challenges for the legal sector – a standardised set of rules and regulations may prove challenging to understand, interpret and apply consistently amongst various RCEP members, as similar experiences with the World Trade Organisation and the European Union have clearly shown. However, these challenges can be overcome by drawing from the experience of existing RCEP parties, facilitating legal service exchanges with RCEP members and having robust dispute-resolution mechanisms to resolve any disagreements. Joining the RCEP provides a great opportunity to enhance Hong Kong’s long-term status as a hub for dispute settlement in the Greater China Region, and is expected to increase commercial dispute resolution matters that involve individuals and entities from other RCEP members in 2023.

Second, the Legislative Council passed the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (the “Ordinance”) on 26 October 2022. The Legislative Council has indicated that the Ordinance will come into effect in about six to seven months (ie, in the middle of 2023) once all the necessary mechanisms in both jurisdictions are established. The Ordinance aims to allow for (i) the recognition and enforcement of mainland judgments relating to civil and commercial matters in Hong Kong, and (ii) the recognition and enforcement of Hong Kong judgments relating to civil and commercial matters in mainland China. Importantly, the Ordinance also removes the need for parties to agree on exclusive jurisdiction clauses in favour of Hong Kong or mainland China before such recognition can take effect. This greatly expands the attractiveness of commercial dispute resolution in Hong Kong and the Greater China Region, since it gives a relatively straightforward and convenient mechanism for the recognition and enforcement of judgments in both jurisdictions, allowing commercial parties to achieve their intended litigation outcomes in a swifter and more efficient manner. The Ordinance therefore further strengthens the status of Hong Kong as a one-stop shop for resolving disputes that relate to mainland Chinese matters. This, in turn, will likely lead to a rise in commercial dispute resolution matters related to mainland China in 2023, along with growth in enforcement proceedings brought under the auspices of the Ordinance.

Third, on 16 December 2022 Hong Kong implemented a new regime permitting various types of conditional fee arrangements pursuant to the Arbitration and Legal Practitioners Legislation (Outcome Related Fee Structures for Arbitration) (Amendment) Ordinance 2022 and the Arbitration (Outcome Related Fee Structures for Arbitration) Rules 2022 (the “Legislation”). The Legislation now permits lawyers in Hong Kong to enter into a flexible assortment of conditional fee arrangements for arbitration proceedings seated in or outside of Hong Kong, emergency arbitration proceedings as well as related court and mediation proceedings. The Legislation, therefore, allows parties to use outcome-related fee structures throughout the entire lifespan of an arbitration, notably for arbitration-related court proceedings such as the enforcement of awards. Most significantly, when compared to competing pro-arbitration jurisdictions such as Singapore, the Legislation provides for an even more flexible and expansive selection of conditional fee arrangements that are available for parties to voluntarily agree upon. The Legislation is part of Hong Kong’s ongoing effort to promote itself as a prime arbitration hub, and this development will likely further facilitate the use of arbitration for alternative commercial dispute resolution in Hong Kong and the Greater China Region in 2023.

Conclusion  

Although 2022 has no doubt been a challenging year for Hong Kong and the Greater China Region, recent developments suggest 2023 will be a year for positivity and growth. It is hoped that the general governmental economic and pandemic policies, along with the specific directives and initiatives outlined above, will lead to a year of increased economic growth and fertility for commercial dispute resolution in the region.

香港商业争议解决领域概述 

前言 

尽管面对新冠肺炎疫情带来的挑战，大中华地区在商业纠纷解决领域的前景仍然是积极乐观和充满希望的。随着近期中国内地在疫情管控措施方面进一步放松以及经济回暖，再加上香港与大中华区其他地区的法律行业近期的发展，我们有理由相信，2023年对于整体经济市场，特别是对法律行业而言，将会是更具前景的一年。

新冠肺炎疫情与经济政策的变化 

在刚过去的2022年，大中华区迎来了第五波新冠肺炎疫情，各地区感染率急剧上升。在这个背景下，政府加强实施限制新冠肺炎疫情的管控措施，从而导致了大规模的经济衰退，以及随之而来的企业破产、倒闭、就业率下跌等现象。因此，在持续的经济衰退中,香港在2022年11月下调了全年的经济预测。与前几年的数字相比，香港本地的生产总值（GDP）和房地产价值亦经历了显着下降。

然而，低迷的经济并没有对香港的法律行业造成完全负面的影响。相反，大家在面对经济衰退和资本减少的情况下，不得不为减少损失而采取最佳策略，因此香港商业纠纷的案件数量并没有减少。与此同时，企业和个人破产的数量亦一直呈上升趋势。在推动经济复苏的过程中，银行在重组坏账和可疑债务方面亦十分活跃。因此，尽管市场交易可能受到经济衰退的影响，商业活动亦面临着前述的各项挑战，但商业纠纷解决仍然活跃，因为经济参与者必须决定如何最好地适应不利的市场条件。

