With
the Mainland Judgments in Civil and Commercial Matters (Reciprocal Enforcement)
Ordinance (Cap. 645) (the “Ordinance”) coming into effect on 29 January 2024,
the long-awaited new statutory regime on reciprocal enforcement of judgments
between Hong Kong and Mainland China has finally been implemented.
In
our previous Newsletter issue 06, June 2023, we discussed the main features
of the old and new regimes on enforcement of Mainland judgments in Hong Kong.
In this article, we will recap the remarkable changes introduced by the new
regime. Further, with 3 months into the enactment of the new regime along with introduction
of the implementing rules and practice direction, we will also walk you through
some commonly asked questions regarding the new regime.
Important
Changes Under the New Regime
The
old regime outlined under the Mainland Judgments (Reciprocal Enforcement)
Ordinance (Cap. 597) (the “MJREO”) was in force in Hong Kong since 1 August
2008. Restrictive conditions, including most notably, the requirement of a
contract in the underlying dispute to contain an exclusive jurisdiction clause
in favour of the Mainland courts, must be fulfilled for a Mainland judgment to
be eligible for registration in Hong Kong under the old regime.
With
the growing business ties between Hong Kong and Mainland China, there is a
pressing demand to broaden the scope of reciprocal enforcement of judgments. This
calls for the enactment of the new regime which introduces the following important
changes:-
1. 1. Expanded Scope of
Disputes: Under the old regime, disputes covered by the Mainland judgment must arise from
a contract in a civil or commercial matter. In contrast, the new regime is
expanded to cover most civil and commercial matters as well as criminal matters
with monetary compensation or damages ordered.
2. 2. Choice of Mainland Court
Requirements Removed: The old regime imposes a stringent condition that the
contract in the underlying dispute shall contain an exclusive jurisdiction
clause in favour of the Mainland courts. The new regime relaxes the same, and the
jurisdiction requirement will generally be satisfied if it can be shown that the
individual defendant’s place of residence was in the Mainland or that the
corporate defendant maintained a representative office, branch, office, place
of business in the Mainland, the place of performance of the contract or the
place of commitment of the tortious act was in the Mainland, etc.
3. 3. Extension to the
enforcement of non-money judgments: In addition to monetary judgments, the new regime
also encompasses judgments which require the performance of an act. This opens
the possibility of the enforcement of injunctions and specific performance
ordered by Mainland courts in Hong Kong.
4. 4. Judgments by Lower
Mainland Courts Covered: Judgment from lower Mainland courts may not be enforced
under the old regime unless it is given by one of the courts in the list of
Recognized Primary People’s Court. That said, the new regime abolishes such
requirement and recognizes judgments, rulings, conciliatory statements, and
payment orders made by all Mainland courts.
Commonly
Asked Questions Regarding the New Regime
1. Question: If I obtained a
favourable Mainland judgment before 29 January 2024, can I register the same in
Hong Kong under the new regime with the Ordinance being effective now?
Answer: No. The new regime is
only applicable to Mainland judgments given after the commencement date of the
Ordinance, i.e. 29 January 2024.
However, the old regime runs
in parallel, and Mainland judgments fulfilling the relevant requirements under
the MJREO (i.e. the old regime) may still be registered under the old regime. For
those Mainland judgments that does not fulfill such requirements, enforcement
under common law through commencing a fresh action in Hong Kong may be explored.
2. Question: Is there a
deadline to apply for registration under the new regime?
Answer: Yes, the application
must be made within 2 years after a default in complying with the Mainland
judgment has first occurred. Further, if the Mainland judgment orders for
payment/performance of an act to be made in stages, the application covering
that specific obligation must be made within 2 years from the non-compliance of
that obligation first occurred or from the relevant date for compliance.
For example, if the
Mainland judgment orders for the defendant to make payment in stages, with the
1st installment being due immediately, the deadline for the
Plaintiff to make an application in Hong Kong to register the judgment relating
to the 1st installment is 2 years from the effective date of the
judgment.
3. Question: If my Mainland
judgment is obtained in insolvency proceedings, can I register it in Hong Kong
under the new regime?
Answer: No. The new regime only covers judgments given in
proceedings that are civil and commercial in nature, and does not cover
judgments on corporate insolvency, debt restructuring or personal insolvency.
However, an application for recognition of Mainland
insolvency proceedings may be made with the Hong Kong court under the pilot
measure for mutual recognition and assistance of insolvency proceedings between
the courts of three pilot areas in Mainland China and Hong Kong, which is known
as the Cooperation Mechanism (or in case the insolvency proceedings were carried
out at a Mainland court outside the pilot areas, the Hong Kong court may still accept
the request for recognition and assistance under common law. For details,
please see here).
4. Question: After I file the
application for registration of the Mainland judgment, if the judgment is
stayed in Mainland China, do I have to inform the Hong Kong court of this new
development?
Answer: Yes. The application for registration is made on an ex-parte
basis (i.e. without giving notice to the defendant), and the applicant has a
continuing duty of making full and frank disclosure, disclosing to the Court all
relevant information and documents, whether such information or documents are beneficial
or adverse to the applicant.
In particular, if it has come to your attention any latest
development of change of circumstances that would render the basis for granting
the registration order no longer valid and sustainable (e.g. where the Mainland
Judgment is stayed or set aside, etc.), you must immediately inform the Hong
Kong court the same by way of supplemental affidavits. Failure to comply with
such disclosure requirement may render the registration application refused or final
order discharged.
5. Question: After I
successfully registered the Mainland judgment in Hong Kong, can I immediately enforce
it against the defendant?
Answer: After the registration order has been granted, the
applicant must serve a notice of registration on the defendant (and all other
parties against whom the Mainland judgment may be enforced) by delivering it personally
or sending it by registered post to the recipient.
Generally, if no application for setting aside the
registration of the judgment is made within 14 days after service of the notice
of registration, action may be taken to enforce the registered Mainland
judgment as if it were a judgment originally given by the Hong Kong court on
the date of registration.
Conclusion
The
implementation of the new regime marks a significant milestone in cross-jurisdictional
reciprocal recognition and enforcement of judgments between Hong Kong and
Mainland China. With the more comprehensive legal framework, parties may now enforce
a wide range of civil and commercial judgments issued by courts in Hong Kong or
Mainland China, thereby reducing the need to initiate separate lawsuits in both
jurisdictions.
We
will continue to monitor further developments and provide timely updates.
About Us
Vivien Chan & Co. is a full-service law practice with offices in Hong Kong (1985) and Beijing (1993). We are consistently recognized as a premier law firm for and in Greater China. With over 35 years of doing business in Greater China, our Hong Kong and China teams have an in-depth understanding and knowledge of the legal culture and market dynamics.
Our long established licensed law offices in Greater China have allowed us to develop deep local roots and an integrated global perspective necessary to help domestic businesses and multinational companies alike seamlessly manage even the most complex local and cross border transactions.
We have advised on some of the most significant acquisitions, arbitrations, real estate projects and intellectual property enforcement to date. This is particularly evident from our leading position in areas such as intellectual property, tax, employment, mergers & acquisitions and dispute resolution. Our ability to collaborate across practices and borders with ease allows us to bring the right team to every transaction, regardless of location.
