15 September 2020

Update on the exclusive benefit when selecting Hong Kong arbitration: asset, evidence and conduct preservation in China Mainland. How is it working?

This article was written by Paul Starr, Gao Feng, Haidi Teng, Xu Xianhong and Wang Jianjian.


On 1 October 2019, 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”) came into force.

As we previously reported (“First Order issued under Interim Measures Arrangement between China Mainland and Hong Kong SAR”), the Arrangement is a significant development and has made Hong Kong* a uniquely attractive seat for parties doing business with China Mainland entities, no matter where in the world. Hong Kong has become the only arbitration venue outside of China Mainland to have a direct mechanism where parties can apply to Mainland Courts for interim measures including asset, evidence and conduct preservation orders.

Within around 11 months of its implementation, the Hong Kong International Arbitration Centre (“HKIAC”) has processed 25 applications made to the Mainland Courts for interim measures for a total value of RMB 9.4 billion (approximately USD 1.4 billion). 24 of the applications were for asset preservation and 1 for evidence preservation. There have been at least 17 successful applications for the preservation of assets for a total value of RMB 8.7 billion (approximately USD 1.3 billion). Our Hong Kong and Shanghai teams were the first successfully to secure USD 360 million of asset protection from the Shanghai Financial Court, and we are engaged in several other applications.

Scope of the Arrangement


Under the Arrangement, the following criteria must be met before a party can apply to the Intermediate People’s Court (the “IPC”) for interim measures:

  1. The arbitration must be seated in Hong Kong; and
  1. The arbitration must be administered by certain eligible institutions or permanent offices which qualify under the Arrangement.

The eligible institutions or permanent offices which currently qualify under the Arrangement include:-

  1. HKIAC;
  1. CIETAC;
  1. ICC - Asia Office;
  1. Hong Kong Maritime Arbitration Group;
  1. South China International Arbitration Center (Hong Kong); and
  1. The eBRAM International Online Dispute Resolution Centre.

The requirement for the arbitration to be administered means that the Arrangement is only applicable to institutional arbitrations and not to ad hoc arbitrations. As such, please consult your legal adviser when drafting the arbitration agreement to ensure that the Arrangement is applicable.

Timing and proper forum

Prior to the commencement of arbitration or during the arbitration the applicant can apply to the IPC of either:-

  1. The respondent’s place of residence; or
  1. The place of the subject matter of the application (i.e. where the property or the evidence is located).


The applicant must submit a written application together with supporting evidence, including inter alia:-

  1. The interim measure application specifying the particulars of the parties, the amount of assets to be preserved, the particulars of the conduct together with the time period;
  1. The arbitration agreement;
  1. Identity documents;
  1. The factual and legal basis for the application, including details of the urgency of the circumstances;
  1. Clear particulars of the asset and evidence to be preserved or concreate threats which may lead to a train of inquiry; and
  1. Information on the assets in China Mainland to be used as security or certification of financial standing.

Articles 4 and 5 of the Arrangement outline in detail the documents and information required to make an application to the Mainland Court. However, it should be noted that the application will be determined according to the practical meaning of the relevant provisions in the context of PRC law.

How it is working and key practical takeaways

The HKIAC recently published statistics about the 25 applications made to the IPCs for interim measures which it has processed since the Arrangement came into force. The following are the main statistics and our key practical tips when making an application under the Arrangement:-

Majority of applications are made by parties from jurisdictions outside China Mainland

HKIAC reported that the majority of applications were made by parties from jurisdictions outside China Mainland (around 70% from outside of China Mainland and 30% from Mainland Chinese parties). Furthermore, half of the applications were for assets or evidence owned by Mainland Chinese parties and the other half were for assets on the Mainland owned by non-Mainland parties. The Arrangement has been an effective mechanism for protecting the interests of both Mainland Chinese and foreign parties.

For foreign applicants, it is important to seek specialist advice from local PRC counsel on how to make the application to the appropriate Mainland Court. Bearing in mind that this is a new arrangement, with which most local IPCs will not be familiar, having a legal team on the ground in the location of the Mainland Court is incredibly important to deal efficiently with any issues raised by the IPC.

Applications to various IPCs

HKIAC reported that the processed applications so far have been made to 15 different IPCs in the following Mainland Chinese cities: Beijing, Dalian, Hangzhou, Jinan, Lianyungang, Nanjing, Shanghai, Shenzhen, Xiamen, Yantai and Zhaoqing. 

The requirements for notarisation and legalisation may differ between the different IPCs depending on the jurisdiction of the applicant or the jurisdiction in which the documents are created. Early thought needs to be given to translation of documents into Chinese, for that purpose.

Preparing Mainland Court-compliant documentation can take a significant amount of time, cost and coordination especially where there are several jurisdictions involved. Again, this is an area where PRC counsel’s advice can be invaluable because they can liaise with the relevant Mainland Court in advance to understand the specific requirements for an upcoming application.

Applications submitted directly to the IPC by the Arbitral Institution

HKIAC reported that of the 25 applications it processed, 9 were submitted by HKIAC to the IPCs upon their request. This reflects the common practice for the Mainland Chinese arbitral institute to transfer applications from the parties to the court, which differs from the common law practice for parties to make direct applications to court. Consequently, this would require the applicant to work closely with the Hong Kong arbitral institution qualified under the Arrangement when making an application.

For applications under the Arrangement, there are different mechanisms in place. For example, there are two avenues under the HKIAC procedure. Either the HKIAC issues a letter of acceptance to the applicant who submits the application to the Mainland Court directly, or, the applicant submits the full application to HKIAC for onward transmission to the relevant Mainland Court. The process to follow depends on several factors including:-

  1. Whether the arbitration has already commenced; and
  1. Whether the receiving Mainland Court has indicated any practice as to how it accepts interim measures applications.

This requires coordination between your Hong Kong legal adviser and local PRC counsel.

Provision of security

According to HKIAC, all the IPC decisions it is aware of have granted the application for the preservation of assets upon the applicant’s provision of security.

As the Arrangement provides that the Mainland Courts may require the applicant to provide security, and, in practice, it has been a factor in granting the asset preservation orders so far, the applicant should be aware that the amount of security required will vary depending on the circumstances of the case. Furthermore, the amount of security required will usually be a percentage of the amount of assets sought to be preserved but could be as much as the entire amount. Applicants could consider the option of arranging insurance from local PRC qualified insurance companies as security for their application. Early thought needs to be given, as it can take time.


The significant number of successful applications for the preservation of assets made in aid of Hong Kong arbitration is a compelling reason for parties to select Hong Kong as the seat of arbitration where they are doing business with China Mainland parties. Moreover, this should provide greater confidence to parties seeking ultimately to enforce arbitration awards in China Mainland, as there is a reduced risk of dissipation of assets before the arbitration is concluded.

The efficient submission of an application under the Arrangement requires successful coordination between your Hong Kong legal advisers and local PRC counsel. In this regard, King & Wood Mallesons with our network of offices in Hong Kong and China Mainland is uniquely placed to provide a one-stop comprehensive legal service.

*Any reference to “Hong Kong” or “Hong Kong SAR” shall be construed as a reference to “Hong Kong Special Administrative Region of the People’s Republic of China”.

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