Matter note: arbitrating a construction

Hong Kong-seated arbitration under the HKIAC Administered Arbitration Rules (the institutional rules of the Hong Kong International Arbitration Centre, effective in their current form from 1 June 2024) offers a well-tested route for construction and infrastructure disputes across the Asia-Pacific region – and the enforceability of the award at the asset end is, in our experience, the decision that shapes the entire strategy from the outset.

The case described below is anonymised. No client-identifying facts appear. It is offered as a matter note because the sequence of steps, the turning point, and the lesson it produced travel across many construction and infrastructure disputes we see in cross-border practice. The jurisdictions, the sector, and the contractual context are generalised.

The situation: a cross-border construction dispute with the wrong clause in the contract

A regional infrastructure group – operating through a Hong Kong intermediate holding company with project-level entities in a Southeast Asian jurisdiction – reached a significant dispute with its Mainland Chinese engineering contractor. The underlying contract governed a mid-market infrastructure project. The claim centred on prolonged delay, alleged defective works, and the recovery of advance payments made against performance that, in the principal's view, was never completed.

The dispute clause in the original contract was not well-drafted. It named a domestic arbitration body in the project jurisdiction. It was silent on the seat. It contained an ambiguous governing-law provision that mixed the project-jurisdiction law with a reference to "international practice". The counterparty, once the dispute crystallised, took the position that the clause required domestic arbitration in its home jurisdiction – where the contractor enjoyed structural advantages and the enforcement of any award against it in China would require a further layer of recognition proceedings.

The principal's in-house team had originally structured the holding entity through Hong Kong specifically to preserve optionality for cross-border disputes. The difficulty was that the project contract had been negotiated by a different adviser without that strategic objective in mind. By the time our desk was engaged, the contractor had already written to nominate a domestic arbitrator, and the principal faced a genuine risk of being drawn into a forum it had never intended.

What complicated matters further: the contractor's meaningful assets – machinery, sub-contractor receivables, and a share register entry in a BVI holding vehicle – were dispersed across the Mainland, Hong Kong, and an offshore centre. Any award would only have value if it could be registered or enforced in at least two of those jurisdictions.

The cross-border problem: which forum, which law, which enforcement route?

The enforceability of an award is determined long before the tribunal is constituted. The forum question, the seat question, and the enforcement route are, in a well-run construction arbitration, resolved as a set rather than as a sequence.

In this matter, the competing positions were stark. If the dispute proceeded in the domestic forum named in the contract, any award would be a domestic award in the project jurisdiction. Enforcing it in Mainland China would require a court to apply the relevant bilateral or multilateral convention – a route whose practical reliability varied considerably depending on the relationship between the two states. Enforcing it in Hong Kong would depend on whether that jurisdiction's common-law rules on foreign judgment recognition applied or whether any statutory regime was engaged. The contractor's BVI holding vehicle would require a separate set of BVI enforcement proceedings.

Conversely, if a Hong Kong seat could be established, the position changed materially. A Hong Kong-seated award under the Arbitration Ordinance (Cap. 609, the statute governing arbitration in Hong Kong, modelled on the UNCITRAL Model Law) would engage both the New York Convention (the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards, applicable to Hong Kong) for offshore enforcement and the Arrangement Concerning Mutual Enforcement of Arbitral Awards Between the Mainland and the HKSAR (the bilateral mechanism governing award enforcement across the Mainland–Hong Kong boundary). The contractor's Mainland assets would be reachable through the Arrangement, and its BVI vehicle would be addressable through Convention enforcement in the BVI courts. The asset endgame, in short, was materially better from a Hong Kong seat.

The question was whether a Hong Kong seat could be established against the contractor's resistance.

In our cross-border practice, this is precisely the junction where matters are won or lost before a single pleading is filed. The forum is the enforcement route, and the enforcement route is the recovery.

The strategy: anchoring the seat in Hong Kong

We assessed the dispute clause carefully. The clause was poorly drafted, but it was not hopeless. Several elements worked in the principal's favour. The clause did not expressly exclude Hong Kong. The reference to "international practice" in the governing-law provision opened an argument for the application of internationally recognised procedural norms. The holding entity through which the contract flowed was incorporated and registered in Hong Kong, creating a connection-based argument for Hong Kong jurisdiction over the dispute arising from it. The contract also had a separate choice-of-law provision for the financing documents, which named Hong Kong law.

