To promote better management of cross-boundary disputes between Mainland China and Hong Kong, the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of Mainland China and Hong Kong was signed in 2019. In Hong Kong, the 2019 Arrangement has been implemented through the Enactment of the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645) (the “New Regime”), which recently came into force on 29 January 2024.
Difficulties before the New Regime
Under common law, it was difficult to seek enforcement of Mainland judgments in Hong Kong. This was because a party seeking to enforce a non-Hong Kong judgment was required to bring a new action in Hong Kong by way of writ, whereby the party also bore the burden of proving to the court that the judgment complies with the requirements for recognition and enforcement. The Mainland judgment also had to be regarded as final and conclusive.
Alternatively, a party may seek reciprocal enforcement of judgments in Hong Kong under the Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap. 597) (the “Prior Regime”). The Prior Regime remains in force for judgments obtained in the Mainland before 29 January 2024 as the New Regime has no retrospective effect.
Key Changes in the New Regime
1. Prior Agreement Requirements Removed
The Prior Regime requires parties to have already agreed to submit exclusively to the jurisdiction of the courts in Mainland China or Hong Kong in their underlying agreement to allow reciprocal enforcement of judgments. Such requirement is removed under the New Regime, allowing for most civil or commercial Mainland court judgments to be enforced in Hong Kong subject to certain exclusions.
2. Scope of enforceable judgments
The New Regime also broadens the scope of judgments applicable for reciprocal enforcement. The Prior Regime only applies to judgments granted for monetary relief from Mainland or Hong Kong courts in commercial disputes. Under the New Regime, judgments granting non-pecuniary reliefs, such as orders for declarative reliefs, specific performance, injunctions etc. may be registered as well.
3. Expansion of eligible courts
Under the Prior Regime, only specifically designated Mainland judgments from the Primary People’s Court could be enforced in Hong Kong. Mainland judgments enforceable in Hong Kong under the New Regime will now be expanded to apply to decisions made by lower Mainland courts as well. On the other hand, Hong Kong judgments enforceable in Mainland China will now include decisions of the Lands, Competition, Labour and Small Claims Tribunal under the New Regime.
Excluded Judgments
Despite the broadened scope of relief in enforceable judgments, Section 7 of the New Regime provides a list of excluded judgments as follows :-
(a) matrimonial / family law judgments;
(b) judgments concerning the administration or distribution of estates;
(c) judgments in certain intellectual property cases (e.g. patent infringement cases);
(d) judgments in certain maritime cases;
(e) insolvency and bankruptcy judgments;
(f) judgments in certain administrative cases;
(g) judgments in certain arbitration matters (concerning the validity of arbitration agreements, setting aside arbitral awards and for the recognition or enforcement of foreign arbitral awards); and
(h) judgments in proceedings concerning the recognition of foreign judgments.
Application for Registration
Judgment creditors must establish that (a) the Mainland Judgment was given on or after 29 January 2024, (b) is effective in the Mainland, and (c) the following conditions are satisfied :-
(i) the Judgment or part requires the payment of a sum of money, or the performance of an act, by a party to the original proceedings for the Judgment;
(ii) a default in complying with the requirement occurred within 2 years before the date of the application; and
(iii) the default has not been made good as at the date of the application.
Judgment creditors under qualifying Mainland judgments may apply in a simple procedure for a registration order to register the judgment or any part of it pursuant to the practice directions. The application is made ex parte (i.e. without notice to the judgment debtor(s) by originating summons with an affidavit in support. Upon acceptance of such application, the judgment debtor’s assets may be frozen by the Hong Kong court as an interim measure.
Grounds to Set Aside Registration of a Mainland Judgment
A person whom a registered judgment may be enforced against may apply to set aside the registration within 14 days after notice of registration has been given to him. The court may set aside the registration on various grounds. The ground may include, for example, instances where the jurisdictional requirement was not satisfied; where the registered judgment was obtained by fraud; or where a judgment was already given and enforced by a Hong Kong court or court elsewhere (besides Mainland China). The court may also set aside judgments which may be considered manifestly incompatible with the public policy of Hong Kong.
Conclusion
The New Regime seeks to broaden the Prior Regime and simplify the mechanism for reciprocal enforcement of judgments in civil and commercial matters between Hong Kong and the Mainland. This should make Hong Kong an attractive jurisdiction for dispute resolution when conducting business in Mainland China as judgments obtained in Hong Kong may now be registered and enforced in the Mainland China and vice versa with greater ease.
Our Litigation and Dispute Resolution team has extensive experience acting for international and domestic clients in registration of foreign judgments, complex corporate, contractual and commercial disputes and arbitration in the Greater China region especially those of a cross-border nature. If you have any questions on the above eNews or relating to litigation and / or arbitration matters, our experienced Dispute Resolution lawyers would be happy to assist you.