How to approach drafting an HKIAC arbitration CIS

A contract with a counterparty in Russia, Kazakhstan, Ukraine or another CIS (Commonwealth of Independent States, the post-Soviet economic and political grouping) state looks straightforward at the term-sheet stage. The complexity lands later, when the commercial relationship sours and the question becomes: where is the award enforced, and against what assets? That answer should govern the drafting choices made before the contract is signed – not after a dispute has already begun.

Drafting an effective HKIAC arbitration clause for a CIS counterparty requires the contracting party to fix the seat, the rules, the governing law, and the procedural language in a sequence that maximises enforceability against CIS-situated assets. Hong Kong, as a common-law seat with a well-tested arbitral institution and strong treaty connections, is a defensible choice – but only if the clause is constructed correctly and the enforcement endgame is mapped in advance.

This guide sets out the decision the in-house counsel or principal faces, the drafting sequence in order, the gate that must pass at each step, and the common mistakes that render an otherwise sound clause unusable when the assets matter most.

Why Hong Kong as a seat for CIS disputes?

Hong Kong's position as an arbitral seat for CIS-facing contracts is not accidental. It offers a neutral, common-law forum with an independent judiciary, a statute – the Arbitration Ordinance (Cap. 609) – that is modelled on the UNCITRAL Model Law, and an institutional partner in the HKIAC (Hong Kong International Arbitration Centre) whose administered rules were last updated with effect from 1 June 2024.

For CIS counterparties, the neutrality argument is substantial. A seat in a European capital carries political associations that can complicate negotiations. A seat in the counterparty's home jurisdiction eliminates the independent-forum advantage entirely. Hong Kong sits outside both political orbits while remaining commercially credible to sophisticated CIS principals who have transacted through it for decades.

There is also an enforcement logic. The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards – which applies to Hong Kong – has been ratified by most CIS states, including Russia, Kazakhstan, Ukraine, Belarus, Azerbaijan, Armenia, Georgia, Uzbekistan and Kyrgyzstan. A Hong Kong-seated award travels on that treaty when the assets sit inside those states. The treaty framework is not perfect – enforcement in any jurisdiction is a local-court process that depends on local practice – but it is far more reliable than a foreign court judgment, which has no equivalent multilateral foundation across the CIS.

In our cross-border practice, the comparison that most often clarifies the seat decision for clients is this: an HKIAC award gives the creditor a treaty-based enforcement route into most CIS states and simultaneously a clean registration path in Hong Kong if the counterparty holds assets here. A judgment from any other forum typically offers one or the other, not both.

Step 1 – Decide the governing law of the contract before the seat

The governing law of the arbitration clause is distinct from the governing law of the main contract, and both should be deliberate choices. Many practitioners treat these as one question. They are not.

The main contract governing law determines how the substantive commercial obligations are interpreted and what remedies exist. If Hong Kong law governs, the common-law body of contract, damages and remedies doctrine applies. If English law governs, it is materially similar but distinct. CIS parties sometimes push for the law of their home state; this can be accommodated, provided the arbitration clause expressly specifies a different governing law for the clause itself or, at minimum, anchors the seat and institutional rules clearly.

Why does this matter at the drafting stage? Because a court enforcing the award in a CIS state will examine whether the arbitration agreement was valid under the law applicable to it. An ambiguous governing-law position creates an avoidance argument at precisely the point where the creditor least wants litigation: the enforcement proceeding in the CIS court.

The practical gate here is straightforward. The in-house counsel should confirm, before finalising the governing law clause, whether any mandatory rule of the counterparty's home jurisdiction prohibits arbitration of the contract type in question. Certain CIS states have arbitrability carve-outs for particular categories of state-connected contract. Checking that gate closes a significant enforcement risk before the contract is signed.

Step 2 – Fix the seat, the rules, and the institutional reference correctly

The HKIAC publishes a model arbitration clause. Using it verbatim – adapted only for language and number of arbitrators – is the single most reliable drafting choice available. Departing from it without understanding why introduces ambiguity that courts and tribunals will later have to resolve, usually at the creditor's cost.

