HKIAC Interim Measures

Reciprocal Arrangement

The foundation of this process is a 2019 agreement between the Supreme People’s Court of China and the Hong Kong government which created a special channel for judicial assistance. Under this arrangement, a party to an arbitration administered by the Hong Kong International Arbitration Centre can apply directly to a mainland Chinese court for an order to freeze assets or to preserve evidence. This is a significant departure from the general rule that mainland courts do not issue interim orders in support of foreign arbitrations.

To use this mechanism, the applicant must first obtain a letter of support from the arbitration center, which confirms that the case is being properly administered and that the request for measures is appropriate. This letter is then submitted to the Intermediate People’s Court in the location where the defendant resides or where the assets are located. The mainland court then reviews the application according to the Chinese Civil Procedure Law, applying the same standards as it would for a domestic litigation.

Judicial Assistance

Once the mainland court receives the application and the supporting letter from the arbitration center, it has the authority to issue a preservation order that is immediately binding. This order may include the freezing of bank accounts, the sealing of real estate, or the requirement that certain documents be placed in the custody of the court. The hkiac interim measures provide a level of security that was previously unavailable to many international investors, as it bridges the gap between the flexible, private nature of arbitration and the coercive power of the state.

The applicant is typically required to provide counter security to the mainland court to cover any potential losses if the preservation is later found to be wrongful. This security can be in the form of cash, a bank guarantee, or a specialized insurance policy. The mainland court retains the power to modify or lift the measures if the circumstances change or if the arbitration is terminated.

This cooperation ensures that the final award issued by the arbitral tribunal is not rendered useless by the disappearance of the defendant’s assets.

Enforcement Limit

While the arrangement is powerful, it is restricted to specific types of relief and is subject to the procedural rules of the mainland courts. The measures are limited to the preservation of assets, the preservation of evidence, and conduct preservation, which corresponds to the categories available under Chinese law. It does not allow for the enforcement of the final award itself, which must still go through the standard recognition and enforcement process under the New York Convention.

Furthermore, the application must be filed before the final award is issued by the tribunal, as the arrangement is designed to protect the integrity of the proceedings rather than to execute the result. The mainland court also has the right to refuse the application if it believes the measures would violate the public interest or if the procedural requirements have not been met. Despite these limits, the system has become a vital component of the Hong Kong legal landscape, reinforcing its position as the preferred seat for resolving disputes involving mainland Chinese parties.

The effectiveness of the preservation depends on the speed of the application and the accuracy of the asset information provided by the claimant.