On May 15, 2025, AALCO Hong Kong Regional Arbitration Centre (the “Centre”) welcomed a delegation of Mainland Chinese construction and legal experts from the “Smart Construction in Hong Kong: Exploring Innovation in Engineering and Legal Systems” initiative.
The visit highlighted Hong Kong’s groundbreaking Construction Industry Security of Payment Ordinance (SOPO) (Cap. 652) – enacted in December 2024 and to be effective from 28 August 2025 – underscoring the city’s robust legal framework and the Development Bureau’s two-decade commitment to modernising the industry.
Delegation Overview
Led by Professor Yin Yilin (尹贻林教授), a preeminent scholar in China’s construction field (recipient of the National Teaching Excellence Award and State Council Special Allowance), the delegation comprised over 20 senior executives from leading Mainland universities, engineering enterprises, and consultancy firms. The visit facilitated knowledge-sharing on Hong Kong’s legal infrastructure and the SOPO’s transformative role in fostering fair payment practices.
Background
The visit coincided with two milestones: the SOPO’s enactment and the Centre’s 4-day inaugural adjudicator training programme in April 2025, which equipped local professionals to administer the Ordinance’s framework shortly after its passage.
As part of the AALCO Dispute Settlement System – which includes regional centres with deep expertise, such as Kuala Lumpur’s adjudication of thousands of cases since 2014 – AALCO Hong Kong International Arbitration Centre is ready to contribute to the successful implementation of the SOPO and ensure its alignment with international best practices.
Key Discussions: SOPO’s Framework & Impact
Mr. Dennis Cai, Deputy Director of AALCO Hong Kong Regional Arbitration Centre, delivered a 90-minute presentation detailing the Centre’s role in resolving construction disputes and his participation in the SOPO’s decade-long legislative journey since 2010. He emphasized the SOPO’s core features:
- Prohibition of conditional payment terms(Section 17), ensuring fair cash flow.
- Mandatory statutory adjudication(Section 23), allowing claimants to file payment claim within 28 days, even without prior contractual agreement.
- Enforceable determinations(Section 49) through the Court of First Instance and District Court.
- Right to suspend work(Section 59 and 60), safeguarding unpaid parties from breach claims while entitling them to cost recovery and time extensions.
SOPO (Cap.652) : A Milestone for Hong Kong’s Construction Ecosystem
Delegates praised the Development Bureau’s decades-long efforts to create a fair, efficient ecosystem for Hong Kong’s construction sector. Professor Yin and Mr. Zhong Quan (Chairman, Zonleon Engineering Consulting Co., Ltd.) shared insights into Mainland China’s evolving use of voluntary mechanisms like Dispute Adjudication Boards (DAB) and Dispute Avoidance/Adjudication Boards (DAAB).
While acknowledging these tools, delegates applauded the SOPO’s statutory advantages, particularly its mandatory adjudication and enforceable remedies.
Professor Yin remarked, “Hong Kong’s statutory right to suspend work provides a direct, practical solution unmatched by purely contractual mechanisms. This, combined with AALCO-HKRAC’s expertise, sets a global benchmark.”
The delegation also explored the idea of urging Mainland policymakers to consider similar security-of-payment legislation, emphasising the SOPO’s success in balancing execution efficiency (via statutory enforcement) and industry adaptability.
The event concluded with a tour of AALCO-HKRAC’s new premises at the Former French Mission Building – a landmark in Hong Kong’s legal and architectural heritage – symbolising the Centre’s role as a bridge for regional cooperation.
