Unlocking opportunities: navigating the middle east market with lcq15
Following is a question by the Hon Edward Leung and a written reply by the Secretary for Financial Services and the Treasury, Mr Christopher Hui, in the Legislative Council today (April 24):
Question:
Regarding exploring the Middle East market, will the Government inform this Council:
(1) whether it will provide a specific definition for family offices (e.g. whether it will set a minimum asset threshold); if so, of the details; if not, the reasons for that;
(2) of the number of family offices from the Middle East region among the family offices currently established in Hong Kong, and the proportion of the amount of capital they have invested in Hong Kong in the overall amount of capital invested by all family offices established in Hong Kong; of the number of family offices from the Middle East region planning to set up operations in Hong Kong;
(3) among the family offices established in Hong Kong which came from the Middle East region as mentioned in (2), of the number of those directly facilitated by the dedicated FamilyOfficeHK team under Invest Hong Kong;
(4) of the structure, staffing establishment and strength of the dedicated team mentioned in (3) involved in the work relating to the Middle East market; whether the authorities have allocated dedicated funding and additional manpower for targeted publicity in order to attract capital from the Middle East region; if so, of the details; if not, the reasons for that;
(5) whether it has formulated performance indicators for individual government departments concerned in respect of attracting capital from the Middle East region, such as (i) the number of target clients to be approached, (ii) the number of events to be held, (iii) the amount of capital to be brought in, and (iv) the number of family offices to be attracted to set up in Hong Kong each year; and
(6) as it is learnt that some Mainland cities have put in place a reward system to encourage referrers to attract enterprises and investments, under which referrers will get a cash bonus at different stages such as upon capital investment by investors and upon generation of actual tax revenues by the government, and such practice is very effective, whether the authorities will look into such practice to encourage third parties to proactively introduce family offices from the Middle East region to Hong Kong; if so, of the details; if not, the reasons for that?
Reply:
President,
In consultation with the Commerce and Economic Development Bureau and Invest Hong Kong (InvestHK), the consolidated reply to the various parts of the question is as follows:
(1) Family offices (FOs) generally refer to private companies which assume the day-to-day management and administration of the family assets of ultra-high-net-worth individuals (usually defined as individuals with a net worth of at least US$30 million in investible assets). There are generally two types of FOs: single FOs (which provide services to a single ultra-high-net-worth family) and multi-FOs (which provide services to multiple ultra-high-net-worth families).
Under the Inland Revenue (Amendment) (Tax Concessions for Family-owned Investment Holding Vehicles) Ordinance 2023, family-owned investment holding vehicles managed by an eligible single FO with aggregate specified assets of at least HK$240 million are eligible for profits tax exemption.
(2) and (3) According to the research findings of the consultant commissioned by InvestHK and publicised in March this year, there were around 2 700 single FOs as of end-2023, with over half of them set up by ultra-high-net-worth individuals having a wealth of US$50 million or above. The dedicated FamilyOfficeHK team (the dedicated team) of InvestHK provides one-stop support services to FOs and ultra-high-net-worth individuals interested in pursuing development in Hong Kong. Since its establishment in June 2021 up to end-March 2024, the dedicated team received over 650 enquiries on setting up FOs in Hong Kong (including around 40 enquiries from the Middle East). One hundred thirty-six FOs (nine of which are from the Middle East) have indicated that they are preparing or have decided to set up or expand their business in Hong Kong.
The dedicated team has assisted 64 FOs in setting up or expanding their business in Hong Kong (including 49 from the Mainland, eight from Asia, four from North America and three from Europe; thus far no FOs from the Middle East). As FOs in Hong Kong are not required to disclose their assets under management to the Government, the Government does not maintain relevant figures.
(4), (5) and (6) As set out in the 2022 Policy Address, the Government aims to attract at least a total of 1 130 companies to set up or expand their operations in Hong Kong from 2023 to 2025. In 2023, InvestHK assisted 382 companies (including four from the Middle East) to set up or expand their business in Hong Kong, representing an increase of 27 per cent over 2022. InvestHK will continue to strive to attract Mainland and overseas (including the Middle East) enterprises to invest in Hong Kong so as to achieve the performance indicator.