Three elements of the institutional reference matter: the seat, the rules, and the name of the institution. All three must be present, consistent, and unambiguous.

The seat determines the curial law – the national law that governs the arbitral process, court assistance, and setting-aside applications. Specifying Hong Kong as the seat anchors the proceedings under the Arbitration Ordinance (Cap. 609) and the jurisdiction of the Court of First Instance. If the seat is left blank or described only as "Asia", the default under the HKIAC Administered Arbitration Rules may place the seat in Hong Kong, but that default is a less certain position than an express stipulation.

The rules should be identified by institutional name and, where appropriate, by the version in force at the time of the dispute (the HKIAC Rules provide that the version in force at commencement governs, unless the parties agree otherwise – a feature worth explaining to CIS counterparties who may be unfamiliar with administered arbitration).

The number of arbitrators is a practical decision with real cost and time implications. A sole arbitrator is faster and significantly less expensive. A three-member tribunal offers each party a nominated arbitrator and is often expected in higher-value CIS contracts. The HKIAC Administered Arbitration Rules allow the Centre to determine the number if the clause is silent; however, an express choice removes that uncertainty and prevents a preliminary skirmish on the point at the outset of a dispute.

Step 3 – Choose the procedural language and think about what the CIS court will read

The procedural language of the arbitration – English is the default for HKIAC proceedings unless the parties specify otherwise – affects every downstream step. Pleadings, awards, and procedural orders will all be produced in that language. When the creditor takes the award to enforce in, say, Kazakhstan or Uzbekistan, the local court will require a certified translation into the state language.

This is not a reason to conduct the arbitration in Russian or another CIS language. It is a reason to plan for the translation and certification step at the enforcement stage, and to ensure that the key terms of the award – the operative paragraph, the amount, the named parties, the seat – are drafted with translation in mind. Vague or convoluted English in the award operative paragraph creates a translation problem that a local court can use to decline enforcement on technical grounds.

Our desk regularly prepares enforcement strategy documents alongside the drafting of the main arbitration clause. The question of what the CIS-court enforcement judge will see is answered before the contract is signed, not after the award is made. That sequencing changes the drafting choices, particularly around party identification (full legal names in the Roman and Cyrillic scripts where the counterparty uses both), the description of assets in any security arrangements, and the currency in which any award sum is expressed.

Should the clause specify the language expressly? Yes, as a matter of prudence. "The language of the arbitration shall be English" is seven words that remove a preliminary procedural argument.

What are the common drafting mistakes that destroy enforceability?

The most frequent error we encounter in CIS-facing contracts is the pathological clause – a clause that refers to arbitration but introduces contradictions that make it unworkable. Common variants include: a clause that names the HKIAC as administrator but specifies the ICC Rules; a clause that specifies Hong Kong as the seat but also provides that disputes "shall be subject to the exclusive jurisdiction of the courts of [CIS state]"; or a clause that provides for arbitration of "certain disputes" without defining which.

Each of these creates a threshold challenge. The respondent's first move in any enforcement proceeding will be to argue that the arbitration agreement was invalid, inoperative, or incapable of being performed. A pathological clause provides the textual ammunition for that argument.

The second most common error is the failure to account for multi-party or multi-contract structures. A CIS transaction often involves a head contract, a guarantee from a related entity, and a security agreement over assets held by a third vehicle. If only the head contract contains the arbitration clause, the guarantor and the security vehicle are outside the arbitral jurisdiction. The award runs against the primary obligor only. The assets – which sit in the related entities – cannot be reached through the arbitral process without a separate basis of jurisdiction.

Counsel on our desk sees this most often in commodity and energy-sector contracts, where the operating entity is a CIS-registered company and the guarantor is a holding entity incorporated offshore. The arbitration clause in the supply agreement covers the former. The offshore guarantor is not bound unless the guarantee document separately submits to arbitration or to court jurisdiction in a place where the guarantee can be enforced. Mapping this structure before the contract is signed takes a fraction of the time it takes to reconstruct the enforcement route after a default.

