Seating an Arbitration in Hong Kong or Singapore: Considering a Decades-Old Conundrum in 2025

The arbitration infrastructure of Hong Kong and Singapore is broadly similar, built on arbitration-friendly legislation, pro-arbitration courts and a consistent reputation for neutrality in the context of arbitration. Indeed, in the WJP Rule of Law Index, Singapore ranks 16th and Hong Kong 23rd (out of 142 jurisdictions), and both jurisdictions rank higher than Canada, the UK and the US for “civil justice” and “absence of corruption.”

Notwithstanding such similarities, certain considerations may favor one jurisdiction over another:

• Mainland China: The strategic significance of Hong Kong as a seat cannot be overstated in any transaction or arrangement involving parties, interests or assets in Mainland China, not least because of the mutual arrangements concerning interim measures and enforcement.
• Outcome-related fee structures: Although both jurisdictions allow conditional fee agreements (typically “no win, no fee” or “no win, low fee”), only Hong Kong caps the success fee that a lawyer receives if a client obtains a successful outcome. Moreover, only Hong Kong permits damages-based agreements, under which the lawyer receives up to 50% of any financial benefit obtained by the client (in addition to recoverable costs).
• Right of appeal: In Hong Kong-seated international arbitration, the parties can expressly opt in to a right of appeal to the courts on a question of law arising out of the final arbitral award. This election is not available for parties to Singapore-seated international arbitration.

Background

An arbitration agreement is built on three fundamental pillars:

1. The seat of the arbitration.
2. The rules of the arbitration.
3. The governing law of the arbitration agreement itself.

We strongly encourage parties to expressly set out in their arbitration agreement their choice concerning each pillar (i.e., the seat, the rules and the governing law).

The seat sets the applicable law of the arbitration. This choice determines procedural and certain substantive matters, such as the availability of interim measures and the grounds on which arbitral awards may be challenged. These rules can differ significantly among jurisdictions.

For several years, Hong Kong and Singapore have been in the top five most preferred seats globally, and the top five most preferred arbitral institutions globally have included the Hong Kong International Arbitration Centre (HKIAC) and the Singapore International Arbitration Centre (SIAC).¹

In particular:

• Hong Kong: The most recent HKIAC statistics show that confidence in Hong Kong remains strong, with parties continuing to choose Hong Kong as a seat. Of the arbitrations submitted to HKIAC in 2024 (97.1% of which were seated in Hong Kong), (i) over 40% arose from contracts signed between 2022 and 2024, and (ii) over 65% arose from contracts signed between 2020 and 2024. The top five foreign/nondomestic users in 2024 were Mainland China, British Virgin Islands, Cayman Islands, Singapore and the US. Although Mainland China tops the foreign/nondomestic user rankings, 59.4% of 2024 arbitrations did not involve any Mainland Chinese parties.
• Singapore: The most recent SIAC statistics demonstrate the continuing strength and global popularity of Singapore as an arbitral seat. Of the cases submitted to SIAC in 2024, 91% were international in nature, involving parties from 72 different jurisdictions — a record number. The top five foreign/nondomestic users in 2024 were South Korea (which topped the list for the first time), Mainland China, India, Hong Kong and the US.

Other reputable institutions that have representative offices in Hong Kong and Singapore include CIETAC HK (Hong Kong),² the International Chamber of Commerce (Hong Kong and Singapore), AAA-ICDR Asia Case Management Centre (Singapore) and AALCO Hong Kong Regional Arbitration Centre (Hong Kong).

Arbitration Infrastructure

The continuing endorsement of Hong Kong and Singapore is attributable, in large part, to the following common features of their arbitration infrastructure:

Neutrality and the rule of law: The World Justice Project’s annual Rule of Law Index is said to measure how the rule of law is experienced and perceived.

• Globally, Singapore ranks 16th and Hong Kong 23rd (out of 142 jurisdictions).
• In East Asia and Pacific, Singapore ranks fourth and Hong Kong sixth (out of 15 jurisdictions).
• As mentioned above, Singapore and Hong Kong rank higher than Canada, France, the UK and US for “civil justice” and “absence of corruption.”

Pro-arbitration laws: Hong Kong and Singapore are both common law jurisdictions with deep wells of jurisprudence and robust arbitration-friendly legislative frameworks (based on the UNCITRAL model law).

