HKIAC Remains Popular Destination for Arbitration Despite Slight Downturn in 2021 | Morrison & Foerster LLP
On February 9, 2022, the Hong Kong International Arbitration Centre (“HKIAC”) released its annual statistics…
On February 9, 2022, the Hong Kong International Arbitration Centre (“HKIAC”) released its annual statistics for 2021. The statistics suggest that HKIAC, while not as busy as it was during the record-breaking year 2020, continued to prosper as a popular venue for cross-border disputes.
In 2021, HKIAC’s caseload slightly decreased. A total of 277 arbitrations were submitted to HKIAC, 183 of which were administered by HKIAC, down from 318 and 203, respectively, in 2020. The total amount in dispute across all arbitrations also dropped from HKD 68.8 billion (approximately USD 8.8 billion) in 2020 to HKD 54.6 billion (approximately USD 7 billion) in 2021.
Although HKIAC’s caseload was lower in 2021 than in 2020, most arbitrations submitted to HKIAC continued to be international in nature. In 81.6% of all arbitrations submitted to HKIAC in 2021, at least one party was from outside Hong Kong, and in 7.6% of all arbitrations submitted, no Asian party was involved. Parties from a total of 41 jurisdictions appeared before HKIAC in the previous year, with parties from Hong Kong, Mainland China, the British Virgin Islands, the Cayman Islands, and the United States at the top of the list.
In our 2021 coverage of HKIAC statistics for 2020, we noted that HKIAC responded swiftly to the COVID-19 pandemic by offering flexible virtual hearing services. In light of the ongoing pandemic, hearings hosted by HKIAC continued to be predominantly virtual in 2021. Of the 138 hearings hosted by HKIAC in 2021, 101 were fully or partially virtual hearings, and 37 were in-person hearings that took place at HKIAC’s premises in Hong Kong.
Under the Arrangement Concerning Mutual Assistance in Court-Ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong Special Administrative Region (the “Arrangement”), which came into force on October 1, 2019, parties to institutional arbitrations seated in Hong Kong are able to seek interim relief from Mainland Chinese courts in aid of arbitration. (For an overview of the Arrangement, please see our client alert in September 2019.) In 2021, parties appearing before HKIAC continued to take advantage of the Arrangement. According to HKIAC statistics, HKIAC processed 25 applications made to 15 different Mainland Chinese courts under the Arrangement in 2021, slightly more than the 22 applications to 14 Mainland Chinese courts that were processed in 2020, and in 2021 the Mainland Chinese courts issued orders to preserve RMB 1.5 billion (approximately US$233.6 million) worth of assets in response to these applications.
Although different kinds of interim relief are available under the Arrangement, including preservation of assets, evidence, and conduct, according to a September 2021 HKIAC press release, preservation of assets was by far the most popular interim relief sought. In fact, 47 out of the first 50 applications were for preservation of assets, and the Mainland Chinese courts issued orders to preserve a total of RMB 10.9 billion (approximately US$1.7 billion) worth of assets in response to those applications. HKIAC processes applications under the Arrangement within 24 hours, and HKIAC’s FAQs on the Arrangement report that, as of 15 February 2022, “the average time taken by Mainland Courts to issue a decision was 17.9 days from receipt of an Application[,]” and the median time was 7.5 days.
Although the statistics for 2021 show a slight downturn in HKIAC’s caseload year-over-year, the raw data demonstrates that HKIAC remains a popular destination for international arbitrations, including international arbitrations with no direct Asian nexus. We expect Hong Kong to continue to be a popular seat for international arbitration in 2022, especially for China-related ones, given the unique advantage the Arrangement brings to HKIAC.
For more information, please see HKIAC’s 2021 statistics.