On August 9, 2012, representatives of the Straits Exchange Foundation of Taiwan and the Association for Relations Across the Taiwan Straits of the People's Republic of China ("China") signed an “Agreement for protection and promotion of cross-Strait investments” ("Investment Promotion Agreement").  Under the Investment Promotion Agreement, both sides shall provide fair and just treatment of investors from the other side and accord such investors with no less than the same treatment as they would for investors from other countries or regions so long as such investment was made legally.  Where Taiwanese investments are made through an entity formed in a third jurisdiction, such investment is also protected.

The Investment Promotion Agreement also provides for dispute resolution mechanisms including negotiation and the use of local dispute settlement authorities such as mediation or arbitration entities, the investment division of the Cross-Strait Economic Cooperation Committee and the local courts.  By consent of the parties, even where there is no arbitration agreement in place, private disputes may be submitted to arbitration in an arbitration institution in Taiwan, China, including Hong Kong, or a third jurisdiction and awards may be enforced by courts in both China and Hong Kong.  

The Investment Promotion Agreement is the first official document between the two sides that endorses the use of arbitration to settle disputes between Chinese and Taiwanese parties.  However, Chinese, Taiwanese and other international parties have long accepted Hong Kong as an appropriate jurisdiction for dispute settlement and many contracts between Chinese and Taiwanese parties include Hong Kong arbitration as the mechanism for settling disputes.  They recognize Hong Kong's respect for the rule of law, based on an independent, impartial and efficient common law system inherited from the British.  Hong Kong has long supported arbitration and has maintained international best practices and its courts are pro-arbitration with a strong tradition of recognizing and enforcing arbitral awards. Hong Kong arbitral awards are also recognized and enforceable in China and more than 140 jurisdictions under the New York Convention.

Hong Kong is a UNCITRAL model law jurisdiction and since 1985, the Hong Kong International Arbitration Centre has actively administered arbitrations and other dispute resolution activities.  In November 2008, the International Court of Arbitration of the International Chamber of Commerce opened a branch of the Secretariat of the Court in Hong Kong to administer cases in Asia under ICC Rule of Arbitration.  Thus, Hong Kong has recognized arbitration institutions for handling both institutional arbitration under ICC rules and ad hoc arbitration under UNCITRAL rules.