Official Reply on the Issue of the Effectiveness of the Agreements of Hong Kong and Macao-Invested Enterprises Registered and Established in the Guangdong–Hong Kong–Macao Greater Bay Area in Which the Laws of Hong Kong or Macao are Selected as the Laws Governing the Contract or that Specify Hong Kong or Macao as the Seat of Arbitration

(Promulgated by the Supreme People’s Court on February 13, 2025 and effective as of February 14, 2025.)

SPC Interpretation [2025] No.3

Guangdong Provincial Higher People’s Court:

Your Request for Instructions on the Issue of the Validity of an Agreement in Which One or Both Parties Opt(s) to Apply the Laws of Hong Kong or Macao or Opt(s) for Arbitration in Hong Kong or Macao for a Hong Kong or Macao Wholly-Owned or Joint Venture Enterprise Registered and Established in the Guangdong-Hong Kong-Macao Greater Bay Area (Yue Gao Fa [2023] No. 53) has been received. After consideration, we give our official reply as follows:

1.         Where one or both of the parties agree, for a Hong Kong or Macao-invested enterprise registered and established in Shenzhen or Zhuhai of the Guangdong-Hong Kong-Macao Greater Bay Area, to select the laws of the Hong Kong Special Administrative Region or the Macao Special Administrative Region as the laws governing the contract, request application of such laws in a legal action and the people’s court, following review, finds that the same does not violate mandatory provisions of state laws nor jeopardize the public interest, it shall uphold such request.

2.         Where one or both of the parties specify in an agreement the Hong Kong or Macao Special Administrative Region as the seat of arbitration for a Hong Kong or Macao-invested enterprise registered and established in one of the nine cities on the mainland in the Guangdong-Hong Kong-Macao Greater Bay Area and a party petitions the people’s court to confirm the arbitration agreement as being invalid on the grounds that the dispute in question does not involve any Hong Kong or Macao-related elements, the people’s court shall deny such petition.

Where the parties submit a dispute for arbitration as agreed and, once the relevant award has been rendered, one of the parties asserts that the arbitral award ought not to be recognized and enforced on the grounds that the dispute does not involve Hong Kong or Macao elements and that the arbitration agreement is invalid, the people’s court shall reject such assertion.

3.         For the purposes of this Official Reply, the term “Hong Kong-invested enterprise” and “Macao-invested enterprise” means an enterprise that is wholly or partly invested in by a natural person, enterprise or other organization from the Hong Kong Special Administrative Region or the Macao Special Administrative Region and is registered and established in mainland China in accordance with the law.