Category Archives: Arrangements

Mainland-Hong Kong Insolvency “Arrangement” Forthcoming

For those for whom the timing is right, tomorrow’s (14 May afternoon) event gives the interested person an opportunity to watch a discussion in real-time concerning a new hard-law legal “Arrangement”  (it is now clear that the document is not so entitled) between the Mainland (presumably the Supreme People’s Court (SPC) and the Hong Kong Special Administrative Region (Hong Kong SAR) on bankruptcy (insolvency) law and learn about relevant recent updates. The document is the Conference Summary [Meeting Minutes] on Procedures for the Mutual Recognition of and Assistance in Insolvency Procedures by the Courts of the Mainland and the Hong Kong SAR (内地与香港特别行政区法院相互认可和协助破产程序的会谈纪要).  At the same time, the SPC is releasing an Opinion approving pilot projects to implement the Conference Summary  最高人民法院关于开展认可和协助香港特别行政区破产程序试点工作的意见.  A pilot project approach is usual when the SPC wants to test whether procedures are workable before implementing them nationwide.

social media posting by one of Hong Kong’s leading barristers chambers describes it as the “most momentous cross-border insolvency development in a generation. ”  Although it is not so stated, I surmise (by reviewing the press conference announcing the Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region” (the Supplemental Arrangement (关于内地与香港特别行政区相互执行仲裁裁决的补充安排), that the official signing of the new insolvency Arrangement will be held in the morning, after which a press conference will be held. My guess, based on that press conference, is that  SPC Vice President Yang Wanming (杨万明副院长) will sign on behalf of the SPC and that Hong Kong SAR Secretary for Justice Teresa Cheng will sign on behalf of the Hong Kong SAR Government.  The link to the SPC’s press conference indicates that Vice President Yang Wanming will in fact sign and that Judge Si Yanli will participate in the signing ceremony and the press conference.

According to the social media posting above, Mr. Justice Jonathan Harris, current Companies and Insolvency Judge of Hong Kong’s High Court, will be delivering a keynote speech during the afternoon Forum announced above.   My guess (without any factual basis) is that Judge Si Yanli will give a keynote as well.  The Arrangement is likely to have involved a great deal of hard work on the part of all involved in the drafting.

Justice Harris’s judgments contain valuable insights into some of Hong Kong’s cross-border insolvency-related issues, such as the intersection between stock exchange listings and insolvency.  His decision in the Winding-Up Proceedings of China Huiyuan Juice Group is a good example:

As I explained at the outset of this decision the court is hearing many petitions to wind-up listed companies whose businesses are in the Mainland.  Since the court resumed hearings in May more than half the petitions I have heard have involved listed companies. Remarkably petitions to wind-up Hong Kong incorporated companies operating domestic businesses are currently a minority…  What is now quite clear is that the use of the group structures I have described present difficulties.  It will be useful if I describe these and what I anticipate will be their impact for creditors and shareholders in Hong Kong and other jurisdictions….

As will be apparent from this decision the practice has developed of Mainland businesses listing in Hong Kong using corporate vehicles which have no connection with the Mainland, which is commonly the COMI [Center of Main Interest], , or Hong Kong where the business is to be listed.  The structure is made more complicated by group architecture which involves inserting between the listed company and the mainland companies at least one, and my impression is commonly more than one, intermediate subsidiary incorporated in a different offshore jurisdiction.  As this decision demonstrates this structure creates a significant barrier to steps being taken by creditors and shareholders to enforce rights using the courts of Hong Kong, which is the legal system that they have probably assumed they will be able to access if they need to take steps to enforce their legal rights against a company listed here.

As I have previously written,  cross-border bankruptcy (insolvency) law is an area of particular focus of the SPC.  Phrases in two 2020 SPC Opinions signal this Arrangement. Article 16 of the November 2020 SPC Opinion  on Providing Support and Guarantees for Shenzhen to Build Itself into a Pilot Demonstration Zone for Socialism with Chinese Characteristics (最高人民法院关于支持和保障深圳建设中国特色社会主义先行示范区的意见) states:

Promote the establishment of a cross-border bankruptcy recognition and assistance mechanism推动建立跨境破产认可与协助机制.

