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Arbitration: Need to Know

Our Guest Blogger, Richard Firth[1] has filed a “heads up”; of the upcoming HKIAC London presentation and gives some commentary on the issues:


Since the publication of the 2013 ISDA Arbitration Guide (the “Guide“), market participants are increasingly “hard-wiring”  arbitration provisions into new  ISDA Master Agreements (“ISDA MAs“) in place of  the submission to the jurisdiction of the English or New York courts provided for in the printed version of Section 13 of the ISDA MA.

Parties are having to make strategic decisions.  They not only need to determine their ” house view ” i.e. their  preferred dispute resolution mechanism, but also to be effective in  ISDA MA negotiations, parties need to know the strengths and weaknesses of other possibilities.


The Hong Kong International Arbitration Centre (“HKIAC“) which is one of the lead institutions named in the Guide and which itself is putting emphasis on derivative transactions, is holding a road show (the second stop on a global tour) in London this coming Friday, May 30th, 3.45-6.30pm at the offices of Allen & Overy, New Change. 


There is no charge for attending.


Many of us from London have been mesmerised by Asia’s economic rise. A side effect in that rise is that  the balance of negotiating power in relation to the contents of documentation, including in respect of dispute resolution, is tilting in favour of parties from the East.  This means that arbitration in respect of cross-border transactions where one of the parties is from Asia-Pacific (“APAC“) will increasingly take place in that region and not, for example, in London or New York. 

This roadshow is primarily about the 2013 HKIAC Administered Arbitration Rules.  Although the session does not have a particular focus on financial transactions, it should  assist in-house legal management and litigators in  London who have global responsibilities  both:

  • generally to understand the perspectives, concerns and needs of parties from APAC; and
  • specifically to help form a balanced view in relation to arbitration in the Hong Kong Special Administrative Region (“HKSAR“).

The HKSAR has a special role in the People’s Republic of China (“PRC“).  By many measures the PRC is the most powerful growth engine in the region.


Writing in April 2011, Lord Hoffman, described the advantages of Hong Kong as seat of arbitration:

“…….the choice of [the place of  the seat of arbitration] is likely to depend upon a combination of geographical convenience for the parties, ready access to good legal services and a local legal system which can be relied upon to be impartial and exercise unobtrusive supervision over the arbitration, intervening only when things have gone badly wrong.  There are not many places in the world which can satisfy all of these requirements: New York, London, Paris, Geneva and Singapore are names which regularly come up.  But Hong Kong also satisfies the requirements I have mentioned and its unique amphibious position in relation to China, being part of the People’s Republic of China but equipped with good legal services and an excellent court system, is coming to be recognised…The rule of law in Hong Kong is in good shape, as I can testify after 14 years of participation in the work of its Court of Final Appeal….”[2]

Similar remarks were authoritatively made as recently as last November by Andrew Li, Chief Justice of the HKSAR 1997-2010, when he observed at a KPMG event ” …I would say that the rule of law with an independent judiciary is alive and well in Hong Kong…”[3].


Last Friday, I was privileged to attend a round table lunch hosted by the International Bar Association and The P.R.I.M.E. Finance Foundation on arbitration[4].  The feeling of the meeting -which included a  serving High Court Judge and the Leader of the Hong Kong Bar – was that the rule of law remains the  “pole star” of  Hong Kong law.


Many years ago Philip Wood gave some sound advice (which I intend to follow) to English solicitors who might feel tempted to pontificate ex cathedra on foreign law issue:

“Anyone wishing to know the precise position would need to consult lawyers of the particular state who are alone competent to pronounce upon their own legal systems[5].

