A quiet step forward in my ongoing engagement with alternative dispute resolution. Looking forward to continuing to learn and grow within the field.

Cesar Pereira C.Arb FCIArb, Michael Tonkin, #CIArb #HKIAC #icc #Arbitration #DisputeResolution

Artificial intelligence is rapidly becoming part of everyday legal practice, and arbitration is no exception. It is already being used for research, document review, translation, drafting support, summarisation, and case management, while institutions and practitioners continue to test how far those tools can safely go.

The real question is no longer whether AI will enter arbitration, but whether arbitration can remain meaningfully confidential once it does. If confidential submissions, witness materials, and draft awards are being processed by systems outside the direct control of the parties and the tribunal, the foundation of confidentiality itself begins to look fragile.

Practical implementation across the industry confirms both the immense promise and the strict limitation of these tools, where rapid data processing cannot replace necessary legal judgment. AI can accelerate research, summarise complex materials, and assist with drafting in ways that would have seemed remarkable only a few years ago. But speed is not judgment, and arbitration depends on the latter.

AI has already entered the arbitration process in several ways. Counsel use it for legal research, document review, drafting, and case preparation. Arbitrators use it for summarisation and administrative support. Arbitral institutions are also beginning to explore AI for analytics, workflow support, and procedural efficiency.

The central issue is not whether AI should be used, but how it should be used. In arbitration, the critical concern is whether AI assists human decision-making or begins to displace it. Arbitration is built on trust in a designated human decision-maker. Parties appoint an arbitrator because they want that person’s analysis, reasoning, and experience, not the output of a machine.

This raises difficult questions. At what point does AI-assisted drafting become machine adjudication? Where is the boundary between administrative support and substantive decision-making? An award prepared primarily through undisclosed AI assistance may undermine confidence in the arbitral process. Parties expect a human being to evaluate the facts, law, arguments, and credibility of witnesses.

The principle of due process creates further complications. AI systems may introduce authorities, analyses, or factual points that were never argued by the parties. If an arbitrator relies on such material, questions may arise about whether the parties had a fair opportunity to address those issues. That can create grounds for challenging or setting aside an award on procedural fairness grounds.

Equality of arms is another concern. Better-resourced parties may have access to sophisticated AI systems capable of analysing vast quantities of material quickly, while less-resourced parties may not. That imbalance could distort the arbitration process, especially in document-heavy disputes. Arbitrators may need to address this through proportionality, transparency, and procedural safeguards.

Bias is also a serious issue. AI systems are trained on data, and both the composition of that data and the design of the model influence outputs. Some systems may reproduce biases or limitations embedded in the technology. There is also the problem of opaque reasoning: users may see a polished answer without being able to trace how it was produced. That lack of transparency is troubling, particularly when the result is used in a legal setting.

Hallucinations remain a known risk. AI systems can fabricate cases, quotations, authorities, and legal principles while presenting them with confidence. Several Courts have sanctioned lawyers who filed fictional authorities generated by AI. Arbitration presents additional difficulties because tribunals generally lack the same coercive powers available to Courts.

Confidentiality: the real fault line

Confidentiality in arbitration is not merely a contractual obligation; it is part of the bargain on which parties choose arbitration instead of litigation. The risk posed by AI is different in kind from the risk of a physical file being mishandled in a law office. When a confidential document is kept within a law firm or tribunal, access is limited to a known and identifiable group of people who owe duties of confidence. When the same document, or even prompts describing the dispute, the issues, or the desired outcome, is uploaded to an AI system, control can be significantly reduced in many environments.

In particular, externally hosted systems may leave users with limited visibility into storage, retention, access controls, and downstream use of data. Even where contractual protections exist, parties may not enjoy the same practical degree of control that traditionally accompanies confidential arbitral materials. In some settings, users may not know where the data is stored, who may access it, whether it is used to improve future models, or whether it could later influence outputs generated for others.

That is why the confidentiality question is so difficult. The level of risk depends heavily on the type of AI tool being used. Public or externally hosted systems may create serious confidentiality concerns because the user may have limited control over storage, retention, access, and downstream use of data. By contrast, internally controlled or enterprise-grade tools may reduce the risk, especially where strong governance, contractual protections, and technical safeguards are in place. Even so, any use of confidential arbitral material in AI systems requires caution, verification, and strict data controls.

If confidentiality cannot be meaningfully safeguarded in practice across the tools actually being used, there is a strong argument for rethinking the balance between privacy and transparency in some contexts, including the publication of awards.

It is difficult to justify a strong confidentiality narrative while allowing highly sensitive information to be processed by systems over which the parties and tribunal may have limited real control.

Disclosure as a double-edged issue

Disclosure of AI use, while important, does not eliminate the underlying difficulty. A disappointed party may still argue that the model relied upon was unlawful in the seat of arbitration or in another jurisdiction closely connected to the proceedings. The problem is not simply one of transparency, but of legality: if an AI service is restricted locally and accessed through a VPN or an offshore subscription, the act of using it may itself breach applicable technology or data‑compliance rules.

In that situation, disclosure does not shield the award from challenge. Instead, the reliance on an unlawful service can be portrayed as undermining the integrity of the process, moving the objection beyond mere procedural irregularity into the realm of enforceability. The risk is that what appears to be a technical choice by the tribunal or a party becomes a substantive fault line, exposing the award to annulment at the seat or refusal of recognition abroad. Put simply, disclosure may show honesty, but it cannot cure illegality.

Disclosure therefore cuts both ways. Non-disclosure may itself be advanced as a ground for challenge because the parties were denied the opportunity to regulate or object to AI use. Yet disclosure may also invite a separate challenge based on legality, data protection, or confidentiality concerns. The real problem is not simply transparency versus secrecy; it is that disclosure can destabilise the award from either direction.

The practical implications of mandatory disclosure may be significant. Once disclosure is required, parties may ask not only whether AI was used, but which model was used, when it was used, for what purpose, what prompts were entered, what data was provided, what outputs were generated, and whether an audit trail exists. A regime designed to promote transparency could therefore generate satellite disputes, confidentiality objections, jurisdictional challenges, and post-award litigation. In some cases, the disclosure obligation itself may become a greater threat to finality than the underlying use of AI.

The reputational harm from such disputes may also be severe. Even if an award survives, the parties and the arbitrator may face prolonged litigation, regulatory scrutiny, and damage to their standing in the market. In many cases, the reputational cost may outweigh any efficiency gained from using AI.

The Quebec case

The risks described above are no longer theoretical. In ARIHQ c. Santé Québec (CIUSSS du Centre-Sud-de-l’Île-de-Montréal), 2026 QCCS 1360 (22 April 2026), the Quebec Superior Court annulled an arbitral award after finding that the reasoning relied on non-existent authorities and that this seriously compromised the integrity of the arbitral process. The Court did not prohibit AI use in arbitration altogether, but it held that AI cannot replace an arbitrator’s independent reasoning and decision-making. The award, which concerned a healthcare dispute of roughly CA$1.2 million, was set aside and the parties were ordered to appoint a new arbitrator within 60 days.

The judgment makes clear that not every use of AI will invalidate an award. The key question is whether procedural integrity was compromised in a way that could affect the result. It also confirms that AI may be used for limited tasks such as summarising documents or translating material, provided that the final reasoning reflects the arbitrator’s own judgment and the sources are properly verified. In effect, the Quebec decision draws a bright line between permissible AI assistance and impermissible AI adjudication.

Other jurisdictions

The Quebec decision is not isolated. In the United States, a party filed a petition to vacate an arbitral award on the basis that the arbitrator had outsourced his adjudicative role to artificial intelligence: LaPaglia v Valve Corp, No. 3:25-cv-00833 (S.D. Cal., filed 8 April 2025). The petitioner alleged that the award contained factual assertions not in the record and bore the hallmarks of AI-generated drafting, and also alleged that the arbitrator had previously acknowledged using ChatGPT for writing. The petition was ultimately dismissed on jurisdictional grounds under the Federal Arbitration Act, and the Court did not reach the merits of the AI allegations. Even so, the case shows that parties are prepared to invoke AI misuse as a basis for challenging awards, and Courts will increasingly be asked to confront the line between permissible assistance and impermissible delegation.

Guiding principles

Emerging institutional guidance, including the CIETAC Guidelines on the Use of Artificial Intelligence in Arbitration (July 2025), rests on three core principles. CIArb adopts a similar approach, treating AI as an assisting tool and allowing arbitrators to regulate, limit, or prohibit its use where transparency, fairness, confidentiality, or data security are at risk.

· Party autonomy

· Assistance only

· Continuing obligations

These principles confirm that efficiency must never come at the expense of fairness, confidentiality, or human judgment.

Safeguards for practice

A cautious approach requires several disclosures, verifications, security measures, ownership checks, clear procedural rules, and a pre-deployment assessment before any AI tool is used.

From tool to agent

When many early guidance documents were drafted, AI was largely a passive tool that responded to individual prompts. Today, autonomous AI agents can read files, adapt strategies, and execute multi-step workflows with limited human input. The challenge is therefore no longer only how to use a tool, but how to supervise a digital actor.

That shift requires fresh calibration. The balance is no longer simply between efficiency and accuracy, but between managing semi-autonomous systems and preserving the human core of adjudication. Any framework must ensure that AI remains a powerful assistant to justice, never a quiet substitute for it.

There is also an ongoing debate about whether formal AI guidelines are necessary at all. Some argue that technology evolves too quickly for detailed regulation. Broad principles may be preferable to rigid rules that become outdated within months. Questions remain about disclosure obligations, including whether parties should disclose all AI use or only substantive applications involving drafting, analysis, or decision support.

Many practitioners already rely on AI as an assistant. They use it for research, summarisation, document analysis, presentations, and organisational tasks. However, they generally stop short of allowing AI to determine witness credibility, interpret evidence conclusively, or decide legal issues. Human judgment remains indispensable.

Several broader concerns remain unresolved. Should parties disclose which AI systems they use? Who should bear the cost of verifying AI-generated work? Could widespread reliance on a small number of AI systems create systemic bias across the legal industry? If AI-generated awards become more common, should there be additional review mechanisms beyond traditional setting-aside and enforcement proceedings?

Different jurisdictions are already taking different approaches. Some Courts focus primarily on lawyer accountability, requiring lawyers to stand behind all submissions regardless of AI assistance. Others require disclosure of AI use in particular circumstances. Concerns are especially acute in relation to witness statements and expert reports, because AI-generated language may distort the evidence.

At the same time, it is important not to overreact. Lawyers have always relied on assistants, clerks, researchers, and junior colleagues to help prepare documents. In many respects, AI is another tool in a long tradition of delegated assistance. The key distinction is ensuring that responsibility, judgment, and accountability remain with the human professional.

Conclusion

The central issue is not whether AI will be used, but whether arbitration can remain meaningfully confidential if it is used widely. Hallucinations are a known risk, but they are not the only challenge. The deeper issue is that once confidential information, or even prompts revealing the nature of a dispute, is entered into many AI systems, the risk is no longer merely local; it can become broader, harder to control, and difficult to reverse

If the arbitration community is willing to accept that risk in the name of efficiency, it should also be willing to confront the consequences honestly. The future of arbitration may depend less on partnership with AI than on a candid choice: preserve confidentiality by restricting AI use in sensitive contexts, or accept that the traditional model of private arbitration is under increasing strain

In arbitration, the most important question about AI may not be how to use it, but when to refuse it.

Bibliography

1. LaPaglia Valve Corp, No. 23-cv-02600 (ND Call filed 14 March 2023)

2. Quebec Association of Intermediate Housing Resources (ARIHQ) v Quebec Health – Integrated University Health and Social Services Centre of South-Central Montreal (CIUSSS), 2026 QCCS 1360 (22 April 2026).

3. China International Economic and Trade Arbitration Commission (CIETAC), Guidelines on the Use of Artificial Intelligence in Arbitration (July 2025); and Chartered Institute of Arbitrators, Guidelines on the use of AI in Arbitration (2025), available at:https//www.ciarb.org/news-listing/ciarb-launches-guidelines-on-the-use-of-ai-in-arbitration/

Other works by the author (AI)

4. ‘2025 Changed Everything For AI Accountability’ (25 December 2025) LinkedIn https://www.linkedin.com/pulse/2025-changed-everything-ai-accountability-ahmed-ashfaq-dmqhc?utm_source=share&utm_medium=member_ios&utm_campaign=share_via

5. ‘The 2026 Agentic Accountability Crisis’ (1 January 2026) LinkedIn https://www.linkedin.com/pulse/2026-agentic-accountability-crisis-ahmed-ashfaq-l7v7c?utm_source=share&utm_medium=member_ios&utm_campaign=share_via

6. ‘Why the Sceptic Will Inherit the Courtroom’ (11 March 2026) LinkedIn https://www.linkedin.com/pulse/why-sceptic-inherit-courtroom-ahmed-ashfaq-utf6c?utm_source=share&utm_medium=member_ios&utm_campaign=share_via

7. ‘A Few Practical Insights on AI Tools’ (27 March 2026) LinkedIn https://www.linkedin.com/pulse/few-practical-thoughts-ai-tools-from-someone-who-has-used-ashfaq-ryxec?utm_source=share&utm_medium=member_ios&utm_campaign=share_via

8. ‘Artificial Intelligence Will Write the Pitch. People Will Win the Client. Exploring the Future of Legal Services Through AI, Data, Pricing, and Human Connection’ (11 July 2026) LinkedIn https://www.linkedin.com/pulse/artificial-intelligence-write-pitch-people-win-client-ahmed-ashfaq-rbefc?utm_source=share&utm_medium=member_ios&utm_campaign=share_via

9. ‘Reimagining International Arbitration: A New Architecture for Trust, Efficiency, and Human Judgment in a Disrupted World’ (2 July 2026) LinkedIn https://www.linkedin.com/pulse/reimagining-international-arbitration-a-new-architecture-ahmed-ashfaq; also available on the author’s newsletter https://newsletter.ahmedashfaqsolicitor.com/p/reimagining-international-arbitration?utm_campaign=post&utm_medium=web

Disclaimer:

This article is provided for general informational purposes only and does not constitute legal advice. While reasonable efforts have been made to check the accuracy of the content, no guarantee is given, and errors or omissions may remain. Readers should conduct their own research and seek independent professional advice before relying on any of the matters discussed. The views expressed are those of the author in a personal capacity and do not necessarily reflect the positions of any institution, tribunal, or client.

