HONG KONG SAR, CHINA Law and Practice Contributed by: Christopher Andrew Potts, Crump & Co
third-party bill holders, including consignees and endorsees. However, incorporation will not be effective if it is ambiguous, where the charterparty is not identifiable or where it does not show clear intention to incorpo - rate the specific arbitration clause. 7.3 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards The 1958 New York Convention is applicable in Hong Kong because the PRC has extended its applica - tion to the HKSAR. The Convention is implemented domestically by the Arbitration Ordinance (Chapter 609). Therefore, foreign arbitral awards made in other Convention states are recognisable and enforce - able in Hong Kong. However, awards from Mainland China are excluded from the Convention regime and are enforced under a separate statutory arrangement reflected in the Ordinance. 7.4 Arrest of Vessels Subject to Foreign Arbitration or Jurisdiction Hong Kong courts will generally order the arrest of a vessel or grant security where the claim is subject to foreign arbitration or a foreign court jurisdiction clause, provided the statutory requirements for arrest are met. Arrest is a procedural, protective remedy based on the court’s admiralty jurisdiction over the underlying statutory maritime claim, not an attempt to enforce an arbitral award. Claimants may therefore commence an in rem action and obtain arrest or security for claims (eg, under a charterparty or for necessaries), provided statutory requirements are met. The existence of a foreign arbi - tration or jurisdiction clause must be fully disclosed on the arrest application. The clause does not bar arrest, but allows the ship-owner to apply for a stay of the Hong Kong proceedings in favour of the agreed forum, usually after security has been provided. Hong Kong courts are consistently pro-arrest and pro-arbitration, using arrest to support, not undermine, foreign dis - pute resolution. 7.5 Domestic Arbitration Institutes HKMAG is a non-profit body of maritime and com - mercial professionals focused solely on maritime dis -
pute resolution, offering tailored procedures. HKMAG has its own maritime arbitration rules, adapted from internationally recognised standards (eg, the London Maritime Arbitrators Association rules) and tailored for use in Hong Kong under Hong Kong’s arbitration law. Despite not being exclusively maritime-focused, other institutions like the Hong Kong International Arbitra - tion Centre (HKIAC) can also administer maritime or commercial arbitrations. Hong Kong supports mari - time arbitration, with courts able to grant interim measures for HKMAG and HKIAC-administered arbi - trations under a specific arrangement with Mainland China. 7.6 Remedies Where Proceedings Are Commenced in Breach of Foreign Jurisdiction or Arbitration Clauses If the parties have agreed an exclusive foreign jurisdic - tion clause, the court will generally grant a stay of pro - ceedings unless the claimant shows strong cause. If the claimant brings proceedings in Hong Kong despite an arbitration agreement, the defendant can apply for a stay under the Arbitration Ordinance (Chapter 609), which generally mandates staying proceedings to give effect to arbitration agreements provided there is a valid arbitration agreement and the dispute falls within its scope. Anti-suit injunctions are available for both cases. 8. Ship-Owners’ Income Tax Relief 8.1 Exemptions or Tax Reliefs on the Income of Ship-Owners’ Companies Hong Kong offers specific tax advantages for mari - time owners under the Inland Revenue Ordinance (IRO). Profits derived from the international operation of ships (including carriage and chartering) by Hong Kong-resident operators are exempt from profits tax. Only Hong Kong-sourced shipping profits could be taxable under the territorial system, and exempt sums require a substantial activities test (adequate activi - ties, employees and expenditure in Hong Kong). Hong Kong flag registration brings no standalone tax ben - efit.
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