CHINA: An Introduction to Commercial Dispute Resolution: The Bar

Introduction

In 2024–2025, Hong Kong isn’t just holding its ground as a premier global financial and legal hub – it’s pushing ahead with bold legislative and regulatory advancements to stay ahead of the curve. These developments have signalled the city’s commitment to remaining competitive, internationally connected and business-friendly. In this overview, we take a closer look at how the city’s bounce-back in commercial activity compares with nearby jurisdictions like Singapore, and some of its key legal updates, including:

• the release of the updated Hong Kong International Arbitration Centre (HKIAC) Administered Arbitration Rules 2024, which means faster, cleaner and more secure arbitrations;
• the introduction of the Stablecoin Bill, a potential game changer for crypto confidence;
• the implementation of the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645) (MJREO), allowing for smoother cross-border legal wins; and
• the opening of the new International Organisation for Mediation (IOMed) Headquarters in Hong Kong; a global vote of confidence in Hong Kong’s mediation prowess.

Together, these updates reflect a clear push to make Hong Kong even more attractive for international businesses, particularly when it comes to cross-border dispute resolution and enforcement.

General Economic Outlook: 2025 Exhibits Signs of Recovery and Growth

After a sluggish few years in Asia generally, Hong Kong’s economy has shown sparks of revival: GDP grew by 3.1% year-on-year in Q1 of 2025; and the Hong Kong Exchange has reported a strong start to the year, with 17 listings raising HKD18.7 billion in Q1 of 2025, compared with 12 listings raising HKD4.8 billion in Q1 of 2024. In comparison, Singapore’s SGX recorded four IPOs raising USD30 million in the entirety of 2024. The average daily turnover at the HKEX also reached a new peak of HKD620.7 billion this year, smashing the previous record set in July 2021 by a 171% increase.

Whilst the Asian economy generally benefited from importers’ front-loading in preparation for US tariffs, three things stand out as key drivers of optimism in Hong Kong:

• Hong Kong government efforts luring private wealth and family offices are starting to pay off as wealth flows back into the city;
• mainland stimulus measures, as announced in the “two sessions”, are sparking hope in the Greater Bay Area; and
• energy from the tech sector, fuelled by breakthroughs in AI technology and digital assets.

At the time of writing, the real GDP growth for Hong Kong in 2025 is forecasted at 2–3%, outpacing the more modest 0–2% growth prediction for regional neighbour Singapore.

Fallout From the Chinese Property Market Crash Continues to be Felt

Despite the general upswing, the fallout from the Chinese property market crash continues to be felt in Hong Kong. It remains a seller’s market for insolvency specialists, even as another wave of bonds issued by mainland property developers is set to mature this year. 

In addition to these general macroeconomic trends, there have been sector-specific developments in Hong Kong’s legal landscape.

New HKIAC 2024 Rules make arbitrations faster, cleaner and more secure

The new HKIAC 2024 Rules, which came into effect on 1 June 2024, introduce various refinements to the 2018 version to enhance arbitration efficiency. These rules provide, inter alia:

• powers for arbitral tribunals to lock down sensitive information, meaning stronger data protection;
• clarity on the powers of arbitral tribunals in interlocutory matters, meaning accessing these tools is now more straightforward;
• a hard-stop time limit for the close of proceedings and issuing of an award, meaning clearer timelines for parties to the arbitration; and
• powers to a tribunal to veto proposed changes in legal representation to avoid conflicts of interest, meaning cleaner arbitrations.

These measures will streamline the arbitration processes and allow the city to double down on its competitive advantages of having an exclusive arrangement with the Mainland for the enforcement of interim measures arising out of arbitrations seated in Hong Kong in mainland courts, reinforcing Hong Kong’s standing as a preferred seat of arbitration. The hard-stop time limit for the close of proceedings, and the certainty it brings to parties, is also a unique feature not to be found in the rules for other leading dispute resolution centres in Dubai, Singapore, or London.

Stablecoin Bill to boost investor confidence in stablecoins issued in Hong Kong

The government recently passed the Stablecoin Bill in May of this year. Under the passed Bill, issuers of stablecoins will have to: (i) be licensed by the Hong Kong Monetary Authority; (ii) satisfy minimum capital and other requirements on, inter alia, segregation of client assets, customer due diligence; and (iii) have sufficient liquid reserves for the redemption of issued stablecoins at par value.

This forward-thinking legislation not only enhances investor confidence and legal certainty in digital asset transactions but also signals Hong Kong’s ambition to lead in regulated digital finance. Compared to Singapore, where regulatory scrutiny applies only to larger issuers, Hong Kong’s regime is more comprehensive.

At a time when cryptocurrency activity remains largely restricted in Mainland China, Hong Kong’s Stablecoin Bill provides a clear and trusted regulatory framework, helping the city cement its position as a regional hub for digital assets.

MJREO significantly widens the scope of mutually enforceable judgments in the Mainland and Hong Kong

The new MJREO came into force in early 2024, significantly expanding the enforceability of court judgments between Hong Kong and Mainland China. Key changes include:

• removing the need for an exclusive jurisdiction clause designating either a Mainland or Hong Kong Court before a judgment concerning a claim can be enforced in the Mainland/Hong Kong; and
• broadening of enforceable relief beyond damages to include declaratory relief, orders for specific performance, and compensation arising from criminal proceedings.

Enforcing foreign judgments in the Mainland is notoriously difficult. Hong Kong’s unique legal arrangement with Mainland China gives businesses a reliable mechanism to protect their interests and reduces cross-border legal uncertainty, especially important for companies with integrated operations in both jurisdictions.

Establishment of the IOMed Headquarters in Hong Kong reinforced the city’s status as a global dispute resolution hub

The IOMed is the world’s first intergovernmental international legal organisation dedicated exclusively to resolving international disputes through mediation. It has established its headquarters in Hong Kong. The mission of the IOMed is to offer mediation services to three types of international disputes submitted by mutual consent: (i) disputes between sovereign states; (ii) investor-state disputes involving states, international organisations and foreign nationals; and (iii) cross-border commercial disputes between private parties.

The organisation’s decision to base itself in Hong Kong highlights the city’s bilingual legal system, independent judiciary and world-class dispute resolution infrastructure. It also confirms Hong Kong’s growing prominence as a trusted, neutral venue for resolving international legal conflicts.

Additional Updates Shaping Hong Kong’s Commercial Landscape

Several recent developments are likely to trigger new categories of disputes, particularly in the areas of governance, compliance and ESG. These include:

• HKEX’s updated ESG disclosure rules, which raise the risk of shareholder actions and regulatory enforcement against non-compliant companies;
• new Company Ordinance provisions on treasury shares, which may provoke shareholder challenges around dilution or manipulation; and
• legal framework enabling corporate redomiciliation, inviting more companies to relocate to Hong Kong – but also bringing potential disputes on governance, creditor protection and jurisdictional issues.

Conclusion

In a global climate of regulatory flux and digital transformation, Hong Kong continues to adapt with agility. Whether through groundbreaking digital asset legislation, seamless cross-border enforcement with the Mainland, or its status as an international mediation hub, the city is making a strong case for being Asia’s most future-ready legal and financial centre. Hong Kong’s 2025 trajectory reflects a careful balance of economic recovery and strategic regulatory enhancements. While challenges remain, particularly in relation to mainland economic headwinds, the city’s focus on arbitration, fintech and cross-border enforcement solidifies its role as a dependable hub for international business. The year ahead will test the resilience of these reforms, but the foundations for sustained growth appear well laid.