It has been an absolute honour to engage with such brilliant minds. As the discourse evolves toward the future of technology in dispute resolution, "balance" should be the keyword.

Looking forward to continuing our conversations on arbitration and AI.

One of the final questions I had the privilege of suggesting to the panel, indeed, the second-last question of the programme, was:

Should parties and arbitrators be required to disclose their use of AI in arbitration? Why or why not…

Given the potentially catastrophic consequences for arbitral awards, would a disclosure obligation create a new minefield for post-award challenges…

If AI use must be disclosed, would parties and arbitrators also need to disclose which AI model was used, when and how it was used, for what purpose, what data was uploaded, what outputs were generated, and even provide a complete audit trail of its use…

If AI use is not disclosed, an award may be challenged for non-disclosure. Yet if it is disclosed, parties may seek to challenge the specific AI model used, its legality in the relevant jurisdiction, the manner in which it was accessed, or whether the use of AI compromised the confidentiality of the proceedings.

Does mandatory AI disclosure therefore risk creating a no-win situation that undermines the very principles of confidentiality, finality, and enforceability that arbitration is designed to protect…

YA Dato’ Lee Swee Seng, Judge, Federal Court of Malaysia, Jintao OU, Patrick Zheng, James Kwan, Professor Abe Shinichiro, Dutsadee Dutsadeepanich (ดุษดี ดุษฎีพาณิชย์) , Yiwen (Wenny) Huang, FCIArb, Naresh Mahtani, Borneo International Centre for Arbitration and Mediation (BICAM)

Court 1: A Fast-Paced Environment

Court 1 is extremely busy. Advocates have limited time and must get straight to the point.

Focus on the Strongest Grounds

Identify and present the key reasons why bail should be granted without unnecessary detail.

Master the Case File

You must be completely familiar with the facts, allegations, and instructions before entering Court.

Be Ready for Questions from the Bench

Anticipate likely queries and be prepared to answer them confidently and immediately.

Maintain the Flow of Your Submissions

If interrupted, you should be able to continue seamlessly from where you left off.

Take Detailed Client Instructions

Ensure you have obtained all necessary instructions before the hearing.

Avoid Seeking Instructions in Court

When the Bench raises a query, you should already have the information needed to respond. Turning back to seek instructions can create the impression that you are not fully prepared.

Longer Submissions Require Advance Planning

If you anticipate needing more time for submissions, write to the Court in advance and seek leave for the matter to be assigned to a side Court. Clearly indicate the estimated duration required for your submissions so that appropriate arrangements can be made.

Bottom Line

Effective bail advocacy depends on preparation, precision, brevity, and the ability to respond to the Bench’s concerns without hesitation.

Introduction

Multinational companies operating in Asia face a complex and evolving tax environment. Recent developments in South Korea, China, Singapore, and Hong Kong have significant implications for cross-border investments, corporate structures, and compliance obligations. This article provides a practical overview of the key tax issues businesses should understand in each jurisdiction.

Part One: Tax Considerations in South Korea

Corporate Migration

Corporate migration refers to a company changing its country of registration. For example, a company registered in Luxembourg might decide to move its registration to Delaware in the United States. This practice is becoming increasingly common among multinational companies seeking to simplify group structures by removing unnecessary layers of holding companies.

The Question: If a foreign company that owns a Korean subsidiary moves to another jurisdiction, does this trigger tax in Korea?

Korean Law: Korean law does not explicitly recognise corporate migration. Korean companies cannot move abroad, and foreign companies cannot become Korean companies. The law provides no specific guidance on the tax treatment of such moves.

The Tax Authority’s Approach: When reviewing corporate migration cases, the Korean tax authority (NTS) considers three factors: whether the move dissolves the existing company and creates a new one; whether there has been a change in the company’s legal substance, including its rights, obligations, or ownership; and whether there is a reasonable business purpose for the move.

Recent Rulings: In July 2023, the NTS issued rulings on two corporate migration cases. In one, a Malaysian company moved its registration to Singapore. The NTS ruled that this did not trigger Korean tax because the company continued to exist as the same legal entity and its substance did not change.^[1]

Practical Implications: Companies should maintain thorough documentation to prove that the entity remained the same throughout the migration. Without proper documentation, the tax authority may attempt to treat the migration as a taxable event.

Indirect Share Transfers

Consider this scenario: A foreign company owns shares in a second foreign company, which in turn owns shares in a Korean company. If the first company sells the shares of the second company to a buyer, this constitutes an “indirect transfer” of the Korean company shares.

The Tax Question: Does this indirect transfer create tax obligations in Korea?

Korean Tax Law: Korean tax law lists specific types of income that are taxable when earned by foreign companies. Income from indirect transfers is not included on that list.

The Tax Authority’s Position: The NTS sometimes attempts to “recharacterise” indirect transfers as direct transfers of Korean shares, using a “substance over form” principle. This would create tax obligations where none would otherwise exist.

Court Developments: In December 2024, the Jeju District Court ruled against the tax authority’s attempt to tax an indirect transfer. The Court held that the transfer did not constitute Korean-source income and that a specific statutory basis, not general principles, was required to impose such taxes (2023GuHap5879). Although the tax authority appealed, the matter was later upheld by the Jeju Division of the Gwangju High Court (2025nu1053) and the Supreme Court (2026Du30033) in favour of taxpayers.^[2]

Practical Implications: Companies involved in multi-layered holding structures should be aware of the potential for challenge and ensure their transactions have clear commercial purposes and proper documentation.

Recent Enforcement Developments

South Korea has seen several significant changes in its tax environment:

· A new administration has taken office with proposals to increase corporate tax rates

· A new commissioner has been appointed to lead the tax authority

· The government is expected to conduct more tax audits

Enforcement Fines: Under the New Enforcement Penalty Provision, for tax audits commencing on or after 1 September 2025, if a taxpayer fails to submit requested information and documents without justifiable reason, an enforcement penalty may be imposed. The previous penalty was limited to KRW 50 million, making it difficult to enforce compliance. The new framework represents a significant new compliance risk.¹

Corporate Tax Rates (2025-2026): South Korea applies progressive corporate tax rates: 10% on taxable income up to KRW 200 million, 20% on income between KRW 200 million and KRW 20 billion, and 25% on income exceeding KRW 20 billion. Value-added tax is levied at a flat rate of 10%.

Part Two: Tax Considerations in China

Unique Features of China’s Tax System

Legal Entity Requirements: Foreign companies cannot simply set up branches in China. They must establish separate legal entities, which creates different tax considerations.

Foreign Exchange Controls: China has strict procedures for moving money in and out of the country. Different types of payments follow different procedures, for example: investments must go through special capital accounts; trading payments are reported through customs; and service payments require contract registration with tax authorities.

Dispute Resolution: Almost all tax disputes in China are resolved through negotiation with tax authorities rather than through courts, owing to the strict statutory pre-conditions that taxpayers must first clear all tax liabilities or provide guarantees and exhaust all administrative reconsideration stages. Only then, can they gain further access to judicial review by the courts.^[3] Thus, it means that understanding local procedures and building relationships with tax officials is critical.

Key Tax Issues in Mergers and Acquisitions

Corporate Income Tax Rate: The standard corporate income tax rate in China is 25%. However, qualified High and New Technology Enterprises are eligible for a reduced rate of 15%. Small and low-profit enterprises may qualify for even lower effective rates.

Goodwill Treatment: Under China’s Enterprise Income Tax Law, purchased goodwill is not amortisable for tax deduction purposes. Goodwill is only deductible upon transfer or liquidation of the enterprise.^[4] This creates an additional tax cost that must be factored into acquisition planning.

Tax Loss Utilisation: China has placed strict limits on using accumulated tax losses from acquired companies. The standard carry-forward period is five years,^[5] extending to ten years for High and New Technology enterprises and science and technology SMEs. In certain regions like Nansha, the carry-forward period extends to 13 years.^[6]

Transfer Pricing Enforcement: While China’s transfer pricing rules are similar to international standards, enforcement relies heavily on negotiation with local tax authorities. Effective communication with local officials is essential for achieving favourable outcomes.

Holding Structures for China Investment

For companies investing in China, two jurisdictions are commonly used for holding structures:

1. Hong Kong: Geographically and politically close to China, making management easier

2. Singapore: Has a favourable tax treaty with China

Investment Opportunities

Despite economic challenges, certain sectors in China remain attractive: biotechnology, information technology, and joint manufacturing arrangements. Chinese companies continue to seek cooperation with foreign investors in these areas.

Part Three: Tax Considerations in Singapore

Singapore’s Approach to Tax Disputes

Singapore’s tax authority takes a principles-based approach to disputes. Few cases reach court, and the authority will often withdraw its position when a taxpayer’s position is legally sound. In 2023, only two civil tax cases went to court in Singapore.

Refundable Investment Credits (RIC)

Singapore introduced the Refundable Investment Credits regime in Budget 2024 in response to BEPS developments.² The Income Tax (Refundable Investment Credits) Regulations 2025 came into operation on 1 September 2025.³ The regulations provide for the implementation of the RIC, which supports up to 50% of qualifying expenditures for qualifying activities.⁴

Awarded on an approval basis by the Economic Development Board (EDB) or Enterprise Singapore, the RIC allows companies to receive support on qualifying expenditure categories.⁵ Rather than applying rigid statutory metrics, the approving authorities set custom substantive economic commitments tailored to the project’s scale and industry impact. Each RIC award has a qualifying period of up to 10 years.⁶ Eligible activities include investments to expand manufacturing capacity, establish headquarters or service centres, conduct R&D and innovation, engage in commodity trading, or carry out energy efficiency or decarbonisation projects.⁷

The RIC can be used for set-off against corporate income tax, Domestic Top-up Tax, and Multinational Enterprise Top-up Tax.⁸

Taxation of Capital Gains

Singapore traditionally does not tax capital gains. However, a new rule (Section 10L of the Income Tax Act 1947) was introduced effective from 2024.⁹ Foreign-sourced gains brought into Singapore may be taxed if the Singapore entity lacks sufficient economic substance. The rule does not apply if the entity has real operations, employees, and activity in Singapore, or if gains are not brought into Singapore.

Important Note: The threshold for “adequate economic substance” is not clearly defined in legislation, creating some uncertainty for taxpayers. However, the Inland Revenue Authority of Singapore (IRAS) has published an e-Tax Guide, “Income Tax: Tax Treatment of Gains or Losses from the Sale of Foreign Assets,” which provides guidelines on how the Comptroller of Income Tax determines the adequacy of economic substance for the purpose of Section 10L.¹⁰ Taxpayers must rely on these administrative guidelines rather than rigid statutory parameters.¹¹ The economic substance assessment takes into account factors such as the number of Singapore full-time employees of the entity and the qualifications and experience of employees or other persons.¹²

Transfer Pricing

Transfer pricing is a significant focus area in Singapore. A 5% surcharge is imposed on transfer pricing adjustments made for non-compliance with the arm’s length principle.¹³ The surcharge applies to adjustments made by the Inland Revenue Authority of Singapore (IRAS) or to self-initiated adjustments that increase income or reduce deductions.

Mutual Agreement Procedures are available for resolving cross-border disputes, with many cases resolved within two years. Advance Pricing Agreements provide upfront certainty.

Anti-Avoidance Rules

Singapore has a general anti-avoidance rule, but it is rarely applied to large multinational companies. Most anti-avoidance cases involve domestic professionals setting up multiple entities. The tax authority focuses on commercial substance.

Indirect Transfers: Market practice in Singapore considers it legitimate to transfer shares of a company that owns Singapore assets, except for residential property, which has specific rules. Circular transactions or “round tripping” of funds on the same day have been identified by courts as tax avoidance structures.

Part Four: Tax Considerations in Hong Kong

Hong Kong’s Tax System at a Glance

Territorial Basis of Taxation: Hong Kong operates on a territorial basis of taxation. Under section 14 of the Inland Revenue Ordinance, any person carrying on a trade, profession or business in Hong Kong is chargeable to tax on all profits arising in or derived from Hong Kong from such trade, profession or business.¹⁴ The tax residence of a person is irrelevant for profits tax purposes. Non-residents carrying on business in Hong Kong are chargeable on profits arising from Hong Kong unless protected by a tax treaty.

Profits Tax Rates: Hong Kong applies a two-tiered profits tax system. For corporations, the rate is 8.25% on the first HKD 2 million of assessable profits, and 16.5% on profits above that threshold.^[7] For unincorporated businesses, the rate is 7.5% on the first HKD 2 million of assessable profits, and 15% on profits above that threshold.^[8] For groups with multiple entities, only one entity can claim the lower rate.^[9]

Capital Gains and Dividends: Gains and receipts that are capital in nature are generally not subject to tax in Hong Kong. Dividends from local companies are exempt, while dividends from overseas companies are generally treated as offshore income and not taxable. However, the foreign-sourced income exemption (FSIE) regime has introduced important exceptions.

No VAT/GST: Hong Kong does not have a value-added tax, goods and services tax, or sales tax.

Stamp Duty: Stamp duty is charged on transfer of Hong Kong stock by way of sale and purchase at 0.2% of the consideration (or the market value if higher) per transaction.

