Hong Kong becomes a Host Country

On 4 January 2015, the Permanent Court of Arbitration (“PCA”) and Government of the People’s Republic of China signed a Host Country Agreement and related Memorandum of Administrative Arrangements, the result of which is the establishment in Hong Kong of a legal framework under which PCA-administered proceedings can be conducted in Hong Kong on an ad hoc basis, without the need for a physical presence of the PCA (which is based in the Hague) in Hong Kong.

A Host Country Agreement secures the provision by the host country of facilities and services required for PCA-administered proceedings, such as office and meeting space and secretarial services, which may be offered at no cost to parties in such proceedings. Further Host Country Agreements regulate the privileges and immunities afforded by the host country to adjudicators and participants in such proceedings. The PCA has previously signed Host Country Agreements with Singapore, Vietnam, Argentina, Chile, Costa Rica, India, Lebanon, Mauritius, and South Africa.

The Permanent Court of Arbitration

The PCA, is an intergovernmental organisation with 116 member states, established in the Hague in 1899, which provides facilities and support services for PCA-administered arbitration, conciliation, mediation, and fact-finding commissions of inquiry between member states. It provides such services for the resolution of disputes involving various combinations of states, state entities, intergovernmental organizations, and private parties. Its caseload encompasses territorial, treaty, and human rights disputes between states, as well as commercial and investment disputes, including disputes arising under bilateral and multilateral investment treaties.

The PCA’s Secretariat (the International Bureau), by its Secretary-General, provides administrative support to tribunals and commissions and can also assist in the selection of arbitrators or be called upon to designate or act as appointing authority. For example, the UNCITRAL Arbitration Rules entrust the PCA’s Secretary-General to designate an "appointing authority" upon request of a party to arbitration proceedings, where the parties have not made such designation by agreement.

What does this mean for Hong Kong?

The PCA has concluded Host Country Agreements with Asian countries, including Hong Kong, in view of the increasing demand for arbitration services for disputes between investors and states involving Asian parties. Hong Kong now being a Host Country will be able to handle PCA-administered proceedings, including some of the 100 plus cases currently outstanding. This will no doubt further enhance Hong Kong’s position as an international arbitration centre and amounts to a vote of confidence in Hong Kong and its legal system.