• Singapore has a dual regime: Domestic arbitration is governed by the Arbitration Act 2001, and international arbitration is governed by the International Arbitration Act 1994.
• Hong Kong, a Special Administrative Region of the People’s Republic of China, maintains a legal system distinct from that in Mainland China under the “one country, two systems” principle. It has a single regime for domestic and international arbitration governed by the Arbitration Ordinance (Cap. 609).

Pro-arbitration courts: The courts of Hong Kong and Singapore have strong pro-arbitration reputations. Those reputations are well documented in case law concerning issues that may arise throughout the life cycle of an arbitration, from granting interim relief in support of arbitration to prioritising the enforcement of arbitral awards. Intervention by the courts in both jurisdictions is limited, occurring only in exceptional circumstances.

Indeed, the Hong Kong court recently (i) emphasised the “exceptional nature of challenges” to arbitral awards (CNG v. G³); (ii) confirmed that the statutory grounds for challenging final arbitration awards cannot be relied upon to challenge interim orders (G v. N⁴); and (3) ordered security for costs against the party applying to set aside an arbitral award, with indemnity costs if it failed to provide such security (P1 and P2 v. D⁵). In fact, of the 100 cases where enforcement was sought in Hong Kong in 2024, 16 applications were made to set aside the award, and only one such application succeeded.⁶ Notably, the default position in unsuccessful applications to the Hong Kong courts to set aside arbitral awards is that indemnity costs are payable.⁷

Moreover, the Singapore court (i) recently repeated the principle that parties have a “very limited right of recourse to the courts” if they have agreed to arbitration (Swire Shipping v. Ace⁸); and (ii) made the observation, in late 2021, that “over the past 20 years, approximately only 20% of applications to set aside arbitral awards have been allowed” (CAJ v. CAI⁹). In Singapore, indemnity costs are not the default position in unsuccessful applications to the Singapore courts to set aside arbitral awards.¹⁰

Innovative and modern approach to financing:

• Outcome-related fee structures: Hong Kong and Singapore permit conditional fee agreements (CFAs) in arbitration proceedings and related court proceedings, as well as in mediation. CFAs typically take the form of “no win, no fee” or “no win, low fee.” In the event of a “win,” the lawyer typically receives a success fee in the form of an uplift on their benchmark fee (the fee the lawyer would have charged if there was no CFA). The definition of a “win” or successful outcome is to be agreed upon by the client and the lawyer. There are, however, substantive differences between Hong Kong and Singapore concerning the scope of permissible CFAs and the availability of other forms of outcome-related fee structures. These differences are explored below.
• Third-party funding: Hong Kong and Singapore permit third-party funding in arbitration proceedings and related court proceedings, as well as in mediation.

Party autonomy: For Hong Kong- and Singapore-seated arbitrations, parties are free to nominate arbitrators (with no nationality-related restrictions) and select lawyers (even those from their own foreign jurisdiction).

Enforcement: Singapore is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), and Mainland China has extended the territorial application of the New York Convention to Hong Kong. Arbitral awards made in Singapore or Hong Kong can therefore be recognised and enforced in over 170 contracting states. There is, however, a substantive difference between the jurisdictions: Hong Kong has entered into an Arrangement Concerning Mutual Enforcement of Arbitral Awards with Mainland China, and Singapore has not. This difference is explored below.

Considerations That May Favor Singapore as the Seat of Arbitration

Uncapped CFA success fee: Although Hong Kong and Singapore permit CFAs, only Hong Kong has imposed a legal cap on the CFA success fee (which is payable in the event of a “win”). In Hong Kong, the success fee (or uplift element) must not exceed 100% of the benchmark fee (the fee the lawyer would have charged if there was no CFA).¹¹ Although no such limit applies in Singapore, the Singapore professional conduct rules regarding overcharging continue to apply.

Appealing jurisdiction rulings: Singapore has departed from the UNCITRAL Model Law on this issue. A party to Singapore-seated international arbitration can appeal to the Singapore courts from a ruling by a tribunal that it has jurisdiction (a positive jurisdiction ruling), or that it does not have jurisdiction (a negative jurisdiction ruling).¹² By contrast, a party to a Hong Kong-seated arbitration can only appeal to the Hong Kong courts from a positive jurisdiction ruling.¹³