The strategy we mapped had three components. First, file for HKIAC-administered arbitration under the HKIAC Rules, asserting Hong Kong as the seat on the basis of the contractual connections and the silence on seat in the dispute clause. Second, apply to the HKIAC for an emergency arbitrator to seek Mainland interim measures – a step available under the Arrangement on Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the HKSAR, which has been in effect since 1 October 2019 and applies specifically to arbitrations seated in Hong Kong. Third, prepare a parallel position on the enforceability of any eventual award across each relevant jurisdiction, so that the litigation track for registration was ready to move as soon as an award issued.

The interim-measures step was the tactical anchor. By filing for emergency relief at the HKIAC and seeking a Mainland court order freezing certain assets of the contractor, the principal demonstrated that the Hong Kong seat was not merely asserted but operative. The contractor's resistance to HKIAC jurisdiction became, in practical terms, a position it would have to litigate before the tribunal while simultaneously facing Mainland asset exposure.

The sequence and the turning point

The emergency arbitrator proceedings moved within the window contemplated by the HKIAC Rules – ordinarily completed within 14 days of file transmission. The Mainland courts, engaged through the bilateral Arrangement, issued a preservation order against a portion of the contractor's identified Mainland assets within the statutory timeframe applicable under that mechanism.

That order was the turning point. The contractor, which had until that point maintained that only domestic arbitration in the project jurisdiction was available, agreed to submit the jurisdictional question to a constituted HKIAC tribunal rather than resist the Hong Kong proceedings entirely. The principal had effectively changed the negotiating geometry: contesting jurisdiction was now an exercise the contractor would run while its Mainland assets were under preservation.

The tribunal was constituted. The jurisdictional objection was argued. The tribunal found, on the construction of the dispute clause read against the contractual matrix, that the silence on seat did not compel the domestic forum and that the connection-based arguments for Hong Kong were sufficient to establish the seat. The hearing proceeded under HKIAC administration.

The substantive hearing addressed the delay claims, the defective-works allegations, and the recovery of advance payments. The engineering evidence was presented through a combination of Hong Kong-based expert testimony and documentary evidence produced through the HKIAC procedural mechanism. The contractor was represented throughout; the proceedings were contested.

The award issued within the period consistent with the HKIAC Rules. It was a final award on the merits and included a costs determination.

Registration of the award for enforcement in Hong Kong proceeded through the Court of First Instance under the Arbitration Ordinance. The enforcement track for the Mainland, under the 1999 Arrangement and its 2020 Supplemental Arrangement, was initiated simultaneously – a step the Supplemental Arrangement expressly permits.

The qualitative outcome and the transferable lesson

The principal recovered a substantial portion of the advance payments and a portion of the delay claim. The recovery was materially enabled by the Mainland asset-preservation order, which gave the final award teeth when registration proceedings commenced. The BVI enforcement track produced a separate order against the contractor's offshore holding vehicle.

The lesson is not jurisdictional. It is structural.

Construction and infrastructure disputes in Asia fail at the recovery stage not because the law is unclear but because the enforcement route was never mapped at the contract stage. In our cross-border practice, we regularly advise groups structuring project-level contracting that the dispute clause and the holding-entity selection are part of the same decision. A well-chosen intermediate holding entity – Hong Kong, in most Greater China structures – can anchor the seat, engage the interim-measures mechanism, and open the bilateral enforcement route across the Mainland boundary. Negotiated after the dispute has crystallised, those options narrow considerably.

Three practical points transfer from this matter:

Seat silence is a risk, not a neutral position. A dispute clause that names an institution but not a seat is an invitation to a jurisdiction contest. The time to fix it is at contract negotiation, not after the dispute emerges.
Interim measures are a strategic tool, not a last resort. The Mainland interim-measures Arrangement is available only to Hong Kong-seated arbitrations. Filing early and asserting the seat operationally changed the posture of the entire matter.
Simultaneous enforcement is permitted and should be planned. The 2020 Supplemental Arrangement to the arbitral-award enforcement mechanism between the Mainland and Hong Kong expressly permits simultaneous applications in both jurisdictions. Coordinating both tracks from the moment the award issues reduces the window during which a counterparty can dissipate assets.