A third error is omitting to consider whether the CIS counterparty is state-connected. Where the counterparty is a state enterprise or has the state as a significant shareholder, questions of sovereign immunity may arise at the enforcement stage. The approach to sovereign immunity in CIS jurisdictions is not uniform. Some have adopted restrictive immunity doctrines; others have not. The contract should, where legally permissible under the counterparty's domestic law, include an express waiver of immunity from jurisdiction, from enforcement, and from pre-award measures. Absent such a waiver, an otherwise valid award may be unenforceable against the assets of a state-connected entity.

Step 4 – Structure the clause to support interim measures from Mainland courts where relevant

This step applies where the transaction has a Mainland China dimension – for example, a CIS group contracting with a Hong Kong company that is itself a subsidiary of a Mainland parent, or a contract where the assets include Mainland-situated property.

Since 1 October 2019, an HKIAC-seated arbitration may apply to Mainland courts for interim measures (property preservation orders and the like) before the award is made. This is a significant practical tool for transactions where the debtor's reachable assets sit in the Mainland rather than in the CIS home state.

For in-house counsel advising on a CIS-to-Mainland trade or investment structure, this means that the HKIAC seat gives access to interim-relief mechanisms in two major asset locations simultaneously: the Hong Kong courts (under the Arbitration Ordinance) and the Mainland people's courts (under the interim-measures Arrangement). No other arbitral seat currently provides that combination.

The drafting implication is modest but important: the clause must correctly identify the seat as Hong Kong (not merely "Asia" or "offshore") and must designate the HKIAC as the institution, since the interim-measures Arrangement operates by reference to a list of designated Hong Kong institutions of which the HKIAC is the primary member.

For further detail on how Mainland courts process these applications, see our briefing on interim measures from Mainland courts in aid of Hong Kong arbitration.

Step 5 – Run the enforcement-endgame check before signing

The final step before the clause is finalised is the enforcement-endgame check: a structured review of where the counterparty's assets actually sit, and whether the chosen seat and rules maximise the creditor's reach to those assets.

For a CIS counterparty, that review typically covers four questions. First, where are the operating assets – in the CIS home state, in an offshore holding vehicle, in the Mainland, or in Hong Kong itself? Second, does the relevant CIS state have a functioning enforcement regime for New York Convention awards, and what is the current practice of its courts on enforcement grounds? Third, are any of the assets held by entities that are not party to the arbitration agreement? Fourth, does the counterparty have a presence in Hong Kong or any other common-law jurisdiction where enforcement is straightforward?

The answers to these four questions may lead the counsel to modify the seat choice, add parallel enforcement provisions in the guarantee, or include a hybrid clause that provides for arbitration but preserves court jurisdiction in a specific forum for interim relief. That kind of modification is easier to negotiate before the contract is signed than after a dispute has started.

For parties whose enforcement endgame is primarily in Hong Kong – for example, CIS groups with a Hong Kong asset base or bank relationships – an alternative or supplement to the HKIAC clause is a choice-of-court agreement that engages the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645), which came into force on 29 January 2024. That instrument covers monetary and non-monetary judgments, removed the old exclusive-jurisdiction requirement, and provides a registration mechanism in the Court of First Instance. It is a court-judgment tool, not an arbitration tool, but for some CIS transactions where the enforcement endgame is entirely in Hong Kong or the Mainland, it may be relevant alongside or instead of an arbitration clause.

For a fuller analysis of enforcing arbitral awards with a BVI or offshore dimension, see our guide on enforcing an arbitral award from the BVI through Hong Kong.

Decision checklist for in-house counsel

The following checklist reflects the five-step sequence above. It is intended as a pre-signing review, not a post-dispute remedy.