Additionally, Article 12 of the September 2020 SPC  Guiding Opinions on Further Expanding People’s Court Service Safeguards for Expanding the Opening Up to the World (Open Policy Guiding Opinions)) (最高人民法院关于人民法院服务保障进一步扩大对外开放的指导意见) contains the following (translation thanks to Chinalawtranslate):

12. Properly handle cross-border bankruptcy [insolvency], financial, and enforcement cases. Adhere to the principle of equal protection for similar claims, actively participate in and promote the formulation of international treaties on cross-border bankruptcy [insolvency], improve the coordination mechanisms for cross-border bankruptcy [insolvency] and protect the rights and interests of creditors and investors in accordance with the law…12.妥善处理跨境破产、金融、执行案件。 坚持同类债权平等保护原则,积极参与和推动跨境破产国际条约的制定,完善跨境破产协调机制,依法保护债权人和投资人权益。

This single issue illustrates the close reading skills needed to understand SPC Opinions.

Further analysis of the implications of the Arrangement will need to follow its release.

Soft and Hard Law Arrangements & Other Agreements Between the Mainland Authorities and the SAR Governments

1st Joint conference meeting on the Hong Kong BRI Arrangement

If you have never heard of hard and soft law  Arrangements (安排) and other agreements between Mainland authorities and the Hong Kong and Macau Special Administrative Region (SAR) governments, do not be surprised.  The classification is my own and I see it as useful to capture the types of Arrangements and other soft law agreements that have been signed between certain Mainland authorities and the Hong Kong SAR and the Macau SAR, as well as Arrangements between the two SARs. This blogpost highlights several of the more important soft law Arrangements and other agreements between the mainland authorities and the SAR governments.  

This classification harmonizes with the analysis of Professor Wang Heng of the University of New South Wales concerning Belt & Road Initiative Agreements.  

Definition of Arrangements

Although I have written previously about Arrangements between the Supreme People’s Court (SPC) and the Hong Kong Special Administrative Region (SAR) Government, I have not seen an official definition of “Arrangement.”     It appears to be used as a form of agreement between certain Mainland authorities  (intended to include institutions such as the Supreme People’s Court and the Standing Committee of the National People’s Congress as well as ministries and commissions under the State Council ( and it seems some counterparts at the provincial level) and the government of the Hong Kong or Macau SAR.  Some are between the two SARs. I have not seen an equivalent to the Law on the Procedure for the Conclusion of Treaties.  Perhaps guidance exists internally. I surmise (from my blogpost on the recent SPC Arrangement) that the Hong Kong and Macau Affairs Office supervises Arrangements.

What I had not realized until recently that Arrangements are far more numerous and cover a broader range of areas than most legal professionals outside of China (including me) are generally aware of.   Both types of Arrangements can include affiliated measures, such as joint [steering] conferences 联席会议 (related to one of my recent posts ) and yearly implementation measures, such as agreed areas for cooperation.   

Hard and Soft Law Arrangements

 The “Hard Law Arrangements” often have content that is somewhat analogous to a treaty between sovereigns-that is, they have normative content, while the “Soft Law Arrangements” have more soft law content, some more analogous to the ones Professor Wang Heng discussed in the BRI content, while others have language found in domestic Chinese government documents.  I will borrow the definition that Professor Wang Heng uses in his article: soft law refers to quasi-legal obligations or law-like promises that are not legally binding but may affect state behavior.  His definition draws on earlier work, such as that of my colleague Professor Francis Snyder.  (My colleague has a forthcoming book chapter on soft law.)

Professor Wang Heng describes Belt & Road Initiative (BRI) primary agreements (soft law agreements) as largely emphasizing project development rather than rule development. This is also seen to some extent with “soft law Arrangements.” 

“Hard Law” Arrangements

“Hard Law Arrangements” and other “hard law” agreements between mainland authorities and the Hong Kong and Macau SARS are well-known, so this section only mentions a few of the most prominent: 

Professor Henry Gao noted in an article that during the negotiations leading to the conclusion of the CEPAs, it had been suggested that they should be called free trade agreements (FTAs) but they were named  “Closer Economic Partnership Arrangements” instead. He commented that in substance, the two CEPAs are no different from the other FTAs around the world.

For those interested, the Ministry of Commerce (MOFCOM) has a webpage that consolidates the related Macau supplemental agreements.

  •  Dispute Resolution Arrangements

Hong Kong’s Ministry of Justice has a webpage (available in multiple languages) with links to arbitration-related Arrangements as well as recognition and enforcement of civil and commercial judgments Arrangements.  The webpage also links to Arrangements involving other Hong Kong SAR government departments. It appears that some agreements mentioned on that webpage may be soft law documents, but I have not seen the full text of some of these documents and so cannot confirm.

An Arrangement on the Mutual Recognition and Enforcement of Arbitral Awards between the Supreme People’s Court and the Macau SAR Government also exists.

Many other hard law Arrangements have been signed, but I have not seen a single repository of these documents. It is my hope that the Hong Kong Government can do so.

