Update: data, confidentiality and IP clauses in cross-border contracts

Cross-border contracts that touch Mainland China, Hong Kong, and offshore holding centres are carrying a structural risk that in-house teams routinely underestimate: the governing-law and forum clause drafted for one corridor does not automatically travel to the next. When a data-sharing arrangement, an NDA, or an IP licence is enforced across the Mainland–Hong Kong boundary, the sequence of steps – and the instrument in play – determines whether the clause holds at all.

Data, confidentiality, and IP clauses in cross-border contracts require deliberate choice of governing law, a forum clause that survives in the enforcement jurisdiction, and alignment with the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645), which came into force on 29 January 2024 and now governs the recognition of most civil and commercial judgments between the Mainland and Hong Kong.

This briefing covers the operative change, who it affects across the corridor, and the immediate action for groups with live contract programmes.

What has changed – and why it matters now

The enforcement picture shifted materially when Cap. 645 replaced the older choice-of-court regime. The old regime required an exclusive-jurisdiction clause pointing to the enforcing court. That requirement is gone. The new connection-based test is broader – but it also means that a clause drafted around the old exclusive-jurisdiction standard may no longer operate as intended when registration is sought before the Court of First Instance.

For data and confidentiality agreements, the practical consequence is immediate. A well-drafted NDA between a Hong Kong entity and a Mainland counterparty used to turn on whether the choice-of-court clause was exclusive. Under Cap. 645, the operative question is whether the judgment meets the connection and scope conditions of the Ordinance. Agreements that were drafted to satisfy the earlier test now need to be read against a different framework.

IP licences carry a further layer. Intellectual property rights are jurisdiction-specific by nature. An assignment or licence valid under the law of one system does not automatically carry its rights into another. Where the IP is registered in the Mainland and the licence is governed by Hong Kong law – or vice versa – the governing-law clause and the dispute-resolution mechanism must be calibrated together. A mismatch at that point is not a drafting nicety; it is an enforcement gap.

Our desk regularly sees contracts where the governing-law clause and the forum clause point in different directions. That mismatch is manageable during performance. It becomes critical the moment a party needs to move.

Who is affected across the corridor

The groups most immediately affected are those with active contract programmes running across the Mainland–Hong Kong interface: technology licensing arrangements, R&D collaboration agreements, cross-border service contracts with data-sharing schedules, and joint-venture ancillary documents that include confidentiality undertakings.

Offshore holding structures add a second dimension. A BVI or Cayman holding entity entering a data or IP agreement governed by Hong Kong law, with a Mainland counterparty, sits across three legal systems simultaneously. The enforcement route is not linear. Cap. 645 applies to judgments between the Mainland and Hong Kong; an offshore entity must route any enforcement action through its Hong Kong subsidiary or affiliate, or pursue a separate regime.

Groups operating across the Greater Bay Area – where data flows, technology transfers, and IP co-development arrangements are common – face this issue in volume. A single product-development agreement may engage Mainland data-protection rules, Hong Kong contract law, and the governing law of the IP-owning entity's jurisdiction, all at once.

For a structural read on how the corporate-counsel function manages this across jurisdictions, see our corporate counsel practice. For a worked example in a joint-venture context, the Singapore joint-venture matter illustrates how governing-law and forum terms interact with shareholder-level documents. The cross-border distribution and agency analysis covers the same tension in a commercial-agreement context.

The immediate action

Three steps apply to any group with live cross-border data, confidentiality, or IP agreements.

First, audit the governing-law and forum clause against the Cap. 645 connection-based test. Agreements drafted under the pre-2024 regime may rely on an exclusive-jurisdiction formulation that no longer maps cleanly to the registration mechanism before the Court of First Instance.

Second, check the alignment between the governing-law clause and the dispute-resolution mechanism. Arbitration and litigation produce different enforcement routes across the Mainland–Hong Kong corridor. Where arbitration is chosen, the relevant Mainland–HK Arrangement governs; where litigation is chosen, Cap. 645 applies. The choice must be deliberate, not default.

Third, for any agreement where IP rights are the primary subject matter, confirm that the assignment or licence is valid and registrable under the law of the jurisdiction where the right subsists – and that the forum clause does not direct disputes to a court that lacks jurisdiction to grant the relief sought against that right.

For a structured assessment of your cross-border contract programme and its current enforcement position, write to us at info@lockhartyip.com.

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Related

• Corporate Counsel
• Shareholders Agreement Terms Singapore Joint Venture Singapore Matter
• Cross Border Distribution Or Agency Agreement Asia Analysis

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