Update: shareholders' agreement terms for the CIS joint venture

Joint ventures between CIS-based principals and partners in Greater China are reaching a recurring inflection point. Governing-law and forum clauses drafted under older conventions are meeting a changed enforcement environment – and the mismatch is producing real commercial risk. For groups using Hong Kong as the transaction hub or as the seat of arbitration, the structural question demands a fresh read.

A shareholders' agreement (the primary constitutional document governing the rights and obligations of co-owners in a joint-venture entity) for a CIS-Hong Kong joint venture must address governing law, dispute resolution forum, and the day-two operating reality – the detailed mechanics that determine whether the arrangement functions once it is in place. Where those terms were set under earlier market conditions, they may no longer reflect the enforcement routes actually available across the Hong Kong–CIS corridor.

This briefing covers what has shifted, who is exposed, and the immediate action.

What Has Changed Across the Hong Kong–CIS Corridor

The enforcement environment for cross-border joint-venture arrangements between CIS counterparties and Hong Kong-side partners has moved on several fronts at once. Hong Kong's reciprocal-enforcement regime for Mainland judgments – the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance, in force since 29 January 2024 – altered the calculus for groups whose joint-venture holding entity sits between Hong Kong and a Mainland operating layer. Simultaneously, CIS jurisdictions have continued to develop their own commercial-court frameworks, and the question of where a dispute will be heard, and how an award or judgment will be recognised, is no longer a theoretical one.

The practical consequence is straightforward: a governing-law clause pointing to a jurisdiction that has no functioning recognition treaty with Hong Kong, and a forum clause selecting an arbitral seat whose awards face uncertain enforcement across the CIS, can leave a shareholder with rights on paper and no route to enforce them in practice. We regularly see shareholders' agreements in this corridor that were negotiated with care on economic terms but with minimal attention to the dispute-resolution and enforcement chain. That gap becomes visible only when the relationship deteriorates.

There is a second, less-discussed shift: the day-two operating reality. Deadlock provisions, reserved matters, pre-emption rights, and information rights all depend on the local law of the jurisdiction where the joint-venture entity is incorporated. A Hong Kong holding company is subject to the Companies Ordinance (Cap. 622). A BVI or Cayman vehicle carries its own statutory regime. CIS-incorporated entities operate under local corporate law that may differ substantially on directors' duties, minority protections, and the mechanics of calling a general meeting. Shareholders' agreements that do not align with the underlying corporate statute – or that assume a corporate law framework that does not apply – produce obligations that cannot be performed as written.

Who Is Exposed and What to Do Now

Groups most immediately affected fall into three categories. First, existing joint ventures with CIS principals where the shareholders' agreement was drafted more than two to three years ago and has not been reviewed since. The governing-law and forum terms in those documents reflect a prior environment. Second, joint ventures where a Hong Kong holding entity was introduced as a structural layer but where the shareholders' agreement was not updated to reflect that entity's governance obligations under Hong Kong company law. Third, ventures currently under negotiation where the instinct is to carry forward standard terms from a prior deal in a different corridor.

The immediate action in each case is a structured review of the governing-law clause, the dispute-resolution clause, and the day-two operating provisions – in that order. The governing-law clause determines which court or tribunal will interpret the agreement. The forum clause determines where any dispute is heard and, critically, where any resulting award or judgment can be enforced. The day-two provisions determine whether the arrangement functions in practice before any dispute arises.

For groups at the negotiation stage, the window to get these terms right is open now. For groups with existing agreements, the window for a consensual amendment is almost always easier before a disagreement has surfaced. Once a shareholder relationship has deteriorated, amending a governing-law or forum clause requires the agreement of the very party you may shortly be in dispute with.

Our Corporate Counsel practice advises on shareholders' agreement terms and joint-venture structures across the Hong Kong–CIS corridor. For related governance questions affecting Hong Kong subsidiary structures, see our analysis on director duties and governance in Hong Kong subsidiaries. For cross-border restructuring considerations in an adjacent corridor, our briefing on corporate restructuring across Hong Kong and the UAE covers comparable structural issues.

The sequence above describes the standard position. Your matter turns on the documents, the jurisdictions actually engaged, and the order of steps – which is where the outcome is determined. To discuss how these terms apply to your cross-border joint-venture position, contact info@lockhartyip.com.

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