Landmark First Order Under Mainland-HK Arbitration Arrangement Issued

A new ground-breaking arbitration pact between mainland Chinese and Hong Kong courts has been hailed as a "game-changer" for China-related cross-border transactions. The Arrangement, signed in April, allows parties of Hong Kong-seated arbitration proceedings to apply for interim relief from mainland courts. Within a week of it taking effect, a mainland court granted the first interim measure under the new rule.

On October 8, the Shanghai Maritime Court issued a landmark asset preservation order against a Shanghai company that has been the respondent in a Hong Kong-seated arbitration proceeding initiated by a Hong Kong-based shipping company. The two companies had agreed on a charter party in May 2018 whereby the Hong Kong-based applicant would provide a cargo ship to transport coal from Indonesia to Shanghai. When the respondent canceled the charter party, the applicant started an ad hoc arbitration in Hong Kong as stipulated by the charter party and reached a settlement in May 2019 that required the respondent pay $180,000 to the applicant.