One-off Tax Reduction: The Inland Revenue (Amendment) (Tax Concessions) Ordinance 2025 was gazetted on 9 May 2025 to give effect to the 100% reduction of profits tax for the year of assessment 2024/25, subject to a cap of HKD 1,500 per case.¹⁵ For the year of assessment 2025/26, a similar 100% waiver applies subject to a cap of HKD 3,000 per case.

OECD Pillar Two – Global Minimum Tax

Overview: In July 2021, Hong Kong joined more than 130 jurisdictions in accepting the OECD’s two-pillar international tax reform framework to tackle base erosion and profit shifting.¹⁶ Hong Kong applies the global minimum effective tax rate of 15% on in-scope MNE groups starting from 2025.¹⁷

The GloBE Rules: Under Pillar Two, a global minimum tax of 15% is imposed on multinational enterprise groups with annual consolidated revenue of EUR 750 million or above in at least two of the four fiscal years immediately preceding the current fiscal year.¹⁸ The rules operate through two interlocking mechanisms: the Income Inclusion Rule (IIR) which is the primary rule that imposes top-up tax on the parent entity of an in-scope MNE group, and the Undertaxed Profits Rule (UTPR) which acts as a backstop to IIR.

Hong Kong’s Implementation: The Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Ordinance 2025 was enacted on 6 June 2025.¹⁹ The IIR and HKMTT provisions apply to fiscal years beginning on or after 1 January 2025, while the UTPR timeline will be further announced. The rules incorporate the GloBE Model Rules promulgated by the OECD through the newly added Part 4AA and Schedules 61 to 64 of the Inland Revenue Ordinance.²⁰

Hong Kong Minimum Top-up Tax (HKMTT): Hong Kong has introduced its own qualified domestic minimum top-up tax. A jurisdiction in which an in-scope MNE group operates and for which the effective tax rate is below the minimum rate has the first priority to collect the top-up tax if it has implemented its own QDMTT.

Compliance Obligations:

· Declaration of In-Scope Status: Respond to IRD letter within 2 months (generally by November 2025)

· Filing of top-up tax notification: Within 6 months after the end of the reporting fiscal year

· Filing of top-up tax return: Within 15 months (extended to 18 months for the first transition year)

· Payment of top-up tax: Due one month after the return filing deadline or notice of assessment

The IRD launched the first phase of the Pillar Two Portal on 19 January 2026 for electronic filing of top-up tax notifications.²¹ Electronic filing of Profits Tax returns will become mandatory for all Hong Kong constituent entities of in-scope MNE groups starting from the Year of Assessment 2025/26.²² Under a “once-in, always-in” approach, once an entity falls within the scope of the mandatory e-filing regime, it will remain subject to the regime permanently, regardless of whether it continues to be part of an MNE group for the GloBE/HKMTT regimes in subsequent years of assessment.²³

Foreign-Sourced Income Exemption (FSIE) Regime

A Significant Shift: Hong Kong’s FSIE regime, introduced in 2023 and expanded from 1 January 2024, represents a significant shift from its traditional territorial tax system.²⁴ Foreign-sourced passive income received in Hong Kong is now taxable unless specific exemption conditions are met. Originally limited to interest, dividends, equity disposal gains and IP income, the regime was extended in 2024 to cover non-equity disposal gains.

Covered Income: The FSIE regime encompasses four categories of foreign-sourced passive income: interest income, dividend income, disposal gains from the sale of assets (equity interests and, from 1 January 2024, other types of assets), and IP income (from patents or software-related copyrights).

Exemption Conditions:

For interest and non-IP disposal gains, the exemption requires an economic substance requirement. For dividends and equity interest disposal gains, the exemption requires either an economic substance requirement or a participation requirement. For IP income and IP disposal gains, the exemption requires a nexus requirement.

A foreign-sourced disposal gain that falls within the scope of the FSIE regime may be taxable if the exemption requirements are not met, even if the gain is capital in nature.

Economic Substance Requirement: Multinational entities must demonstrate economic substance in Hong Kong to claim exemption. Applicants need to pass a “sufficient level test”, including employing a sufficient number of qualified employees and incurring an adequate level of operating expenditure in Hong Kong for the relevant activities.

Recent Clarifications: On 24 July 2025, the IRD published additional FAQs providing clarifications.²⁵ A Hong Kong taxpayer’s share of profits from an overseas associate recognised under the equity method does not constitute a dividend for FSIE purposes. Only when profits are formally declared and distributed will the income be treated as a dividend. Where foreign-sourced disposal gains are deemed taxable, such gains are computed by reference to disposal proceeds less acquisition cost and direct expenses. An in-kind dividend in the form of shares in an overseas entity will generally not be regarded as “received in Hong Kong” where the investee entity is incorporated and managed outside Hong Kong.

Practical Implications: The FSIE regime has significantly increased compliance complexity. Companies should track dividend declarations separately from accounting results, maintain detailed documentation to distinguish direct disposal costs from other expenses, and carefully document the overseas nature of investee management and operations for in-kind distributions.

Transfer Pricing

The Arm’s Length Principle: Hong Kong’s transfer pricing rules, introduced in 2018, follow global standards set by the OECD. The arm’s length principle requires that transactions between connected parties be priced as if they were between independent parties under comparable circumstances.

2025 Updates: The Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Ordinance 2025 updated Hong Kong’s transfer pricing rules to align with the 2022 OECD transfer pricing guidelines.²⁶ With increased reviews expected in 2025, maintaining clear documentation is essential.

Documentation Requirements: Companies must document how intercompany prices are set and prepare Master File and Local File records if they cross certain thresholds.

Transfer Pricing Methods: The methods that can be used to determine the arm’s length price include Comparable Uncontrolled Price Method (CUP), Resale Price Method (RPM), Cost Plus Method (CPM), Transactional Net Margin Method (TNMM), and Profit Split Method (PSM).

Stamp Duty

Share Transfers: Stamp duty is charged on the transfer of Hong Kong stock by way of sale and purchase at 0.2% of the consideration (or the market value if higher) per transaction. The duty is calculated at 0.1% on every sold note and every bought note. The total stamp duty rate was reduced from 0.26% to 0.2% on 17 November 2023.²⁷

Property Transfers: Effective from 11 am on 26 February 2025, ad valorem stamp duty on transfer of properties is charged at progressive rates.²⁸ The Stamp Duty (Amendment) Ordinance 2025 was gazetted on 16 May 2025. The progressive rates start at HKD 100 for properties valued at up to HKD 4 million, and increase progressively to a maximum of 4.25% for properties valued exceeding HKD 20 million.

Intra-Group Relief: Section 45 of the Stamp Duty Ordinance provides relief from stamp duty for transfers of shares between associated companies within the same group, subject to certain conditions being satisfied, including that one body corporate must be the beneficial owner of not less than 90% of the issued share capital of the other.

Company Re-domiciliation Regime

New Framework: The Companies (Amendment) (No. 2) Ordinance 2025 was gazetted and came into effect on 23 May 2025.²⁹ The regime allows eligible overseas-incorporated companies to transfer their legal domicile to Hong Kong without needing to wind up or re-incorporate.

Key Features: Four types of companies may redomicile to Hong Kong: private companies limited by shares, public companies limited by shares, private unlimited companies with a share capital, and public unlimited companies with a share capital.³⁰ Under normal circumstances, the Companies Registry will complete the approval process within two weeks. A 120-day period is allowed for the re-domiciled company to complete the deregistration procedures at its place of incorporation.³¹

Tax Implications: Re-domiciled companies are treated as Hong Kong-incorporated entities. Hong Kong does not impose tax on the basis of residence or domicile. To eliminate double taxation, the Amendment Ordinance provides for unilateral tax credits for re-domiciled companies. A re-domiciled company will also be regarded as a resident of the Hong Kong SAR for the purpose of comprehensive avoidance of double taxation agreements.

Applications Open: Re-domiciliation applications opened on 23 May 2025.³²

Tax Treaty Network

As at 31 March 2025, Hong Kong has signed comprehensive avoidance of double taxation agreements with 51 jurisdictions.³³ Recent additions include a Comprehensive Double Tax Agreement with the Maldives signed on 26 May 2025, with Jordan signed on 4 September 2025, with Rwanda signed in October 2025, and with Norway signed on 16 December 2025.³⁴ The agreement with Norway marks Hong Kong’s 55th CDTA.

Part Five: Common Themes Across Jurisdictions

The Importance of Certainty

Across all jurisdictions, what multinational companies value most is certainty. Transfer pricing presents particular challenges because acceptable prices always fall within a range, leaving room for disagreement. This is why more companies are seeking Advance Pricing Agreements and other mechanisms to obtain certainty in advance.

Divergence in Tax Systems

While Asian countries continue to align with global standards on transfer pricing and tax treaties, each jurisdiction maintains its own approach to domestic tax matters. Countries use tax policy as a tool to attract investment and shape their economies.

Investment Flows from China

Chinese investment in Southeast Asia is driven by two factors: government policy encouraging companies to invest overseas, and rising labour and operating costs in major Chinese cities, prompting companies to seek lower-cost locations.

Part Six: Strategic Conclusion

Despite the recent introduction of the FSIE regime and the 15% global minimum tax under OECD Pillar Two, Hong Kong still distinguishes itself from other jurisdictions for its unchanged DNA: it retains the advantage of the simplest tax system in Asia.Based on the analysis above, Hong Kong emerges as the preferred jurisdiction for most generic multinational operations. For most generic multinational operations, the combination of the simplest tax system in Asia (no VAT, no capital gains tax, no dividend withholding tax), the lowest effective tax rate for SMEs (8.25% on first HKD 2 million), territorial taxation with full offshore income exemption, unmatched gateway access to China, and strong capital markets makes Hong Kong the most compelling choice for trading, holding, and treasury operations.

Why Hong Kong Wins:

Hong Kong is the only jurisdiction in Asia that combines no VAT or GST, no capital gains tax, no dividend withholding tax, territorial taxation, and full offshore income exemption. Singapore comes close but has a 9% GST and more restrictive offshore income exemption rules. South Korea imposes VAT at 10%, capital gains tax, and dividend withholding tax, and taxes worldwide income. China imposes VAT at 13%, capital gains tax, dividend withholding tax, and taxes worldwide income.

Corporate Tax Rate Comparison:

Hong Kong applies 16.5% standard rate with 8.25% on first HKD 2 million. Singapore applies 17% standard rate with effective rates as low as 4.25% for new companies. South Korea applies 10%-25% progressive rates with R&D credits up to 50%. China applies 25% standard rate with 15% for high-tech enterprises.

Global Competitiveness: In the IMD 2025 World Competitiveness Ranking, Hong Kong staged a significant resurgence to rank 3rd globally with a score of 99.2 out of 100, sitting neck-and-neck with Singapore, which ranked 2nd with a score of 99.4. Hong Kong was ranked #1 globally for Tax Policy and #1 for Business Regulations.³⁵

When Other Jurisdictions Win:

For trading, e-commerce, and holding companies, Hong Kong is the best choice due to no VAT, offshore exemption, and the 8.25% SME rate. For technology, R&D, and biopharma companies, Singapore is the better choice due to its 400% R&D deduction and 15% concessionary rate. For manufacturing and semiconductors, South Korea offers up to 50% R&D credit and strategic industry support. For companies targeting the China market, China itself offers the 15% high-tech rate and direct market access.

Singapore is Hong Kong’s only serious competitor. However, its 9% GST and more restrictive offshore income exemption rules give Hong Kong a clear edge for most trading, holding, and treasury operations. However, businesses should note that Singapore offers superior R&D incentives (400% deduction), a larger treaty network (100+ countries), and a more developed family office ecosystem. For technology, biopharmaceutical, and asset management companies, Singapore may still be the better fit.

In the era of BEPS 2.0, the days of relying on simple, tax-driven structures are gone. These new rules require the MNEs to move beyond merely comparing nominal corporate tax rates. Instead, they should holistically consider tax benefits of a jurisdiction against its newly introduced compliance costs. Ultimately, there is no one-size-fits-all solution, The choice depends on your specific business needs, industry, and target markets. The analysis above summarises which jurisdiction best suits different business types.

Footnotes

¹ ‘Seoul Approves Amendment to BNTL Including Enforcement Fines’ (PwC Korea, 27 February 2025).

² ‘Singapore Budget 2024 Highlights’ (RSM Singapore, 2024).

³ Income Tax (Refundable Investment Credits) Regulations 2025 (Singapore) reg 1.

⁴ Income Tax (Refundable Investment Credits) Regulations 2025 (Singapore) reg 3.

⁵ ‘Singapore Implements Refundable Investment Credit Framework’ (Mondaq, 2 October 2025).

⁶ ‘Singapore brings Refundable Investment Credits regime into force’ (Sovereign Group, 1 December 2025).

⁷ ‘Singapore brings Refundable Investment Credits regime into force’ (Sovereign Group, 1 December 2025).

⁸ IRAS, ‘Refundable Investment Credit (RIC)’ (IRAS, 2026).

⁹ Income Tax Act 1947 (Singapore) s 10L.

¹⁰ IRAS, ‘Income Tax: Tax Treatment of Gains or Losses from the Sale of Foreign Assets’ (e-Tax Guide, 2024).

¹¹ Tan Kay Kheng and Tan Shao Tong, ‘Section 10L – Taxation of Gains From Sale of Foreign Assets’ (WongPartnership, November 2023).

¹² ‘Section 10L explained: Economic substance and tax compliance’ (Forvis Mazars, 2025).

¹³ ‘Singapore Transfer Pricing Guidelines (Eighth Edition)’ (EY, 19 November 2025).

¹⁴ Inland Revenue Ordinance (Cap 112) (Hong Kong) s 14.

¹⁵ Inland Revenue (Amendment) (Tax Concessions) Ordinance 2025 (Hong Kong).

¹⁶ OECD, ‘Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy’ (1 July 2021).

¹⁷ Inland Revenue Department, ‘Global Minimum Tax and Hong Kong Minimum Top-up Tax for Multinational Enterprise Groups’ (IRD, 2025).

