On 29 January 2024, the new Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645) (the “Reciprocal Enforcement Ordinance”) came into force, together with the accompanying Rules [1] providing an enhanced regime for the reciprocal enforcement in Hong Kong of judgments from Mainland China. The Reciprocal Enforcement Ordinance implements the ‘Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by Courts of the Mainland and of the Hong Kong Special Administrative Region’ signed on 18 January 2019 (the “2019 Arrangement”).
The Ordinance supercedes the former regime in place since August 2008 under the Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap. 597) (the “MJREO”) which gave effect to the ‘Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by Courts of the Mainland and of the Hong Kong Special Administrative Region pursuant to Choice of Court Agreements between Parties concerned’ signed on 14 July 2006 (the “2006 Arrangement”) – although the MJREO will remain in force and continue to apply to judgments obtained before 29 January 2024.
Key changes
Under the 2006 Arrangement, judgments could only be reciprocally enforced if the parties had agreed beforehand in a written contract under which a dispute arose to an exclusive jurisdiction clause either for the Hong Kong Court or a designated Mainland Court.
The most important change under the 2019 Arrangement and Reciprocal Enforcement Ordinance (together the “New Regime”) removes this requirement. The abolition of the requirement for an exclusive jurisdiction clause in an underlying agreement means that under the Reciprocal Enforcement Ordinance most Mainland court judgments in civil and commercial matters can now be enforced in Hong Kong – apart from in certain specifically excluded cases (see further below) – by a simple registration procedure provided the requirements under the Reciprocal Enforcement Ordinance are fulfilled.
Under the 2006 Arrangement and MJREO, relief was limited to monetary relief. The New Regime expands the scope of enforceable relief. Non-monetary relief, such as declaratory relief or orders for specific performance, can now also be subject to reciprocal enforcement.
Judgments awarding compensation/damages in criminal proceedings can also be registered.
Exclusions
Under section 7 of the Reciprocal Enforcement Ordinance, certain judgments are excluded, including:
- matrimonial / family law judgments;
- judgments concerning the administration or distribution of estates;
- judgments in certain intellectual property cases (e.g. patent infringement cases);
- judgments in certain maritime cases;
- insolvency and bankruptcy judgments;
- judgments in certain administrative cases;
- 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
- judgments in proceedings concerning the recognition of foreign judgments.
It should be noted that for some of these excluded categories other cross-border arrangements are in place which can be relied on to for the recognition and enforcement of judgments in those proceedings.[2]
Establishing jurisdiction of Mainland Court had jurisdiction to hear the original case
Under the Reciprocal Enforcement Ordinance, a judgment creditor must establish that the Mainland court had jurisdiction to hear the original case. This is by reference to factors establishing a connection with the Mainland at the time the Mainland court accepted the proceedings, including:
(1) the defendant residing in the Mainland;
(2) the defendant’s representative office or place of business being in the Mainland;
(3) the place of performance of the disputed contract, or committal of a tortious act, being in the Mainland;
(4) the parties having agreed in writing the Mainland courts were to have jurisdiction (whether exclusive or non-exclusive); or
(5) where all parties reside in Hong Kong, showing “an actual connection between the Mainland and the dispute” (such as the contract was to be performed or signed in the Mainland, or the subject matter was situated in the Mainland).
Registration mechanism under the Reciprocal Enforcement Ordinance
Judgment creditors under qualifying Mainland judgments may apply under the Reciprocal Enforcement Ordinance for a registration order to register the judgment or any part of it. The application is made ex parte (i.e. without notice to the judgment debtor(s)) by originating summons with an affidavit in support.
Once registered, the applicant/judgment creditor must serve a notice of registration on all persons against whom such judgment may be enforced.
Setting aside
An application to set aside the registration may be made within 14 days after the date of service of the notice of registration.
