HONG KONG SAR, CHINA Trends and Developments Contributed by: Lianjun Li, Matthew Townsend, Patrick Chong and Vanessa Fung, Reed Smith
recent years have promoted and facilitated the use of ISDS mechanisms. In order to better accommodate ISDS, Chinese arbi- tration institutions have been actively enhancing their administrative capabilities. The China International Economic and Trade Arbitration Commission (CIETAC) has launched pioneering rules governing the arbitra- tion of international investment disputes (“CIETAC Investment Arbitration Rules”), the first of their kind in China, to govern, inter alia, investor–state disputes. It was designed to fill a longstanding legal gap in inter- national investment arbitration in China, and to sup- port the BRI by providing a structured and reliable channel to investors for resolving their disputes with host states. To further this object, the CIETAC Invest- ment Dispute Resolution Centre was established in Beijing to administer the CIETAC Investment Arbitra- tion Rules. Recently, in September 2025, the PRC Arbitration Law also underwent significant revision. The amended law now provides a long-awaited and explicit legal basis for Chinese arbitration institutions to administer inter - national investment arbitration cases. This legislative update marks a crucial step forward in aligning Chi- na’s legal framework with international standards. Hong Kong’s role in BRI and its ISDS Hong Kong’s role in the BRI has been described as a pivotal one – serving as a “super connector” that facil- itates open dialogue and forges partnerships to drive progress. Leveraging its strategic location, wide range of professional services and unique position under the “One Country, Two Systems” framework, Hong Kong adds value to the BRI under its five pillars. In earlier years, Hong Kong had actively developed its capacity to administer investor–state disputes. In 2015, the Hong Kong International Arbitration Cen- tre (HKIAC) introduced the HKIAC Procedures for the Administration of International Arbitration, which may be adopted for any investor–state arbitration adminis- tered by the HKIAC under the UNCITRAL Rules pursu- ant to a treaty providing for protection of investments or investors. Further strengthening its expertise, the HKIAC formed an industry-focused Belt and Road Advisory Committee in 2018, bringing together legal
and commercial expertise across a range of Belt and Road industry sectors. In the same year, the HKIAC administered two investor–state arbitrations under the UNCITRAL Arbitration Rules, including a claim under the US–South Korea Free Trade Agreement com- menced against the Government of the Republic of Korea. Additionally, the CIETAC Rules provided that CIETAC’s Hong Kong Arbitration Centre may admin- ister investment disputes if agreed to by the parties or where Hong Kong is the seat of arbitration. More recently, there has been a policy shift in Hong Kong from a primary focus on investor–state arbitra- tion to an increased emphasis on mediation. In May 2025, the signing ceremony of the Convention on the Establishment of the International Organization for Mediation (IOMed) took place. While the IOMed is still in its early stages and has not yet commenced its operation, its scope of mediation services includes commercial or investment disputes between a state and a national of another state. Looking ahead, it is expected that Hong Kong will devote more of its resources to the development of investor–state mediation, while also maintaining its robust capacity to handle investor–state arbitration. This dual approach highlights Hong Kong’s commit- ment and ability to provide comprehensive dispute resolution options in the investor–state disputes domain, a topic that will be further explored below. Hong Kong Arbitration and Mediation World-class legal framework and judicial system Hong Kong’s unique status under the “One Coun- try, Two Systems” framework grants it a high degree of autonomy, except in matters of national defence and foreign affairs. This arrangement provides Hong Kong’s dispute resolution professionals with unpar- alleled insight into the Chinese legal and business environment. At the same time, Hong Kong maintains an independent legal system and a comprehensive, pro-arbitration court system. As the only common law jurisdiction in China, and the only bilingual common law jurisdiction worldwide where both Chinese and English are used in legal proceedings, Hong Kong ensures that its dispute resolution processes are internationally recognised and accessible to a diverse range of parties.
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