Reading the risk in freezing assets

A creditor who wins an arbitration or secures a judgment against a Mainland counterparty faces a question that is almost never answered by the award itself: where do the assets actually sit, and can they be reached before the debtor moves them? For cross-border disputes touching both Hong Kong and the People's Republic of China, that question has a specific, time-sensitive answer. The route runs through a set of interlocking instruments – and the sequence of steps, not just the outcome of the hearing, decides whether the relief is real.

Freezing assets across the Hong Kong–Mainland boundary requires coordinating interim-relief proceedings under the Arbitration Ordinance (Cap. 609) with the cross-border interim-measures arrangement that has been in effect since 1 October 2019, and – where enforcement of a final judgment or award is the objective – the mutual-recognition regime under the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645), which came into force on 29 January 2024. Each instrument has a defined scope, a defined sequence, and a defined risk of failure if used out of order.

This analysis covers the commercial stakes, the governing instruments and how they interact, the comparative position across the two systems, and where our desk reads the risk as sitting now.

What is commercially at stake when assets straddle the boundary?

The practical problem is asset mobility. A Mainland counterparty that anticipates an adverse award or judgment can move liquid assets – inter-company receivables, cash at bank, shareholdings – across entities or across borders faster than most arbitral or court proceedings move. The window between a dispute crystallising and a final award or judgment running to months, sometimes years. An unencumbered asset pool at the start of the process is not an unencumbered asset pool at the end.

Hong Kong's position in this picture is structural. It is both a common-law forum capable of granting interim relief and a hub through which Mainland-connected capital routinely flows. Groups incorporated in the British Virgin Islands or the Cayman Islands frequently hold their Mainland operating assets through a Hong Kong intermediate holding entity. That structure, beneficial for many commercial reasons, also means that the most attachable assets – the shares in the Hong Kong holding company, or the receivables it holds against the Mainland operating entity – are often within reach of the Hong Kong courts even before a final award or judgment exists.

The commercial stakes, then, are not merely procedural. Securing interim relief in Hong Kong at the right moment can freeze the very asset layer that makes the ultimate enforcement meaningful. Missing that moment – through a misjudged sequence, an incomplete application, or a failure to anticipate the Mainland dimension – can reduce a well-won arbitration to a paper award.

How does the governing regime actually work?

Three instruments govern the cross-border picture, and they operate at different stages of the dispute lifecycle. Understanding what each instrument does – and what it does not do – is the starting point for any realistic risk assessment.

The Arbitration Ordinance (Cap. 609), modelled on the UNCITRAL Model Law, governs Hong Kong-seated arbitrations. It gives the Court of First Instance broad power to grant interim measures in support of arbitral proceedings, including Mareva injunctions (worldwide freezing orders). That power applies before, during and – in certain circumstances – after an arbitration. The court's jurisdiction to grant such relief in support of a Hong Kong-seated arbitration is well-established and does not depend on whether the assets are located in Hong Kong.

The cross-border interim-measures arrangement – in force since 1 October 2019 – adds a second layer. Under that arrangement, a party to a Hong Kong-seated arbitration administered by a designated institution (including the HKIAC) may apply directly to a Mainland people's court for interim measures, including property preservation orders, before or during the arbitration. This is a significant departure from the pre-2019 position, where Mainland interim relief in support of a Hong Kong arbitration was not available by direct application. The arrangement does not give the Hong Kong courts the power to freeze Mainland assets directly; it provides a route for the Mainland courts to act in support of a Hong Kong-seated arbitral process.

The third instrument – Cap. 645, in force from 29 January 2024 – governs the mutual recognition and enforcement of final judgments (and, in certain respects, arbitral awards) between the Mainland and Hong Kong. It replaced a narrower 2008 regime that required an exclusive jurisdiction agreement. The new ordinance applies a connection-based test and extends to monetary and non-monetary judgments made on or after its effective date. Crucially, the registration mechanism under Cap. 645 is not interim relief; it is an enforcement mechanism for a judgment that is already final and effective. The distinction matters: by the time a creditor reaches the Cap. 645 stage, the interim-measures window is long past.

Where do the two systems diverge – and why does that gap create risk?

Hong Kong and the Mainland operate distinct legal orders. That is the foundational reality of the one country, two systems framework. In the dispute-resolution context, the divergence that creates the most practical risk is not doctrinal – it is procedural and jurisdictional.