Governing law confirmed – the governing law of the main contract and of the arbitration clause have been separately identified; any home-jurisdiction arbitrability restriction has been checked.
Seat expressly fixed – "Hong Kong" stated in terms; no competing jurisdiction clause; curial law is the Arbitration Ordinance (Cap. 609).
Rules and institution correct – clause references the HKIAC Administered Arbitration Rules; no internal inconsistency between rules and institution name.
Number of arbitrators fixed – sole arbitrator or three-member tribunal expressed; no ambiguity for the Centre to resolve at commencement.
Procedural language specified – "English" (or another language if agreed) stated in terms; translation and certification for enforcement planned.
Multi-party / multi-contract scope checked – every entity whose assets may need to be reached in enforcement is either a party to the arbitration agreement or separately bound by an enforceable submission.
Sovereign immunity addressed – if the counterparty is state-connected, an express and legally permissible waiver of immunity is included.
Interim-measures access considered – if Mainland assets are in scope, the HKIAC seat and institutional designation are confirmed to access the interim-measures Arrangement.
Enforcement endgame mapped – the four asset-location questions above have been answered; any modification to the standard clause has been recorded and explained to the counterparty.

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 route is won or lost.

To discuss how the HKIAC arbitration clause applies to your specific CIS contract and the enforcement route in the relevant asset jurisdiction, contact info@lockhartyip.com.

A micro-scenario: CIS commodity supplier and Hong Kong trading house

A Central Asian commodity group contracted through a Hong Kong trading entity. The supply agreement contained an arbitration clause referencing Hong Kong, but the institution named was non-existent – a transcription error had produced a name that matched no recognised body. When the trading entity failed to pay across three consecutive shipments, the commodity group commenced what it believed was an HKIAC arbitration. The respondent challenged jurisdiction on the basis that the named institution did not exist and that no valid arbitration agreement had been formed.

We were engaged after the jurisdictional challenge had been filed. The factual record showed a clear intent to arbitrate in Hong Kong under administered rules; the error was a clerical one. The tribunal, applying principles of interpretation consistent with the Arbitration Ordinance (Cap. 609), found jurisdiction and proceeded. The award was eventually made and registered. The episode cost the claimant approximately one full procedural cycle in time – delay that a correct clause would have eliminated entirely.

The lesson is not exotic. It is that the clause must be checked against the institution's actual name and the current rules before the contract is executed. A single drafting review at the contract stage is materially less expensive than a jurisdictional challenge at the commencement of proceedings.

If an earlier filing, structure, or enforcement attempt produced an adverse or stalled result, a second read can identify the strategic error and the routes still open. Reach us at info@lockhartyip.com.

Related practices

Disputes & Arbitration – cross-border arbitration strategy, enforcement, and interim measures across Greater China and the CIS
Holding Structures – structuring Hong Kong and offshore holding vehicles with enforcement-path awareness

Frequently asked questions

Which jurisdiction's law applies to drafting an HKIAC arbitration clause for the CIS counterparty?

The governing law of the arbitration clause can be agreed separately from the governing law of the main contract. In practice, Hong Kong law most often governs the arbitration clause where Hong Kong is the seat, because the Arbitration Ordinance (Cap. 609) supplies the curial framework. The main contract may simultaneously be governed by English law, Hong Kong law, or – subject to arbitrability review – the law of the CIS counterparty's home state. Confirming both choices expressly in the contract removes an avoidance argument at the enforcement stage.

Do I need a Hong Kong adviser for drafting an HKIAC arbitration clause for the CIS counterparty?

The clause engages Hong Kong arbitration law, HKIAC procedural rules, and – for the enforcement endgame – the law of the CIS state where the assets sit. Counsel familiar with the Hong Kong seat and the CIS enforcement environment is well-placed to combine all three. Home-state or European counsel may be strong on the main-contract governing law but unfamiliar with how the Arbitration Ordinance interacts with the interim-measures Arrangement or with CIS enforcement practice. The practical answer is that the clause benefits from cross-border input at the drafting stage rather than remediation at the dispute stage.

How does the cross-border element affect drafting an HKIAC arbitration clause for the CIS counterparty?

The cross-border element is the central design constraint. The clause must be valid under the law governing it, enforceable in the CIS state where the assets are situated, and consistent with the procedural rules of the seat. Those three requirements do not always point in the same direction. The most common tension is between a CIS counterparty's preference for home-state court jurisdiction and the creditor's need for a New York Convention award that travels into that state without a separate treaty. Resolving that tension at the drafting stage – through the seat choice, the governing-law clause, and the multi-party scope review – is the central task the guide addresses.

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

How to approach drafting an HKIAC arbitration clause for the CIS counterparty