Two of the questions which do need to be answered by appropriately qualified and experienced counsel before selecting Hong Kong as a forum  for settling disputes in any given matter relate to the entity type which you are facing :

1.Sovereign/state immunity: is it correct  that a foreign state enjoys absolute immunity from enforcement and jurisdiction in Hong Kong even in commercial disputes and so one should not seek to arbitrate with a foreign (i.e. non – PRC) state in Hong Kong?  Can that foreign state waive immunity?[6]

2.Crown immunity: is the proposition correct that the Chinese government now enjoys blanket immunity in the Hong Kong courts?[7]  It has been suggested in an article emanating from the Law Faculty at Cambridge that it is not always easy in practice to identify a Chinese government entity – is that  practical concern correct?[8]

Finally, to ensure that I had a balanced view, I would also seek advice on the utility of the observations by Mr Justice Bokhary in his memoirs[9] published at the time of his retirement last year as a Permanent Judge of Hong Kong’s Court of Final Appeal:

“For the rule of law I see – much as I wish that I did not see – storm clouds on the horizon. The storm which they threaten is a storm of unprecedented ferocity…”

In making a legal risk assessment from outside Hong Kong looking in, can we take it that the views of that distinguished (though liberal) judge are “outliers” and not mainstream? 


HKIAC “kicked off” the road show series at its home ground here in Hong Kong on Monday of last week before a packed meeting room: a well-written and rehearsed mock arbitration dealing with a number of points arising from applying the new rules, including the judgement given in the Court of First Instance on that very day in Gong Behai v. HKIAC[10]. What struck me most of all was the palpable patient attention, intellectual rigour and but above all fairness, displayed by Matt Gearing, Chair of the HKIAC Proceedings Committee who explained the very rigorous internal processes followed by HKIAC when exercising significant discretion. (In parenthesis, it can be noted that Matt is a leading derivatives litigation practitioner whose recent matters include representing Deutsche Bank in its successful ICSID arbitration in respect of commodity derivatives against Sri Lanka).

In a succinct article entitled “in-house counsel: why they should involved more in the arbitral process”[11], the writer, a Frenchman, concludes with Churchill’s definition of success “which is to go from failure to failure without loss of enthusiasm”. The HKIAC under its Secretary-General, Chiann Bao, has consistently done more than that!


[1] I retired in November last year from full-time practice as a senior consultant in Linklaters global commodities group but continue to work on occasion with the firm in Hong Kong.  During my in-house career, I worked at several of the world’s leading financial institutions including Citigroup, and Barclays where for 10 years I was Global Head of Commodities Legal and a member of the commodities division senior management team.  I am a contributor to Simon Firth’s leading UK text book Derivatives Law and Practice and regularly lecture at the Institute of Maritime Law, Southampton University.  I also serve on the education committee of the London Shipping Law Centre.

I consult no-one in producing these guest blogs (which do not purport to give legal or other advice) and therefore any errors of interpretation or misunderstandings of facts can only be attributed to me.

I would like to thank my very good (and learned) friend Boris Ka Ming Lee, B.Bus, ACIS, CPA, LL.M. of Lau, Wan & Chan for procuring my unimpeded access to the High Court Library here in Hong Kong.

I can be contacted at

[2] From Lord Hoffman’s Forward to John Choong and J. Romesh Weeramantry “The Hong Kong Arbitration Ordinance: Commentary and Annotations”, Sweet & Maxwell, Thomson Reuters (2011),

[3] Reported in Part 3 of (2013) 43 Hong Kong Law Journal

[4]Lead speaker and chairman of the ensuing discussion: Jonathan Ross, P.R.I.M.E. Finance Expert “Five years since the 2008 Global Financial Crisis: developments, trends and issues arising out of the resolution of disputes including derivatives and complex financial transactions in Hong Kong and in regional and international markets, the role and education of domestic courts, judges and arbitrators, the rise and rise of regional and international arbitration and the role of institutions such as the IBA and P.R.I.M.E. Finance.”  

[5] Philip Wood, “Law and Practice of International Finance ” (1980). I read this book – then a single volume – from cover to cover  when it was first published.  This is the only law book I have read which is worth purchasing  – it inspired me to spend my career working in international finance.

[6] Please refer to the decision of the Hong Kong Court of Final Appeal in Democratic Republic of Congo v. FG Hemisphere Associates LLC   FACV No 5 of 2010 (8 June 2011) 1 & (8 September 2011) 2 CFA

[7] Please refer to the Hong Kong High Court decision in Intraline Resources v. The Owner of the Ship or Vessel “Hua Tian Long” [2010] HKCFI 361

[8] An article by Professor Christopher Forsyth and Nitish Upadhyoya entitled  “The Spectre of Crown Immunity after the End of Empire in Hong Kong and India”  in  Part 2 of (2013) 21 Asia Pacific Law Review.


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