Additional grounds to challenge a final award: In Hong Kong, the standard list of limited grounds for challenge applies because Article 34 of the UNCITRAL Model Law has been incorporated into the Arbitration Ordinance at Section 81. Although parties can also challenge an award on the additional ground of serious irregularity, such challenge is only available if they have expressly opted into Section 4 of Schedule 2 to the Arbitration Ordinance. The election must be included in the arbitration agreement, and so the additional ground is not available as of right.¹⁴ In Singapore international arbitration, parties may challenge an arbitral award on the basis of the limited grounds in the standard Model Law list as well as two additional grounds: (i) the award was induced or affected by fraud or corruption, and (ii) a breach of the rules of natural justice occurred in connection with the making of the award.¹⁵

Considerations That May Favor Hong Kong as the Seat of Arbitration

Mainland China nexus: The following arrangements between Hong Kong and Mainland China provide clear mechanisms for securing interim relief during arbitration proceedings and enforcing arbitral awards. The processes are efficient and effective, and should make Hong Kong a highly attractive seat for international parties that are dealing with counterparties that have assets or operations in Mainland China:

• Arrangement Concerning Mutual Assistance in Court-Ordered Interim Measures:¹⁶ Under this arrangement, parties to a Hong Kong-seated arbitration can apply directly to the courts of Mainland China for interim relief in aid of the ongoing arbitration (such as preservation orders concerning assets, evidence and/or conduct). The application process is straightforward. The arrangement is available if the arbitration is administered by a qualifying institution (e.g., HKIAC, the ICC and CIETAC HK). The qualifying institution must issue a “Letter of Acceptance” certifying the institution’s acceptance of the arbitration. This arrangement does not extend to arbitrations seated in Singapore, and SIAC is not a qualifying institution. The HKIAC reported that, with respect to the applications it has issued a Letter of Acceptance in support of, it is aware of 116 decisions issued by the Mainland China courts as of 11 April 2025. Of those decisions, 110 granted the relevant application, preserving assets totaling around $3.5 billion in US dollars.¹⁷
• Arrangement Concerning Mutual Enforcement:¹⁸ Since 1999, arbitral awards issued in Hong Kong have been effectively enforced in Mainland China under this arrangement. Since 2021, under the Supplemental Arrangement Concerning Mutual Enforcement, an award creditor to an arbitral award issued in Hong Kong can (i) make an immediate application to the courts of Mainland China for interim relief (such as preservation orders concerning assets), before seeking to enforce the award in Mainland China; and (ii) subsequently make simultaneous applications to the courts of Mainland China and Hong Kong for enforcement of the award.

Damages-based agreements (DBAs): A DBA is a form of “no win, no fee” arrangement under which the lawyer receives a “DBA Payment” if a financial benefit is awarded to the client (calculated as a percentage of that financial benefit). The DBA Payment is capped at 50% of the financial benefit obtained by the client and excludes recoverable legal costs. Therefore, for example, the lawyer can receive up to 50% of any monetary damages awarded to the client in addition to any legal costs that can be recovered from the other parties. Hong Kong permits DBAs. Singapore does not.¹⁹

Hybrid damages-based agreements (Hybrid DBAs): Under a Hybrid DBA, the lawyer receives (i) fees that are typically at a discount on the lawyer’s benchmark fee (the CFA element), regardless of success; and (ii) if successful, a DBA Payment calculated as a percentage of the financial benefit awarded to the client (the DBA element). The following scenarios should be noted:

• Scenario 1: If the client is not awarded a financial benefit, the CFA element is capped at 50% of the irrecoverable costs, being any part of the lawyer’s benchmark fee that cannot be recovered.
• Scenario 2: If the client is awarded a financial benefit but the DBA Payment is less than the lawyer would have received in Scenario 1, the lawyer can elect to use the Scenario 1 payment rule.²⁰

Appeal on a point of law: If Hong Kong is chosen as the seat, parties can expressly opt in to a right of appeal to the Hong Kong courts on a question of law arising out of the arbitral award. That election must, however, be included in the arbitration agreement.²¹ If there is no such election, an arbitral award issued in a Hong Kong-seated arbitration is final and may not be appealed on a question of law (although a challenge may be possible pursuant to Section 81 of the Arbitration Ordinance). If such an election is made, the appeal mechanism in Sections 5, 6 and 7 of Schedule 2 to the Arbitration Ordinance applies, and the parties must still obtain leave to appeal (the threshold for which is very stringent). By contrast, this election is not available for parties to Singapore-seated international arbitration. However, parties to Singapore-seated domestic arbitration can appeal on a point of law to the Singapore courts, unless the court’s jurisdiction is excluded by the parties.²²

Final Thoughts

Hong Kong and Singapore regularly feature as seat candidates, particularly for parties looking for a neutral option in the context of a global transaction (i.e., a jurisdiction other than those in which the parties operate or are incorporated).

