HONG KONG SAR, CHINA Law and Practice Contributed by: Lianjun Li, Matthew Townsend, Patrick Chong and Max Lam, Reed Smith
ing. The Hong Kong government is also consulting and negotiating with Bangladesh, Egypt, Peru, Qatar, Russia and Saudi Arabia in relation to an IPPA. 2.2 Model Bilateral Investment Treaty The IPPAs referenced above are typically bilateral investment treaties (BITs) as opposed to multilateral investment treaties (MITs). 2.3 Free Trade Agreements According to data compiled by the Hong Kong Trade and Industry Department, Hong Kong has entered into nine free trade agreements, respectively with Mainland China, New Zealand, the member states of the Euro- pean Free Trade Association (EFTA), Chile, Macao, the Association of Southeast Asian Nations (ASEAN), Georgia, Australia and Peru. These free trade agree- ments typically include provisions for ensuring fair and equitable treatment of investments, non-discrimina- tion, and compensation for expropriation. With respect to dispute settlement, certain agree- ments, such as the Free Trade Agreement (FTA) between Hong Kong and the member states of EFTA and the FTA between Hong Kong and Chile, provide for arbitration as a form of dispute resolution. Oth- er FTAs, such as the Closer Economic Partnership Arrangement (CEPA) between Hong Kong and main- land China, provide for mediation. 2.4 Interpretive Aids For FTAs, the Trade and Industry Department of Hong Kong publishes accompanying side documents (such as exchanges of letters), implementation overviews, briefs to the Hong Kong Legislative Council, press releases, commercial information circulars, and pro- motional leaflets. For IPPAs, side agreements are made available where they exist. However, the Trade and Industry Depart- ment does not provide any other interpretative aids in relation to IPPAs. 2.5 Investment Laws Hong Kong has no specific laws on foreign invest- ment. There are no general restrictions on foreign investments in Hong Kong, although restrictions are in place in relation to a number of industries, includ-
ing broadcasting services and telecommunication licences. 2.6 Arbitration Clauses in Investor–State Contracts Arbitration agreements are not uncommon in inves- tor–state contracts and investment contracts between investors and state-owned entities. The mechanisms for commencement of arbitration, selection of the arbitral panel and the arbitration procedures may dif- fer on a case-by-case basis as it will be a product of the parties’ negotiations. It may be that investment treaties are more likely to contain pre-conditions to arbitration. For example, the dispute resolution provisions of the IPPA between Hong Kong and Canada provide for disputing parties to hold consultations and attempt to settle a claim amicably before an investor may submit a claim to arbitration. Such stepped or escalation arbitration clauses may be less common in investment contracts between an investor and a state-owned enterprise. That said, the mechanism for dispute resolution and arbitration again very much depends on the parties’ negotiated terms.
3. Substantive Protections and Breaches 3.1 Common Complaints
Hong Kong has not been a respondent in any known investor-state arbitration. Accordingly, there is no available case data on the types of treaty or contract claims against Hong Kong, and no pattern of frequent- ly cited complaints can be identified.
4. The Arbitral Tribunal 4.1 Limits on Selection
The Arbitration Ordinance (Cap. 609) (AO) does not impose any statutory eligibility criteria for members of the arbitral tribunal, so parties are free to set their own requirements, such as professional qualifications, specific industry expertise, or even nationality.
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