¹⁸ OECD, ‘Tax Challenges Arising from the Digitalisation of the Economy – Global Anti-Base Erosion Model Rules (Pillar Two)’ (OECD, 2021).

¹⁹ Inland Revenue (Amendment) (Minimum Tax for Multinational Enterprise Groups) Ordinance 2025 (Hong Kong).

²⁰ Inland Revenue Department, ‘Global Minimum Tax and Hong Kong Minimum Top-up Tax for Multinational Enterprise Groups’ (IRD, 2025).

²¹ Inland Revenue Department, ‘Pillar Two Portal’ (IRD, 19 January 2026).

²² ‘Pillar Two – Global Minimum Tax’ (RSM, 4 November 2025).

²³ ‘Connected Hong Kong tax compliance’ (PwC, 27 November 2025); ‘Hong Kong: IRD issues updated guidance on Pillar 2 e-filing’ (Regfollower, 23 October 2025).

²⁴ Inland Revenue Department, ‘Foreign-sourced Income Exemption (FSIE) Regime’ (IRD, 2024).

²⁵ ‘Hong Kong FSIE Regime: IRD Issues Further Clarifications (July 2025)’ (The French Chamber of Commerce and Industry in Hong Kong, 24 July 2025).

²⁶ ‘Hong Kong’s Transfer Pricing Rules and 2025 Updates’ (Mondaq, 5 September 2025).

²⁷ Stamp Duty (Amendment) (Transfer of Securities) Ordinance 2023 (Hong Kong), s. 3.

²⁸ Stamp Duty (Amendment) Ordinance 2025 (Hong Kong).

²⁹ Companies (Amendment) (No. 2) Ordinance 2025 (Hong Kong).

³⁰ Companies Registry, ‘Company Re-domiciliation Regime’ (Hong Kong, 2025).

³¹ ‘Re-domiciliation applications open’ (news.gov.hk, 23 May 2025).

³² ‘Re-domiciliation applications open’ (news.gov.hk, 23 May 2025).

³³ Inland Revenue Department, ‘Comprehensive Avoidance of Double Taxation Agreements’ (IRD, 31 March 2025).

³⁴ ‘Hong Kong Signs Tax Treaty with Norway’ (Yahoo Finance, 16 December 2025).

³⁵ IMD World Competitiveness Center, ‘IMD 2025 World Competitiveness Ranking’ (IMD, 17 June 2025);

^[1] ‘South Korea: A Tax: Consultants Overview’ (Chambers and Partners, 2026)

^[2] Yvette Chan and Florence Leung, ‘Exploring Indirect Transfer Rules in APAC region: Effects of the Hong Kong Inward Re-Domiciliation Regime’ (Alvarez & Marsal, 14 July 2025)

^[3] Article 88(1) of the Law on the Administration of Tax Collection.

^[4] Article 12 of the Law on Enterprise Income Tax.

^[5] Article 18 of the Law on Enterprise Income Tax.

^[6] Notice on Preferential Corporate Income Tax Policies in Nansha, Guangzhou

issued by the Ministry of Finance and State Tax Administration of the PRC (Caishui [2022] No. 40). However, this preferential policy will end on 31 December 2026.

^[7] Inland Revenue Ordinance (Cap 112) (Hong Kong) Sch. 8B(2)(a).

^[8] Inland Revenue Ordinance (Cap 112) (Hong Kong) Sch. 8A(2).

^[9] Inland Revenue Ordinance (Cap 112) (Hong Kong) s. 14AAC(4).

Disclaimer

The information and analyses contained in this article are provided for general informational and educational purposes only and do not constitute formal legal, tax, accounting, or professional advice. While every effort has been made to ensure the accuracy and completeness of the information at the time of writing, legal and regulatory frameworks are subject to rapid change. Readers should not act or refrain from acting upon any information in this article without seeking appropriate professional advice tailored to their specific circumstances. Transmission or receipt of this publication does not create a lawyer-client or advisory relationship between the author and any reader.

How Artificial Intelligence, Legal Business Development, Legal Operations, and Alternative Fee Arrangements Are Reshaping the Future of Legal Services

An Unexpected Encounter with AI

A few days ago, I submitted a job application online. Within seconds, a notification appeared with a “success score.” No recruiter had reviewed my credentials. No hiring manager had read my CV. The first judgment on my professional suitability had been made by an artificial intelligence system.

That experience stayed with me.

If AI is now screening lawyers before a human ever reviews an application, it is reasonable to ask another question: Is the same technology now being used to evaluate the law firms competing for legal work? The answer is increasingly yes.

Across the legal market, procurement teams, legal operations professionals, and technology platforms are transforming how legal services are purchased. Requests for Proposals (RFPs) are becoming more structured.

Pricing is being scrutinised more closely. Clients increasingly expect measurable value rather than generic claims of excellence. Artificial intelligence is beginning to influence not only how law firms prepare pitches, but also how clients assess them.

This new reality is creating a remarkable paradox. The more technology shapes the pitching process, the more valuable human skills become. Artificial intelligence can draft a proposal, analyse a client’s industry, recommend relevant credentials, identify market trends, and even suggest a pricing model.

What it cannot do is build trust. It cannot establish credibility. It cannot reassure a client navigating a difficult transaction, a regulatory investigation, a restructuring, or a high-stakes dispute.

That remains the role of people. And it is why the future of legal business development may be more human than ever.

A Fundamental Shift in How Clients Buy Legal Services

For many years, the legal market was largely relationship-driven. Legal instructions frequently flowed from long-standing relationships. Trust developed over lunches, meetings, industry events, and years of successful work. Firms won mandates because clients knew the partners personally and felt confident in their ability to deliver.

Those factors still matter. In fact, they may matter more than ever. However, they are no longer sufficient on their own. Corporate clients now operate in an environment where accountability, budgeting, efficiency, and governance are under constant scrutiny. General counsel are expected to justify legal spend.

Boards want predictable costs. Procurement departments want consistency. Legal operations teams are tasked with measuring value and improving efficiency.

As a result, legal services procurement has become more sophisticated. Major banks, listed companies, multinational corporations, private equity firms, and government-related organisations increasingly rely on structured procurement processes when selecting external counsel. Panel appointments, competitive tenders, formal RFPs, and performance reviews have become common features of the modern legal market.

Consequently, law firm pitching is no longer simply about showcasing expertise. It is about demonstrating value, efficiency, innovation, commercial understanding, and pricing discipline.

The firms that recognise this change early will be better positioned to grow. Those who continue relying solely on traditional approaches may find themselves struggling to compete.

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The Two-Stage Reality of Modern Legal Pitching

Many law firms still view pitching as a single activity. In reality, modern legal pitching consists of two entirely separate competitions. The first is about competence. The second is about trust. Understanding the difference is critical.

Stage One: Surviving the Machine Review

Before a client ever meets a law firm, the firm must frequently pass through multiple layers of evaluation. Procurement teams review fee structures. Legal operations professionals assess delivery models. Technology platforms compare responses. Increasingly, artificial intelligence helps review and evaluate written submissions.

At this stage, clients are asking practical questions. Does the firm have relevant experience? Can it deliver the work? Has it answered the questions properly? Is the proposal clear and concise? Does the pricing align with the client’s budget expectations? Can the firm demonstrate measurable value?

The written submission has become a filtering mechanism. Many proposals never progress beyond this stage. It is no longer enough to submit a beautifully formatted credentials document filled with generic statements about excellence.

Clients want clear evidence that the firm understands their specific business challenges and can provide practical solutions. This means legal business development teams must focus on relevance, clarity, and precision. The objective is simple: survive the first filter.

Stage Two: Winning the Human Review

Once a firm reaches the shortlist, everything changes. At this point, the technical gap between competing firms is often quite small. Most shortlisted firms are highly capable. The client’s focus, therefore, shifts elsewhere.

The questions become more personal. Can we trust this team? Do they understand our business? Will they respond quickly when problems arise? Can they explain complex issues in plain English? Do they appreciate our commercial pressures? Will they work collaboratively with our internal stakeholders? Are they people we genuinely want to work with?

The final decision is often determined less by technical expertise and more by trust, chemistry, communication, and commercial understanding. Technology may get a firm through the first gate. People get it through the second.

Welcome to the Double-AI Era

One of the most significant legal sector trends today is what might be called the Double-AI Era. For the first time, artificial intelligence is becoming embedded in both sides of the legal procurement process. Law firms are using AI. Clients are using AI. This creates an entirely new competitive landscape.

Many firms now use artificial intelligence in legal services to support proposal drafting, client research, experience management, compliance questionnaires, market analysis, and business development planning. At the same time, sophisticated clients are beginning to use AI-powered systems to review submissions, compare responses, identify gaps, and assess proposals more efficiently.

The implications are profound. A proposal may be drafted using AI, refined by business development professionals, reviewed by partners, submitted through a procurement platform, and then analysed by an AI tool before a human reviewer ever sees it. Success, therefore, requires firms to communicate effectively with both machines and people.

A poorly structured proposal may perform badly in an AI-assisted review process. Equally, a technically perfect proposal may fail if it lacks genuine insight and fails to resonate with human decision-makers. The firms that thrive will be those capable of mastering both dimensions simultaneously.

Consider a simple illustration, far from the law but close to the point. A professional services firm, presented with a business challenge from a supermarket chain, once spent days buried in old files to produce a thick but largely irrelevant proposal.

Today, the firm’s AI can scan the request, pull relevant past work, and draft a clear first response in minutes. That efficiency freed the professional to visit the supermarket, walk the aisles, listen to the manager’s fears about a brand scandal erupting on social media, and return with a simple, human promise of protection. The machine did the heavy lifting.

The professional brought understanding and trust. The client said yes. That is the Double-AI Era in microcosm: technology accelerates the process, but human connection closes the deal.

Why Generic Proposals Are Dying

The era of generic law firm credentials documents is ending. For many years, firms relied on standard descriptions of expertise. The same biographies appeared repeatedly. Similar matter examples were recycled across countless proposals. Capability statements often looked almost identical from one submission to the next. Clients are no longer impressed by this approach.

The reality is simple. Procurement teams receive enormous volumes of information. In-house lawyers face increasing pressures on their time. Legal operations teams review multiple competing submissions. Nobody wants to read twenty pages of boilerplate marketing language.

Clients want specificity. They want relevance. They want evidence that a firm has taken the time to understand their business. Most importantly, they want practical solutions to real-world problems.

The most successful law firm marketing and business development teams have shifted their mindset. Instead of asking, “What do we want to tell the client?” they ask, “What does the client need to hear?” That distinction may seem subtle. In reality, it changes everything.

Why Data Is Becoming a Competitive Advantage

Many firms assume that AI is the most important challenge they face. In truth, data is often the bigger issue. Artificial intelligence is only effective when it has access to accurate information. Unfortunately, many law firms still struggle with fragmented data. Experience records sit across multiple systems.

Matter descriptions are inconsistent. Partner biographies become outdated. Pricing information is spread across spreadsheets and finance systems. Historic deal information is difficult to locate. Knowledge often remains trapped within individual lawyers rather than being captured institutionally.

This creates enormous inefficiencies. Poor data leads to poor outputs. Strong data leads to strong outputs. The firms achieving the greatest benefits from legal technology are not necessarily those spending the most money on AI.

They are the firms investing in clean, structured, reliable information. In the future, experience databases, matter histories, pricing repositories, and knowledge management systems will become critical strategic assets. Data is no longer merely an operational issue. It is a competitive advantage.

There is an important caution here. Rushing to adopt AI before fixing the underlying data is like buying the finest oven and then filling it with spoiled ingredients. The meal will not improve.

An AI drawing on messy archives can become a confident liar-citing a great success that actually ended badly, recommending an expert who has long retired, or borrowing a phrase from a document never meant to be seen again. The result is not efficiency but embarrassment. In a profession built on accuracy and trust, even one such mistake can do lasting damage.

From Reactive Bidding to Proactive Pursuit

Traditional business development often begins when an RFP arrives. The client issues the tender. The firm assembles a team. The proposal is drafted. The deadline arrives. The submission is sent. The waiting begins.

Increasingly, leading firms are adopting a different approach. Artificial intelligence, market intelligence platforms, and legal technology tools now allow firms to identify opportunities much earlier.

Emerging regulatory developments, industry trends, corporate transactions, governance issues, and economic developments can all provide signals of future legal demand. This enables firms to become proactive rather than reactive. Instead of waiting for opportunities, they can identify them.

Instead of responding to client problems, they can anticipate them. Instead of entering a competitive process late, they can begin building relationships before competitors are even aware of the opportunity.

This represents a fundamental shift in law firm strategy. The best business development professionals are increasingly becoming opportunity spotters rather than proposal writers.

The Pricing Revolution Has Already Begun

The future of legal services is closely linked to pricing. Increasingly, clients want certainty. They want predictability. They want transparency. Many procurement teams now ask questions such as: “ How are you using AI? How are you creating efficiencies? Can you offer a fixed fee? Can you provide Alternative Fee Arrangements? Can you share risk? How do you measure value?

These questions are reshaping legal services procurement. Alternative Fee Arrangements (AFAs) are no longer niche innovations. They are becoming mainstream expectations. For many clients, the conversation is no longer about the number of hours required. It is about the value delivered.

This change presents challenges for traditional law firm models. Yet it also creates significant opportunities. Technology allows many routine tasks to be completed more efficiently than ever before.

Under a fixed-fee structure, improved efficiency can increase profitability rather than reduce it. The firms that embrace this reality are likely to gain a meaningful competitive advantage.

Why Human Skills Matter More Than Ever

Perhaps the greatest irony of the AI revolution is that it is increasing the importance of human skills. As technology automates routine work, the qualities that differentiate lawyers become increasingly difficult to replicate.

Empathy matters more. Listening matters more. Communication matters more. Commercial judgment matters more. Storytelling matters more. Relationship building matters more. Strategic thinking matters more.