2023年，香港以及大中华区其他地区正在逐步取消限制性的疫情控制措施和政策。从2022年12月左右开始，香港政府宣布将放开几乎所有新冠肺炎管控措施，包括对入境者的强制性核酸检测要求、疫苗通行证计划，以及对密切接触者的检疫要求等，这与内地实施的类似政策如出一辙。据预测，政府政策的变化将迎来经济前景的改善和经济增长。有经济学家乐见其成，相信新措施将在2023年为香港带来生产总值的正面增长。同时，经济前景的改善反过来将进一步促进争议诉讼的出现，因为更多的投资和经济活动将会在香港和大中华区其他地区持续活跃发展。

除了整体经济的正面发展，鉴于以下3项主要发展，2023年香港和大中华区其他地区的商业纠纷解决领域的前景可能会有更加正面的发展：

第一，香港政府预计将于2023年加入《区域全面经济伙伴关系协定》（RCEP）。RCEP是世界上最大的自由贸易协定，其覆盖了世界30%的人口（22亿人），成员国国内生产总值为38万亿美元（约占全球GDP的三分之一）。从经济角度来看，香港加入RCEP后，将享有RCEP为成员国提供的优惠关税，并改善解决非关税壁垒的机制，包括海关程序、检疫和技术标准，以及与RCEP其他缔约方共同使用一套知识产权、贸易和电子商务的规则。这为香港与RCEP其他缔约方的企业开展重大经济合作和增长提供了空间，进而为商业争议解决创造了巨大的发展机遇。从法律的角度来看，香港加入RCEP确实给法律行业带来了一系列新的挑战——正如世界贸易组织（WTO）和欧盟的类似经历所表明的情况，一套标准化的规则和条例可能很难在各RCEP缔约方之间得到一致理解、解释和适用。然而，香港可以通过借鉴现有的RCEP缔约方的经验、促进与RCEP缔约方在法律服务方面的交流，以及建立强而有力的争议解决机制来解决分歧，以此克服这些挑战。加入RCEP将为香港巩固其作为大中华区争议解决中心的长期地位提供了一个绝佳的机会，而2023年香港将有机会增加更多涉及RCEP其他缔约国的个人和企业的商业争议解决事宜。

第二，香港特区立法会在2022年10月26日通过了《内地民商事判决（相互强制执行）条例》（以下称“《条例》”）。根据立法会，待两地关于《条例》的所有必要机制建立起来后，《条例》将于约六至七个月内（即2023年年中）生效。该《条例》旨在允许（1）在香港承认和执行内地的民商事判决，以及（2）在内地承认和执行香港的民商事判决。值得关注的是，《条例》亦取消了专属管辖权条款的要求，即各方当事人必须达成在香港或内地起诉的专属管辖权协议，判决才会得到香港或内地承认。这大大提高了当事人选择在香港和内地解决商业纠纷的吸引力。《条例》为两地判决的相互承认和强制执行提供了一个相对直接且方便的机制，使商业纠纷的当事人能够以更迅速且有效的方式实现其预期的诉讼结果。因此，《条例》进一步巩固了香港作为一站式解决与内地事务有关的纠纷的争议解决中心的地位，亦可能会导致2023年在香港进行的与内地有关的商业纠纷解决事项，以及在《条例》下提起的强制执行程序的增长。

第三，在2022年12月16日，香港根据《2022年仲裁及法律执业者法例（与仲裁结果有关的收费架构）（修订）条例》及《仲裁（与仲裁结果有关的收费架构）规则》（以下称“《ORFS法例》”）实施了一项新制度，即允许各种类型的仲裁按条件收费安排。《ORFS法例》现在允许香港的律师为在香港或香港以外地区进行的仲裁程序、紧急仲裁程序以及相关的法院和调解程序订立各类灵活的按条件收费安排。因此，《ORFS法例》允许各方当事人在仲裁的整个过程中，特别是在与仲裁有关的法庭程序中（如执行仲裁裁决程序），使用与结果有关的收费架构。最重要的是，与新加坡等同样是主要仲裁中心的司法管辖区相比，《ORFS法例》提供了更加灵活且广泛的按条件收费安排，可供各方当事人自愿商定。《ORFS法例》是香港不断努力促进自身成为主要仲裁中心的其中一项措施，这项发展可能会进一步促进香港和大中华区其他地区在2023年使用仲裁来替代解决商业纠纷。

结语 

虽然2022年对香港和大中华区其他地区来说无疑是充满挑战的一年，但是，近来各方面的发展亦表明，2023年将是正向增长的一年。衷心期盼政府的总体经济和疫情管控政策以及上述的具体法例和举措可以进一步促进2023年的经济复苏，以及各地区在商业纠纷解决领域方面的蓬勃增长。