Soft Law Arrangements and Other Soft Law Agreements

It appears that less attention has been paid to soft law Arrangements and other soft law agreements.  There are also memoranda of understanding (MOU), with analogous usage to those in BRI projects. A number of the important ones are highlighted below.

  • July, 2017 National Development and Reform Commission, People’s Government of Guangdong Province, Government of the Hong Kong Special Administrative Region, Government of the Macao Special Administrative Region Framework Agreement  on Deepening Guangdong-Hong Kong-Macao Cooperation in the
    Development of the Greater Bay Area Greater Bay Area (GBA Framework Agreement)

This Framework Agreement is a soft law agreement that links hard and soft law content. In discussing BRI soft law agreements, Professor Wang Heng mentions Project-Linked Agreements and Mechanism-Creating Agreements and mentions that some combine both. The GBA Framework Agreement mentions some of the above hard law Arrangements, with a great deal of new soft law content aimed at promoting the development of the GBA.  It flags what was then forthcoming BRI Arrangements. Among the goals cited:

deepen co-operation between the Bay Area and related countries and regions in… legal and dispute resolution services… and to build an important support area for pursuing the Belt and Road Initiative.for Hong Kong…

establish a centre for international legal and dispute resolution services in the Asia-Pacific Region…

This is the document that attracted my interest in “soft law Arrangements.”  Several articles relate to developing Hong Kong’s role in dispute resolution, such as:

2.To support Hong Kong in developing high value-added maritime services, including…maritime law and dispute resolution,

26. To support Hong Kong in establishing itself as a centre for international legal and dispute resolution services in the Asia-Pacific region to provide relevant services for the Belt and Road Initiative.

The Hong Kong BRI  Arrangement links to Article 34 of the SPC’s 2019  Opinion On Further Providing Judicial Services and Guarantees by the People’s Courts for the “Belt and Road” Initiative (BRI Opinion #2). That article contains language about supporting the Hong Kong SAR to develop as a regional legal service and dispute resolution center and Hong Kong playing a more important role in jointly developing the BRI:

The development of the regional legal service and dispute resolution center of the Hong Kong Special Administrative Region (“Hong Kong SAR”) shall be further supported, the cooperation between arbitration institutions in Hong Kong such as Hong Kong International Arbitration Centre and arbitration institutions in the Mainland, the arbitration institutions in the Hong Kong SAR shall be introduced to the construction of the “one-stop” dispute resolution platform of international commercial courts… and the Hong Kong SAR shall play a more important role in the joint development of the “Belt and Road” Initiative. 进一步支持香港特别行政区区域法 律服务和纠纷解决中心的建设,支持 香港国际仲裁中心等仲裁机构与内地 仲裁机构的合作,在国际商事法庭 “一站式”纠纷解决平台建设中适当 引入香港特别行政区仲裁机构…不断发挥 香港特别行政区在共建“一带一路” 中的重要作用。

The Arrangement establishes a joint conference mechanism (that features in a number of Arrangements) comprising responsible officials from the National Development and Reform Commission (NDRC), the Hong Kong and Macao Affairs Office of the State Council and other relevant departments as well as senior representatives of the HKSAR.  The SPC has participated in at least two of these meetings, but from the reports on the meetings, does not appear to be a joint conference member institution.

The  Hong Kong BRI Arrangement could be linked to the 2019 Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong Special Administrative Region and the 2020 Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong SAR. Although  BRI Opinion #2 explicitly restates the Chinese government’s desire that more international commercial disputes (including BRI ones) be resolved in China, this clause is also a recognition that the Hong Kong International Arbitration Centre is often selected in contracts between Chinese companies and foreign companies, including in BRI disputes, as evidenced in Professor Matthew Erie‘s recently published article.

Under the Arrangement, the two sides have agreed, in related documents, upon major areas of work and in 2020, allocation of responsibilities and have established an annual joint conference. It is unclear whether a similar set of documents exist for the Hong Kong BRI Arrangement.

The Macau and Hong Kong BRI Arrangements are quite different from one another and deserve further analysis. Under the Macau BRI Arrangement, for example, the Macau SAR Government undertakes to be a platform for liaison with Lusophone countries.

It is unclear why there is no courtesy English translation of this Arrangement (as there is for the Hong Kong BRI Arrangement). The content of this Arrangement provides insights into plans for Hong Kong and the Mainland to cooperate in the area of science and technology, but time does not permit further analysis.

A final comment is that it appears to be difficult to locate the full text of some of the soft law Arrangements reported.

More to Come?

I surmise that the Hong Kong and Macau SARs’ futures will involve more hard and soft law Arrangements and other agreements with the Mainland.  The topic of these agreements deserves closer attention. I hope that someone with an interest, the time, and the language skills can take this research forward.