Clients do not hire lawyers simply because they know the law. Clients hire lawyers because they trust them to solve problems. They hire lawyers because they need guidance through uncertainty.

They hire lawyers because they want advisers who understand both legal risk and commercial reality. Artificial intelligence can support those conversations. It cannot replace them.

This point has a deeper, cautionary dimension. For decades, junior professionals learned their craft through the very drudgery that AI now eliminates. Sifting through old archives, cross-referencing past cases, and drafting standard text allowed them to absorb institutional knowledge almost by osmosis.

That repetitive process taught them what worked, what failed, and why. If AI completely automates this groundwork without a deliberate plan to provide alternative learning paths, we risk producing a generation that knows how to prompt a machine but lacks deep, conceptual expertise.

When a complex, non-standard crisis hits, purely algorithmic competence will fall short, leaving organisations dangerously exposed.

The solution is not to reject AI. It is to combine technological efficiency with deliberate investment in human development. The machine can gather the threads. Only a human can weave them into a story worth trusting.

The Future of Legal Business Development

The future of law firm business development will look very different from the past. Business development professionals will spend less time gathering credentials and updating biographies.

They will spend more time analysing markets, interpreting data, identifying opportunities, coaching lawyers, and strengthening client relationships. The role will become increasingly strategic.

The same applies to lawyers. Technical expertise will remain essential. However, the ability to build trust, communicate clearly, and demonstrate commercial understanding will become increasingly valuable.

In a world where AI can generate technically competent content at scale, human connection becomes a differentiator. The firms that understand this will be best positioned for long-term success.

The Firms That Will Win the Future

The most successful law firms over the next decade will not necessarily be those with the largest technology budgets. Nor will they be those who resist change. The winners will be the firms that successfully combine legal innovation with human excellence.

They will invest in strong data foundations. They will embrace AI in legal services intelligently. They will modernise their pricing strategies. They will leverage legal technology to improve efficiency.

They will strengthen client relationship management. They will analyse feedback systematically. Most importantly, they will continue investing in the one thing that technology cannot replicate: trust.

Because at the end of every legal procurement process, every panel review, every pitch presentation, and every client meeting, a human being still makes the final decision.

And when that moment arrives, trust matters more than technology. The future of legal business development is not ultimately a story about artificial intelligence. It is a story about people.

AI may write the pitch. But people will always win the client.

Disclaimer:

This article is intended for general information and thought leadership purposes only. It does not constitute legal advice, professional advice, or recommendations regarding any specific technology, product, vendor, law firm, client, or business strategy. The views expressed are the author’s personal views and are based on publicly observable trends in legal business development, legal operations, artificial intelligence, legal technology, procurement, and professional services. Readers should evaluate any technology, pricing model, or business development strategy in light of their own circumstances and seek appropriate professional advice where necessary.

Examples, anecdotes, and scenarios used in this article are included for illustrative purposes only. References to artificial intelligence, legal technology, Alternative Fee Arrangements (AFAs), procurement processes, and business development practices should not be interpreted as endorsements of any particular platform, provider, or methodology.

The legal profession, regulatory environment, client expectations, and technology landscape continue to evolve rapidly. Accordingly, the observations and opinions expressed in this article reflect the position at the time of writing and may change as market practices develop.

This milestone is incredibly personal for me. I officially qualified as a solicitor on December 7, 2024. Immediately after qualifying, we launched this service in January 2025. This initiative is exactly as old as my Post-Qualification Experience (PQE). It feels like it was truly meant to be, rather than just a coincidence.

• Qualified as Solicitor: December 7, 2024

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Gathered in the dynamic commercial hub of Chengdu for the 2026 ICC China Arbitration Day, the global dispute resolution community stood at the threshold of a profound structural shift. Convened just weeks after the June 1, 2026, entry into force of the new ICC Rules of Arbitration, the conference served as a critical crucible for examining a profession in rapid evolution. Drawn directly from the presentations, debates, and live interactive insights of the proceedings and colleagues from different jurisdictions, this article synthesises a vision for the future of international arbitration. It argues that survival and legitimacy in a disrupted world rest on a new tripartite foundation: a procedurally courageous overhaul that sheds centennial anachronisms, an unyielding framework of continuous ethical transparency, and a radical, client-centric reorientation that prioritises trust over institutional tradition.

International arbitration is experiencing a moment of profound and necessary transformation. The forces compelling this change are multiple and mutually reinforcing: a global business community demanding faster, cheaper, and more predictable dispute resolution; the disruptive and existential challenge posed by artificial intelligence; a geopolitical landscape fractured by economic sanctions and shifting trade corridors; and a growing insistence from users that legal services must be reconfigured around client needs rather than institutional tradition. The ICC global conference, convened in the major commercial hub of Chengdu, western China, provided an extensive forum for examining these pressures. This article presents a detailed thesis synthesising the entirety of those proceedings.

It argues that the future legitimacy of international arbitration rests on a new tripartite foundation. The first pillar is a procedurally courageous overhaul that eliminates centennial anachronisms, replacing them with a dynamic, multi-speed architecture ranging from highly expedited three-month procedures to robust full-tribunal hearings, all anchored by a non-delegable commitment to human decision-making. The second pillar is an uncompromising ethical framework that mandates continuous and cooperative disclosure, equips tribunals to investigate red flags of corruption, and thoughtfully navigates the uncharted territory of artificial intelligence through flexible guidelines rather than premature, potentially dangerous codification.

The third, and most critical, pillar is a thoroughgoing client-centric reorientation that defines value not by the issuance of an award, but by the cultivation of trust, the control of cost and delay, the active engagement of capable local counsel as an alternative to the reflexive hiring of branded global firms, and a restless curiosity about how to communicate, evolve, and consistently exceed the expectations of the businesses that arbitration exists to serve.

Part I: Procedural Architecture

The focal point of the conference was the launch of a revised set of arbitral rules, the product of a two-year global consultation involving several rounds of feedback. This was not a closed-door, top-down revision; it was an iterative dialogue with the global arbitration community, with a particularly deliberate effort to capture the voices of in-house counsel, the system’s ultimate consumers. The process was driven by a tripartite mandate articulated directly by the institution’s president: greater clarity, greater efficiency, and greater utility. The goals were set not by the institution in isolation, but in direct response to the needs articulated by in-house counsel in conversations held around the world.

The most dramatic and symbolically weighted change is the abolition of the Terms of Reference. This document had been the defining procedural hallmark of this institution for over a century. This was not a casual decision. A live, real-time poll conducted at a related conference revealed the divided sentiments of the arbitration community: a plurality of 42% supported abolition, welcoming the removal of a time-consuming procedural step, while a significant minority of 18% expressed genuine regret, mourning the loss of a document that historically served to crystallise the dispute at an early stage and provided a touchstone for the tribunal. A further 26% were ambivalent, and 11% were actively hostile, urging the institution to move on.

The historical origins of the Terms of Reference are essential to understanding why their abolition is now justified. The practice dates back to the institution’s founding in 1923 and was formally adopted into the rules in 1955. Its original purpose was legal, not managerial. At that time, jurisdictions within the French legal tradition did not recognise the validity of arbitration agreements concluded before a dispute arose. The Terms of Reference, signed by the parties after the dispute had crystallised, thus served as a fresh, post-dispute consent to arbitrate, satisfying a mandatory legal requirement for the validity of the process. With the near-universal adoption of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, this original legal foundation has entirely evaporated. The Terms of Reference became a solution in search of a problem.

Over the decades, the document’s function evolved into a case management tool, requiring the tribunal to set out a summary of the parties’ claims and the issues to be determined. In modern, complex disputes, however, this requirement has become increasingly artificial. It is often impossible to definitively list all legal and factual issues at the very beginning of a case, when the full dimensions of the dispute are not yet known. The result, as candidly acknowledged by practitioners on the panel, was a formulaic, generic document filled with placeholder language that consumed time and incurred Costs without delivering proportional value. The document was often drafted only to be immediately superseded by a more detailed Procedural Order.

The decisive proof of concept, however, came from the institution’s own experience. Since 2017, the Expedited Procedure Rules have operated without any requirement for a Terms of Reference. These cases, which must be resolved within six months, demonstrated that the absence of the document did not impair procedural fairness or efficiency. If a six-month process could function without it, why should it burden a regular procedure? The new rules thus abolish the Terms of Reference and re-centre the procedural architecture around the Case Management Conference. Convened immediately after the tribunal’s constitution, this conference becomes the new procedural cornerstone, producing a Procedural Order No. 1 that sets the definitive timetable for the proceedings. The deadline for introducing new claims, a critical procedural gate, is now pegged to the conclusion of this conference rather than the signing of a now-abolished document, preventing dilatory tactical amendments and upholding due process.

The time limit for the final award has been recalibrated as well. Under the prior rules, a default six-month period was stipulated, but it was routinely, almost automatically, extended by the institution’s Court. This created a glaring internal inconsistency: the Expedited Procedure promised a final award in six months, while the regular procedure also nominally promised the same, leading to confusion among users. The new rules eliminate this fiction. The institution’s president now sets a realistic deadline for the final award based on the procedural timetable agreed upon between the tribunal and the parties. If the timetable does not yet cover the entire process through to a hearing, a deadline is set with an explicit communication that it will be extended. The primary consideration is the reality of the case, which requires transparency and honesty with the parties. This change also serves a protective function; in certain jurisdictions, the absence of an institutional time limit could trigger a very short statutory deadline imposed by the local law of the seat. The institutional time limit thus acts as an additional layer of protection.

Beyond this structural reform, the new rules provide a multi-speed toolkit. The Highly Expedited Arbitration procedure is an opt-in mechanism for a final award within three months. This is distinct from the Expedited Procedure that automatically applies. It is designed for disputes that are simple in nature, even if high in value, such as a straightforward financial claim under a loan agreement or a share redemption dispute with no complex factual matrix to unravel. The procedural compression required to meet this deadline is severe: statements of claim and defence must be submitted before the tribunal is constituted, there is only a sole arbitrator, and the parties are limited to a single round of submissions. This represents a deliberate trade-off between the process’s completeness and the speed of resolution, one that sophisticated commercial parties are increasingly willing to make.

The Early Determination procedure has been elevated from a note of guidance for tribunals to a fully codified rule. This empowers a tribunal, upon the application of a party, to dismiss a claim or defence that is manifestly without legal merit or that falls manifestly outside the tribunal’s jurisdiction. The move from guidance to rule is a deliberate institutional act to embolden tribunals, who have been historically reticent to use this summary power for fear of being seen as prejudging the case or of having their award challenged for a denial of due process. By placing the power directly in the rulebook, the institution is giving tribunals the explicit authority to swiftly prune unmeritorious arguments, thereby sparing parties the crushing Costs and delays of a full proceeding on a point that could have been decided on the papers.

Part II: The Ethical Imperative

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The modernisation of procedure is paralleled by a sharpening of the ethical obligations that underpin arbitration’s legitimacy. The new rules now explicitly state that an arbitrator’s duty of independence and impartiality is a continuous obligation, binding them from the moment of appointment through to the rendering of the final award. This is not a new concept in practice, but its codification in the rules as a continuous duty sends an unmistakable signal.

The standard for disclosure has been carefully reframed. Rather than asking what the arbitrator subjectively believes is relevant, the new rules adopt the parties’ perspective. An arbitrator must disclose any fact or circumstance that, in the eyes of the parties, could give rise to justifiable doubts about their impartiality. The guiding principle is clear: when in doubt, disclose. This is a deliberate tilt towards transparency, intended to build trust and prevent the corrosive effect of later-discovered relationships.

Recognising that even the most diligent arbitrator may lack full visibility into the opaque corporate structures and third-party funding arrangements of the parties before them, the new rules introduce a novel and significant cooperative mechanism. Parties are now mandated to assist the tribunal in fulfilling its disclosure obligations. At the outset of the case, when filing key submissions such as the Request for Arbitration, the Answer, or a request for joinder, each party must provide a list of entities and individuals with a direct or indirect financial interest in the outcome of the dispute.

This includes parent companies, controlling entities, and third-party funders. This provision is a direct countermeasure against a known strategic abuse of the process: a party concealing a relationship only to deploy it later as a basis for a dilatory challenge to the arbitrator, often when the proceedings are advanced, and the timing is tactically opportune.

A vital safeguard, however, accompanies this expanded disclosure duty. The rules explicitly state that the act of disclosure does not constitute an admission by the arbitrator of a lack of impartiality or independence. This provision is critical to prevent the mechanism from backfiring. Without it, a hyper-cautious disclosure regime could be weaponised, with parties arguing that the very fact an arbitrator disclosed a relationship is proof of bias. The rules draw a clear line. Conversely, a failure to disclose a relevant fact is formally listed as a factor that the institution’s Court will weigh when assessing a subsequent challenge to an arbitrator. The failure to disclose, rather than the disclosed fact itself, becomes the potential mark against the neutral.

This ethical vigilance extends directly to the substance of the disputes themselves, most critically in the domain of corruption. The conference highlighted a growing and insistent global judicial expectation, driven by leading Courts in major arbitral seats such as London and Paris, that arbitral tribunals have a positive duty to investigate red flags of corruption in the underlying contract. A tribunal can no longer be a passive observer. The institution’s internal award scrutiny process serves as a crucial backstop here.

If a draft award ignores evident red flags of corruption on the face of the record, the institution’s Court will raise the issue with the tribunal before the award is finalised, requiring the tribunal to demonstrate that it has properly investigated the matter. A dedicated, long-running global task force on corruption in international arbitration has finalised its comprehensive report, which is scheduled for formal launch later in the year. This guide will serve as an essential resource for both practitioners and tribunals, offering a structured approach to identifying and addressing red flags of corruption.

