Bridging borders: a new page for reciprocal enforcement of Mainland Judgment in Hong Kong from 29 January 2024

The Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Ordinance (Cap. 645) (the "Ordinance")^[1] and the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement) Rules (Cap. 645A) (the "Rules") ^[2] are poised to take effect on 29 January 2024.

Together, they give effect to the Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and of the Hong Kong Special Administrative Region (the "2019 Arrangement")^[3], which provides a more streamlined and comprehensive mechanism for registration and enforcement of Mainland judgments in civil and commercial matters in Hong Kong.

The 2019 Arrangement 

The 2019 Arrangement supersedes the preceding Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters Pursuant to Choice of Court Agreements (the "2006 Arrangement")^[4] which was implemented through the Mainland Judgments (Reciprocal Enforcement) Ordinance (Cap. 597).^[5]

Key differences between the 2019 Arrangement and the 2006 Arrangement

The key differences between the Arrangements are as follows:

(a) Removal of the exclusive jurisdiction requirement: The exclusive jurisdiction requirement under the 2006 Arrangement is now replaced with a jurisdictional test,^[6] which requires the enforcing party to show that the underlying dispute has a nexus with Mainland China. The test is satisfied if the Mainland Court had jurisdiction at the time when the underlying proceedings were accepted. This can be shown by (i) the defendant's place of residence, representative office or place of business being in the Mainland; (ii) the underlying contract and/or tortious act was performed/committed in the Mainland; or (iii) the parties having agreed to the jurisdiction (whether exclusive or non-exclusive) of the Mainland Court and there being a connection between the dispute and the Mainland. 

(b) Expanded scope of registrable judgments and available remedies: The 2019 Arrangement is no longer confined to the registration of monetary judgments, the scope of registrable judgment is now expanded to include monetary/non-monetary judgments, judgments regarding specific intellectual property rights^[7] as well as criminal judgments that contains an order for payment of compensation and/or damages.^[8] The 2019 Arrangement also expands the categories of remedies available, covering both monetary and non-monetary relief.

(c) Finality: Under the 2019 Arrangement, there is no longer a requirement for a judgment to be "final and conclusive" in order to qualify for registration, as long as it is "legally effective".^[9] In this regard, a Mainland Judgment is presumed to be "legally effective" if a certificate certifying the same is issued by the original Mainland court.^[10] 

Summary of the registration procedure

Ex parte application by Originating Summons: The application to register a Mainland Judgment must be made by way of an ex parte Originating Summons to the Court of First Instance in Hong Kong supported by an affidavit. The affidavit must exhibit copies of identity/company documents relating to the parties, sealed judgment duly certified by the original Mainland court, evidence relating to the enforceability of the judgment and a statement costs in respect of the application.^[11] 

Notice of registration: Upon the Court's making of a registration order in respect of the judgment, the enforcing party must serve a notice of registration on the relevant judgment debtor.^[12] 

Setting aside the registration order: The judgment debtor may apply to set aside the registered judgment (or any part of it) within 14 days (or such longer period as specified by the Court) after the date on which a notice of registration is served on him.^[13] The grounds for setting aside the registration of the judgment are set out in section 22 of the Ordinance, which include, for example, the registered judgment was obtained by fraud, the Hong Kong court has given a judgment on the same cause of action between the same parties or the registered judgment has been reversed or otherwise set aside pursuant to an appeal or a retrial.

No duplicative proceedings allowed: If an application for registration of a Mainland Judgment is made, duplicative court proceedings in Hong Kong having the same cause of action between the same parties shall be stayed^[14] or precluded from commencement^[15]. 

Enforcement only after end of setting aside procedure: If the judgment debtor has taken no steps to set aside the registration upon the expiry of the prescribed 14-day period^[16], and provided that any setting aside application has been disposed of, the Mainland Judgment is deemed to be registered . Upon registration, it may then be enforced in Hong Kong as if it were a judgment given by the Court of First Instance.^[17] The judgment creditor may proceed with enforcement mechanisms, including for example, garnishee order and charging order, against the assets of judgment debtor available for enforcement in Hong Kong.  

Conclusion and advantages of the new legislation

The more streamlined and efficient registration process under the new legislation will provide greater judicial certainty, and reduce time and costs of unnecessary re-litigation of judgments. With the new legislation, it is estimated that around 90% of judgments of civil and commercial disputes can be reciprocally recognised and enforced between Hong Kong and the Mainland. This will enhance Hong Kong's role in resolving any civil and commercial disputes with a Mainland connection (vice versa, for Hong Kong judgment to be registered and enforced in the Mainland), cementing Hong Kong's standing as a preeminent regional hub for dispute resolution and facilitate cross-border trade and investment.  

Statistically, between August 2008 and December 2021, the Hong Kong court dealt with a total of 134 cases under the 2006 Arrangement.^[18] With the much improved registration process under the new legislation, no doubt there will be an uptick of enforcement applications going forward. Strategically, enforcing parties may choose to register the Mainland Judgment in Hong Kong before seeking enforcement in other jurisdictions.  

Pausing here, a litigant must not lose sight of his/her commercial objectives before so proceeding with cross-border registration and enforcement. Commercial objectives such as the degree of compliance of the Mainland Judgment by the judgment debtor, the availability of judgment debtor's assets subject to enforcement in Hong Kong, and the resistance or technical manoeuvre the judgment debtor might put up during registration and/or enforcement procedures in Hong Kong will have a bearing on whether these legal steps will lead to fruits. A litigant is advised to seek legal advice and make a commercial assessment before taking actual steps in Hong Kong.

Please reach out to your usual Withers contacts should you have any questions.