Arbitrating a construction or infrastructure dispute in Asia

A construction or infrastructure dispute is rarely a single legal problem. It is a sequence of overlapping failures – delay, defect, scope creep, payment default – each generating its own liability question, and each occurring across a project that often spans three or four jurisdictions at once. When the contract breaks down and negotiation fails, the foreign principal faces a sharper version of the question every cross-border litigant faces: which forum, which law, and – most importantly – where the award will actually land.

Hong Kong is a well-tested seat for construction and infrastructure arbitration in Asia. The Arbitration Ordinance (Cap. 609) is modelled on the UNCITRAL Model Law, the HKIAC Administered Arbitration Rules provide a full procedural toolkit for technically complex disputes, and the territory's common-law courts support interim relief and enforcement. The endgame – recovery against assets in the Mainland or in an offshore holding structure – is governed by a distinct and sequenced set of mechanisms under the Mainland–HK Arrangements and, since 29 January 2024, the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645).

This service note sets out how we structure the arbitration and enforcement route for foreign principals with construction or infrastructure exposure in Greater China and the principal offshore centres, from the first pre-arbitration step through to the asset endgame.

When does a foreign principal need specialist cross-border arbitration counsel?

The trigger is structural complexity, and it crystallises at a specific moment: when it becomes clear that the dispute cannot be resolved at contract level and that the counterparty's assets – or the enforcement route that matters – are in a different legal system from the seat of arbitration.

In our cross-border practice, the pattern we see most often is this. A foreign developer, contractor or employer holds a contract with a Mainland Chinese EPC counterparty (an engineering, procurement and construction contractor) or a state-linked infrastructure entity. The contract may specify Hong Kong as the seat, or it may be silent – and the seat question then becomes the first battleground. Meanwhile, the assets that represent real recovery sit in the Mainland, in a BVI or Cayman holding vehicle, or in a combination of both.

That structural gap – between where the arbitration runs and where recovery is available – is the core problem this service addresses. It does not resolve itself. It requires a deliberate enforcement architecture built in parallel with the arbitration itself, not as an afterthought once the award is issued.

The secondary trigger is document control. Construction and infrastructure disputes are document-heavy by nature: delay records, site instructions, variation orders, payment certificates, inspection reports, as-built drawings. Foreign principals frequently discover, when the dispute surfaces, that their document position is weaker than the contract entitles them to be. Correcting that position early – before the first memorial – is work that changes outcomes.

The governing instruments: what drives the process from seat to enforcement

Three instruments set the procedural architecture for a Hong Kong-seated construction arbitration with enforcement ambitions in Greater China.

The Arbitration Ordinance (Cap. 609) is the foundation. It adopts the UNCITRAL Model Law with modifications and gives the Hong Kong courts supervisory jurisdiction over the seat. That jurisdiction is well-exercised and predictable. The courts have a strong record of supporting arbitration and a correspondingly strong record of refusing to interfere with it.

The HKIAC Administered Arbitration Rules (2024 Rules, effective 1 June 2024) sit on top of the Ordinance. For a construction or infrastructure dispute, the Rules' provisions on multi-party consolidation, emergency arbitration, and expedited procedure are directly relevant. An emergency arbitrator can ordinarily complete emergency-relief proceedings within 14 days of file transmission. That window matters when a counterparty is dissipating assets or interfering with ongoing works.

The third instrument is the Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the HKIAC, which has been in effect since 1 October 2019. This Arrangement allows a party to a Hong Kong-seated HKIAC arbitration to apply to Mainland courts for interim measures – asset preservation, evidence preservation, conduct orders – before or after the arbitration has commenced. The asset preservation application can run in parallel with the arbitral proceedings, not after them. That sequencing is critical to the enforcement endgame.

We advise foreign principals to read these three instruments as a single system, not as separate procedural tracks. The construction dispute itself may last years. The interim-measures route can move within months, and it directly supports the recovery that the final award is meant to achieve.

For a broader picture of how we approach the disputes and arbitration practice, see our Disputes & Arbitration service overview.

How does the cross-border element affect the arbitration route?

The cross-border dimension of a construction or infrastructure dispute is not merely a procedural complication. It changes the nature of the strategic choices available from the outset.

Consider the most common fact pattern at our desk: a foreign-incorporated employer or contractor holds a construction contract with a Mainland counterparty for a project located in the Greater Bay Area or another PRC province. The contract specifies Hong Kong as the seat and English as the language of arbitration. The counterparty is a subsidiary of a state-linked group, and its assets – including project receivables and intercompany loans – sit in both the Mainland entity and an offshore holding structure in the BVI.