A distinct but equally pressing ethical and practical concern is the impact of economic sanctions. The discussion revealed a palpable and growing anxiety within the arbitrator community about the potential personal and professional risks of accepting appointments in cases involving sanctioned entities or territories. Arbitrators and counsel are asking how they can ensure they can sit without being at risk. In response, global branches of a leading professional body organised a dedicated international webinar, bringing together its New York, London, and European branches to provide guidance on navigating this complex terrain. This underscores a broader, unavoidable truth: in an increasingly fragmented geopolitical world, the ethical obligations of neutrals now extend to a sophisticated, up-to-date understanding of the shifting landscape of international sanctions law.

Part III: The AI Paradox

No topic generated a more profound and existential debate than the role of artificial intelligence. The discussion laid bare a fundamental tension between the desire for regulatory clarity and the sober recognition that the technological landscape is shifting far too rapidly for rigid, codified rules. The institutional decision to deliberately exclude any AI-specific provision from the 2026 rules was a strategic choice, not an oversight. It drew public criticism, with some commentators asking how the institution could ignore the most important issue of the moment. The answer, provided directly from the podium, was that the institution did not ignore it; it debated it at length and concluded that a fast-evolving field is best served by flexible, periodically updated guidelines rather than rules that would be obsolete within months. A dedicated task force is actively working on this, focusing on arbitrators’ use of AI.

The debate, however, quickly moved beyond mere policy to a fundamental philosophical interrogation of the profession. The president of a global professional body for arbitrators, who had chosen “Trust in a Changing World” as the annual theme, discussed the organisation’s early issuance of AI guidelines. The guidelines themselves were not the first of their kind; the Silicon Valley Arbitration and Mediation Centre issued the earliest set in 2024. These early frameworks all coalesce around a set of core, non-negotiable principles: participants are personally responsible for ensuring that any AI tools they use protect the confidentiality of the proceedings, and, this is paramount, the decision-making power of the tribunal is absolutely non-delegable.

This discussion was linked to a parallel development in the new rules regarding tribunal secretaries. The rules now explicitly state that an arbitrator cannot delegate their decision-making authority and responsibility to a tribunal secretary. This, it was argued, is the exact perfect analogy. The clear red line is that arbitrators cannot delegate their decision-making responsibility to a human or to a machine. AI may be used as a sophisticated assistant, in the same way a tribunal secretary is, but the act of judgment itself must remain human. A practical example from a recent case was provided: the Terms of Reference included a provision requiring all participants to check AI-generated content for hallucinations and fabricated case law, and that arbitrators could use AI tools only to the same extent they would use a human assistant.

The single hottest point of contention in the global AI debate is whether the use of AI by counsel and arbitrators must be disclosed. The conference issued a powerful and carefully reasoned caution against a simplistic and premature rush towards a mandatory disclosure obligation. The argument against blanket disclosure is that it is a dangerous trap. Many everyday digital tools, from mapping applications used to navigate to a hearing to advanced legal research platforms, are already integrated with AI in ways that are not transparent to the user. An undefined, sweeping obligation to “disclose all use of AI” could create a retroactive minefield for the losing party, who could seek to set aside an award on the ground that some unspecified AI tool was used without disclosure. The risk to the validity of arbitral awards is immense. The focus, the conference argued, should instead be on transparency in the discussion and clarity in what the parties agree to, rather than a mechanistic and unworkable disclosure checklist.

This practical debate opened a door to a profound philosophical reflection on the very nature of justice. The “coin toss” analogy was deployed to devastating effect: a coin toss is a perfectly fair, impeccably neutral procedure. Yet no rational commercial party would ever consent to resolving a multi-million-dollar contract dispute, one involving the interpretation of complex contractual language and the assessment of witness credibility, by a coin toss. This demonstrates conclusively that procedural fairness is not synonymous with substantive justice. The real danger, the speakers argued with passion, is not the technical question of whether AI can replace human arbitrators. The answer to that question is almost certainly yes, at least in a technical sense. The real and urgent danger is that we, as a legal community, might passively let it happen.

The question “Why would we let that happen?” was posed not as a Luddite plea for the status quo, but as a call to arms for the entire profession. The legal community has a duty to actively define what it values in the human act of judgment, the ability to read a witness’s demeanor, to sense the moral hazard behind a transaction, to apply equitable discretion, to understand the commercial context in a way that transcends data, and to build a system where technology is a tool that serves those values, rather than an algorithm that erodes them. The non-delegable nature of the decision-making process is the non-negotiable foundation of this future. It is the red line that must never be crossed.

Part IV: The Client-Centric Mandate

All procedural and ethical reforms are animated by a single overarching strategic reorientation: the adoption of a “client mindset.” The president of the institution described this as the prism through which every decision, from the design of a new rule to the administration of a daily case, is now made. When in-house counsel are asked why they choose this institution for their dispute resolution needs, the word they use repeatedly, across industries and jurisdictions, is “trust.”

This trust is not an abstract marketing slogan; it is the product of the institution’s daily, often invisible, operational work: the rigorous scrutiny of every draft award, the meticulous vetting of potential conflicts of interest by a global Court of practitioners, and the provision of a truly collective, international perspective on challenges to an arbitrator’s neutrality. The goal is not simply to administer a dispute to its conclusion, but to consistently meet and exceed client expectations in every interaction, recognising that companies worldwide have a choice of forum.

This client-centric philosophy found its most concrete and immediate expression in the strategic priority afforded to one of the world’s most dynamic and important markets. The new rules were translated into Mandarin as the very first non-English-language version, a deliberate and powerful signal to a jurisdiction whose companies are now the fifth most frequent users of the institution globally, drawn from nearly 150 countries. The conference host city, a rapidly emerging commercial and legal hub in western China, was repeatedly spotlighted as a strategic nexus for both inbound and outbound investment. The message was explicit: companies can choose to seat their international arbitrations in this city, bringing world-class institutional infrastructure directly to their doorstep.

This is not an abstract possibility; it is a concrete option, available alongside other major Chinese cities. This is a direct, practical response to the needs of Chinese companies engaged in massive outbound infrastructure, energy, and technology projects, who are seeking a neutral, trusted, and geographically convenient forum for resolving the disputes that inevitably arise from such complex, long-term ventures.

The in-house counsel who took the stage, representing a global energy equipment giant, a major state-owned infrastructure contractor, and a leading private-sector solar energy firm, grounded this strategic vision in gritty operational reality. They voiced a collective, growing frustration that the traditional model of international legal services is failing to meet their evolving needs. The reflexive and often unquestioning corporate habit of hiring a large, branded global law firm for every significant dispute is in constant and intensifying tension with the unrelenting internal pressure to control legal Costs.

A clear and direct call was issued from the conference stage to the assembled legal community: the market needs a new model. Corporations are actively seeking to partner with smaller, highly specialised “small and beautiful” boutique firms that can offer deep, focused expertise at a predictable, controlled cost. The challenge, however, is identifying them. The in-house leaders called upon international arbitral institutions to actively facilitate the integration of capable, excellent local counsel into the global arbitration ecosystem, helping to break down the persistent and limiting perception that only a handful of global mega-firms are qualified to handle complex, high-value international cases. There was a clear demand for a more diverse, competitive, and cost-effective marketplace for legal services.

Other practical, operational pain points were laid bare with equal candour. A senior infrastructure executive highlighted a critical and frustrating gap in the market: the lack of any clear, transparent, and ethically sound framework for structuring success or conditional fee arrangements for external counsel in international arbitration. This was posed as a direct, unanswered question to the assembled global experts. Another speaker underscored that the fate of a dispute is often sealed long before a lawyer is ever engaged, in the mundane, daily failure of on-the-ground project personnel, engineers, project managers, and commercial officers to maintain rigorous and contemporaneous contractual records.

This is a failure of what was termed “evidence consciousness,” and it is a problem that no external counsel, however brilliant, can retroactively fix. The corporate response to this challenging landscape is an increasingly systematic, front-loaded, and technology-enabled approach to risk management. Companies are building integrated digital platforms that embed legal, compliance, and sanctions screening directly into the procurement-to-payment workflow, ensuring that risk is managed not as a post-hoc legal fire drill, but as an integrated, real-time component of core business operations from the very inception of a project.

Part V: Emergency Arbitration and the Jurisprudence of Urgency

A dedicated panel dissected the high-stakes, high-pressure world of interim measures and emergency arbitration (EA) with forensic precision. The EA procedure is a crucible of pressure for all involved. A respondent, often strategically served with an application on the eve of a national holiday or a weekend, may have as few as three days to prepare a comprehensive factual and legal response. This compressed timeline must accommodate the intensive gathering of client evidence, legal research across multiple jurisdictions, and the preparation for and attendance at a full hearing, all while the clock ticks relentlessly towards a 15-day institutional deadline. The only viable strategy for a respondent in this situation is immediate, honest, and round-the-clock collaboration with counsel. This reality requires the client to recognise the existential gravity of the proceeding instantly.

The new rules introduce a significant and debated procedural innovation: the Preliminary Order. This mechanism allows a party, in truly exceptional circumstances where providing prior notice to the other side would likely defeat the very purpose of the application, such as providing a window for the dissipation of assets or the destruction of critical evidence, to seek a temporary, ex parte order from the emergency arbitrator before the respondent is even notified of the application.

This tool was designed in direct response to user feedback calling for a credible alternative to the ex parte relief available in many national Courts, ensuring that the arbitral process is not a weaker option. It is, however, carefully hedged with robust procedural safeguards: the unheard party must be given a full and reasonable opportunity to present its case immediately upon the order being made, and the emergency arbitrator retains the power to modify, suspend, or revoke the order upon hearing from both sides.

The discussion then turned to the core, judicially developed test that an emergency arbitrator must apply when deciding whether to grant any form of urgent interim relief. The test involves a delicate, intensely fact-sensitive balancing exercise, requiring the arbitrator to weigh three distinct yet interrelated factors. The first is the prospect of the applicant’s success on the merits of the underlying claim. This is not a mini-trial; the applicant must demonstrate a genuine, arguable case, not a certainty of winning.

The second, and often most heavily weighted, factor is the risk of irreparable harm. The applicant must show that it would suffer harm that could not be adequately compensated by an award of monetary damages at the final hearing. The third factor is the balance of interests, a holistic weighing of the harm the applicant would suffer if the measure is refused against the harm the respondent would suffer if the measure is wrongly granted.

The role of the expert witness at this nascent, urgent stage of a dispute is uniquely constrained and requires a different discipline from that of a final hearing. Working with inevitably incomplete information and punishingly short deadlines, an expert must not attempt to deliver a definitive, final, and unqualified opinion, which would be both premature and potentially misleading to the tribunal. Instead, the expert’s true value lies in helping the tribunal understand and map the landscape of uncertainty.

The expert must clearly separate what is a fact from what is a working assumption and what remains unknown. Findings should be presented as ranges or under alternative, clearly stated scenarios, rather than as a single, deceptively precise figure. The expert must be transparent about the limitations of their analysis. This discipline protects not only the expert’s own credibility but also the integrity of the process, as an early expert opinion does not disappear; it becomes a permanent part of the evidentiary record and will be rigorously tested during cross-examination.

This entire analysis leads directly to the most acute jurisprudential danger inherent in the emergency mechanism: the risk of pre-judging the merits of the case. The question was posed with stark clarity from the panel: if an Emergency Arbitrator issues sweeping, onerous restrictions on a party’s commercial conduct before a full tribunal is even formed, when does the legitimate act of preventing irreparable harm cross the invisible line into effectively and prematurely deciding the case? The answer, woven through the entire expert discussion, lies in a disciplined, self-conscious, and restrained application of the legal test.

An order that restrains a party’s conduct to preserve the status quo pending a final decision by the full tribunal is legitimate classic interim relief; it is a provisional, preservative measure. But an order that grants the applicant the very commercial benefit it could only hope to achieve after finally prevailing on the merits crosses that line. It pre-judges the case. It usurps the role of the yet-to-be-constituted full tribunal. The emergency arbitrator’s proper and exclusive focus must be on the immediacy and gravity of the threatened irreparable harm, not on a final adjudication of the underlying contractual dispute.

The “prospect of success” is to be assessed not as a definitive Trial on the merits, but as a preliminary, low-threshold filter designed solely to ensure that the application is not frivolous or vexatious. The emergency arbitrator must resist, with intellectual rigour, the temptation to do final justice in a provisional proceeding. The non-delegable decision-making mandate, the unshakeable principle that human judgment is the core of the process, applies here with its most singular and consequential force: the emergency arbitrator, acting alone and at speed, must exercise a disciplined, restrained, and profoundly human judgment to draw that critical line, protecting a party from catastrophic and irreparable loss without, for one moment, usurping the sacred role of the full tribunal that is to follow.

Part VI: The Judicial Partnership

The emergency arbitrator does not operate in a vacuum. A senior judicial official provided a landmark, detailed overview of the progressive evolution in a major jurisdiction, where a newly revised arbitration law has systematically and comprehensively expanded the scope of judicial support for interim measures in both domestic and international arbitrations. The presented data was striking and told a clear story of institutional intent: a 4.3-fold increase in the number of judicial review and interim measure cases between 2023 and 2024, with the Court’s support rate for such applications reaching a remarkable 98.90%. This near-universal support rate is the most direct possible expression of a pro-arbitration judicial policy.

This policy was brought to life through a series of concrete, innovative case examples. In Shanghai, a Court issued an investigation order directly in support of a foreign-seated international arbitration, effectively bridging the gap between the domestic judicial system and the needs of an offshore tribunal. In Guangzhou, a Court executed a full cross-border asset preservation order under a landmark bilateral arrangement with Hong Kong, demonstrating the practical mechanics of cross-border judicial cooperation in aid of arbitration. And in the very province and city hosting the conference, a local Court acted with decisive speed to freeze assets and halt external guarantees in a complex, multi-party cross-border dispute, an act specifically cited as preventing systemic financial risk. These are not theoretical possibilities; they are operational precedents. They demonstrate a judicial philosophy that is actively, and with evident success, building a complete ecosystem designed to be a “preferred destination” for international commercial dispute resolution.

