Hong Kong: State and Crown immunity in Hong Kong: practical considerations in selecting and drafting disputes clauses

Last Updated: 22 October 2011
Article by Kim Barton

State and Crown immunity have been hot topics in Hong Kong.  The Hong Kong Court of Final Appeal's ("CFA") preliminary decision in the Congo case1 that foreign states have the right to absolute immunity in Hong Kong has been confirmed by an Interpretation issued by the PRC Central Government on 26 August 2011.2 On 8 September 2011, the CFA issued a final judgment confirming that the principle of absolute immunity applies in Hong Kong.

State immunity does not apply, in Hong Kong, to the PRC and its entities.  However, the PRC and its entities enjoy Crown immunity (as did Her Majesty the Queen in the Right of the UK prior to "handover"), as was confirmed by the 2010 decision of the Hong Kong Court of First Instance in Hua Tian Long.3

The Hong Kong Government and its entities are, however, in a different position.  The Crown Proceedings Ordinance ("CPO") continues to permit civil proceedings against the Hong Kong Government and its entities.

Can Hong Kong still be used as a dispute forum in contracts involving state counterparties?

In most cases, yes.

The major impact of the Congo decision is that there is little point bringing proceedings against a foreign government in the Hong Kong courts.  This includes proceedings seeking recognition or enforcement of an arbitral award against a foreign government's assets located in Hong Kong.

Importantly, a Hong Kong arbitration clause involving a foreign state is effective.  There is a residual question over whether the Hong Kong courts will be able to exercise supervisory jurisdiction over an arbitration involving a foreign state or one of its entities: there are strong arguments indicating that participation in a Hong Kong arbitration would amount to a waiver of immunity in relation to the supervisory jurisdiction of the Hong Kong courts but the position is not clear.  That stated the courts residual supervisory powers are very limited under Hong Kong's new legislation.

Practical Steps

You should consider the following when selecting or drafting dispute clauses involving Hong Kong where a government entity is involved:

  • For contracts with the Hong Kong Government or a Hong Kong Government enterprise.  Selection of either the Hong Kong Courts or an arbitration clause is fine.  The Hong Kong Government has, in effect, waived immunity from suit under the CPO. There is no waiver from execution proceedings, however the CPO includes provisions for payment of judgments etc by the Hong Kong Government.  A foreign entity may of course prefer arbitration rather than submission to the Hong Kong courts if the Hong Kong Government or one of its enterprises is the counterparty.
  • For contracts with foreign governments or foreign state-owned enterprises ("SOEs").  Select arbitration and not submission to the Hong Kong courts.  If there are real concerns about the ability of Hong Kong courts exercising supervisory jurisdiction over a Hong Kong arbitration involving a foreign state, then you may prefer to select another New York Convention signatory country which adopts restrictive immunity as the place of arbitration.  This is unlikely to be an issue where the counterparty is a foreign SOE, provided it is independent from its government (see further below).  Do not select a country which is not a signatory to the New York Convention as the place of arbitration because there are likely to be significant problems with enforcement. To view a list of signatory countries, click here.
  • For contracts with PRC Government and its state entities.  Do not adopt a Hong Kong court jurisdiction clause.  The PRC Government and its state entities will be entitled to assert immunity.  You can however select Hong Kong as the place of arbitration where assets are outside of the PRC.  Note there is some question over the ability of the Hong Kong courts to supervise an arbitration involving the PRC Government or one of its entities (discussed above).  If the assets are only in the PRC, then use a New York Convention state venue (but not Hong Kong) and then rely upon the PRC abiding by its treaty obligations.
  • In all cases.  Include a waiver of immunity clause in your disputes clause, including possible waivers from both immunity from suit and immunity from enforcement.  Notwithstanding that these clauses will not be effective in Hong Kong before the Hong Kong courts, they may be effective in other jurisdictions which adopt a less restrictive approach to immunity.  Also, such waiver clauses could be effective in the future in Hong Kong if the PRC decides to adopt a doctrine of restrictive immunity.  In this context it is worth bearing in mind that, in 2005, China signed the UN Convention on Jurisdictional Immunities of States which endorses restrictive immunity. This treaty is not yet in force.
  • How to assess whether the counterparty is part of a state. It is not always clear if an entity connected with a state is legally part of that state for the purposes of immunity.  In Hong Kong, case law provides some guidance for PRC state entities. The fact that a PRC entity carries on commercial enterprises does not mean it cannot claim immunity.  The "bright line" test is one of control, and the question to be asked is whether the entity in question is able to exercise independent powers of its own.  For example, if a PRC state entity requires authorisation from a ministry prior to entering into a particular contract (as was the case in Hua Tian Long) then the entity is likely to be entitled to immunity.  In contrast, an SOE established by the State-owned Assets Supervision Committee ("SASAC") is unlikely to be entitled to immunity: such entities have independent management, ownership of assets and capacity to independently assume civil liabilities.  For state entities connected with foreign governments it is likely that a similar "structural" approach will apply.  Such an approach is normally adopted in countries which follow the absolute state immunity doctrine, which Hong Kong now clearly does.

Finally, if you are dealing with a state or one of its entities, it is also worth checking to see if there is a bilateral investment treaty ("BIT") offering protection for foreign investments which might be used if things go wrong.  A typical BIT will provide for ICSID arbitration, though some provide for UNCITRAL ad hoc or ICC arbitration.  BITs will not provide remedies for all breaches of contract, but they may offer an avenue to recompense foreigners who have been treated unfairly by a state.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.


1 Democratic Republic of the Congo v FG Hemisphere Associates LLC FACV Nos 5, 6 & 7 of 2010, 8 June 2011.

2 See Interpretation of Paragraph 1, Article 13 and Article 19 of the Basic Law of the Hong Kong SAR by the Standing Committee of the National People's Congress.

3 Intraline Resources SDN BHD v The Owners of the Ship or Vessel "Hua Tian Long" [2010] 3 HKLRD 611.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.