When faced with the conundrum of “Hong Kong or Singapore,” we encourage parties to keep in mind that:

1. The arbitration infrastructures of Hong Kong and Singapore are broadly similar.

2. The few substantive differences that do exist may be of strategic, financial or legal significance depending on the parties’ circumstances.

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1 See the Queen Mary 2021 International Arbitration Survey: Adapting Arbitration to a Changing World: The “five most preferred seats for arbitration are London, Singapore, Hong Kong, Paris and Geneva”; and the “five most preferred arbitral institutions are the ICC, SIAC, HKIAC, LCIA and CIETAC.” See also the Queen Mary 2018 International Arbitration Survey: The Evolution of International Arbitration, which records the “five most preferred seats of arbitration are London, Paris, Singapore, Hong Kong and Geneva”; and the “five most preferred arbitral institutions are still the ICC, LCIA, SIAC, HKIAC and SCC.”

2 China International Economic and Trade Arbitration Commission Hong Kong Arbitration Centre.

3 CNG v. G [2024] HKCFI 575.

4 G v. N [2024] HKCFI 721.

5 P1 and P2 v. D [2024] HKCFI 3052.

In the January 2025 issue of Hong Kong Lawyer, the official journal of The Law Society of Hong Kong, partner Friven Yeoh and associate Sui-Hang Hui discussed the Court of First Instance’s decision in P1 and P2 v. D [2024] HKCFI 3052, wherein security for costs was ordered against the plaintiffs applying to set aside an arbitral award. The court further ordered that the set-aside application be dismissed with indemnity costs in the event the plaintiffs fail to provide such security.

6 See the HKIAC’s statistics on “Enforcement of Awards in Hong Kong (2024).”

7 In Pacific China Holdings Ltd (in Liquidation) v. Grand Pacific Holdings Ltd [2012] 6 HKC 40, the Hong Kong Court of Appeal held that “it is fair that if a party was unsuccessful in setting aside or resisting enforcement of the arbitral award, in the absence of special circumstances, he should pay costs on an indemnity basis.”

8 Swire Shipping Pte Ltd v. Ace Exim Pte Ltd [2024] SGHC 211.

9 CAJ v. CAI [2021] SGCA.

10 In CDM v. CDP [2021] SGCA 45, the Singapore Court of Appeal clarified that indemnity costs will not be the default position.

11 Section 98ZC(2) Arbitration Ordinance (Cap. 609); Rule 4 of the Arbitration (Outcome-Related Fee Structures for Arbitration) Rules (Cap. 609D).

12 Section 10(3) Singapore International Arbitration Act 1994.

13 Section 34(4) Arbitration Ordinance (Cap. 609).

14 Section 99(d) and Section 4 of Schedule 2 to the Arbitration Ordinance (Cap. 609).

15 Section 24 Singapore International Arbitration Act 1994.

16 Arrangement Concerning Mutual Assistance in Court-Ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and of the Hong Kong Special Administrative Region.

17 See the HKIAC’s “PRC-HK Interim Measures Arrangement: Frequently Asked Questions.”

18 Arrangement Concerning Mutual Enforcement of Arbitral Awards Between the Mainland and the Hong Kong Special Administrative Region; Supplemental Arrangement Concerning Mutual Enforcement of Arbitral Awards Between the Mainland and the Hong Kong Special Administrative Region.

19 Section 98ZA and Section 98ZC Arbitration Ordinance (Cap. 609); Rule 5(a) of the Arbitration (Outcome-Related Fee Structures for Arbitration) Rules (Cap. 609D).

20 Section 98ZE Arbitration Ordinance (Cap. 609); Rule 6 of the Arbitration (Outcome-Related Fee Structures for Arbitration) Rules (Cap. 609D).

21 Section 99(e) and Section 5 of Schedule 2 to the Arbitration Ordinance (Cap. 609).

22 Section 49 Singapore Arbitration Act 2001.

This memorandum is provided by Skadden, Arps, Slate, Meagher & Flom LLP and its affiliates for educational and informational purposes only and is not intended and should not be construed as legal advice. This memorandum is considered advertising under applicable state laws.