In February 2025, China’s Supreme People’s Court and Ministry of Justice jointly issued new guidelines that significantly expand arbitration options for businesses operating in the Guangdong-Hong Kong-Macao Greater Bay Area (“GBA”). These new policies, building on existing pilot programmes, represent a major shift in cross-border dispute resolution mechanisms and signal China’s commitment to fostering a world-class, market-oriented business environment in the region.
Key Policy Changes
Expansion of “Hong Kong Investment, Hong Kong Law” (港資港法)
The “Hong Kong Investment, Hong Kong Law” policy, which previously operated only in Shenzhen’s Qianhai district since 2020, is now extended to cover the entire cities of Shenzhen and Zhuhai. This expansion allows Hong Kong-invested enterprises registered in these cities to choose Hong Kong or Macao law as the governing law for their contracts, even in the absence of foreign-related elements.
Broadening of “Hong Kong Investment, Hong Kong Arbitration” (港資港仲裁)
More significantly, the “Hong Kong Investment, Hong Kong Arbitration” policy has been expanded from China’s free trade zones to encompass all nine mainland cities within the GBA. This means Hong Kong-invested enterprises in Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen, and Zhaoqing can now choose Hong Kong or Macao as their seat of arbitration for commercial disputes so the law of the seat e.g. Hong Kong will govern the arbitration.
Liberal Definition of Hong Kong-Invested Enterprises
The policies adopt a liberal definition of “Hong Kong-invested enterprises”. Any enterprise wholly or partially invested by natural persons, enterprises, or other organisations from Hong Kong or Macao and duly registered in Mainland China (“香港投资企业” “澳门投资企业”是指全部或者部分由香港特别行政区、澳门特别行政区的自然人、企业或者其他组织投资,依法在内地登记设立的企业), qualifies for the expanded options. This inclusive approach ensures maximum flexibility for businesses at every level of Hong Kong participation.
Practical Implications for Businesses
These policy changes offer substantial advantages for businesses operating within the GBA :-
Potential Expansion
The Department of Justice of Hong Kong has indicated it will monitor implementation of the new policies closely and explore further expansion of pilot areas in consultation with mainland departments, suggesting these policies may extend to additional regions in the future.
Conclusion
These new arbitration policies represent a significant shift in China’s approach to cross-border commercial dispute resolution. The new measures not only enhance the GBA’s attractiveness as a business destination using Hong Kong as the gateway but also reinforce Hong Kong’s position as a premier international arbitration hub in Asia.
For businesses operating in or considering expansion into the GBA, these policies offer compelling advantages – reduced business uncertainty, familiar legal framework, and world-class arbitration facilities. As implementation progresses and awareness grows, these measures are likely to play an increasingly important role in shaping the region’s commercial landscape and cementing its position as a leading global business hub.
Our Dispute Resolution team has extensive experience acting in arbitration cases involving foreign parties and advising on arbitration clauses. We are ready to assist businesses to seize these new opportunities and make the most of the new options available including advice on pre-litigation and risk management strategies.