The development of the Greater Bay Area (“GBA”) is accorded the status of key strategic planning in China’s national development blueprint. We have received many enquiries from overseas and Mainland investors as well as multinationals that wish to launch or expand their business in Hong Kong so as to leverage the opportunities arising from the GBA initiative. This article aims to introduce the key strengths of Hong Kong as the global gateway between GBA and the rest of the world from a legal perspective, and highlight some of the significant developments which enhance Hong Kong’s collaboration with Mainland China.
I. What is the GBA initiative?
The GBA is an initiative that aims to synergise the best qualities of all cities in the region, joining their strengths to maximize regional economic development and international competitiveness for the benefit of all, attracting global businesses and investors. Hong Kong will leverage its unique advantages to form complementary functions with other cities in the GBA, serving as a global gateway to facilitate inbound and outbound businesses between the GBA market and the international market.
II. Key strengths of Hong Kong as the International Legal Hub
III. Significant developments enhancing legal exchange and collaboration between Mainland China and Hong Kong
Governments across different levels in China (including at a national and provincial/SAR level) have put in place many arrangements to enhance legal exchange and collaboration. We have highlighted below a few recent developments.
Arrangement Concerning Mutual Enforcement of Arbitral Awards between Mainland China and Hong Kong
Hong Kong is the only jurisdiction that has mutual enforcement of arbitral award arrangements with Mainland China. It is now possible for the (i) simultaneous enforcement of arbitral awards in Mainland China and Hong Kong and (ii) the grant of interim measures by courts before or after accepting applications for enforcement, upon satisfaction of the required threshold of evidence to be imposed by the relevant court.
GBA Mediation Platform Proposed
The Vice Minister of Commerce of PRC and the Financial Secretary of HKSAR of PRC have signed an investment agreement under CEPA in 2017 which provides mediation mechanisms for cross-border investment disputes, allowing Mainland investors to use Hong Kong mediation services, and Hong Kong investors to appoint Mainland mediation institutions and mediators. To further promote the use of mediation in GBA, a proposal to establish a GBA Mediation Platform has been endorsed. The Guangdong, Hong Kong and Macau legal departments have formed the working group to actively promote the work of the GBA Mediation Platform.
Mutual Recognition and Assistance on Corporate Insolvency Proceedings
Pursuant to the Record of Meeting of the Supreme People’s Court of PRC and the Government of the HKSAR on Mutual Recognition of and Assistance to Bankruptcy (Insolvency) Proceedings between the Courts of the Mainland and of the HKSAR, liquidators from Hong Kong may apply to Mainland courts in pilot areas for recognition of insolvency proceedings in Hong Kong and bankruptcy administrators from pilot areas in the Mainland may apply to the High Court in Hong Kong for recognition of bankruptcy proceedings in the Mainland. Currently the pilot areas include Shanghai, Xiamen and Shenzhen.
Expansion of Right to Choose Hong Kong Law as the Governing Law
Some regulations in Mainland China were passed last year, allowing wholly-owned Hong Kong enterprises registered in Qianhai to choose Hong Kong law as the governing law for contracts, and to choose Hong Kong as the place of arbitration for contracts, even for wholly PRC-related matters without any foreign-related elements. According to the Chief Executive’s 2021 Policy Address of Hong Kong, the Department of Justice in Hong Kong will strive to further extend such right to other areas of Shenzhen and the entire GBA.
Pilot measures for Hong Kong and Macau legal practitioners to obtain Mainland practice qualifications
GBA covers three different legal systems (i.e. Mainland China, Hong Kong and Macau). Upon obtaining a practicing certificate in GBA, experienced legal practitioners in Hong Kong will be able to practice law in specified civil and commercial matters in the GBA, and in turn will be able to advise the business community in structuring their business transactions in the GBA from a holistic regional approach taking into consideration not only legal requirements in Hong Kong but also those in the GBA.
IV. The Way Forward
Looking ahead, with the ongoing rapid development of the Chinese economy, there will be substantial opportunities in Hong Kong.
The GBA initiative aims to attract global businesses and investors. Recently, we have seen numerous multinationals and oversea enterprises strengthening their stake in China.
We envisage that these legal frameworks will continue to enhance Hong Kong’s position as the centre for international legal and dispute resolution services. In structuring your business transactions in the GBA, we urge you to consider the various initiatives and advantages of choosing Hong Kong law and Hong Kong courts or arbitration, as the governing law and dispute resolution mechanisms.