The cross-border dimensions multiply quickly. First, which law governs the merits? The governing law of the contract and the law of the seat are separate questions, and construction contracts in this region frequently specify PRC law on the merits and Hong Kong as the seat. That combination is workable, but it requires counsel comfortable with both systems. We work with locally licensed firms on the PRC-law elements and offshore counsel on the BVI-law questions. The client owns the strategy; the specialist input follows the strategy.

Second, what is the enforcement chain? A Hong Kong arbitral award can be enforced in the Mainland under the 1999 Arrangement and its 2020 Supplemental Arrangement. Since the amendment that took effect in 2021, simultaneous enforcement applications in Hong Kong and the Mainland are permitted. That change materially improves recovery prospects where assets span both sides of the boundary. However, enforcement in the Mainland through the people's courts involves its own sequencing, and an award creditor who has not prepared the documentary basis during the arbitration will face obstacles after it.

Third, what is the position with the offshore holding vehicle? A BVI or Cayman entity holding the Mainland counterparty's assets is a separate enforcement target. Enforcing against it requires recognition proceedings in the relevant offshore jurisdiction. Our analysis of recognising judgments and awards in the BVI from Hong Kong sets out how that route works in practice.

The cross-border element also affects witness access, document production, and the practicality of site-visit directions. A tribunal seated in Hong Kong has no power to compel production from Mainland entities or witnesses. That limitation must be addressed through the contract's document-retention provisions, through the interim-measures Arrangement, and – sometimes – through the Mainland courts directly, with locally licensed counsel handling that strand.

What is the step-by-step route, and where does locally licensed counsel join?

Our role is to own the arbitration strategy and coordinate the cross-border execution. Locally licensed Hong Kong firms handle matters of Hong Kong law – procedural applications before the Hong Kong courts, any enforcement registration step, and the formal filings that require an HK-qualified solicitor. Mainland counsel join for PRC-law issues on the merits and for the interim-measures and enforcement applications in the Mainland courts. Offshore counsel join for the BVI or Cayman enforcement strand. The client deals with one strategic adviser who coordinates all three.

The sequence, in practical terms, runs as follows.

Pre-arbitration. Before a Notice of Arbitration is filed, we conduct a contract audit: governing law, seat, arbitration clause, any dispute-escalation prerequisite (mediation or DAB step). We assess the document position and identify gaps. We map the counterparty's asset profile across the Mainland, Hong Kong, and any offshore vehicle. Where the asset picture suggests a risk of dissipation, we advise on whether to file the Notice and the interim-measures application simultaneously.

Commencement and constitution of the tribunal. We prepare and file the Notice of Arbitration under the HKIAC Rules. Tribunal constitution for a three-member panel in a construction matter typically involves a process of appointment, challenge, and confirmation that runs in parallel with the initial pleading phase. The choice of arbitrators – technical background, jurisdictional familiarity, language – is a strategic decision, not an administrative one.

Pleadings and document production. Construction arbitrations are often documentary in character. The statement of claim must integrate the delay analysis, the valuation methodology, and the legal theory in a single coherent narrative. We build the pleadings around the documents the client controls, and we challenge the counterparty's document position through the production process.

Expert evidence. Most construction disputes require expert witnesses on quantum and delay, and sometimes on technical liability. We instruct and work with independent experts, coordinate their methodology with the legal theory, and manage the concurrent evidence process if the tribunal adopts it.

The hearing. Under the 2024 HKIAC Rules, the tribunal has broad case-management powers. We advise on whether the case warrants a full oral hearing or a document-only procedure for specific issues, and we prepare the witness and expert evidence accordingly.

The award. Under the 2024 Rules, the tribunal aims to render the award within three months of the closure of proceedings, with closure itself occurring no later than 45 days after the last directed substantive submissions. For expedited procedures, the target is an award within six months of the transfer of the file to the tribunal.

Post-award enforcement. This is where the cross-border architecture built during the arbitration is activated. We coordinate the enforcement registration in Hong Kong (with locally licensed counsel) and the Mainland enforcement application (with Mainland counsel). Where the counterparty has an offshore holding vehicle, we coordinate the offshore enforcement strand in parallel.

Our Post-award asset tracing in Mainland China service sets out how the recovery phase runs against Mainland-situated assets.

What decisions and documents must the client own?

An arbitration is a principal's dispute, not counsel's. The client must make the decisions that only a principal can make, and must control the documents that only a principal holds. Our job is to ensure those decisions are made with a full view of the cross-border consequences, and that the documents are in the right shape before they become evidence.

The decisions the client must own include the following.

