The Strategist

Asian multinational businesses may exclude Hong Kong as a jurisdiction for arbitration from their contracts

02/02/2021 - 02:34

According to the Financial Times (FT) sources at several major law firms, large firms are increasingly considering excluding Hong Kong from their legal contracts "out of concern that China's growing control could affect the legal rules" of that autonomy.

Studio Incendo
Studio Incendo
The publication notes that senior lawyers from ten major law firms in Hong Kong, Tokyo and Singapore are reporting increasing enquiries from their clients. 

They are asking whether they should exclude Hong Kong from their contracts in clauses relating to jurisdiction of law and arbitration. These are companies mainly based in the US and Japan, but also dealing with China and other Asian countries.

The applicable law jurisdiction clause allows contracting companies to agree on the law country or territory under which they will resolve potential arbitration disputes.

Hong Kong has recently come under increasing pressure from the Chinese authorities, who are trying to exert total political control over this special administrative area. 

As the FT notes, arrests of opposing activists and violent crackdowns on local demonstrations have raised fears that Hong Kong's current legal system could be weakened by this pressure.