International companies are increasingly avoiding Hong Kong as a jurisdiction for settling disputes through arbitration, one of the clearest signs yet that China’s tightening grip on the financial hub has eroded trust in its legal system.
Businesses are instead choosing rival hubs like Singapore, Paris and London, according to interviews with arbitration lawyers, a shift that has accelerated since the Chinese government bypassed Hong Kong’s legislature to impose a sweeping national security law.
Lawyers say the new legislation has raised doubts about the independence of Hong Kong arbitrators, who are now subject to a vaguely worded statute carrying potential life sentences for crimes including subversion of state power and collusion with foreign forces. Of particular concern is the potential impact on contract disputes with Chinese companies, according to Khelvin Xu, a partner at Rajah & Tann Singapore LLP who specializes in international arbitration and commercial litigation.
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