The Hong Kong Court of First Instance can grant a worldwide Mareva injunction over a respondent's assets wherever they are situated. In practice, however, a Hong Kong freezing order has no self-executing effect on Mainland-situated assets. A Mainland people's court will not treat a Hong Kong court order as automatically binding on assets or entities within its jurisdiction. This is not a defect in the Hong Kong order; it reflects the separate status of the two legal systems under the constitutional framework.

The interim-measures arrangement partially bridges that gap, but only in one direction and only for assets subject to a Mainland court's property-preservation jurisdiction. A Hong Kong arbitral party can request that a Mainland court freeze Mainland-situated assets in support of a HKIAC-administered (or other designated-institution) arbitration. But the Mainland court applies its own procedural rules, its own standards for granting preservation, and its own timeline. The outcome of that application is not certain, and the process requires careful preparation: the application must be made in the correct form, to the correct court, with the correct supporting material. Errors at the application stage can result in delay or refusal, and a refused application leaves the asset unprotected.

There is also a directional asymmetry that practitioners must account for. The arrangement permits a Hong Kong-seated arbitral party to seek Mainland interim measures. It does not, symmetrically, provide a route for a Mainland-seated arbitral party to seek interim measures from the Hong Kong courts through an equivalent mechanism. The Hong Kong courts retain their inherent jurisdiction to grant interim relief in support of foreign arbitrations in appropriate circumstances, but the formalised mutual-assistance route runs specifically from Hong Kong-seated arbitrations toward Mainland courts.

What does this mean in practice? It means that the jurisdiction where the arbitration is seated – and the institution that administers it – has direct consequences for the interim-measures options available to the parties. A counterparty who insists on a Mainland-seated arbitration, or who selects a non-designated institution, forecloses the 2019 arrangement route for the opposing party. That is a drafting risk that is frequently overlooked when arbitration clauses are negotiated at the transaction stage, often years before any dispute arises.

What foreign counsel and in-house teams most commonly get wrong

In our cross-border practice, we see a consistent pattern of errors in cross-border freezing matters. They cluster around three points.

The first is timing. Interim measures are almost always time-critical. The window between a dispute crystallising and a counterparty beginning to dissipate assets is short, and it is often shorter than the time it takes an unfamiliar team to understand the cross-border mechanics. We regularly advise on matters where the critical misstep was not a legal error but a delay of days or weeks while the client assembled the right counsel and understood the procedural route. By the time the application was ready, the most attachable assets had moved.

The second is scope. A freezing order granted by the Court of First Instance in Hong Kong does not freeze Mainland assets by operation of Hong Kong law. A team that obtains a Hong Kong order and stops there – without pursuing the Mainland property-preservation route – may have frozen only part of the asset pool, or the less valuable part of it. The question to ask at the outset is not "can we get a Hong Kong order?" but "where are the assets, and which instruments reach them?"

The third is sequencing in relation to the final enforcement objective. The interim-measures arrangement and the Cap. 645 enforcement regime are not alternatives; they operate at different stages. A party that focuses on the enforcement stage – the registration of a final award or judgment – without having preserved assets at the interim stage may find that the enforcement mechanism is theoretically available but practically empty. The asset pool is gone.

Foreign counsel and in-house teams also frequently underestimate the importance of the arbitration agreement itself. The access to the 2019 arrangement depends on the seat and on the administering institution. An arbitration agreement that selects a non-designated institution, or that is silent on the seat, or that selects ad hoc arbitration, does not provide the same access to the Mainland property-preservation route. Correcting that at the dispute stage is not straightforward.

How the asset picture changes when the enforcement objective is a court judgment rather than an arbitral award

Not every cross-boundary dispute runs through arbitration. Parties sometimes litigate in Hong Kong courts, or hold a Mainland court judgment, and seek to enforce across the boundary. The Cap. 645 regime now provides the primary route for this, replacing the narrower choice-of-court mechanism that preceded it.

Under Cap. 645, a Mainland judgment (a judgment made on or after 29 January 2024 by a Mainland people's court in civil or commercial proceedings) may be registered with the Court of First Instance in Hong Kong, after which it is enforceable as if it were a judgment of the Hong Kong court. The equivalent route runs in the other direction: a Hong Kong court judgment may be presented in the Mainland courts using a certified copy and certificate procedure. Neither route requires the parties to have had an exclusive jurisdiction clause – a significant liberalisation from the prior regime.

The exclusion list under Cap. 645 matters here. The regime does not apply to insolvency proceedings, to certain intellectual-property disputes, to succession and matrimonial matters, or to certain arbitration-related orders. Where the underlying dispute touches an excluded category, the party seeking cross-boundary recognition must look to other mechanisms – or accept that the recognition route is not available and plan the enforcement strategy accordingly.