Regarding FOs, the Government's target is to facilitate no less than 200 FOs from any region to establish or expand their business in Hong Kong by end-2025. The dedicated team is confident in attaining the target. In 2023, the dedicated team conducted over 150 diversified investment promotion activities (e.g. roundtables, seminars, conferences, media interviews and external visits) in Hong Kong, the Mainland and overseas (including Southeast Asia, the Middle East, Europe, the Americas and Australia) to promote to target client groups Hong Kong's competitiveness and unique advantages as a FO hub through face-to-face interactions. It has established offices in Beijing, Brussels, Dubai and Singapore, and plans to deploy additional manpower in the Mainland (e.g. in Shanghai) to tell the good story of Hong Kong and showcase Hong Kong's competitiveness as a FO hub. In collaboration with the Economic and Trade Offices around the world, the dedicated team will also host roundtable forums in major cities under the theme of FOs.
The dedicated team comprises 17 posts, including one global head, one deputy global head, six senior vice presidents, two vice presidents, one senior executive manager, and six Mainland or overseas regional heads. Among the regional heads, the Head of Middle East is responsible for FO-related matters in the Middle East, and works with the investment promotion team of the Hong Kong Economic and Trade Office in Dubai to attract FOs in the Middle East to establish their operations in Hong Kong. The Government currently has no plan to set up a reward system for introducing FOs to Hong Kong.
Source: AI-generated images
Empowering innovation: a recap of sj's inspiring speech at the 26th icca congress
Following is the speech by the Secretary for Justice, Mr Paul Lam, SC, at the 26th ICCA Congress Opening Ceremony today (May 5):
Dr Alexandrov (President of the International Council for Commercial Arbitration (ICCA), Dr Stanimir Alexandrov), Justin (Co-Chair of the ICCA 2024 Hong Kong Host Committee Mr Justin D'Agostino), Neil (Co-Chair of the ICCA 2024 Hong Kong Host Committee Mr Neil Kaplan), Rimsky (Co-Chairperson of Hong Kong International Arbitration Centre (HKIAC) Mr Rimsky Yuen, SC), David (Co-Chairperson of HKIAC Mr David Rivkin), Joanne (Secretary-General of HKIAC, Ms Joanne Lau), distinguished guests, ladies and gentlemen,
Let me begin by expressing my gratitude to ICCA for agreeing to host the Congress in Hong Kong, which is a very strong vote of confidence in Hong Kong as an international arbitration centre. I must also congratulate the HKIAC on its successful organisation of the Congress. The Department of Justice is indeed very pleased to be one of the supporting organisations by providing financial and other supports.
I can now understand why the ICCA Congress is hailed as the Olympics of the international arbitration community. The Olympics is renowned for the great diversity and high standard of the participants. This ICCA Congress has attracted over 1 300 leading experts in international arbitrations from more than 70 jurisdictions. This is a new record, which I believe will be extremely difficult to break.
With so many friends from other parts of the world and the Mainland, as the Secretary for Justice of Hong Kong, I feel duty bound to seize the opportunity to impress on you that Hong Kong is and will remain to be a leading international arbitration centre. I am going to recast the four letters "ICCA" as an acronym to illustrate the unique strengths and qualities possessed by Hong Kong that make it stand out as one of the best venues for international commercial arbitration.
"I" - Institutional support
"I" stands for "institutional support". Hong Kong is home to many world-class and internationally renowned arbitral institutions. As our home-grown dispute resolution institution, HKIAC has always been ranked as one of the most-preferred arbitral institutions in the world. It is very encouraging to see that HKIAC received a total of 281 arbitration filings in 2023. I think Joanne mentioned some other relevant figures. They continued to be predominantly international arbitration featuring parties from 45 jurisdictions. The total amount in dispute in all arbitration cases was HK$92.8 billion, which is equivalent to about US$12.5 billion, representing a record high for HKIAC.
Among sponsors of the ICCA Congress are other reputable arbitral institutions with offices based in Hong Kong, such as the China International Economic and Trade Arbitration Commission (CIETAC), and the South China International Arbitration Center (Hong Kong) (SCIA(HK)).
"C" - Comprehensive legal framework
The first "C" stands for our "comprehensive legal framework" in arbitration. The Arbitration Ordinance in Hong Kong forms the backbone of our arbitration framework. Coming into effect in 2011, the Ordinance is largely based on the Model Law on International Commercial Arbitration of the United Nations Commission on International Trade Law, which is familiar to practitioners from both civil law and common law jurisdictions, as well as the international business community.
