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Originally from Alternatives to the High Cost of Litigation

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Under Article 2 of the Interpretation by the Standing Committee of the National People’s Congress Regarding the First Paragraph of Article 13 and Article 19 of the Basic Law of the Hong Kong Special Administrative Region of the People’s Republic of China (2011), China’s central government has emphasized that the Hong Kong Special Administrative Region, including its courts, must apply or execute the state immunity rules or policies adopted by the central government. The Hong Kong SAR courts are therefore required to follow the state immunity policies set by the central government and may not adopt differing or conflicting rules.

In a notable case before the enactment of the Law of the People’s Republic of China on Foreign State Immunity, or FSIL, on Sept. 1, 2023, in the case of Democratic Republic of the Congo v. FG
Hemisphere Associates LLC, (2011) 14 HKCFAR 95, the applicant sought to enforce an International Chamber of Commerce arbitration award against the assets of the Congo located in Hong Kong. The Hong Kong Court of Final Appeal ruled in favor of the absolute immunity doctrine, dismissing the enforcement action on the grounds that the Congo’s assets were protected by sovereign immunity.

This decision reflects the historical approach of the Hong Kong SAR, following the central government’s absolute immunity principle for foreign states’ assets. But since the FSIL’s enactment, Hong Kong shall shift its position from absolute immunity to restricted immunity as well. Due to the strict FSIL standard, enforcing investment awards in Hong Kong may also be significantly challenging.