For arbitral awards, the position is governed by the 1999 Arrangement between the Mainland and Hong Kong (supplemented in 2020), under which arbitral awards may be recognised and enforced across the boundary. A key point – confirmed by the 2021 amendment to the Supplemental Arrangement – is that simultaneous enforcement applications are permitted. This resolved a prior uncertainty about whether a party had to choose between enforcement in one jurisdiction or the other. The ability to apply simultaneously is relevant to the asset-preservation strategy: a creditor who holds an award can move on both fronts at once rather than exhausting one enforcement route before opening another.

A scenario: where the risk materialises

Consider a mid-size European manufacturing group that contracted with a Mainland counterparty through a BVI holding entity, with a Hong Kong intermediate holding company standing above the Mainland operating entities. The contract contained an HKIAC arbitration clause, seat Hong Kong. When the Mainland counterparty defaulted and the dispute was referred to arbitration, the group's in-house team focused on building the merits case. Interim measures were discussed but not pursued in the first two months of the proceedings, in part because the team was uncertain whether a Mainland property-preservation application was feasible.

By the time the group sought advice on the interim-measures route, the Mainland counterparty had restructured its receivables into a related entity outside the reach of the immediate preservation application. The assets that remained within the property-preservation perimeter were real property assets, which are less liquid and harder to dissipate but also harder to enforce against quickly. The arbitration was ultimately won. The enforcement process, however, was protracted and the eventual recovery was partial.

This pattern – a strong merits position, a delayed interim-measures application, an asset pool that has partially moved by the time the application is made – is common in our cross-border practice. The legal tools were available. The sequencing was not.

Where we read the risk now: our analytical view

The interim-measures arrangement has been in force for several years. The Cap. 645 enforcement regime has been in force since early 2024. The technical tools for cross-boundary asset freezing and enforcement are more developed than they were five years ago. That is the good news.

The risk, in our assessment, has shifted. It is no longer primarily a question of whether the instruments exist – they do. The risk now sits in three places.

The first is drafting. Arbitration clauses negotiated without attention to the 2019 arrangement's requirements – seat, institution, designation – continue to be executed across the market. Those clauses create disputes where the interim-measures route is unavailable or uncertain. We see this regularly, particularly in contracts drafted under pre-2019 precedents that have not been updated.

The second is preparation. A cross-boundary property-preservation application requires documentary preparation that is different from – and, in some respects, more demanding than – a standard Hong Kong Mareva application. Parties who have not prepared the supporting material in advance face delays at the point when speed matters most. In our desk's experience, the quality of the preparation at the application stage is as important as the legal entitlement to the relief.

The third is the asset landscape itself. As Mainland-connected capital structures become more complex – layered holding arrangements, intra-group receivables, asset-backed structures that move value without moving title – the identification of the correct target asset, and the correct mechanism to reach it, requires analysis that goes beyond the dispute itself and into the corporate structure. Disputes and holding-structure counsel need to work together at an early stage. Where that does not happen, the enforcement endgame is compromised before the arbitration even begins.

One further risk deserves attention. The Cap. 645 regime is new, and its practical operation – how Mainland courts receive Hong Kong registration applications, how Hong Kong courts respond to registration of Mainland judgments – is still developing. The exclusion perimeter, the connection-based test, and the interaction with existing arbitral-award enforcement routes will be clarified through practice over time. Parties planning enforcement strategies around the new ordinance should approach the analysis with appropriate care and should verify the current position before acting.

The decision matrix: situation, instrument, route, timing, risk

The appropriate instrument depends on the stage and the asset location.

Where the arbitration is Hong Kong-seated and administered by a designated institution, and Mainland assets need to be frozen before or during the arbitration, the route is the 2019 interim-measures arrangement, applied to the relevant Mainland people's court, at the earliest stage after the dispute crystallises. The risk here is preparation quality and timing.

Where Hong Kong assets need to be frozen in support of a Hong Kong-seated arbitration, the route is a Mareva application to the Court of First Instance under the Arbitration Ordinance. The Hong Kong court has well-established jurisdiction and a clear procedural route. The risk here is the worldwide versus Hong Kong-only scope question, and the need to serve the respondent correctly.

Where the dispute has produced a final award and Mainland-situated assets are the enforcement target, the route is the arbitral-award Arrangement (1999, supplemented 2020), with simultaneous applications in both jurisdictions now permitted. The risk here is the exclusion perimeter and any challenge by the debtor on recognised grounds.