The Court must set aside the registration if the party seeking to set aside can establish any of the following grounds:
- The requirements of the Reciprocal Enforcement Ordinance have not been complied with;
- the original court lacked jurisdiction over the dispute;
- the defendant was not given a reasonable opportunity to defend the proceedings;
- the registered judgment was obtained by fraud;
- the case was accepted by the Mainland Court after proceedings in respect of the same cause of action between the same parties were started in Hong Kong;
- a Hong Kong Court has given judgment on the same cause of action between the same parties;
- a court outside Hong Kong has given judgment on the same cause of action between the same parties and the judgment has already been recognised or enforced in Hong Kong;
- an arbitral award has been made on the same cause of action between the same parties (and where made in arbitration outside Hong Kong the award has already been recognised or enforced in Hong Kong);
- enforcement is manifestly incompatible with public policy of Hong Kong;
- the registered judgment has been reversed or set aside pursuant to an appeal or a re-trial.
Enforcement
Registered judgments may be enforced in Hong Kong in the same way as Hong Kong judgments after the period allowed for setting aside has been disposed of or any such setting aside application has been finally disposed of. Remedies available to the judgment creditor include:
- Examination orders against the judgment debtor (to identify assets against which the judgment can enforced);
- Garnishee proceedings (to require third party banks or other partis holding funds of the judgment debtor to make payment to the judgment creditor);
- Charging orders over land, real property or securities;
- Writs of execution for delivery up of goods;
- Winding up or bankruptcy proceedings.
Registration and enforcement of Hong Kong judgments in the Mainland
Under the 2019 Arrangement, there are reciprocal rights to register and enforce Hong Kong civil and commercial judgments in the Mainland, which should be filed with an Intermediate People’s Court in the place of residence of the applicant or the respondent or where the property of the respondent is located.
Sections 33 and 34 of the Reciprocal Enforcement Ordinance deal with the facilitation of recognition and enforcement of Hong Kong judgments in the Mainland. Upon payment of the prescribed fee, the Hong Kong Court will issue a certified copy of the Hong Kong judgment with a certificate certifying that the judgment is a Hong Kong judgment in a civil or commercial matter and is effective in Hong Kong.
Conclusion
The New Regime and the implementation of the Reciprocal Enforcement Ordinance is a significant and welcome development which should be of great benefit to Hong Kong, making it even more attractive as a preferred venue of choice for resolving cross-border business disputes involving Mainland parties or assets. The scope of judgments that can be registered and enforced has been significantly expanded, with the categories of relief also expanded to include non-monetary relief as well as monetary relief.
Previously, where judgments were ineligible for registration this necessitated effectively re-litigating cases in either Hong Kong or the Mainland for the purpose of enforcement. The expanded scope of the New Regime, however, should reduce the need for duplicated proceedings thereby saving time and costs as well as enhancing certainty around enforcement.
In short, the New Regime and the Reciprocal Enforcement Ordinance should provide further options for parties involved in Mainland transactions and do much to enhance Hong Kong’s competitiveness as a dispute resolution centre.
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This article is intended only to provide a summary of the subject covered. It does not purport to be comprehensive or to provide legal advice. No person should act in reliance on any statement contained in this publication without first obtaining specific professional advice.
[1] Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement ) Rules (Cap. 645A)
[2] E.g. under the ‘Arrangement on Reciprocal Recognition and Enforcement of Civil Judgments in Matrimonial and Family Cases by Courts of the Mainland and of the Hong Kong Special Administrative Region’ signed on 20 June 2017 and the Mainland Judgments in Matrimonial and Family Cases (Reciprocal Recognition and Enforcement) Ordinance (Cap. 639) or under the ‘Record of Meeting of the Supreme People’s Court and the Government of the HKSAR on Mutual Assistance to Bankruptcy (Insolvency) Proceedings between the Courts of the Mainland and of the HKSAR’ which was signed in May 2021 and the accompanying Practical Guide issued by the HKSAR and the Opinion promulgated by the Mainland’s Supreme People’s Court (for the three pilot provinces to which these arrangements presently relate).
