Des Voeux Chambers is honored to have been invited by Chambers & Partners to contribute an Overview of the Commercial Dispute Resolution in Hong Kong (Great China Region 2025 – Commercial Dispute Resolution: The Bar) for its Greater China Region guide.
This overview will examine key developments in the field of Commercial Dispute Resolution across Hong Kong and Greater China region in 2024, providing insights into how regulatory reforms and evolving trade dynamics are shaping the landscape. Each development presents new opportunities and challenges for legal professionals, businesses, and policymakers, emphasizing the continuing role of Hong Kong as a leading centre for international dispute resolution.
Des Voeux Chambers has long been renowned for its expertise in the field of commercial dispute resolution in Hong Kong. DVC is recognised by Chamber & Partners Greater China Region Guide 2025 as a leading Set of Chambers in Band 1. Many DVC members are also individually ranked in this guide, comprising 38% of the list.
See our full rankings with commentary at https://chambers.com/legal-rankings/trusts-probate-succession-the-bar-china-116:3589:60:2?l=en-GBhttps://lnkd.in/g_9QWmPA
Learn about DVC members’ practice in this area at https://www.dvc.hk/practice-areas/commercial-law
CHINA: An Introduction to Commercial Dispute Resolution: The Bar
Background
2024 was an exciting year in the area of commercial dispute resolution, encapsulating the development of existing rules and regulatory reforms to enhance the sphere of commercial relationships and trade in Hong Kong and the Greater China Region. While fostering local growth in businesses, slow but steady efforts to build ties with commercial entities internationally have prompted increased activity in the sphere of trade and commercial dispute resolution.
Economy
Hong Kong’s economy has shown signs of recovery in 2024 – bolstered by a rebound in tourism, a robust financial sector, and new government initiatives. The Hong Kong labour market has remained resilient, and inflation rate has remained moderate within the 0.8-1.2% range for most of the year. IPO and commercial activity have also seen an uptick over the course of 2024, as exemplified by Midea’s recent listing in Hong Kong, raising about HKD4 billion.
That said, there remains room for growth. Commercial real estate investment volume for the first nine months in 2024 was almost HKD34 billion, which is the second-lowest level since 2008 over the same period. More than half of the 2024 figure represents distressed assets which were sold either by overly leveraged borrowers or banks.
China’s GDP also grew 4.8% year-over-year in the first three quarters of 2024. The government has introduced various policy incentives in the fiscal and financial sectors, in order to support consumption, real estate and capital markets. Consequently, the consultancy firm KPMG is expecting China’s economy to meet its growth target in 2024. Despite international trade disruptions and imbalances, China’s economy remains to be on track and is expected to continue growing in 2025.
Three Key Developments
There are three key developments which are likely to play a role in positively impacting commercial dispute resolution in Hong Kong and the Greater China Region in 2024, including both new initiatives and major milestone developments on existing projects and plans.
New HKIAC Arbitration Rules
On 3 May 2024, the Hong Kong International Arbitration Centre (HKIAC) announced its new Administered Arbitration Rules (the “Rules”) which came into effect on 1 June 2024. The amended Rules aim to enhance efficiency and flexibility, while reducing the costs involved in arbitrations generally.
Of particular note is the increased efficiency of rules relating to the commencement of a single arbitration pursuant to multiple contracts — these rules concern the designation of arbitrators, a change to the criteria of determining the costs of the arbitration, and relaxed criteria for granting an expedited procedure.
Further, under the Arrangement Concerning Mutual Assistance in Court-Ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and the Hong Kong Special Administrative Region (the “Arrangement”), attempts to obtain interim relief measures from the Mainland courts have often been successful. As of 10 December 2024, HKIAC has issued acceptance letters for 143 applications where assets with a total value of RMB34 billion were requested to be preserved. Such increased cooperation between the Hong Kong and Mainland Courts could also be attributed to newly implemented legislative frameworks, including the implementation of the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645) which recently came into force – this legislation allows for the reciprocal enforcement of Hong Kong and Mainland judgments for civil and commercial matters.
Businesses which opt for the Rules as the basis of their arbitration agreement can reap benefits which span across Hong Kong and the Greater China Region. Not only is the reduction in costs a major benefit, the continued possibility of efficiently disposing of matters through single arbitrations and expedited provisions makes clear the advantages of the Rules. Further, the generally pro-arbitration attitude adopted by the Hong Kong courts is also attractive to parties who intended to choose Hong Kong as their seat for international arbitrations. In 2024, especially with the new Rules, Hong Kong remains a leading choice of seat for international arbitrations.
Major milestones in the Belt & Road Initiative
The 9th Belt and Road Summit (the “Summit”) took place in Hong Kong this past September, marking a resurgence of business activity as the post-Covid economic climate gains momentum.