The sequence above describes the standard position across a complex cross-border asset map. Your matter turns on the documents, the jurisdictions actually engaged, and the order of the steps – which is where the recovery is secured or lost.

For a structured assessment of your construction or infrastructure dispute across the relevant jurisdictions, write to us at info@lockhartyip.com.

What foreign counsel typically misread in Asia construction arbitration

We see a consistent pattern in instructions that arrive after a dispute has already been filed in the wrong forum or where an award has been obtained but cannot be enforced against the assets that matter.

The most common error foreign counsel make is treating the dispute clause in an Asian construction contract as a procedural formality rather than a strategic instrument. The choice of institution, seat, and governing law in a construction contract is, in effect, a decision about which jurisdiction's courts will ultimately handle registration proceedings and which enforcement mechanisms will be available against which asset classes.

A second pattern concerns the sequencing of enforcement steps. Counsel unfamiliar with the bilateral mechanisms between Hong Kong and the Mainland frequently attempt New York Convention enforcement of a Hong Kong-seated award through Mainland courts – a route that does not apply. The Mainland–Hong Kong Arrangements govern, not the Convention; and the available routes, conditions, and timelines under the Arrangements differ from Convention enforcement. Engaging Hong Kong-experienced international counsel early avoids this misdirection.

A third error is treating the offshore holding vehicle as invisible to enforcement. A BVI or Cayman entity above the project company is typically a New York Convention jurisdiction. An award creditor with a Hong Kong-seated award and identified assets in the offshore vehicle has a well-established route through the common-law courts of those jurisdictions. That route needs to be activated promptly; delay creates dissipation risk.

If an earlier filing, structure, or enforcement attempt has produced an adverse or stalled result, a second read can identify the strategic error and the routes still open. To discuss your position, write to info@lockhartyip.com.

For background on the broader practice, see our Disputes & Arbitration practice page. For a step-by-step treatment of the award enforcement route, see our guide on enforcing an arbitral award across jurisdictions. For a fuller treatment of the procedural considerations in Asian construction arbitration, see our guide to arbitrating a construction or infrastructure dispute in Asia.

Frequently asked questions

What does the route look like for arbitrating a construction or infrastructure dispute in Asia?

The route typically runs from institution selection and seat confirmation through to tribunal constitution, a substantive hearing, and an award – followed immediately by parallel enforcement steps in each jurisdiction where assets sit. For disputes with a Greater China dimension, a Hong Kong-seated HKIAC arbitration engages both the bilateral Mainland–Hong Kong enforcement Arrangement and New York Convention routes for offshore enforcement. The seat decision, made at the outset or anchored through early procedural steps, determines which of those routes is available. Interim measures – including Mainland asset preservation – are available only from a Hong Kong seat, and their strategic value is highest when filed early.

How long does arbitrating a construction or infrastructure dispute in Asia usually take?

Timelines vary with the complexity of the claim, the number of parties, and the volume of technical and documentary evidence. Under the HKIAC Administered Arbitration Rules, an expedited procedure award issues within six months of file transfer; a standard procedure award is due within three months of the close of proceedings. Construction disputes with substantial engineering evidence typically run longer than commercial contract claims. Interim-measures proceedings, including emergency arbitrator proceedings, are ordinarily completed within 14 days of file transmission – the relevant period under the HKIAC Rules. Parties should verify the current procedural position before acting.

Do I need a Hong Kong adviser for arbitrating a construction or infrastructure dispute in Asia?

Where the seat is Hong Kong, or where enforcement of the award will proceed through Hong Kong courts or the Mainland–Hong Kong Arrangements, Hong Kong-experienced international counsel is essential. The bilateral enforcement mechanisms, the interim-measures Arrangement, and the registration procedure before the Court of First Instance each require familiarity with both the HKIAC procedural rules and the cross-border enforcement architecture. Foreign counsel alone, without that familiarity, will typically miss the sequencing steps that determine whether the award translates into actual recovery. We act as international and cross-border counsel and coordinate with locally licensed Hong Kong firms on matters of Hong Kong law.

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

Matter note: arbitrating a construction or infrastructure dispute in Asia