Where the dispute has produced a Hong Kong court judgment and Mainland assets are the target, or a Mainland judgment is to be enforced in Hong Kong, Cap. 645 is the primary route for judgments made on or after 29 January 2024. The risk here is the exclusion list and the newness of the regime's practical operation.

In each scenario, the decision about which instrument to use, in what order, is made more complex by the asset structure of the respondent. A BVI holding entity sitting above a Hong Kong intermediate holding company above a Mainland operating entity creates at least three potential target layers, each governed by a different mechanism. The enforcement strategy needs to map the asset structure before it maps the legal route.

What changes if the asset structure runs through the BVI or Cayman layer?

Many Mainland-connected groups structure their offshore holding through BVI or Cayman entities. When a dispute arises, the most reachable assets may not be Mainland-situated operating assets at all; they may be the shares in the BVI or Cayman entity, or the receivables flowing from the Mainland operating level through the Hong Kong intermediate company to the offshore holding entity.

The Hong Kong courts can grant Mareva relief over a respondent's worldwide assets, including shares in offshore companies, provided the court has personal jurisdiction over the respondent. That is a powerful tool. However, the practical enforceability of a Hong Kong freezing order against BVI or Cayman assets depends on whether the relevant offshore court will recognise and give effect to the Hong Kong order – a question governed by the law of the offshore jurisdiction and the procedural rules of those courts.

In our cross-border practice, we work alongside locally licensed Hong Kong firms and allied counsel admitted in the relevant offshore jurisdictions to coordinate these applications. The key point is that the multi-layer asset structure demands a multi-instrument approach. A single freezing order – however well-drafted – does not automatically reach all the layers. The strategy must be designed for the specific corporate structure of the respondent.

For readers tracking the interaction between the disputes practice and related structural considerations, our analysis of enforcing arbitral awards from Cyprus through Hong Kong addresses a parallel set of issues in the Cyprus–Hong Kong corridor. The structural context for offshore-connected enforcement routes is discussed further in our briefing on recognising BVI court judgments in Hong Kong.

Our Disputes & Arbitration practice overview sets out the full range of our cross-boundary enforcement work and the mechanisms we apply in the Greater China and offshore contexts.

Related practices

Holding Structures – structuring offshore and intermediate holding layers to support enforcement and asset protection objectives
Corporate Counsel – governance and entity management across Hong Kong, offshore and Mainland-connected structures

The sequence above describes the standard analytical position. Your matter turns on the specific documents, the corporate structure of the respondent, the jurisdictions actually engaged, and the order in which steps are taken – which is where the route is won or lost. For a structured assessment of the freezing and enforcement options across the Hong Kong–Mainland and offshore dimensions, write to us at info@lockhartyip.com.

Frequently asked questions

What does the route look like for freezing assets across the Hong Kong–Mainland boundary?

The route combines a Mareva injunction from the Hong Kong Court of First Instance – available in support of a Hong Kong-seated arbitration under the Arbitration Ordinance (Cap. 609) – with a property-preservation application to the relevant Mainland people's court under the cross-border interim-measures arrangement in force since 1 October 2019. These two steps address Hong Kong-situated and Mainland-situated assets respectively. For final enforcement of awards, the 1999 arbitral-award Arrangement and the Cap. 645 mutual-recognition ordinance provide the applicable mechanisms. The optimal route depends on asset location, the stage of proceedings, and the arbitration clause in the underlying contract.

What is the first step in freezing assets across the Hong Kong–Mainland boundary?

The first step is identifying which assets are reachable and under which system – before any application is filed. That analysis drives the sequencing. Where the arbitration is Hong Kong-seated and administered by a designated institution, a Mainland property-preservation application under the 2019 arrangement can be made at the earliest stage after the dispute crystallises, even before the tribunal is constituted. For Hong Kong-situated assets, a without-notice Mareva application to the Court of First Instance is the standard first move. Delay at this stage is the most common source of failure in cross-boundary freezing matters.

What documents are needed for freezing assets across the Hong Kong–Mainland boundary?

For a Hong Kong Mareva application, the core materials are a without-notice summons, an affirmation setting out the full facts of the claim and the asset position, a draft order, and supporting evidence of the respondent's assets and the risk of dissipation. For a Mainland property-preservation application under the 2019 arrangement, the requirements are set by the Mainland court's procedural rules and typically include translated copies of the arbitration agreement, the notice of arbitration, and evidence of the assets to be preserved. Preparation of both sets of documents in parallel, before any application is filed, is the standard approach on our desk.

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This publication is general information and does not constitute legal advice. For advice on your situation, contact info@lockhartyip.com.

Reading the risk in freezing assets across the Hong Kong-Mainland boundary