First, the claim scope. A construction dispute frequently generates more heads of claim than a single arbitration can efficiently absorb. Scope decisions made early – which issues to run, which to reserve, how to sequence the relief sought – shape the entire proceeding and directly affect the cost-to-recovery ratio.

Second, the seat and governing-law position, if it is still open. Where the contract is silent or ambiguous on seat, the window to establish a favourable seat closes quickly. We advise on the seat question at the earliest point, including where a parallel domestic-court filing or an existing proceeding in another jurisdiction affects the analysis.

Third, the settlement authority. Construction arbitrations settle more often than they conclude with a final award. The principal must have a clear internal position on settlement range, conditions, and authority levels before the arbitration commences. Counsel cannot negotiate what the client has not authorised, and the negotiation opportunities in a HKIAC arbitration arise at defined procedural points.

The documents the client must own and organise include project records (site diaries, progress reports, variation registers, payment records), correspondence (contract administrator instructions, notices, claims submitted under the contract), and the contract itself with all amendments and side letters. We regularly see foreign principals enter arbitration with these records in a fragmented state. The reconstruction effort, if it is even possible, is expensive and imperfect. Starting the document-control exercise at the pre-arbitration stage is the single most cost-effective step a principal can take.

A micro-scenario from our desk illustrates the point. A European infrastructure investor with a BVI holding entity held a Hong Kong-seated arbitration clause in its EPC contract with a PRC state-linked contractor for a Mainland project (winter 2024). By the time the dispute crystallised, the project correspondence had accumulated across four internal systems in three languages, and the variation register was incomplete. We ran a focused document-collection exercise across the client's internal teams and project-level records before filing the Notice, which allowed the first memorial to be built on a complete evidentiary base. The claim proceeded without the disruption of a contested production order.

Common mistakes and how foreign principals lose the advantage they should have

Construction arbitrations are winnable on the merits and then lost in execution. The mistakes we see most often are not legal errors in the narrow sense. They are structural and timing errors that close down options before the legal case is even filed.

The first and most common error is treating arbitration as a last resort rather than a designed process. Parties who have not structured their construction contracts with arbitration in mind – specific seat, specific rules, appropriate multi-party provisions, clear governing law – find themselves in a disputed arbitration clause proceeding before the substantive dispute is even opened. A week spent on arbitration clause design before the contract is signed is worth months of jurisdictional argument afterward.

The second error is ignoring the asset picture until after the award. An award against a counterparty with no accessible assets is a costly document. The asset-preservation architecture – specifically the interim-measures Arrangement that has been available for Mainland assets since October 2019 – is available during the arbitration. Foreign principals who do not use it, often because they are unaware of it or because their counsel lacks Mainland enforcement experience, arrive at the enforcement stage with no leverage.

The third error is what foreign counsel frequently get wrong when handling the cross-border dimension from outside the region: they treat PRC governing law as a complication rather than a defined system. The PRC's construction law regime – including its mandatory provisions on project procurement, completion certification, and defect liability – generates fixed rules that apply regardless of the arbitration clause. Counsel unfamiliar with those rules cannot assess the merits correctly, and the merits analysis drives the settlement authority and the claim strategy from the outset.

The fourth error is failing to distinguish between the Hong Kong enforcement step and the Mainland enforcement step. These are sequential but legally independent processes, each with their own documentary requirements. A foreign principal who obtains an award and then treats enforcement as a single process will find that the procedural gaps between the two steps are expensive to correct after the fact.

Decision matrix: which route for which situation?

The right arbitration and enforcement architecture depends on the specific combination of contract, counterparty, and asset profile. The following decisions describe the main scenarios we encounter.

Where the construction contract specifies Hong Kong as the seat and HKIAC Rules, and the counterparty's assets are primarily in the Mainland: the arbitration proceeds under the HKIAC Rules; the interim-measures Arrangement is activated at commencement; post-award, simultaneous enforcement applications run in Hong Kong (registration with the Court of First Instance) and in the Mainland courts under the 1999 Arrangement and its 2020 Supplemental Arrangement. The risk here is procedural: Mainland enforcement through the people's courts requires careful documentary preparation, and the locally licensed Mainland counsel join at the enforcement stage at the latest.

Where the contract specifies a different seat – Singapore, London, or a PRC arbitration institution – but the enforcement target is primarily in Hong Kong or the Mainland: the award is brought to Hong Kong for registration or to the Mainland for enforcement under the applicable bilateral mechanisms. The route differs depending on the seat and the institution. Not all foreign awards enjoy the same enforcement pathway into the Mainland. We assess the applicable Arrangement at the outset, because the enforcement architecture for a Singapore-seated award against a Mainland counterparty is different from the architecture for a Hong Kong-seated award.