Notably, the Summit in 2024 featured over 800 one-on-one business matching meetings for more than 280 projects, in exploring emerging markets to explore new development opportunities in markets under the Belt and Road Initiative (the “Initiative”). A record 25 memorandum of understandings were signed during the Summit, and these included 4 between governments, and 21 between businesses, involving government bodies and companies from Indonesia, Malaysia, Vietnam, Bahrain, Kuwait, and Kazakhstan. Further, a highlight of the Summit included discussions of Hong Kong’s role in facilitating green development under the Initiative.
The positive outlook of the Summit was also shared by attendees. For instance, it was emphasised by Cahyo R Muzhar, the director general of legal administrative affairs of Indonesia’s Ministry of Law and Human Rights, that Hong Kong’s dispute settlement mechanism provides a model which is worth exploring in Indonesia, where it seeks to develop its family-office and social-enterprise areas. This is consistent with Hong Kong’s move to encourage family offices to thrive in this jurisdiction, by ensuring security in dispute resolution procedures and mechanisms as well as the provision of tax concessions.
The Chinese deputy international trade representative, Li Yongjie, emphasised in her opening remarks that the Ministry of Commerce would support and expand the space for Hong Kong’s participation in joint developments under the Initiative, further connecting economies across Asia, Europe, Africa and South America. There was also emphasis on Hong Kong receiving support from Beijing to secure more free trade and investment protection agreements with other jurisdiction, and to enter the Regional Comprehensive Economic Partnership (RCEP) “as soon as possible”.
The conclusion of this Summit poses significant implications for businesses. First, with the Central Government’s support of Hong Kong and recognition of its role in fostering cross-border business relationships, there is much opportunity to be explored in fostering relationships with markets under the Initiative, particularly sectors which involve energy, transportation, urban development, innovation, technology and logistics infrastructure, which formed the majority of the businesses involved in negotiations. Second and importantly, the move to ensuring effective commercial dispute resolution mechanisms in Hong Kong would encourage businesses to conclude agreements with Hong Kong as its governing law and jurisdiction, in recognition of the legal protections and mechanisms readily in place. Hong Kong’s fundamental and recognised role in the Initiative would encourage disputes to be brought in this jurisdiction, which again bodes well for the development of commercial dispute resolution in Hong Kong.
Cryptocurrencies and compliance
The regulation of virtual asset trading platforms, as well as the development of cryptocurrencies and compliance policies will undoubtedly be the focal point of conversations for the next few years. In this regard, Hong Kong aims to instill confidence and boost the trading of cryptocurrencies by acting an international platform through the continual implementation of new legislation and regulations.
The Stablecoins Bill was published on 6 December 2024, which sets out a licencing framework for fiat-referenced stablecoin issuers, and grants the Hong Kong Monetary Authority (HKMA) necessary powers of investigation, supervision and enforcement. The HKMA further announced a list of participants of the stablecoin issuer sandbox, where the listed institutions can demonstrate genuine interest in developing a stablecoin issuance business in Hong Kong under the arrangement, which would be conducted within a risk-controlled environment. Further, virtual asset ETFs have also been listed on the Hong Kong Stock Exchange throughout 2024, following the Securities and Futures Commission’s expression of willingness to authorise funds with virtual asset exposure.
Hong Kong courts have also commented and provided guidance which arose from cryptocurrency disputes. The Court of First Instance had previously in Re Gatecoin Ltd, confirmed that cryptocurrency is in fact categorised as “property” which can be held on trust, and recently the courts have also recognised a need to mandate the disclosure of financial records and books related to a decentralised autonomous organisation (DAO) finance platform in the cryptocurrency industry in the case of Mantra Dao Inc.
New moves have also come from China’s Administration of Foreign Exchange, which released new rules requiring banks to flag risky trades, including those involving cryptocurrencies. Banks are required to put in place risk-control measures that cover those entities and restrict provision of certain services to them. The rules focus on avoiding trade in cryptocurrencies to evade its forex regulations. This notwithstanding, there remains hope that the layered vetting of cryptocurrencies and/or virtual assets by Hong Kong authorities would provide a layer of safeguards to boost the confidence of trading of cryptocurrencies in the Mainland.
A growth in legal professionals in the area of digital assets and compliance is expected to materialise, and a positive outlook for businesses involved in the cryptocurrency industry remains.
Conclusion
Despite the relatively slow progress, Hong Kong and the Greater China Region are gradually but definitively making their way back to pre-pandemic commercial activity. Charting into both familiar and new territories, the outlook for commercial parties and the legal sector remains optimistic.