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The battle of the seats: Hong Kong

Hong Kong has long emerged as an international arbitration hub, especially as regards China-related disputes. The city benefits from the perception that local arbitrators are more culturally attuned to the practice of business in mainland China, while still retaining the characteristics of international cities, with easy accessibility and (relatively) close proximity to Chinese parties.

Government support is crucial to erect a successful arbitration hub. The market of international arbitration is not only appealing due to its economic impact but also, and perhaps even more, because of the reputation associated with hosting international arbitrations. Governments worldwide recognise that hosting international arbitrations is not only a way to attract business but also to build prestige. In a press release issued this week, Hong Kong’s Secretary for Justice Rimsky Yuen argues that Hong Kong is an ideal neutral arbitration venue for Mainland and foreign enterprises. The main advantages mentioned are the continued use of the common law system, a rich legal experience in international business law, its tradition as a dispute resolution hub, and the enforceability of arbitral awards rendered in Hong Kong. An extended version of the same press release can also be accessed here.

The expansion of international trade and the propagation of international commercial arbitration led to the emergence of multiple arbitral institutions throughout the world. These institutions compete fiercely to attract arbitration proceedings, both at the regional and international level. Competition between arbitral institutions can take a variety of forms. Arbitration providers certainly compete on price. After all, they provide arbitration services against the payment of fees. Arbitral institutions also compete with each other by reviewing their arbitration rules to make them more attuned to their clients’ needs. Many arbitral institutions have been insistently promoting their services by keeping their institutional rules on the cutting edge of market changes and needs. The Hong Kong International Arbitration Centre (HKIAC) has amended its Administered Arbitration Rules in 2008 and 2013 in an effort to be the leading centre for the resolution of international commercial disputes in the region.

As arbitral institutions are devoted specifically to the arbitration business, they compete ferociously to attract more and more arbitration proceedings. To improve their market share, they seek governmental support, namely by lobbying officials in their jurisdiction to improve the legal framework. In the global ‘battle of the seats’, success is measured by how effective arbitral institutions are in transforming their jurisdiction into a hub for arbitration, where parties are willing to go in case any dispute arises. The video below, entitled ‘How to resolve disputes in Hong Kong’, is a good example of how cities and arbitral institutions engage in marketing techniques to promote their work and build prestige. You can read more in this report by Hong Kong Trader. I discuss the different tools used by governments and arbitral institutions to attract arbitration proceedings on chapter 2 of my book Commercial Arbitration between China and the Portuguese-speaking World (Kluwer Law International, 2014).


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