The "Arrangement Concerning Mutual Enforcement of Arbitral Awards Between the Mainland and the Hong Kong Special Administrative Region" (the Arrangement) was signed in 1999 and it generally covers awards made in Hong Kong pursuant to the Hong Kong Arbitration Ordinance. In principle, this should include non-institutional arbitral awards (that is, ad hoc awards) as well as ICC awards made in Hong Kong.

In practice, however, doubts have sometimes been expressed over whether such awards are enforceable in the PRC. It is generally believed that PRC law does not recognise the validity of ad hoc arbitrations conducted in the PRC, nor of arbitrations in the PRC conducted under the auspices of a foreign arbitral institution such as the ICC (see, however, Legal update, First reported case of China ICC award being enforced in China).

In theory, these restrictions should not prevent the enforcement in the PRC of such awards which have been made outside the PRC, given the wording of the Arrangement. Nonetheless, some doubts have persisted.

To deal with these concerns, the Supreme People's Court initially issued a letter dated 25 October 2007, to Hong Kong's Secretary for Justice, clarifying that ad hoc arbitral awards made in Hong Kong are in general enforceable in the PRC. This clarification letter, however, was not widely circulated, and some concerns remained. In the meantime, the ICC opened a branch Secretariat office in Hong Kong, specifically handling Asia-related arbitration cases (see Legal update, ICC opens Hong Kong centre). This underscored the need to resolve this question once and for all.

It is therefore helpful that on 30 December 2009, the Supreme People's Court issued a "Notice of Relevant Issues on the Enforcement of Hong Kong Arbitral Awards in the Mainland" (the Notice). It directs the Higher People's Courts of all provinces, autonomous regions and municipalities under the PRC Central Government to examine any application for enforcement of an ad hoc arbitral award made in Hong Kong, or an ICC or other foreign arbitral award made in Hong Kong, based on the provisions of the Arrangement, and to enforce such awards unless one of the conditions in Article 7 applies.

Article 7 of the Arrangement largely reproduces the well-established and limited New York Convention grounds for resisting enforcement of awards, and need not cause undue concern.

Although the Notice does not change the law as such, it is nonetheless a helpful confirmation that Hong Kong awards (including ad hoc and ICC awards) are enforceable in the PRC. This will be particularly helpful when parties are seeking to persuade lower courts in the PRC to enforce such awards. In addition, it appears to highlight the Supreme People's Court's relatively pro-enforcement stance towards the enforcement of foreign arbitral awards, particularly those from Hong Kong.