Where the counterparty's assets are held offshore in a BVI or Cayman vehicle: the Mainland or Hong Kong enforcement step may need to run in parallel with an offshore enforcement application. The BVI enforcement route involves its own recognition regime. The timing of the offshore application relative to the Mainland and Hong Kong steps matters because an offshore freezing order, if obtained early, can prevent asset movement that would otherwise frustrate the primary recovery.

Where the contract is silent on seat or the arbitration clause is defective: the first step is an assessment of whether the clause is salvageable and, if not, whether a court proceeding in Hong Kong or the Mainland offers a better route to a judgment that can be enforced. Since 29 January 2024, a Mainland court judgment on a civil and commercial matter can be registered with the Hong Kong Court of First Instance under Cap. 645, without the old requirement that the Mainland court had exclusive jurisdiction by virtue of a written choice-of-court agreement. That change materially improves the enforceability of Mainland judgments in Hong Kong and may affect the forum choice for a principal whose counterparty is more easily reachable in the Mainland courts.

A second micro-scenario: a Middle Eastern infrastructure fund held a defective arbitration clause in a supply contract with a PRC entity for equipment for a Mainland project (spring 2025). The clause named a defunct arbitration centre and was governed by PRC law. We assessed the clause, identified the arguments for treating it as an ad hoc arbitration agreement with Hong Kong as a workable seat, and prepared the position for a court-appointment application if the counterparty contested jurisdiction. The matter settled before the jurisdiction hearing, on terms that reflected the counterparty's awareness that the enforcement architecture was already being built.

Self-assessment checklist before commencing arbitration

Before a Notice of Arbitration is filed, the following questions should have a clear answer. Where they do not, the pre-arbitration phase is where they are resolved.

• Does the contract contain a valid and operative arbitration clause? Is the seat clear? Are the applicable rules identified?
• Has any contractual pre-condition to arbitration – mediation, dispute adjudication board process, notice requirements – been satisfied or properly considered?
• What is the governing law of the contract, and does it differ from the law of the seat?
• Where are the counterparty's material assets – Mainland China, Hong Kong, BVI, Cayman, or elsewhere – and what interim-measures mechanism applies to each?
• Is there a risk of asset dissipation that requires an emergency arbitration or an interim-measures application to be filed simultaneously with the Notice?
• Are the project records – site diaries, variation registers, payment certificates, correspondence – collected, organised, and in a format suitable for production?
• Has the client established its internal settlement authority and escalation path before the arbitration commences?
• Are locally licensed Hong Kong counsel, Mainland counsel, and (if relevant) offshore counsel identified and available to join at their respective stages?
• What is the preferred outcome – money award, specific performance, declaratory relief, or a combination – and does the enforcement architecture support each?

Each of these questions has a consequential answer. The answers determine not only whether the arbitration succeeds but whether the award, if obtained, produces actual recovery.

The interaction with post-award asset tracing and cross-border enforcement

An award issued by an HKIAC tribunal is a powerful instrument. It becomes a recovery instrument only when the enforcement architecture has been prepared in advance and executed in sequence.

The enforcement chain for a Greater China construction dispute typically has three nodes. First, registration with the Hong Kong Court of First Instance, handled with locally licensed Hong Kong counsel. Second, the Mainland enforcement application under the 1999 Arrangement and its 2020 Supplemental Arrangement, handled with Mainland counsel. Third, any offshore enforcement step against a BVI or Cayman vehicle, handled with offshore counsel. We coordinate all three in sequence and, where the circumstances require it, in parallel.

Post-award asset tracing is a distinct but closely related exercise. Where the counterparty has moved assets or layered them through intermediate entities, tracing is a prerequisite to meaningful enforcement. The legal tools available in Hong Kong – disclosure orders, Mareva injunctions (freezing orders preventing a defendant from disposing of assets pending enforcement), third-party debt orders – are well-developed and court-supported. Our desk has acted on cross-border tracing matters in which the asset trail ran from the Mainland through a Hong Kong intermediate entity to an offshore vehicle. The sequencing of applications across those three nodes determines the outcome.

The interaction between the arbitration phase and the enforcement phase also has a document dimension. Documents produced or disclosed in the arbitration can, in the right circumstances, be used to support enforcement applications. Building the record with that secondary use in mind is part of the strategic architecture, not a post-award concern.

Related practices

• Disputes & Arbitration – our full arbitration and enforcement service across Greater China and offshore centres
• Holding Structures – structuring BVI, Cayman and Hong Kong holding vehicles for enforcement readiness

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