Meaning
Bilateral judicial assistance frameworks between the jurisdictions of mainland China and Hong Kong allow parties in cross-border disputes to secure assets or evidence through domestic courts. Mainland Hong Kong Interim Measures Arrangement represents the statutory agreement that permits applicants in Hong Kong-seated arbitrations to apply directly to mainland intermediate people’s courts for interim protection. This mechanism covers asset preservation, behavior preservation, and evidence preservation, offering a unique advantage to international businesses that use Hong Kong as a dispute resolution hub.
It bridges the gap between the two distinct legal systems of the region.
Asset Preservation
The primary function of this legal arrangement is to prevent Chinese counterparties from dissipating assets or moving funds during the course of an arbitration. Before this arrangement was implemented, foreign parties with disputes against Chinese companies could not easily freeze assets on the mainland using offshore arbitral proceedings. Now, an applicant can submit a preservation request to the mainland court, which can quickly freeze bank accounts, seal warehouses, or seize real estate belonging to the respondent.
This ability greatly increases the leverage of foreign investors and ensures that any final arbitral award they secure in Hong Kong can actually be enforced against physical assets on the mainland. The process must be initiated before or during the arbitral proceedings, and the mainland court must make a decision quickly to ensure the effectiveness of the freeze.
Institutional Eligibility
To access the benefits of this judicial mechanism, the arbitration must be seated in Hong Kong and administered by a recognized arbitral institution. These designated institutions include the Hong Kong International Arbitration Centre and the ICC. Ad-hoc arbitrations do not qualify for this assistance.
The designated institution must issue a letter of transmission to the mainland court, certifying that the arbitration has been accepted.
Evidentiary Filing
Practical applications must conform to the strict procedural rules and document formats required by mainland courts. All application materials, including the arbitration agreement and identity documents of the applicant, must be notarized and legalized in Hong Kong before being submitted to the mainland court. The applicant must also be prepared to provide counter-security, often in the form of a bank guarantee from a Chinese financial institution, to cover any potential damages caused by the freeze.
This step is critical because failure to provide adequate security will result in the immediate rejection of the preservation application by the mainland judge.