Communication, Curiosity, and the Optimism to Evolve

The conference closed not with a set of resolutions, but with a statement of philosophy. The twin realities of the role, constant, exhausting global travel and the resulting jet lag, combined with the electrifying energy of meeting new people in new places, served as a metaphor for the state of the profession: demanding, disorienting, but deeply exhilarating. What keeps the leaders of the global arbitration community up at night, candidly, is the disruptive and unknowable potential of artificial intelligence, a force that demands constant vigilance and study.

But what gets them up in the morning is a profound, unshakeable sense of optimism and a restless, forward-looking curiosity about what is coming next. This is not a passive optimism that hopes for the best. It is an active, muscular commitment to continuous evolution. The history of this institution is a century-long story of adapting to meet the changing needs and expectations of the global business community.

As the pace of that change accelerates to an unprecedented speed, the core strategic challenge is not simply to envision what arbitration will look like in the future. It is to think fundamentally, and without the constraints of tradition, about how commercial parties will want to resolve their disputes in the future. The answer, the conference concluded, lies in a renewed, disciplined commitment to better communication: to listening deeply and continuously to the global user community, to translating those articulated needs into agile, responsive rules, and to fostering the authentic, trust-based human connections that transcend the daily headlines of geopolitics. The final call was a collaborative one, an invitation to all stakeholders to work together to build an international arbitration system that is not merely a dispute-resolution mechanism but a resilient, trusted, human-centred, and ever-evolving piece of global infrastructure for commercial peace.

2026 Arbitration Rules - ICC: https://iccwbo.org/dispute-resolution/dispute-resolution-services/arbitration/rules-procedure/2026-arbitration-rules/?utm_source=copilot.com

Disclaimer:

This article is intended for general informational and academic purposes only. It does not constitute legal advice, professional counsel, or an official position of any institution or organisation mentioned. The views expressed are those of the author and are based on publicly available information and professional analysis as of July 2026. Readers should seek independent legal advice before relying on any content herein for decision-making or case strategy. References to conferences, institutions, or rule changes are included solely for contextual discussion and do not imply endorsement or affiliation.

2026 Arbitration Rules - ICC - International Chamber of Commerce:

• Conference Summary

Event: ICC Chengdu Arbitration Day
Date: July 2, 2026

What an unforgettable experience at the 2026 ICC China Arbitration Day in Chengdu! This landmark event brought together over 250 top-tier international arbitrators, corporate counsel, and legal scholars to dissect the newly rolled-out 2026 ICC Rules of Arbitration, marking a massive milestone for cross-border dispute resolution in Western China.

The interactive panel sessions sparked highly engaging audience Q&A and genuinely honest debates in the room around two major procedural tightropes capping off what was an incredibly successful and insightful conference!

• On cost optimization & firm selection:
  "With international arbitration costs and timelines continually rising, shouldn't we focus on reducing expenditures? As clients, would you accept a highly capable local law firm practitioner who can do the exact same job at a much lower cost?"
  The exchange on legal costs and firm selection sparked an incredibly honest debate in the room.

• On emergency interim relief:
  "An Emergency Arbitrator must weigh 'irreparable harm' against the 'balance of interests.' If an EA issues sweeping restrictions before a full tribunal is even formed, when does preventing harm cross the line into pre-judging the merits?"

Personal Discussions & Connections

Beyond the panels, the event was a fantastic success for reinforcing regional relationships. It was a true privilege to catch up individually with senior representatives from major arbitral institutions, lead partners from top international law firms, and highly respected independent arbitrators. Our one-on-one exchanges offered deep insights into how the global dispute resolution community plans to navigate these newly updated procedural rules.

Immense value listening to and connecting with the day's stellar panelists and court members.

Closing Note

The ICC Chengdu Arbitration Day has successfully reinforced key regional relationships and brought forward crucial discussions on procedural efficiency and the evolution of cross-border dispute practices. The insights gained from both the panel sessions and the individual exchanges underscore the growing importance of regional talent and surgical procedural remedies in handling complex commercial disputes moving forward.

#InternationalArbitration #DisputeResolution #ICCArbitration #Ciarb #LegalFees #DuanAndDuan #ChengduLawyers #Chengdu

Published today in the July edition of the Butterworths Journal of International Banking & Financial Law (JIBFL), within a restructuring-focused issue featuring contributions from leading practitioners.

Thank you to Amanda Cohen and the editorial team for including my work alongside such distinguished voices in the field.

#bankinglaw #financialregulation #insolvency #JIBFL #publication

Ahmed Ashfaq, “Hong Kong’s Insolvency Two‑Step: Enforcing Forum Bargains and Enabling Cross‑Border Rescue”, Corporate Rescue and Insolvency (CRI) | LexisNexis UK / Butterworths, Vol. 19, No. 2, 1 April 2026

Description:

Feature article: Technical analysis of the judicial enforcement of forum selection clauses within the HKSAR's framework for international debt restructuring and cross-border assistance.

Documented by LexisNexis as thought leadership on insolvency risk and complex regulatory enforcement.

Cross-border dispute resolution involving Hong Kong and Mainland China requires careful attention to the legal and procedural rules of both systems. Issues may arise in relation to arbitration, litigation, interim relief, enforcement, limitation periods, proof of foreign law, interest, guarantees, legal fees, service of judicial documents, and insolvency recognition. The essential point is that Hong Kong and Mainland China should not be treated as if their dispute-resolution regimes operate in the same way. The appropriate strategy depends on the forum, governing law, seat of arbitration, arbitral institution, location of assets, nature of the claim, and procedural stage.

1. Mainland–Hong Kong Judicial Assistance Framework

Mainland China and Hong Kong have a number of mutual legal assistance arrangements. The Hong Kong Department of Justice lists arrangements dealing with matters including service of judicial documents, enforcement of arbitral awards, recognition and enforcement of judgments, taking of evidence, matrimonial and family judgments, and interim measures in aid of arbitration.

In arbitration, the Arrangement Concerning Mutual Enforcement of Arbitral Awards provides an enforcement channel between Hong Kong and the Mainland. The arrangement provides for the enforcement of Hong Kong awards in the Mainland where the award is made pursuant to the Hong Kong Arbitration Ordinance, and for the enforcement of Mainland awards in Hong Kong where the award is made pursuant to the PRC Arbitration Law.

The 2019 Mainland–Hong Kong interim-measures arrangement applies to Hong Kong-seated arbitral proceedings administered by eligible arbitral institutions or permanent offices designated under Article 2(1) of that arrangement. The Department of Justice announced an updated list effective from 2 April 2025.

The nine designated institutions and permanent offices are: Hong Kong International Arbitration Centre; Hong Kong Maritime Arbitration Group; South China International Arbitration Center (HK); eBRAM International Online Dispute Resolution Centre; Shanghai International Arbitration (Hong Kong) Center; Asia Pacific International Arbitration Chamber Hong Kong Arbitration Center; AALCO Hong Kong Regional Arbitration Centre; China International Economic and Trade Arbitration Commission Hong Kong Arbitration Center; and the International Court of Arbitration of the International Chamber of Commerce – Asia Office.

The designation is valid for two years from 2 April 2025, ending on 1 April 2027, subject to further application upon expiry. Accordingly, the interim-measures mechanism is not available for every Hong Kong-seated arbitration; it depends on whether the arbitration is administered by a designated eligible institution or permanent office.

2. Enforcement of Arbitral Awards and Civil or Commercial Judgments

The Mainland–Hong Kong arbitral award framework remains important for cross-border arbitration. The Arrangement Concerning Mutual Enforcement of Arbitral Awards refers to the enforcement of awards made in Hong Kong pursuant to the Hong Kong Arbitration Ordinance and awards made in the Mainland pursuant to the PRC Arbitration Law.

Civil and commercial judgment enforcement is now governed by a broader reciprocal framework. The Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance, Cap 645, came into operation on 29 January 2024. It implements the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region, signed on 18 January 2019.

The 2019 Arrangement applies to the reciprocal recognition and enforcement of legally effective judgments in civil and commercial matters between the Mainland and Hong Kong courts. It also applies to legally effective judgments relating to civil damages awarded in criminal cases.

The Arrangement is broad, but it is not unlimited. It expressly excludes specified categories, including bankruptcy or insolvency cases, certain family and succession matters, certain intellectual property matters, certain maritime matters, cases concerning the validity of arbitration agreements or the setting aside of arbitral awards, and cases concerning recognition and enforcement of judgments or arbitral awards of other countries or regions.

The Arrangement covers both monetary and non-monetary rulings, subject to the limits set out in the Arrangement. However, the definition of “judgment” excludes, in the case of the Mainland, rulings concerning preservation measures and, in the case of Hong Kong, anti-suit injunctions and orders for interim relief.

The Arrangement also contains refusal grounds. Recognition and enforcement may be refused where, for example, the jurisdictional requirements are not met, the respondent was not legally summoned or was not given a reasonable opportunity to be heard, the judgment was obtained by fraud, there are conflicting proceedings or judgments, or recognition and enforcement would be manifestly contrary to the relevant basic principles, social and public interests, or public policy of the requested place.

Article 24 separately provides that the requested court may, before or after accepting an application for recognition and enforcement, impose property preservation or mandatory measures in accordance with the law of the requested place.

Accordingly, as at 28 June 2026, it is not accurate to say that there is no broad Mainland–Hong Kong civil and commercial judgment enforcement mechanism. It is more accurate to say that a broad mechanism exists, but it remains subject to the scope, exclusions, procedural requirements, and grounds for refusal set out in the 2019 Arrangement and Cap 645.

3. Public Policy and Public Interest

Recognition or enforcement may still be affected by public policy, public interest, or equivalent objections where the applicable enforcement framework allows such objections. This article does not state how often such objections succeed, because that question depends on the particular facts, instrument, forum, and applicable law. The practical point is narrower: parties should not assume that satisfying formal enforcement requirements necessarily removes every possible objection.

4. Ascertainment of Foreign Law

In Hong Kong proceedings, foreign law is generally treated as a matter to be pleaded and proved. A Hong Kong legal scholarship summary describes Hong Kong as following the orthodox common-law approach to pleading and proving foreign law. In cross-border disputes, parties should consider at an early stage how the relevant non-forum law will be established. This may be important where Hong Kong law is relevant in Mainland proceedings or Mainland law is relevant in Hong Kong proceedings.

5. Legal Fees and Outcome-Based Arrangements

Hong Kong distinguishes between litigation and arbitration in relation to outcome-based fee arrangements. For arbitration, the Department of Justice states that outcome-related fee structure agreements may include conditional fee agreements, damages-based agreements, and hybrid damages-based agreements. It also states that these structures apply to arbitral proceedings and related court and mediation proceedings.

The Arbitration (Outcome Related Fee Structures for Arbitration) Rules, Cap 609D, came into operation on 16 December 2022. The rules include requirements such as a written agreement signed by the lawyer and the client. This does not mean that contingency fees should be assumed to be permissible in Hong Kong litigation. Litigation and arbitration must be considered separately.

6. Interest Rate Rules

Hong Kong’s money-lending thresholds are no longer the former 60% and 48% figures. The HKSAR Government stated that, from 30 December 2022, the statutory interest-rate cap under the Money Lenders Ordinance was amended from 60% to 48% per annum, and the extortionate-rate threshold was amended from 48% to 36% per annum.

For Mainland private lending, the relevant framework identified here is the four-times one-year Loan Prime Rate rule. A legal commentary source describes the Mainland private-lending framework as setting the upper limit of judicial protection for private-lending interest at four times the same-period one-year LPR at the time of contract formation. The China Foreign Exchange Trade System / National Interbank Funding Centre showed the one-year LPR as 3.00% on 22 June 2026. Four times 3.00% is 12.00%.

That figure should not be treated as a universal fixed cap for every loan. The applicable ceiling depends on the relevant LPR reference date and the nature of the lending relationship.

7. Limitation and Prescription

Hong Kong limitation periods are governed by the Limitation Ordinance, Cap 347. In most Hong Kong commercial disputes, ordinary contract claims are commonly described as subject to a six-year limitation period, while contracts executed as deeds may be subject to a 12-year period. For Mainland China, public commentary on PRC litigation states that the general limitation period for civil claims is three years and that special limitation periods may apply.

Limitation issues are technical and fact-dependent. Parties should verify the applicable period by reference to the claim type, governing law, forum, and relevant dates.

8. Guarantees and Suretyship

Guarantee periods require separate attention in Mainland-related lending or security arrangements. A legal commentary source discussing Article 692 of the PRC Civil Code states that the guarantee period is a fixed period and is not subject to suspension, interruption, or extension. It also states that if the parties have not agreed on the guarantee period, or if the agreement is unclear, the statutory guarantee period is six months.

The practical consequence is that a creditor should identify and monitor the guarantee period separately from the limitation period for the principal debt. In cross-border security structures involving an onshore Mainland guarantor and offshore indebtedness, separate foreign-exchange registration issues may arise. A law-firm commentary on Nei Bao Wai Dai states that non-bank institutions and individuals in China involved in such arrangements are required to complete statutory SAFE registration within the prescribed period, and that failure to do so may affect remittance even where a court judgment or arbitral award has been obtained. This issue should be checked separately in any transaction involving Mainland cross-border security.

9. Interim Measures in Aid of Hong Kong Arbitrations

The 2019 Mainland–Hong Kong interim-measures arrangement applies to Hong Kong-seated arbitrations administered by qualifying institutions or permanent offices. The Department of Justice announced an updated list of qualifying institutions and permanent offices effective from 2 April 2025. The announcement states that the designation is valid for two years, ending on 1 April 2027, subject to further application on expiry.

This article does not assert that Mainland courts have granted interim measures at the enforcement stage of Hong Kong awards. No independently verified public source for such specific cases is cited here.