Taking note of arbitration users' needs for flexible funding options, we have refined our arbitration law to specifically provide for third party funding of arbitration in February 2019. In addition, the Outcome Related Fee Structures for Arbitration (ORFSA) was fully implemented in Hong Kong in December 2022. As at March 2024, based on statistics provided by our arbitral institutions, 88 arbitration cases were disclosed to be conducted with third party funding and five cases were conducted with ORFSA.
As to enforcement, arbitral awards made in Hong Kong are enforceable in Hong Kong, and over 170 contracting parties to the New York Convention. But more importantly, Hong Kong enjoys a unique strength that is not shared by other jurisdictions. Under the principle of "one country, two systems", Hong Kong has entered into three mutual legal assistance arrangements with the Mainland on not only mutual enforcement of arbitral awards, but also mutual assistance in interim measures which allow parties to arbitral proceedings administered by the designated arbitral institutions to apply to the Mainland courts for interim measures for preservation of asset, evidence and conduct, before an arbitral award is made. As at March 2024, Hong Kong's arbitral institutions had processed 118 applications for interim measures made to the Mainland courts, and court orders in respect of over RMB16.3 billion worth of assets had been issued.
"C" - Court's pro-arbitration approach
The second "C" stands for "the Court's pro-arbitration approach". The Hong Kong judiciary has long been adopting a very pro-arbitration approach. And such an approach is confirmed by a number of recent court judgments.
Last year, a landmark judgment C v D was handed down by the Hong Kong Court of Final Appeal. The judgment recognised the distinction between admissibility and jurisdiction, and held that there is a presumption that the issue of non-compliance with a precondition to arbitration is a question of admissibility to be decided by the arbitral tribunal, thereby limiting the scope of court intervention in the arbitral process. In a more recent case of CNG v G, the Court of First Instance reaffirmed the fundamental principles that arbitration is a voluntary and consensual process of final dispute resolution; and it was stressed that the Court must not only respect the autonomy of the tribunal, but also leave the tribunal free to decide the dispute with the proper exercise of its case-management powers, when the tribunal is clearly in the best position to manage its own proceedings and procedure. Lastly, in two very recent judgments handed down around two weeks ago, Re Simplicity & Vogue Retailing (HK) Co Ltd, and Re Shandong Chenming Paper Holdings Ltd, the Hong Kong Court of Appeal noted and ruled that, save in wholly exceptional circumstances, the court should decline to entertain a petition for winding up or bankruptcy when there is an arbitration agreement concerning the debt in question.
"A" - Accessibility to the international legal community
Lastly, the letter "A". Letter "A" stands for the accessibility to the international legal community. I wish to emphasise that the international arbitrations in Hong Kong are accessible to the international legal community. There is no doubt that Hong Kong itself has a very strong tool of legal talents specialised in international arbitrations. This is demonstrated by the large number of sponsors and organisers of not just official events but side events, many of which are leading law firms and barristers' chambers in Hong Kong.
But the point that I really wish to make is that Hong Kong welcomes friends from the Mainland and other parts of the world to take part in international arbitrations conducted here. As an example, to enhance immigration convenience, last year, the Government has expanded the Pilot Scheme on Facilitation for Persons Participating in Arbitral Proceedings in Hong Kong for all visitors to participate in arbitral proceedings here as arbitrators, expert and factual witnesses, counsel in the arbitration, and parties to the arbitration, without the need to obtain any employment visa. From March 2023 to March 2024, 96 persons were allowed to participate in Hong Kong arbitral proceedings without the need to obtain any employment visa under the scheme.
I truly and firmly believe that Hong Kong's reputation as a leading international arbitration centre is well deserved. However, to enable Hong Kong to maintain and enhance such a status, we need your trust and support, in particular, those of you from overseas. Seeing is believing. I hope that, apart from taking part in the official and side events of this ICCA Congress, you will have the chance to experience the Hong Kong life including our delicious food, unique culture and beautiful scenery. I am sure you will be convinced that Hong Kong remains to be a very open, friendly and diversified international society with a solid foundation based on the rule of law.
On this note, I wish to say thank you again, and I wish you all a pleasant evening in celebrating the commencement of the ICCA Congress, and of course, a very fruitful, constructive and pleasant stay in Hong Kong. Thank you very much.
Speech by SJ at 26th ICCA Congress Opening Ceremony Source: HKSAR Government Press Releases
