Hong Kong Ruling Confirms China Judicial Rights

February 18, 2011 Posted by China Briefing Reading Time: < 1 minute

By Richard Hoffmann, Dezan Shira & Associates

Feb. 18 – The Hong Kong Court of Appeals has ruled that it is unable to hear a case involving two Hong Kong companies in dispute as one of the parties invoked the jurisdiction of the courts in Mainland China and obtained final judgment there. This was despite both parties having their registered offices, business operations, management, shareholders and directors located in Hong Kong and Macau and the contract in dispute also being executed in Hong Kong.

This has a profound impact on business disputes involving Hong Kong-based businesses operating in China. In order to reduce the likelihood of this outcome, parties negotiating cross-border contracts should include their jurisdiction of choice and the choice of legal provisions.

Failing to address these issues during pre-contract negotiations increases the prospect of one of the parties successfully invoking the jurisdiction of courts in China (or elsewhere) should any dispute arise.

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