10. Revised PRC Arbitration Law

The revised PRC Arbitration Law is now in force. Public sources state that it was adopted on 12 September 2025 and came into force on 1 March 2026. Public commentary identifies several reforms relevant to foreign-related arbitration, including recognition of the concept of the seat of arbitration, limited introduction of ad hoc arbitration in specified circumstances, recognition of online arbitration, and permission for foreign or offshore arbitral institutions to administer foreign-related cases in designated Mainland areas, including certain pilot free trade zones, the Hainan Free Trade Port, and other areas approved by the State Council.

Shanghai has also issued administrative measures concerning business offices established by overseas arbitration institutions within Shanghai. Those measures refer to the Lin-gang Special Area of the China (Shanghai) Pilot Free Trade Zone framework. This article does not state that the revised PRC Arbitration Law creates emergency arbitrator measures, because that specific mechanism is not verified here from an authoritative primary source.

11. April 2026 Arrangement on Service of Judicial Documents

A new Arrangement on Mutual Service of Judicial Documents in Civil and Commercial Proceedings between the Mainland and the Hong Kong Special Administrative Region was signed in Beijing on 20 April 2026. It applies where judicial documents in civil and commercial proceedings before Mainland courts must be served on a person in Hong Kong, or where judicial documents in civil and commercial proceedings before Hong Kong courts must be served on a person in the Mainland.

The new arrangement broadens the possible modes of service. Article 3 provides that service may be effected by mutual entrustment by the courts and by other agreed modes, including postal service, electronic service, and service by authorised persons. If service cannot be effected by those modes, service by public announcement is permissible.

For mutual court entrustment, Article 4 provides that the High People’s Courts of the Mainland and the High Court of Hong Kong may entrust service to each other. The Supreme People’s Court may directly entrust service to the High Court of Hong Kong, and may authorise mutual entrustment between some Intermediate People’s Courts or Primary People’s Courts and the High Court of Hong Kong after consultation with the Hong Kong Judiciary.

Article 5 provides that, for mutual entrustment by courts, judicial documents may be transmitted electronically, or by post if electronic transmission is not possible. Electronically transmitted judicial documents have the same effect as originals.

Article 19 states that, following promulgation of a judicial interpretation by the Supreme People’s Court and completion of relevant internal procedures in Hong Kong, both sides will announce the commencement date. From that commencement date, the earlier Arrangement for Mutual Service of Judicial Documents in Civil and Commercial Proceedings between the Mainland and Hong Kong Courts will be terminated. Accordingly, as at 28 June 2026, the April 2026 arrangement had been signed, but should be treated as pending commencement unless and until the commencement date has been announced.

12. Cross-Border Insolvency Recognition and Assistance

Mainland–Hong Kong judicial cooperation also extends to certain insolvency matters. The Supreme People’s Court’s Opinion on Taking Forward a Pilot Measure in relation to the Recognition of and Assistance to Insolvency Proceedings in the Hong Kong Special Administrative Region designates the people’s courts in Shanghai Municipality, Xiamen Municipality in Fujian Province, and Shenzhen Municipality in Guangdong Province to conduct pilot work on recognition of and assistance to Hong Kong insolvency proceedings.

For the purposes of the SPC Opinion, “Hong Kong Insolvency Proceedings” include collective insolvency proceedings commenced under Hong Kong’s Companies (Winding Up and Miscellaneous Provisions) Ordinance and Companies Ordinance, including compulsory winding up, creditors’ voluntary winding up, and schemes of arrangement promoted by a liquidator or provisional liquidator and sanctioned by the Hong Kong court under section 673 of the Companies Ordinance.

The SPC Opinion applies where Hong Kong is the debtor’s centre of main interests. It states that the centre of main interests generally means the debtor’s place of incorporation, while the people’s court should also consider factors including the debtor’s principal office, principal place of business, and principal assets. It further states that, when the Hong Kong administrator applies for recognition and assistance, the debtor’s centre of main interests must have been in Hong Kong continuously for at least six months.

A Hong Kong administrator may apply for recognition and assistance where the debtor’s principal assets in the Mainland are in a pilot area, or where the debtor has a place of business or representative office in a pilot area. The SPC Opinion provides that the relevant Intermediate People’s Courts in the pilot areas have jurisdiction over such cross-boundary insolvency assistance cases.

The SPC Opinion also provides for consequences after recognition. Payment of debts by the debtor to individual creditors is invalid; ongoing civil actions or arbitrations involving the debtor are suspended until the Hong Kong administrator takes over the debtor’s property; preservation measures over the debtor’s property are lifted; and execution procedures are suspended.

The SPC Opinion further provides that, after recognition, a Mainland court may allow the Hong Kong administrator to perform specified duties in the Mainland, including taking over the debtor’s property and records, investigating the debtor’s financial position, managing and disposing of the debtor’s property, participating in legal proceedings on behalf of the debtor, and accepting and examining declarations of claims by Mainland creditors. Certain acts, including transferring property out of the Mainland, require separate approval by the people’s court.

The SPC Opinion also sets out grounds on which recognition or assistance must be refused, including where the debtor’s centre of main interests is not in Hong Kong or has been in Hong Kong for less than six months, where Article 2 of the PRC Enterprise Bankruptcy Law is not satisfied, where Mainland creditors are unfairly treated, where fraud exists, or where recognition or assistance would violate the basic principles of Mainland law or offend public order or good morals.

The Hong Kong side also provides a procedure for Mainland bankruptcy administrators applying to the Hong Kong Court of First Instance for recognition and assistance. The Hong Kong practical guide states that the Mainland administrator should first obtain a letter of request from the Mainland court that appointed the administrator, addressed to the Court of First Instance, and that the letter should set out the terms of the order sought from the Hong Kong court.

After obtaining the letter of request, the Mainland administrator may apply to the Court of First Instance by originating summons, supported by affidavit or affirmation evidence, on an ex parte basis, for a standard-form order. The guide also states that the Court of First Instance may deal with the application on paper, although it may direct a hearing if appropriate.

The practical guide includes sample documents for reference, including a letter of request from a Mainland court, an ex parte originating summons, supporting affidavit or affirmation evidence, and a standard-form recognition order. This insolvency recognition framework is relevant where Hong Kong insolvency proceedings require assistance in designated Mainland pilot areas, and where Mainland bankruptcy administrators seek recognition and assistance from the Hong Kong Court of First Instance. It should be treated separately from the 2019 civil and commercial judgments enforcement arrangement, which excludes bankruptcy and insolvency cases.

13. Practical Conclusion

Cross-border dispute resolution between Hong Kong and Mainland China requires precise attention to the applicable legal regime. Arbitration, judgment enforcement, interim measures, service of documents, legal fees, interest, limitation, guarantees, insolvency recognition, and proof of foreign law may each be governed by different rules depending on the forum, governing law, seat of arbitration, institution, asset location, and procedural stage. The safest approach is to avoid assuming that Hong Kong and Mainland rules are interchangeable. Each issue should be checked against the relevant instrument, statute, court rules, and current legal position.

Bibliography:

The following sources were consulted in preparing this article. It is written in original wording. Official titles of statutes, legal instruments, institutions, and legislation are used for accuracy.

1. Hong Kong Department of Justice, “Arrangements with the Mainland”.

https://www.doj.gov.hk/en/mainland_and_macao/arrangements_with_the_mainland.html

2. Hong Kong Department of Justice, “Arrangement Concerning Mutual Enforcement of Arbitral Awards between the Mainland and the Hong Kong Special Administrative Region”, signed 21 June 1999, entered into force 1 February 2000.

https://www.doj.gov.hk/en/legal_dispute/pdf/mainlandmutual2e.pdf

3. Hong Kong Department of Justice, “Arrangement Concerning Mutual Assistance in Court-ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the HKSAR – New Application Exercise to Qualify under Article 2(1)”.
https://www.doj.gov.hk/en/community_engagement/announcements/20241218_an1.html

4. Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region, signed 18 January 2019; Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance, Cap 645, in operation from 29 January 2024; Hong Kong Department of Justice, “CAP645 — The Ordinance and the Arrangement”
Arrangementhttps://www.doj.gov.hk/en/mainland_and_macao/pdf/Doc3_477379e.pdf
Cap 645

https://www.doj.gov.hk/cap645/en/ordinance_and_arrangement/index.html

5. Wilson Lui, “Wilson Lui on Treatment of Foreign Law in Hong Kong” (HKU Legal Scholarship Blog, 9 January 2024).
http://researchblog.law.hku.hk/2024/01/wilson-lui-on-treatment-of-foreign-law.html

6. Hong Kong Department of Justice, “Top 20 FAQs on Outcome-Related Fee Structures for Arbitration”.
https://www.doj.gov.hk/en/legal_dispute/pdf/top_20_faqs_on_outcome_related_fee_structures_for_arbitration.pdf

7. Hong Kong e-Legislation, “Arbitration (Outcome Related Fee Structures for Arbitration) Rules, Cap 609D”.
Direct link: https://www.elegislation.gov.hk/hk/cap609D

8. HKSAR Government, “Amendments to Statutory Interest Rate Cap Take Effect From Tomorrow” (Press Release, 29 December 2022).
https://www.info.gov.hk/gia/general/202212/29/P2022122800417.htm

9. Law in a Minute, “How Much Can Interest Rates Be?”.
Direct link: https://lawinamin.com/articles/how-much-can-interest-rates-be/

10. China Foreign Exchange Trade System / National Interbank Funding Center, “Loan Prime Rate”, 22 June 2026.
https://www.chinamoney.com.cn/english/bmklpr/

11. Hong Kong e-Legislation, “Limitation Ordinance, Cap 347”.
Direct link: https://www.elegislation.gov.hk/hk/cap347

12. DLA Piper Intelligence, “Global Litigation Guide: Hong Kong, SAR — Limitation”.
https://www.dlapiperintelligence.com/litigation/insight/index.html?t=02-limitation&c=HK

13. DLA Piper Intelligence, “Global Litigation Guide: China — Limitation”.
Direct link: https://www.dlapiperintelligence.com/litigation/insight/index.html?t=02-limitation&c=CN

14. Gaopeng & Partners, “The Connection and Differentiation of Warranty Period, Warranty Debt Litigation Limitation, and Principal Debt Litigation Limitation” (Firm Insights, 2021).
https://www.gaopenglaw.com/en/content/details11_2264.html

15. Hong Kong Government, “Institutions and permanent offices qualified for interim measure applications announced” (Press Release, 2 April 2025).
https://www.info.gov.hk/gia/general/202504/02/P2025040200700.htm

16. Weina Ye, Kathryn Ye, “New PRC Arbitration Law: The Key Developments for Foreign-Related Arbitration” (Herbert Smith Freehills Kramer LLP, 25 March 2026).
https://www.hsfkramer.com/insights/reports/2026/inside-arbitration-issue-21/new-prc-arbitration-law-the-key-developments-for-foreign-related-arbitration

17. Hill Dickinson, “PRC’s New Arbitration Law: Impact and Guidance for Hong Kong Arbitrations” (Legal Update, 14 April 2026).
https://www.hilldickinson.com/our-view/articles/prc-s-new-arbitration-law-impact-and-guidance-for-hong-kong-arbitrations/

18. Bird & Bird, “Landmark Reform of the Arbitration Law of the People’s Republic of China” (Client Alert, 21 October 2025).
https://www.twobirds.com/en/insights/2025/china/landmark-reform-of-the-arbitration-law-of-the-people’s-republic-of-china

19. Herbert Smith Freehills Kramer, “Updated PRC Arbitration Law Comes into Effect” (Legal Update, March 2026)
https://www.hsfkramer.com/notes/arbitration/2026-02/updated-prc-arbitration-law-comes-into-effect

20. Arrangement on Mutual Service of Judicial Documents in Civil and Commercial Proceedings between the Mainland and the Hong Kong Special Administrative Region, courtesy English translation, signed in Beijing on 20 April 2026; Hong Kong Department of Justice / HKSAR Government, “HKSAR and Mainland sign new arrangement on mutual service of judicial documents in civil and commercial proceedings” (Press Release, 21 April 2026).
Arrangement https://www.doj.gov.hk/en/mainland_and_macao/pdf/service_arrangement_en.pdf Press release

https://www.doj.gov.hk/en/community_engagement/press/20260421_pr1.html

21. AllBright Law Offices, “Registration of Onshore Guarantees for Offshore Indebtedness” (Professional Articles, 27 February 2017).
https://www.allbrightlaw.com/EN/10475/43f7f7e930acd550.aspx

22. Supreme People’s Court, Opinion on Taking Forward a Pilot Measure in relation to the Recognition of and Assistance to Insolvency Proceedings in the Hong Kong Special Administrative Region, courtesy English translation.
https://www.doj.gov.hk/en/mainland_and_macao/pdf/RRECCJ_opinion_en_tc.pdf

23. Hong Kong Department of Justice, Procedures for a Mainland Administrator’s Application to the Hong Kong SAR Court for Recognition and Assistance: Practical Guide.
https://www.doj.gov.hk/en/mainland_and_macao/pdf/RRECCJ_practical_guide_en.pdf

24. Shanghai Municipal Bureau of Justice, Administrative Measures for the Business Offices in Shanghai Established by Overseas Arbitration Institutions, 23 September 2025.
https://english.shanghai.gov.cn/en-Bulletin/20250923/95f464747b8b441c823bf024c2b9cab9.html

Disclaimer

This article is provided for general informational purposes only. It is not legal advice and should not be construed as legal advice. Readers should not rely on the contents of this article as a substitute for advice from qualified legal professionals. While efforts have been made to ensure the accuracy of the information as of 28 June 2026, the legal position may change, and the application of any statute, arrangement, rule, procedure, case law, or regulatory requirement depends on the specific facts, governing law, forum, procedural stage, contractual documents, asset location, regulatory approvals, and available evidence. Readers should conduct their own research and seek proper legal advice before taking, or refraining from taking, any action based on this article.

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