Update: drafting an HKIAC arbitration clause Mainland

An arbitration clause in a cross-border contract with a Mainland China counterparty is only as valuable as the award it eventually produces – and only if that award can be enforced where the assets sit. The clause is the first decision point, and it is frequently the one that determines whether the asset endgame is reachable at all.

Selecting the Hong Kong International Arbitration Centre (HKIAC) as the administering institution and Hong Kong as the seat brings the dispute within the 1999 Mainland–Hong Kong Arrangement on Mutual Enforcement of Arbitral Awards, as supplemented in 2020, which governs recognition and enforcement of Hong Kong-seated awards in Mainland courts. The HKIAC Administered Arbitration Rules, in their current form effective 1 June 2024, govern the procedure and align with international drafting expectations while preserving full enforceability across the boundary.

This briefing identifies the trigger, the parties it affects, and the immediate steps that follow.

What the current position means for cross-border contracts

Two developments converge for contracts with Mainland counterparties drafted or renegotiated now.

First, the 2024 HKIAC Rules introduced procedural refinements – including adjustments to the emergency arbitrator mechanism, where relief is ordinarily completed within 14 days of file transmission, and to the expedited procedure, under which an award is to be issued within six months of file transfer to the tribunal. Clauses drafted to earlier rules remain valid, but any new contract should reflect the current Rules expressly to avoid procedural ambiguity at the commencement stage.

Second, the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645) came into force on 29 January 2024 in Hong Kong. That instrument covers court judgments, not arbitral awards – but it has reshaped the broader enforcement environment across the corridor. Groups that previously relied on an exclusive jurisdiction clause in favour of Hong Kong courts should now consider whether arbitration seated in Hong Kong delivers a better enforcement position for their Mainland-counterparty contracts. An HKIAC clause can operate alongside – rather than against – the expanded judgment-recognition regime, and in many cross-border structures it offers a more direct enforcement route into Mainland courts.

In our cross-border disputes practice, we see a recurring drafting error: clauses that name the HKIAC but fail to specify Hong Kong as the seat, or that specify a different governing law for the arbitration agreement itself. Either gap can create a challenge to enforcement in the Mainland people's courts. The seat is determinative of which Arrangement applies, and it must be stated expressly.

Who this affects across the Hong Kong–Mainland corridor

This briefing is relevant to any cross-border principal currently drafting or renegotiating contracts with Mainland China counterparties – and to those whose existing standard-form clauses were last reviewed before June 2024.

The exposure is sharpest in four situations. First, joint venture agreements where dispute resolution was addressed at incorporation but has not been revisited since the 2024 Rules took effect. Second, supply and distribution agreements with Mainland manufacturers or distributors that use boilerplate clauses inherited from earlier versions. Third, financing documents where a Mainland operating entity is the borrower or guarantor and an HKIAC clause was inserted without the seat being confirmed. Fourth, technology licensing agreements crossing the boundary, where the asset to be enforced against – the ongoing royalty stream – is in the Mainland.

For groups with significant Mainland counterparty risk, the clause is not a formality. It is the architecture of the enforcement route.

The sequence above describes the standard position. Your contract turns on the specific counterparty, the governing law chosen, the asset location, and the steps that follow an award – which is where the enforcement route is won or lost.

For a structured assessment of your clause across the Hong Kong–Mainland interface, write to us at info@lockhartyip.com. Our disputes and arbitration team regularly advises on HKIAC clause drafting and the enforcement sequence into the Mainland people's courts.

What to do now

Three actions are immediate.

Review existing clauses. Any standard arbitration clause used in Mainland-counterparty contracts should be checked against the 2024 HKIAC Rules. Confirm that the clause names HKIAC, specifies Hong Kong as the seat, and addresses the governing law of the arbitration agreement separately from the governing law of the main contract.

Check the enforcement architecture. For contracts of material value, map the likely asset location of the Mainland counterparty. Where assets sit in the Mainland, the clause must be drafted to produce an award enforceable under the Mainland–Hong Kong Arrangement. Where assets also sit offshore or in Hong Kong, the clause must account for multi-jurisdictional enforcement from the outset. We regularly map this sequence for cross-border groups before signature – not after a dispute arises.

Update template libraries. In-house legal teams maintaining standard-form contract libraries for cross-border use should update arbitration clauses to reflect the 2024 Rules. A clause referencing superseded procedural rules does not defeat enforcement, but it introduces unnecessary complication at the commencement stage.

For disputes that have already arisen under an older clause, or where a Mainland counterparty is resisting arbitration, separate considerations apply – including interim measures, anti-suit proceedings, and the sequence of steps before the Hong Kong courts. Our briefing on anti-suit and anti-arbitration injunctions in Hong Kong addresses that environment directly. For enforcement questions that reach offshore, our guide on debt recovery and enforcement against a Cayman Islands debtor covers the complementary offshore route.

Our full Disputes & Arbitration practice sets out the range of matters we handle across the Hong Kong–Mainland and offshore corridors.

Frequently asked questions

What documents are needed for drafting an HKIAC arbitration clause for a Mainland China counterparty?

The starting point is the main contract and any related transaction documents – including governing-law clauses, shareholder agreements, and any prior arbitration correspondence. Effective clause drafting requires sight of the full contractual structure, the asset location of the Mainland counterparty, and the enforcement jurisdictions likely to be engaged. Where the clause is being inserted into an existing agreement, the amendment documentation must also be reviewed to ensure the clause is validly incorporated under the applicable governing law.

What is the first step in drafting an HKIAC arbitration clause for a Mainland China counterparty?

The first step is confirming the seat. A clause that names the HKIAC but does not specify Hong Kong as the seat creates procedural and enforcement uncertainty. Once the seat is confirmed as Hong Kong, the clause can be drafted to engage the Arbitration Ordinance (Cap. 609) and the 2024 HKIAC Administered Arbitration Rules, and to produce an award enforceable in the Mainland under the relevant Mutual Enforcement Arrangement. Governing law of the arbitration agreement should be addressed separately from governing law of the main contract.

How long does drafting an HKIAC arbitration clause for a Mainland China counterparty usually take?

A standalone clause review and drafting exercise, where the commercial terms of the main contract are settled, is typically a short matter of days. Where the clause must be negotiated with a Mainland counterparty – particularly one proposing an alternative institution or seat – the timeline extends and the negotiation requires a clear understanding of the enforcement consequences of each position. Parties should verify the current position on procedural rules before finalising any clause, as the HKIAC Rules were updated with effect from 1 June 2024.

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

Update: drafting an HKIAC arbitration clause for a Mainland China counterparty

What the current position means for cross-border contracts

Who this affects across the Hong Kong–Mainland corridor

What to do now

Frequently asked questions

Speak with Lockhart & Yip

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